Fjord Defence Group ASA

Investor Presentation • Feb 24, 2022

Carbon Transition Q4 2021 presentation

24 February 2022

Disclaimer

• The information in this presentation has been prepared by Carbon Transition ASA (the "Company"). By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations and provisions:
• This presentation has been prepared by the Company based on information available as of the date hereof. By relying on this presentation you accept the risk that the presentation does not cover all matters relevant of an assessment of an investment in the company.
• No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Company, any advisor or any such persons' officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this presentation. The information herein is subject to change, completion, supplements or amendments without notice.
• The presentation is based on the economic, regulatory, market and other conditions as in effect on the date hereof, and may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect the Company's current expectations and assumptions as to future events and circumstances that may not prove accurate. It should be understood that subsequent developments may affect the information contained in this document, which neither the Company nor its advisors are under an obligation to update, revise or affirm.
• This complete presentation is for informational purposes only and does not constitute an offer to sell shares in of the Company. This presentation is not a prospectus, disclosure document or offering document and does not purport to be complete. Nothing in this presentation should be interpreted as a term or condition of the Transaction. The presentation is strictly confidential and may bot not be reproduced or redistributed, in whole or in part, to any other person.
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• The contents of this presentation are not to be construed as legal, business, investment or tax advice. Each recipient should consult with its own legal, business, investment and tax adviser as to legal, business, investment and tax advice.
• Any investment in the Company involves inherent risks and is suitable only for investors who understand the risks associated with this type of investment and who can afford a loss of all or part of the investment. Investors should carefully review the summary of risk factors set out in the following slides before making any investment decision.
• The presentation and any purported liability in connection with it is subject to Norwegian law and is subject to the exclusive jurisdiction of the Norwegian courts.

Strategy

Investing in companies and technologies which contribute to significant reduction of carbon emissions

• Listed investment company a unique vehicle to take part in the ongoing energy transition from an early stage
• Multiple sectors facing large and lasting changes, creating opportunities to invest in long -term winners (there will be several)
• Opportunistic approach but typically some common denominators:
  • o Unique and proven technology
  • o Scalable business model
  • o High barriers to entry
  • o Global potential
• Company may also invest more broadly in the energy transition space

Value proposition

• Unlock value through investing in companies which are:
  • o Through seed and venture phase
  • o Currently looking for growth capital in pre-IPO phase
  • o Targeting an IPO in the short to medium term
• Attractive investor as we provide a combination of:
  • o Sizeable investment
  • o Active involvement
  • o Attention through stock listing
  • o Strong shareholder base
• Unique access to deal flow through active network
• Income from legacy business to contribute to funding of new investments

* Company may also make investments which deviate from the illustrative model

Q4 2021 highlights

Balance sheet significantly strengthened and investment portfolio delivering solid returns

• Revenues of USD 5.6 million; primarily multi-client late sales
• Net increase in fair value of investments of USD 8.4 million
• EBITDA of USD 12.0 million
• Financial indebtedness reduced by USD 5.5 million; CARBN almost fully debt free following repayment
• Completed corporate downsizing
• Third investment made 12 October
  • o NOK 40.0 million pre-IPO financing into CO2 Capsol AS
  • o Patented HPC carbon capture technology
• NOK 35.0 million equity private placement successfully oversubscribed
• Resignation of CEO

Carbon Transition investments is the way forward

Maximizing value of legacy seismic business

173 nm
Multi-Client	Ocean Bottom Node
▪ Holds significant ownership of high resolution seismic data surveys in	▪ Global experience with multi-vessel ocean bottom node (OBN) operations
Norway and Egypt ▪ Mature production (ILX) areas ▪ Late sales to generate	▪ Project organization capable of performing complex OBN operations
revenues and cash flow; no additional cash costs required	▪ Scalable asset-light business model, low fixed cost structure
▪ Joint ownership TGS and WesternGeco	▪ Evaluating strategic alternatives

Legacy segments 173 nm		Energy transition investments
	Investment # 1	Investment # 2	Investment # 3
▪ Global experience with multi-vessel ocean bottom node (OBN) operations				Investments # 4, 5, 6…
▪ Project organization capable of performing complex OBN operations		▪ ▪	Investments in the energy transition space	Focus on investments in companies and technologies which contribute to significant reductions of carbon emissions
▪ Scalable asset-light business model, low fixed cost structure		▪	investments	Goal of positively impacting the value creation of its
▪ Evaluating strategic alternatives		▪		Investments with an attractive rate of return potential

First investment | Arbaflame

Producer of green coal -replacement fuel and bio chemicals. Completed construction of commercial plant following 10 years of technology development and verification. Plans to utilize patented technology to construct and operate large number of facilities to accommodate significant demand for coal replacement fuels.

CARBN investment position

• USD 3.4 million (NOK 30.0 million) invested; 4.7% fully -diluted ownership
• Fair value at USD 3.4 million (NOK 30.0 million) until milestones reached

Highlights

• Ramp-up of Kongsvinger facility making good progress
  • o Production currently at stable and meaningful levels; expect continued improvement
• Announced letter of intent with Ministry of Energy of Romania
  • o Following successful test, 100,000 tonne facility to be constructed with 10 -year offtake agreement
  • o Additional expansion of two million tonnes per year (20 ArbaNEXT facilities)

Second investment | Britishvolt

Developer and future manufacturer of lithium -ion cell batteries for electric cars. Aims to meet rapidly accelerating electric vehicle demand. Looking to deliver sustainable battery solutions for the automotive and wider transportation sectors.

CARBN investment position

• USD 1.7 million (NOK 15.2 million) invested; 100,000 shares and 100,000 options at same strike price
• Fair value USD 4.6 million (NOK 40.9 million)

Highlights

• Invested in shares and equal number of options in Series B investment round; solid investment group including Glencore, Cathexis Venture II and NG Bailey
• Announced very substantial in -principle grant from UK government; private debt funding agreement of GBP 1.7 billion for building Northumberland Gigaplant
• Entered into memorandum of understanding with British performance car manufacturer Lotus
• Announced joint venture with Glencore to develop world -leading ecosystem for battery recycling in the UK

Third investment | CO2 Capsol

Patented carbon capture solution based on the hot potassium carbonate technology ("HPC technology"). Avoids use of amine -based solutions in carbon capture process which is attractive for HSE reasons. Offers an estimated 40% cost advantage relative to alternative processes.

CARBN investment position

• USD 4.7 million (NOK 40.0 million) invested; 6.2% fully -diluted ownership
• Fair value USD 10.2 million (NOK 90.2 million)

Highlights

• CO2 Capsol's technology selected for Stockholm Exergi's carbon capture facility (800,000 tons CO2/year )
• Stockholm Exergi bio -CCS facility is only project of its kind to receive financial grant from the EU Innovation Fund
• Announced collaboration agreements with Petrofac Limited, WOIMA Finland and Hitachi Zosen Inova
• Announced decision to produce a mobile carbon capture unit, CapsolGo ™; first test campaign planned for Q3 2022

9

Current investments tick the boxes

Fourth quarter income statement

• Revenues of USD 5.6 million; USD 5.5 million from Utsira late sales
• Increase in fair value of investments from USD 9.9 million to USD 18.3 million; gain of USD 8.4 million
• Cost of sales includes USD 0.4 million related to seismic node operations; USD 0.1 million multi-client data cost
• Other operating expenses include corporate downsizing with resulting charge of USD 0.4 million
• EBITDA of USD 12.0 million
• EBIT of USD 9.5 million
• Net income of USD 8.8 million

Fourth quarter financial position

USD millions

ASSETS	31.12.2021
Multi client library	28.9
Property, plant & equipment	3.4
Investments	18.3
Other current assets	0.2
Cash and cash equivalents	4.0
Total assets	54.8
EQUITY AND LIABILITIES	3.12.2021
Equity	46.7
Interest bearing debt	0.9
Accounts payable	0.3
Other current liabilities	6.8
Total equity and liabilities	54.8

Observations

• Multi-client library reduced by standard amortization despite significant Q4 late sales
• Investments at USD 18.3 million; up from initially invested USD 9.9 million
• Interest bearing debt of USD 0.9 million; reduced by USD 5.5 million
• Other current liabilities includes USD 6.1 million in Egyptian taxes
• Tax loss carryforward estimated at USD 60 million

Ratio analysis

• Equity ratio 85.3%
• Net asset value per share NOK 1.72

Investment portfolio

Valuation as of 31 December 2021

USD 18.3 million total investments

Multi-client portfolio

Expect to generate significant late sales and cash flow without additional cash cost

Utsira survey in the North Sea

• Book value of USD 18.3 million
• Approximately 2,000 square kilometers near-field survey backed by AkerBP, Equinor and TGS
• Several important producing filed covered by survey area

Gulf of Suez

• Book value of USD 10.6 million
• Prolific petroleum basin; historically impeded by lack of seismic data
• Supported by Neptune Energy and Schlumberger

Multi-client portfolio

Norwegian North Sea - Utsira

• Three late sales of data licenses from Utsira seismic node survey for a total of USD 5.5 million in Q4 2021
• Survey is located to the west of the Utsira high in the Norwegian North Sea
• Covers approximately 2,000 square kilometers of highly prospective acreage with highdefinition 3D seismic ocean bottom node data
• Survey was acquired during 2018 and 2019 with support from AkerBP, Equinor and TGS
• The Utsira area holds several important fields, including Edvard Grieg, Ivar Aasen, Balder, Gina Krog, Gudrun and Johan Sverdrup, along with a number of undeveloped discoveries and prospects
• The data has extremely high sampling density which helps clients obtain new information and make new discoveries and development of oil and gas deposits previously unavailable with legacy broad band streamer data

Multi-client portfolio Egypt – Gulf of Suez

• Final processed data is expected to be available during the first quarter of 2022
  • o Amortization of the library will commence at completion of final processing
• The Gulf of Suez has been in production since the 1980s; regarded as a prolific petroleum basin where exploration has been impeded by complex geology and presence of salt bodies that complicate seismic imaging
• Data acquired 2020 with support from Neptune Energy and Schlumberger (WesternGeco) and cover an area of approximately 300 square kilometers
  • o Hybrid survey configuration, combining high density ocean bottom nodes with short 3D streamers for near-surface imaging
• Near the Ramadan oil fields; several drilling campaigns planned during the coming years
• Recent highlight from Gulf of Suez area:
  • o 200 MBOE discovery in the Abu Rudeis Sidri development lease by ENI in 2019
  • o 100 MBOE discovery in North Ramadan area operated by Dragon Oil in 2022

Outlook

Green-technology sector expanding rapidly

• Continued international focus on reduction of carbon emissions and development of new energy technologies
• Government policies forcing transition
  • o EU ETS carbon prices at Euro 90 per tonne; up from Euro 5 per tonne in 2017
• As a result, we are experiencing a significant growth in new green-technology companies
  • o Solid flow of investment opportunities
  • o Current market turmoil making it more difficult for growth companies to secure capital
• Important to evaluate investment opportunities carefully
  • o Implementation, construction and market acceptance frequently takes longer than expected
  • o Alternative technologies and solutions may significantly impact market dynamics and result in early obsolescence
• Following Q4 debt repayments, CARBN is almost debt free
• Expect material cash flow from multi-client library
  • o Attractive assets in oil-producing fields in Norway and Egypt
  • o No additional costs associated with multi-client late sales

Shareholders

Largest shareholders per 31 December 2021:

Largest shareholders per 31 December 2021

		Number of	Ownership
	Name	shares	share
1	INVESTERINGSFONDET VIKING AS	28 000 000	11,68 %
2	MIDDELBORG INVEST AS	14 538 461	6,06 %
3	TIGERSTADEN AS	13 760 459	5,74 %
4	ALDEN AS	11 265 384	4,70 %
5	SPAREBANK 1 MARKETS AS	11 180 000	4,66 %
6	F2 FUNDS AS	9 250 000	3,86 %
7	BECK ASSET MANAGEMENT AS	9 012 307	3,76 %
8	F1 FUNDS AS	8 427 223	3,51 %
9	URTIVEN AS	8 230 770	3,43 %
10	GINNY INVEST AS	6 250 230	2,61 %
11	DNB BANK ASA	6 225 280	2,60 %
12	PHILIP HOLDING AS	5 750 230	2,40 %
13	Q CAPITAL AS	5 619 230	2,34 %
14	REDBACK AS	5 000 000	2,09 %
15	TTC INVEST AS	4 000 000	1,67 %
16	Nordnet Bank AB	3 758 002	1,57 %
17	LIVERMORE INVEST AS	3 079 615	1,28 %
18	Skandinaviska Enskilda Banken AB	2 500 000	1,04 %
19	NORDNET LIVSFORSIKRING AS	2 089 077	0,87 %
20	CITADELL AS	2 000 000	0,83 %
	Total	159 936 268	66,71 %
	Total other shareholders	79 823 849	33,29 %
	Total number of shares	239 760 117	100,00 %

Investing in a sustainable future .

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