Eqva ASA

Earnings Release • Aug 27, 2018

HAVYARD GROUP ASA IR summary Q2 2018 - 27.08.18

Headlines/Milestones Q2 2018

• EBIT of NOK 5.1 million and EBIT-margin of 0.89 % in second quarter of 2018.
• EBIT of NOK 0.7 million and EBIT-margin of 0.07 % in first half of 2018.
• Loss in Q2 of NOK -20,1 million and margin -3,51%
• Loss in first half of 2018 of NOK -27,2 million and margin -2,61%.
• Impairment of financial assets by NOK 18,6 million in second quarter.
• Havyard increase to 100 % ownership in Norwegian Electric Systems AS
• Larger new contracts in second quarter
• Power & Control
  • Automation- and propulsion system to live fish carrier built for Alsaker fjordbruk
• Fish Handling:
  • Complete fish handling systems for live fish carrier built for Alsaker fjordbruk
• Larger new contracts after end of quarter
• Delivery of a live fish carrier for Norsk Fisketransport with delivery June 2020 with deliveries from all segments.
• Delivery of design for two cargo vessels for Royal Artic Line A/S.
• Complete fish handling systems for live fish carrier built at Fitjar Mek. Verksted.
• Delivery of processing plant for on-board production for Havfisk AS

Outlook

• Havyard's strategy is to continue to develop the company as a maritime technology group with unique expertise and products throughout the value chain. Our focus areas are Energy, Fish and Transport, where we have established a strong market position in segments with good activity.
• Focus is to take synergies out for the 100% ownership in NES, continue the positive development on time, quality and cost in all projects and successful turn around in MMC FP
• We experience increased market activity in all focus areas Energy, Fish and Transport. New orders expected in Q3 with margins reflecting the improved market.
• Historical high order backlog with profitable activity for the coming years.

Status and Outlook per Segments

Group Key Figures

MNOK	2018 YTD	2017 YTD	2018 Q 2	2017 Q 2	2017
EBIT-margin	0.07%	$-1.65%$	0.89%	$-5.68%$	$-2.05%$
Earnings per share	$-0.96$	$-0.13$	$-0.78$	$-0.35$	$-2.41$
Net interest bearing debt	103	13	103	13	92
Working Capital	134	148	134	148	102
Assets	1,655	1,236	1,655	1,236	1,337
Equity	457	480	457	480	481
Equity ratio	27.6%	38.9%	27.6%	38.9%	36.0%

Order backlog

• External order backlog of approx. MNOK 3,558 (Q4 2017: 2,845)
• 2018 MNOK 1,123
• 2019 MNOK 2,181
• 2020 MNOK 120

Figures per segment

(NOK million)	Ship building Technology	Ship Design & Solutions	Power & Control	Fish Handling	Production & Services	Other	Havyard Group
Operating revenues, External	574.6	33.2	63.1	166.3	66.1	105.4	1,041.9
Operating revenues, Internal	0.2	49.2	158.8	16.7	42.0	$-267.0$	0.0
Total operating revenue	574.8	115.7	221.9	183.0	108.1	$-161.6$	1,041.9
Operating profit /loss EBITDA	$-2.0$	32.9	2.7	$-6.3$	$-3.8$	$-11.1$	12.4
Depreciation	3.9	2.3	0.7	3.8	0.7	0.2	11.6
Operating profit/(loss) (EBIT)	$-5.8$	30.6	2.0	$-10.1$	$-4.6$	$-11.3$	0.7
Net financial items	$-1.3$	2.0	0.5	$-2.2$	$-2.2$	$-25.0$	$-28.3$
Profit/(loss) from associate	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$			$-3.8$	$-3.8$
Profit/(Loss) before tax	$-7.2$	32.5	2.5	$-12.3$	$-6.8$	$-40.0$	$-31.3$
Income tax expense	$-1.6$	7.3	0.7	$-2.8$	0.2	$-7.7$	$-4.1$
Profit/(Loss)	$-5.5$	25.2	1.8	$-9.5$	$-7.0$	$-32.3$	$-27.2$

Balance sheet

TOTAL ASSETS	1654595	1235730

TOTAL EQUITY AND LIABILITIES	1654 595	1 235 730	1337321
Total liabilities	1197 871	755 647	856 375
Total current liabilities	994 070	559 581	668790
Other current liabilities	262 487	142 516	273 346
Customer contracts, liabilities	134 116	272 670	175943
Bond loan (installments next period) Loans and borrowings, current	38 260	12 4 0 6	23 196
	279 630 10 000	0 5.000	10,000
Public duties payables Construction loans	39701	25 596	34 643 $\mathbf{O}$
Taxes payable	8 196	3 812	8 196
Accounts payables	221 679	97 579	143 466
Current liabilities
Other long-term liabilities Total non-current liabilities	203 802	196 066	187 585
	1107	2 418	2 2 5 0
Liabilities to parent company	3506	٠	23 419
Loans and borrowings, non-current	103 977	69 885	63 366
Bond loan	82 590	91 207	86 885
Derivatives	$\mathbf{O}$	0	10 999 667
Non-current liabilities Deferred tax liability	12 6 22	32 556
Total equity	456 724	480 083	480 945
Non-controlling interest	80 281	52 118	100 246
Retained earnings	352 674	404 197	356 930
Treasury shares	$-5$	$-5$	$-5$
Share premium reserve	22.535	22.535	22.535
Share capital	1239	1 2 3 9	1239
Equity
	unaudited urevidert

Net interest bearing debt: MNOK 103

• Working capital: MNOK 134
• Equity ratio: 27.6 %

Cash Flow

Positive CF from operations in 2018:

• Deficit
• Impairment of financial assets
• Accruals regarding projects

Negative CF from Investments in 2018:

• Positive effect from sale of property
• Negative effect from purchase of shares in subsidiary

Positive CF from financing 2018:

• New long term debt
• New loan in subsidiary, presented as equity based on agreement.

(NOK LUUU)	ZUIB TILL	2012 TID	ZUIZ
	unaudited urovident
CASH FLOW FROM OPERATIONS
Profit/(loss) before tax	$-31309$	$-9.961$	$-71794$
Taxes paid		$-2,106$	$-6824$
Depreciation	11644	14 3 2 5	29 178
Net interest	7 1 5 9	6 0 4 5	12 114
Change in value financial derivatives	$-2187$	$-1847$	28,806
Change in bond loan (amortization)	705	896	1573
Profit/loss disposals property, plant and equipment	141
Impairment financial assets	18 645		5 6 8 1
Share of (profit)/ loss from associates	3779	$-4946$	2.677
Changes in inventory	$-13,380$	$-7136$	m
Net changes in construction loans	279 630	$-149$ 163	$-149163$
Changes in accounts receivables	$-29.273$	22 460	26 148
Changes in accounts payable	78 213	$-23908$	20 20 4
Changes in customer contracts, asset	$-258253$	131140	15 674
Changes in customer contracts, liability	$-35.577$	156,203	59.475
Changes in other current receivables/liabilities	$-22602$	52773	11.571
Net cash flow from/(to) operating activities	8 217	82923	$-14568$

460 $-6,104$	- 935 $-438$	507 2.210 17 640
$-55000$
	3.617	3 111
$-225$		$-18.310$
$-7918$	$-9741$	$-24670$
24 000
$-2717$	$-12.347$	$-17312$

Cash and cash equivalents at start of the year	206,069	266.057	266 05
Net change in cash and cash equivalents	9 3 0 7	30 536	$-77.01$
Net cash flow from/ (used in) financing activities	48595	$-35873$	$-25.61$
Purchase/sale of treasury shares			$\overline{27}$
Interest payment	$-7016$	$-RAAD$	$-1432$
Cost renegotiation bond loan	$\sim$	$-1643$	$-164$
Payment of loan in subsidiary (see note 10)	20,000
Repayment non-current debt	$-19.389$	$-36.813$	$-45.51$
New long term debt	55,000	11023	35.59
CASH FLOW FROM FINANCING ACTIVITIES

HSE / QA

An extensive plan is implemented to reduce injuries and absence including subcontractors

Average sick leave

• Last 18 months sick leave on 3.55 %
• In 2018 sick leave on 3.52 %

Injuries resulting in absence from work

• 0 injuries last 12 months

HSE / QA

• Strong focus on Quality in the Group
• Quality deviations are measured, documented in action lists and handled effectively
• Internal audits in accordance with ISO 9001 and ISO 14001
• Supplier audits
• Audits from customers