AKVA Group — Investor Presentation 2010

Oct 28, 2010

AKVA GROUP™

The global leader in aquaculture technology

3Q 2010 presentation

28 October 2010

Morten Nærland, CFO & Acting CEO

AKVA

CCO

akvasmart™

fishtalk™

wavemaster™

polarcirkel™

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AKVA GROUP™

Agenda

• Background & highlights
• 3Q 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

5

"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

3Q highlights

• Operating revenues in 3Q were 212.3 MNOK versus 139.8 MNOK last year.
• The EBITDA in 3Q was 10.2 MNOK versus 7.4 MNOK last year.
• Last year had one-offs of net 6.7 MNOK affecting revenues and profit positively
• Order backlog at the end of 3Q2010 was 270 MNOK versus 203 MNOK last year.
• Implementation of measures to reduce costs and improve earnings continues.

akvasmart

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AKVA GROUP™

3Q highlights cont.

• Knut Molaug stepped down from the position as CEO
• Morten Nærland, the CFO, appointed to Acting CEO

wavemaster

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AKVA GROUP™

Agenda

• Background & highlights
• 3Q 2010 Financial review
• Outlook
• Q & A

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AKVA GROUP

3Q Financials - P&L

P&L 2010	2010	2009	2010	2009	2009
(MNDK)	3Q	3Q	YTD	YTD	Total
OPERATING REVENUES	212,3	139,8	546,6	456,5	599,3
Operating costs ex depreciations	202,1	132,4	547,8	451,9	610,9
EBITDA	10,2	7,4	-1,2	4,5	-11,5
Depreciation	8,1	8,0	23,2	23,7	30,9
EBIT	2,1	-0,6	-24,4	-19,1	-42,4
Net interest expense	-3,2	-3,3	-8,4	-7,5	-8,8
Other financial items	-0,5	0,2	1,1	0,0	-0,8
Net financial items	-3,7	-3,1	-7,3	-7,5	-9,6
EBT	-1,7	-3,7	-31,7	-26,7	-52,0
Taxes	-0,1	-4,1	-8,6	-9,1	-12,9
NET PROFIT	-1,5	0,4	-23,1	-17,6	-39,1
Revenue growth	51,9 %		19,8 %		-30.8%
EBITDA margin	4,8 %	5,3 %	-0,2 %	1,0 %	-1,9 %
EPS	-0,09	0,02	-1,34	-1,02	-2,27

akvasmart

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AKVA GROUP

3Q Financials – P&L comments

• Operating revenue in 3Q10 was 212.3 MNOK vs 139.8 MNOK last year.
• Last year the profit from the sale of Surefish was included in the revenues (11.7 MNOK)

• The increase driven by the Norwegian market but basically an increase in all major markets including the export markets

• The EBITDA was 10.1 MNOK vs 7.4 MNOK last year

• Last year there were one offs affecting positively by 6.7 MNOK
• Margin in 3Q10 negatively affected by cost increases on cage and barge projects.

10

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AKVA GROUP™

Market segments

• Norway is the dominating segment
• Growth in all markets over last year
• Chilean market recovery is becoming more evident

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 3Q.

The positive development within other species than salmon continue.

polarcirkel

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AKVA GROUP

Balance sheet

polarcirkel

| BALANCE SHEET
(MNOK) | 2010
30.9. | 2009
30.9. | 2009
31.12. |
| --- | --- | --- | --- |
| Intangible fixed assets | 239,4 | 244,4 | 243,9 |
| Fixed assets | 37,9 | 44,5 | 39,1 |
| Long-term financial assets | 1,0 | 1,1 | 1,1 |
| FIXED ASSETS | 278,3 | 289,9 | 284,1 |
| Stock | 139,1 | 121,7 | 116,2 |
| Trade receivables | 175,0 | 127,1 | 125,4 |
| Other receivables | 26,5 | 18,4 | 27,5 |
| Cash and cash equivalents | 50,1 | 51,6 | 58,2 |
| CURRENT ASSETS | 390,7 | 318,8 | 327,3 |
| TOTAL ASSETS | 669,1 | 608,7 | 611,3 |
| Paid in capital | 267,1 | 267,1 | 267,1 |
| Retained equity | -34,1 | 11,7 | -10,4 |
| TOTAL EQUITY | 233,0 | 278,8 | 256,6 |
| Other long term debt | 3,6 | 9,1 | 5,6 |
| Long-term interest bearing debt | 141,9 | 102,4 | 150,7 |
| LONG-TERM DEBT | 145,6 | 111,5 | 156,2 |
| Short-term interest bearing debt | 64,5 | 78,8 | 49,4 |
| Other current liabilities | 226,0 | 139,7 | 149,1 |
| SHORT-TERM DEBT | 290,5 | 218,5 | 198,5 |
| TOTAL EQUITY AND DEBT | 669,1 | 608,7 | 611,3 |
| Equity ratio | 34,3 % | 45,0 % | 42,0 % |
| Net interest bearing debt | 156,4 | 129,6 | 141,9 |
| Net working capital | 114,6 | 127,5 | 120,0 |

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AKVA GROUP™

Balance sheet items

Working Capital (MNOK)

NIBD (MNOK)

Working Capital:

• 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 2Q 2010

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AKVA GROUP

Financial position

polarcirkel™

Equity (%)

Cash balance (MNOK)

• Equity:

• Equity position affected by the negative results

• Cash Position:

• Available cash 65 MNOK

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AKVA GROUP

Cash flow statement

| CASH FLOW STATEMENT
(NOK 1 000) | 2010
3Q | 2009
3Q | 2010
YTD | 2009
YTD | 2009
Total |
| --- | --- | --- | --- | --- | --- |
| Net cash flow from operational activities | 4 340 | 15 797 | -327 | 35 486 | 32 656 |
| Net cash flow from investment activities | -4 633 | -1 742 | -13 534 | -17 688 | -24 095 |
| Net cash flow from financial activities | -4 035 | -13 721 | 5 807 | -14 112 | 1 717 |
| Net cash flow | -4 327 | 334 | -8 053 | 3 685 | 10 277 |
| Cash and cash equivalents at the beginning of the period | 54 436 | 51 235 | 58 160 | 47 883 | 47 883 |
| Cash and cash equivalents at the end of the period | 50 108 | 51 569 | 50 108 | 51 569 | 58 160 |

Investments in the first nine months 14.2 MNOK whereof 5.3 MNOK is capitalized R&D expenses in accordance with IFRS.

akvasmart

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AKVA GROUP

Agenda

Background & highlights
3Q 2010 Financial review
Outlook
Q & A

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AKVA GROUP

Order backlog and inflow

20 akvasmart™

Order backlog (MNOK)

• The order backlog was 270 MNOK at the end of 3Q.
• Well above last year

Order inflow (MNOK)

• 3Q order inflow marked by holiday season in Norway.
• YTD order inflow 613 MNOK vs 396 MNOK last year.
• Increase related to Norway, Chile and other markets

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AKVA GROUP

Outlook

• The market fundamentals in terms of salmon prices have remained high, and AKVA’s main customers are experiencing healthy earnings.
• The order inflow should recover from the slowdown seen in 3Q
• The recovery of the Chilean salmon industry is becoming more evident
• Relative good amount of prospects related to the Mediterranean market
• In Norway there is an increasing concern over the sea lice situation and what is required to contain the problem. This combined with other diseases and changes in regulatory framework might cause uncertainty and contain investments
• Several projects to improve gross margin and reduce trhe fixed cost base are ongoing, but the full effect will come through in 1H 2011.

akvasmart

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AKVA GROUP™

Agenda

• Background & highlights
• 3Q 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)

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AKVA GROUP

New Management Structure