AKVA Group — Investor Presentation 2015

Aug 20, 2015

Q2 2015 Presentation

Oslo - August 20th, 2015 Trond Williksen, CEO Eirik Børve Monsen, CFO

Highlights Q2 2015 - by CEO Trond Williksen

Best quarter & best first half ever – improved performance and growth continues

Second Quarter 2015 – Highlights

• Best Q2 and best Q ever
• All business segments and regions with good performance and positive development
• Chile good profitability in Q2 well underway in adjusting for challenges ahead
• Land based profitable and in positive development
• Possible strategic M&A on land based technology LOI signed with Aquatec Solutions A/S. Transaction subject to due diligence and final SPA
• High market activity resulting in the best order backlog after a second quarter ever 493 MNOK

YTD 2015 – Highlights

• Best First Half ever growth in revenues and earnings
• Strong financial position

+7% +3% 478 493 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 MNOK Order Backlog

AKVA group – uniquely positioned for further growth

• The most recognized brand in aquaculture technology
• Leading technology solutions and service partner to the global aquaculture industry
• Global presence subsidiaries in 8 countries
• 701 employees
• Market cap of NOK ~700m and net debt of NOK 76m

Presence in all main farming regions

Nordic 68 % Americas 18 % Export 14 %

Strategic priority to increase the proportion of recurring revenue

Technology sale vs recurring revenue, Q2 2015 Comments

• Aim of increasing relative share of recurring revenue through software and services – by developing software, farming services, technology services and rental further
• Introduction of rental business model in Norway in Q4 2014. Already successfully introduced in UK and Canada.
• First installations of rental equipment in Norway done in 1H 2015
• Rental is an "all inclusive" service providing for instance light or picture for an agreed period of time (2 to 5 years duration) reducing CAPEX and reducing operational work for the customer
• Acquisition of YesMaritime in 2014, a provider of diving, ROV and other services to the salmon farming sector (Farming services)
• Development of Farming Services still in an early stage opportunity for consolidation

Revenue by product groups and species

By product groups – Q2 2015 By species – Q2 2015

• Cage based technologies = Cages, barges, feed systems and other operational systems for cage based aquaculture
• Software = Software and software systems

• Land based technologies = Recirculation systems and technologies for land based aquaculture

• Salmon = Revenue from technology and services sold to production of salmon

• Other species = Revenue from technology and services sold to production of other species than salmon
• Non Seafood = Revenue from technology and services sold non seafood customers

• Several releases of new technologies and products during AQUA NOR, among them

AKVACONNECT feeding

• New software solution for feeding control and management, replacing AKVAControl
• Integration into the AKVAconnect automation platform, enabling a complete and dynamic feed control and management system
• Vast opportunities for customization of setups tailoring customer needs

AKVA Subsea Feeder

• New technology for underwater feeding, avoiding concentration of fish in upper part of water column in cages. Developed by Nærøysund Aquaservice AS.
• Fast and efficient underwater feeding with good distribution
• Large scale tests show promising results with significant reduction in sea lice levels in cages
• Integration to existing AKVA feeding technology and automation

Financial performance Q2 2015 – by CFO Eirik Børve Monsen

Q2 2015 - Financial highlights

• Good overall financial performance taking advantage of the diversified operations
• Reducing cost / exposure in Chile again
• Strong balance sheet maintained with improved working capital level

Revenue

Q2 2015 - Financial highlights, continued

• Stabilizing on a historical higher EBITDA-level both in NOK and in %
• Medium term target of 10% EBITDA still valid

CBT (Revenue & EBITDA %)

SW (Revenue & EBITDA %)

• AKVA group Software AS continues to deliver stable and high margins – with improved revenue and margins YoY
• Wise lausnir ehf had a good first half 2015 with improved performance YoY
• Software continues to invest in new product modules, which is expected to strengthen the financial performance of the SW segment further

LBT (Revenue & EBITDA %)

● Improved performance YoY and QoQ

• Good recovery in Q2 for AKVA group Denmark A/S after a slow start of the year in Q1. Continued good order backlog
• Plastsveis AS on track with profitable first half and a good order backlog

Financials – Detailed P & L

Financials – Detailed P & L
P&L (MNOK)	2015 Q 2	2014 Q 2	2015 YTD	2014 YTD	2014 Total
OPERATING REVENUES	401,5	300,9	726,5	611,3	1 246,1
Operating costs ex depreciations	360,7	276,9	659,1	555,6	1 142,7
EBITDA	40,9	24,0	67,5	55,8	103,4
Depreciation	10,8	8,9	21,3	17,2	35,7
EBIT	30,1	15,1	46,2	38,6	67,6
Net interest expense	-1,5	-1,4	-2,8	-2,9	-4,8
Other financial items	-1,5	0,8	-0,0	-0,6	0,0
Net financial items	-3,0	-0,6	-2,8	-3,5	-4,7
EBT	27,0	14,6	43,4	35,1	62,9
Taxes	7,5	2,5	12,4	7,5	8,4
NET PROFIT	19,5	12,0	30,9	27,7	54,5
Net profit (loss) attributable to:
Non-controlling interests	0,4	-0,2	0,5	-0,1	-0,6
Equity holders of AKVA group ASA	19,1	12,2	30,4	27,7	55,1
Revenue growth	33,4 %	11,4 %	18,8 %	24,2 %	35,6 %
EBITDA margin	10,2 %	8,0 %	9,3 %	9,1 %	8,3 %
EPS (NOK)	0,74	0,47	1,18	1,07	2,13

• Low interest cost due to low net debt and low interest rate

• Mainly currency – considered as an acceptable level

• Minority shareholders (30%) in Plastsveis AS

18

Group financial profile – remains strong

Available cash ROCE

Group financial profile – remains strong, continued

Working capital Equity

• Improved working capital level despite record high activity

• Due to strong capital discipline

• Good nominal increase in equity YoY due to profitable operation

• Note: Dividend payment of 25.8 MNOK in Q4 2014

Net debt (MNOK) and net debt/EBITDA Change in net debt (TNOK)

• Next possible dividend pay-out will according to the new dividend policy be in Q4

Net debt 31.03.2015	82 416
EBITDA	-40 855
Income taxes paid	3 362
Net interest paid	1 473
Capex paid	16 037
Paid dividend	-
Sale of fixed assets	-521
Currency effects	2 025
Other changes in working capital	11 858
Net change	-6 621
Net debt 30.06.2015	75 795

Balance sheet

BALANCE SHEET	2015	2014
(MNOK)	30.06	30.06

ASSETS	1 007	796
Intangible non-current assets	266	263
Tangible non-current assets	83	65
Financial non-current assets	2	2
Inventory	203	129
Receivables	385	283
Cash and cash equivalents	67	54
LIABILITIES AND EQUITY	1 007	796
Equity	415	363
Minority interest	2	2
Long-term interest bearing debt	127	130
Short-term interest bearing debt	16	16
Non-interest bearing liabilities	446	286

Capex (TNOK) and capex / sales (%)

Order backlog Order inflow

- 1Q 2Q 3Q 4Q MNOK

• Highest order inflow and order backlog ever after a second quarter
• The good market activity continues

Maintaining positive outlook

• Strong overall short term outlook due to high market activity and order backlog. Our target remains to outperform 2014
• Strong demand in the Nordic market is expected to continue, with shift towards more investment in Land Based Technology
• UK and Canada are expected to continue to perform well in the next quarters with a significant order backlog and a large portion of recurring business
• Low expectations in Chile. Majority of our Chilean customers struggle with loss making operations and a need to restructure the industry. Situation expected to last. We are well underway to adjust our resources, costs and activity level to the situation
• Land based segment is expected to have a positive development with a growing order backlog and prospect mass. There is historically high market interest for land based technology
• Exports to emerging markets will continue to fluctuate short term, but improved project activity is expected in second half of the year
• We continue our effort to build service and after sales as a key business element in all markets and segments