Argeo AS — Interim / Quarterly Report 2021

Aug 25, 2021

Digitizing the ocean space

Second Quarter Presentation

25th of August, 2021

Strictly private and confidential

• This presentation includes and is based on, among other things, forward-looking information and statements.
• Such forward-looking information and statements are based on the current expectations, estimates and projections of Argeo or assumptions based on information available to the company.
• Such forward-looking information and statements reflect current views with respect to future events and are subject to risks, uncertainties and assumptions.
• Argeo cannot give any assurance as to the correctness of such information and statements.

Transforming the ocean surveying and inspection industry

..by utilizing autonomous underwater and surface vehicles and unique sensor and imaging technology

..to significantly increase efficiency and quality

..and to substantially reduce the CO2 footprint for the industry

Unique imaging and modelling technology

"Faster, better, greener and at a lower cost"

Transforming the ocean surveying and inspection industry

Dedicated survey vessel Dedicated ROV vessel AUV/Robotics CO2-emission: High Data Quality: Low Day rate: High Day rate: High Day rate: Low CO2-emission: High Data Quality: Medium Productivity: Medium Productivity: Low Productivity: High

Traditional players delivering high-cost and time consuming services, applying large vessels and expensive equipment

Highlights and Subsequent Events Outlook

• Argeo has successfully completed several key milestone projects involving all our robotics solutions and data analysis methods for clients
• Demonstrated the services based on our robotics platform (ASV) for EPCI clients in Aquaculture (Fjordmax) and Oil & Gas (AkerBP)
• All three robotics systems, the two Autonomous Surface Vehicle and the Hugin AUV are occupied from late August with potential for extension in September
• Building of both SeaRaptor (SR6K) systems going according to the earlier communicated plan with the first delivery in Q4-2021 and the second delivery in Q1-2022

• Revenue NOK 11 million in Q2 2021

• Argeo sees significant demand for its services within three areas, Offshore Wind installations, Oil & Gas and an increasing activity in Deep Sea Minerals

• In-house technology and solutions in combination with our robotics systems are perfectly positioned to capture market share and to become a significant operator in the offshore wind market
• Argeo sees strong demand building for its services and expects increased activity going forward.
• Some planned projects are delayed hence the revenue expectations for the full year 2021 is reduced.
• Several projects are now in the final tendering stages, and an updated guidance for the remainder of the year cannot be provided now

Project pipeline (NOK)

Company

Segment	Distribution	Weighted
EPCI	0	0
Offshore wind	7,020M	724M
Deep Sea Minerals	220M	73M
O&G	6,845M	687M
Multiclient	330M	33M
TOTAL	14,415M	1,517M

Contract and tender activity

Good global interest and tender activity

Robotics and Digital solutions for the ocean space

• Data acquisition, imaging and underground modelling for large infrastructure projects

• High accuracy imaging reducing project risk and construction costs

• Wind farm design of foundations, substations etc.

• Investigation of routes for power cable

• Inspection of existing infrastructure

• Offshore field design, location of platform and subsea infrastructure

• Investigation of routes for pipelines

• Detection og damage and erosion on existing installations

• Exploration for Deep-Sea Minerals (DSM)

• Wide use of sensors and in-house technology for mineral deposits characterization, a system under development by Argeo Robotics

Robotics for every offshore service requirements

Source: Kongsberg Gruppen, Eelume, Teledyne Technologies, Company Page 9

Technology & Engineering (T&E) – project development

• Next Gen. pipeline and electric cable tracker for integrity inspection
• Ensure correct tracking of buried assets
• Allows for 3x speed over ROV

Key features

Benefits

• Can be implemented in all our AUV robotics solutions
• ✓ 3x efficiency over ROV
• ✓ Integrates in all ARGEO AUV solutions
• ✓ Future continent to continent autonomous inspection
• ✓ Integrates with all other payload sensors in AUV

Sensor development Mineral Hunter

• Deep Sea Mineral exploration and characterization system
• Autonomous implementation allowing for acquisition
• Allows for 3x speed over ROV
• Can be implemented in all our AUV robotics solutions
• ✓ 6000-meter depth rated
• ✓ Integrates in SeaRaptor AUV
• ✓ Seabed & Deep target mineral Characterization system
• ✓ Integrate with all other payload sensors in AUV

Mariner LE

• Low carbon footprint
• Uninterrupted shore-to-shore operations
• Multi sensor installation for shallow water survey
• Link and Dock with Hugin and Eelume system
• ✓ Full onshore Mission Control
• ✓ 30-day endurance ~ 5000 km of autonomous data collection
• ✓ Integrates all payload sensors and Mission Control communication

Argeo Digital Twin

• Autonomous & robotics digital acquisition simulator
• Real-time sensor data processing
• Project data "Time Machine"
• AI/Analytic sensor data interpretation and integration
• ✓ Digital representation of any physical Ocean Space EPCI project
• ✓ Integrates all ARGEO AUV/Robotics solutions
• ✓ Project lifecycle time-laps monitoring

Significant benefits to clients within O&G and Offshore Wind

Benefits to Clients, >50% Cost Reduction O&G and Offshore Wind

Significant direct cost reduction

Operational benefits

Human and environmental benefits

• ✓ Potential for up to 200-day reduction of IMR vessel use annually
• ✓ Hibernating solution provide significant reduction mob/demob cost
• ✓ Extremely versatile and customizable design using modular payload
• ✓ Ultra-flexible and slender body that can operate in restricted subsea areas
• ✓ Robotic arms that can operate tools and carry out intervention tasks
• ✓ Fully mission controlled (supervised) tasks
• ✓ Climate neutral operation with nearly neutral CO2 footprint
• ✓ On-shore remote operation will substantially reduce HSEQ exposure

AUV

Global market size (BNOK)

Market opportunity

• AUV market will overtake ROV market size in 2030
• Military & Defense is the largest AUV segment currently, while the commercial segment is expected to see the highest growth.
• AUV upside compared to ROV for cable inspection:
• 52% time saving
• 62% cost reduction
• 68% reduction in fuel
• The high expectations to the AUV market growth is based on
• A rising number of deep-water offshore activities within Oil & Gas,Offshore wind and maritime security will increase demand for both ROVs and AUVs,
• AUV's can replace several of the work tasks that are currently carried out by ROVs and vessels
• Increased interest in greener technology and lower CO2 emissions.

SEGMENT: Oil & Gas

• Inspection, Maintenance and Repair of existing infrastructure:
• 180,000 km pipelines offshore
• 6,000 offshore platforms
• Commission of new projects:
• Commitments are expected to not only recover going forward, but also set to reach a new record in the five-year period towards 2025:
  • 600 projects
  • 480 BUSD in greenfield expenditure

SEGMENT: Offshore wind

• On average 1% of offshore wind CAPEX are used for Consulting/Environmental surveys/Metocean/G&G studies
• AUV business opportunity:
• 2019-2030: 1,450 MUSD/annually
• 2030-2051: 2,120 MUSD/annually

Fastest and most cost-effective survey solutions	• A significantly more flexible and faster pure-play provider not dependent on the shipping model • More than 50% time savings and 60% cost reduction compared to traditional ROV survey solutions
Significantly reduced emissions	• Minimized need for vessel infrastructure and up to 60% reduction in CO2 emissions from operations
AUVs provide more effective data acquisition	• Lowers the number of operators and allows for smaller support/"mother" vessels • Allows for higher speed and more effective data acquisition than by using ROVs
Improved data quality	• AUVs improve the image resolution and data quality by bringing the sensors closer to their targets

Income Statement

					Full Year
Amounts in NOK	Q2-2021	Q2-2020	First half 2021	First half 2020	2020
Operating revenue	10 863 902	3 719 166	12 004 800	4 863 717	12 834 387
Employee expenses	4 189 645	227 424	5 782 466	853 129	2 902 341
Other operating expenses	8 857 135	1 845 206	10 456 775	2 592 033	6 350 502
EBITDA	-2 182 877	1 646 535	-4 234 441	1 418 555	3 581 544
Depreciation	299 753	244 693	606 965	434 679	972 321
EBIT	-2 482 630	1 401 843	-4 841 406	983 876	2 609 224
Net financial items	83 342	6 445	21 654	-15 572	-97 218
Profit/(loss) before tax	-2 399 289	1 408 287	-4 819 752	968 304	2 512 006
Income tax (expense)	536 665	-309 823	1 050 090	-213 027	-506 495
Profit/ (loss) for the period	-1 862 624	1 098 464	-3 769 662	755 277	2 005 511

• Revenue affected by some minor technical issues that have been resolved.
• Full operating cost during period with technical issues

Balance Sheet

in NOK Amounts	30.6.2021	30.6.2020	31.12.2020
ASSETS
Intangible assets	4 394 394	2 388 449	3 570 598
Deferred tax asset	1 360 811	632 482
, plant and Property equipment	31 038 852	816 204	11 564 582
Investment in JV	5 903 075	0	0
Total non-current assets	42 697 132	3 837 135	15 474 193
Trade receivables	12 262 205	103 125	4 419 219
Other current assets	411 882	1 602 816	288 786
Cash and cash equivalents	124 699 191	1 192 256	7 779 692
Total current assets	137 373 278	2 898 197	12 487 697
Total assets	180 070 410	6 735 332	27 961 890
EQUITY AND LIABILITIES
Equity	162 394 416	4 952 872	6 203 106
debt Long term	6 613 333	800 000	6 693 333
Total liabilities non-current	6 613 333	800 000	6 693 333
Trade payables	9 149 599	536 454	12 345 080
Other liabilities current	1 913 062	446 006	2 720 371
Total liabilities current	11 062 661	982 460	15 065 451
Total liabilities	17 675 994	1 782 460	21 758 784
Total equity and liabilities	180 070 410	6 735 332	27 961 890

• Intangible assets includes data modelling software and the Digital Twin project.
• PPE is mainly payments on the two SeaRaptors
• Trade receivables and payables high due to high activity in the end of the quarter

Cash flow statement

					Full Year
in Amounts NOK	Q2-2021	Q2-2020	First half 2021	First half 2020	2020
Cash flow from operating activities
Profit/(loss) before tax	-2 399 289	1 408 287	-4 819 752	968 304	2 512 006
Depreciation	299 753	244 693	606 965	434 679	972 321
Interest expense	82 167	266	138 291	22 283	106 509
Loss equity investments	-40 098	0	46 617	0	0
Change in current assets	-11 205 180	-657 855	-7 966 082	-1 309 945	-4 312 009
Change liabilities current	8 373 241	256 857	-4 002 790	262 874	14 345 865
cash from operating activities Net	-4 889 406	1 252 249	-15 996 751	378 195	13 624 692
Cash flow from investing activities
in plant and equipment Investment property,	-30 309 605	0	-30 903 191	-117 335	-11 071 483
Capitalisation of development cost	-839 340	-327 443	-839 340	-437 463	-1 951 483
Net investment in Joint Venture	0	0	-5 871 402	0	0
Sale AUV JV to	0	0	10 837 500	0	0
cash from investing activities Net	-31 148 944	-327 443	-26 776 432	798 -554	-13 022 966
Cash flow from financing activities
from Net proceeds new equity	159 910 974	0	159 910 974	0	0
Proceeds from interest-bearing debt	0	0	0	0	6 000 000
of interest-bearing debt Repayment	-40 000	0	-80 000	0	-106 667
paid Interest	-82 167	-266	-138 291	-22 283	-106 509
flow from financial Net cash activities	159 788 807	-266	159 692 683	-22 283	786 824 5
change cash and cash equivalents Net in	123 750 457	924 539	116 919 499	-198 886	6 388 550
Cash and cash equivalents beginning of period	948 734	267 717	7 779 692	1 391 142	1 391 142
of Cash and cash equivalents end the period	124 699 191	1 192 256	124 699 191	1 192 256	779 692 7

• Invested NOK 30.3m in assets, mainly related to the two SeaRaptors
• Capitalized NOK 0.8m as development cost for the Digital Twin project
• Net proceeds from share issue in April was NOK 159.9m