AKVA Group — Investor Presentation 2010

Aug 19, 2010

AKVA GROUP™

The global leader in aquaculture technology

2Q 2010 presentation

19 August 2010

Morten Nærland, CFO & Acting CEO

AKVA
CGO

akvasmart™
fishtalk™
wavemaster™
polarcirkel™

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AKVA GROUP™

Agenda

• Background & highlights
• 2Q 2010 Financial review
• Outlook
• Q & A

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Global leader in aquaculture technology. Nothing more. Nothing less.

AKVA life
2008-2015

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AKVA GROUP

AKVA group in brief

Cage systems

Facts about AKVA group

• The leading supplier of aquaculture technology.
• Strong market position for all main products
• The only supplier with "global" presence.
• Leading supplier in a global growth industry.

Software systems & services

Feed barges

Recirculation systems

Feed systems

Sensors & operational

AKVA's main product brands:
wavemaster
polarcirkel
fishtalk
akvasmart

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AKVA GROUP

"One-stop-shop" in aquaculture technology

Value Chain Software

Programvare for oppdrett

Programvare for sjømat

Land Based Farms

Cage Based Farms

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AKVA GROUP

2Q highlights

• Operating revenues in 2Q were 176.3 MNOK versus 164.3 MNOK last year.
• The EBITDA in 2Q was -11.9 MNOK versus 0.4 MNOK last year.
• Restructuring charges of 6.3 MNOK
• Cost overrun in land based projects
• Order backlog at the end of 2Q2010 was 316 MNOK which is 133 MNOK higher than last year.
• The order inflow in 2Q was 232 MNOK vs 147 MNOK last year.

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AKVA GROUP

Events subsequent to 30.06.2010

• Knut Molaug stepped down from the position as CEO
• Morten Nærland, the CFO, appointed to Acting CEO
• Smaller group management team
• Latin America and North America organized into Americas
• Scotland organized into Export
• PRU Hardware and PRU Recirculation organized under one management

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AKVA GROUP

New Management Structure

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AKVA GROUP™

Agenda

• Background & highlights
• 2Q 2010 Financial review
• Outlook
• Q & A

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AKVA GROUP

2Q Financials – P&L

okvasmart™

P&L 2010	2010	2009	2010	2009	2009
(MNDK)	2Q	2Q	YTD	YTD	Total
OPERATING REVENUES	176,3	164,3	334,3	316,7	599,3
Operating costs ex depreciations	188,2	163,9	345,7	319,6	610,9
EBITDA	-11,9	0,4	-11,4	-2,9	-11,5
Depreciation	7,5	7,8	15,0	15,6	30,9
EBIT	-19,5	-7,4	-26,4	-18,5	-42,4
Net interest expense	-2,9	-2,4	-5,2	-4,3	-8,8
Other financial items	1,4	-0,6	1,6	-0,2	-0,8
Net financial items	-1,4	-3,0	-3,6	-4,4	-9,6
EBT	-20,9	-10,4	-30,0	-23,0	-52,0
Taxes	-4,6	-1,2	-8,4	-5,0	-12,9
NET PROFIT	-16,3	-9,2	-21,6	-18,0	-39,1
Revenue growth	7,3 %		5,6 %		-30.8%
EBITDA margin	-6,8 %	0,2 %	-3,4 %	-0,9 %	-1,9 %
EPS	-0,95	-0,53	-1,25	-1,04	-2,27

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AKVA GROUP

2Q Financials – P&L comments

• Operating revenue in 2Q10 was 176.3 MNOK.
• The quarterly revenue was slightly up compared to 2Q 2009.

• Continued low revenues due to slow investment programs with the customers

• The EBITDA result was -11.9 MNOK

• Low volume compared to cost base
• Cost overrun on land based projects
• Restructuring charges of 6.3 MNOK

akvasmart

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AKVA GROUP

Market segments

Geographic segments (YTD)

• Norway is the dominating segment
• The UK and other markets are showing a positive development
• Chilean market has reduced it's importance compared to the past.

Product Group Segments (YTD)

• HW = Hardware deliveries and services
• Cages, barges, Feed Systems and other operational systems
• SW = Software and software systems
• REC = Recirculation systems

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AKVA GROUP

Market segments

AKVA group revenues within other species

• Sales and order backlog for delivery in 2010 per 2Q.

• The positive development within other species than salmon continue.

• Major contract for delivery of 3 complete cage farms to Cromaris in Croatia was signed in 2Q (54 MNOK).

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AKVA GROUP

Balance sheet

| BALANCE SHEET
(MNOK) | 2010
30.6. | 2009
30.6. | 2009
31.12. |
| --- | --- | --- | --- |
| Intangible fixed assets | 242,5 | 256,2 | 243,9 |
| Fixed assets | 38,3 | 47,8 | 39,1 |
| Long-term financial assets | 1,0 | 1,1 | 1,1 |
| FIXED ASSETS | 281,8 | 305,1 | 284,1 |
| Stock | 138,3 | 121,9 | 116,2 |
| Trade receivables | 162,1 | 149,8 | 125,4 |
| Other receivables | 44,6 | 25,1 | 27,5 |
| Cash and cash equivalents | 54,4 | 51,2 | 58,2 |
| CURRENT ASSETS | 399,4 | 348,0 | 327,3 |
| TOTAL ASSETS | 681,2 | 653,1 | 611,3 |
| Paid in capital | 267,1 | 267,1 | 267,1 |
| Retained equity | -33,2 | 26,5 | -10,4 |
| TOTAL EQUITY | 233,9 | 293,6 | 256,6 |
| Other long term debt | 4,1 | 10,1 | 5,6 |
| Long-term interest bearing debt | 148,3 | 107,6 | 150,7 |
| LONG-TERM DEBT | 152,4 | 117,7 | 156,2 |
| Short-term interest bearing debt | 62,5 | 86,3 | 49,4 |
| Other current liabilities | 232,4 | 155,5 | 149,1 |
| SHORT-TERM DEBT | 294,9 | 241,8 | 198,5 |
| TOTAL EQUITY AND DEBT | 681,2 | 653,1 | 611,3 |
| Equity ratio | 34,3 % | 45,0 % | 42,0 % |
| Net interest bearing debt | 156,3 | 142,7 | 141,9 |
| Net working capital | 112,6 | 141,3 | 120,0 |

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AKVA GROUP

Balance sheet items

Working Capital (MNOK)

Working Capital:

• Seasonal increase in working capital in 2Q
• The company continue to focus on maintaining a low working capital.

Net interest bearing debt (NIBD):

• A waiver extending through 4Q 2010 relating to the financial covenants was agreed with the company's main bank in 2Q10

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AKVA GROUP

Financial position

akvasmart™

• Equity:

• Equity position affected by the negative results

• Cash Position:

• Available cash 62 MNOK

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AKVA GROUP

Cash flow statement

| CASH FLOW STATEMENT
(NOK 1 000) | 2010
2Q | 2009
2Q | 2010
YTD | 2009
YTD | 2009
Total |
| --- | --- | --- | --- | --- | --- |
| Net cash flow from operational activities | -16,4 | 26,0 | -4,7 | 19,7 | 32,7 |
| Net cash flow from investment activities | -4,7 | -10,9 | -8,9 | -15,9 | -24,1 |
| Net cash flow from financial activities | 32,0 | -3,7 | 9,8 | -0,4 | 1,7 |
| Net cash flow | 10,9 | 11,5 | -3,7 | 3,4 | 10,3 |
| Cash and cash equivalents at the beginning of the period | 43,6 | 39,8 | 58,2 | 47,9 | 47,9 |
| Cash and cash equivalents at the end of the period | 54,4 | 51,2 | 54,4 | 51,2 | 58,2 |

• Investments in 1H amounted to 9.2 MNOK whereof 3.8 MNOK is capitalized R&D expenses in accordance with IFRS.

polarcirkel

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AKVA GROUP

Agenda

Background & highlights
2Q 2010 Financial review
Outlook
Q & A

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AKVA GROUP

Order backlog and inflow

• The order backlog was 316 MNOK at the end of 2Q.
• Up 73% compared to same period last year.

Order inflow (MNOK)

• Order inflow was 232 MNOK in 2Q.
• YTD order inflow 445 MNOK vs 236 MNOK 1H last year.
• The increase related to Norway, Chile and other markets

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AKVA GROUP

Outlook

Market development

• The market fundamentals for AKVA’s main customers remain relative unchanged from 1Q. Customers are experience healthy earnings.
• The balance between supply and demand for Atlantic salmon expected to be favourable through 2010 and 2011. This indicating healthy prices.
• Order inflow in 1H higher than last year driven by Norway, Chile and other markets
• The global financial has added uncertainty also to these markets, but there are signs that the uncertainty is now easing of.
• The market for recirculation systems in Norway is developing well and is a product area expected to show a positive development over the next year.

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AKVA GROUP™

Agenda

• Background & highlights
• 2Q 2010 Financial review
• Outlook
• Q & A

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AKVA GROUP

AKVA group – global presence

All major industry players as customers

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AKVA GROUP

AKVA group – brief historic summary

1974: World’s fist plastic cages (Polarcirkel) – today more than 40.000 units delivered
1978: First Seafood industry software solution
1980: World’s first automatic feed systems
1984: Maritech: first seafood industry PC based ERP software system
1985: First Wavemaster steel cages
1992: World’s first software system for fish farm planning
1995: First fish pellet sensing system
1997: First Steel barges
2000: Polarcirkel – large cage designs introduced
2001: Introduction of AkvaMaster feed barges
2002: Akvasmart – integrated control system (CCS)
2004: Fishtalk–fist aquaculture integrated software system
2005: Wavemaster – introduction of 40 x40 steel cages
2006: Akvasmart – integrated sensor system
2007: 10 new products launched at Aquanor show
2008: UNI recirculation–“all in all out” concept

1980 1985 1990 1995 2000 2005

1980: First AKVA deliveries
1982: AKVA incorporated as company
1990s: International expansion through distributors and agents
1995: First International investment (Canada)
1998: Open subsidiaries in Chile and Scotland
2001: Aquasmart International AS (No)
2001: Superior Systems AS (No)
2002: Vicass (Ca)
2003: Feeding Systems AS (No,Ch)
2004: Cameratech AS (No)
2006: Akva kompetanse AS (No)
2006: Wavemaster Group (UK, Ca, Ch)
2006: Helgeland Plast (No, Ch)
2006: IPO – company listed at Oslo Stock Exchange
2007: Maritech International AS (No, Is, US, Ca, Ch)
2007: UNI Aqua AS (Dk)
2008: Danaq Amba (Dk)
2008: Open office in South East Asia (Thai)
2008: Idema Aqua AS (No, UK, Ch)