Eqva ASA — Interim / Quarterly Report 2018

Feb 28, 2019

HAVYARD GROUP ASA

IR summary Q4 2018 – 28.02.19

Headlines/Milestones Q4 2018

• EBIT of MNOK -35,3 (-4,30 %) in fourth quarter of 2018 and EBIT of MNOK -33.9 (-1,42 %) in 2018.
• EBITDA of MNOK -0,03 (-0.003 % ) in fourth quarter of 2018 and EBITDA of MNOK 21,9 (0,92%.) in 2018.
• Loss of MNOK -33.6 (4.1%) in Q4 and loss of MNOK -62.9 (-2,66%) in 2018.
• The Group's operating profit (EBIT) in the fourth quarter is negative, and below the target of positive operating profit. The main reasons are losses on external activity in the segment Production & Services, and the focus is shifted towards internal activity that is profitable and important for the group. The weak results in the segments Power & Control and Fish Handling are related to the restructuring and development of new products and services. Both segments have satisfied customers and a profitable order backlog.
• We have also made an additional depreciation of R&D which has resulted in a negative effect of MNOK 25 compared with 2017.
• Considerable new contracts in fourth quarter

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.
• Historical high order backlog with profitable activity for the coming years.

Status and Outlook per Segments

Group Key Figures

MMNOK	2018	2017	2018 Q4	2017 Q4
EBIT margin	$-1.42%$	$-2.05%$	$-4.30%$	2,21%
Earnings per share	$-1,18$	$-2.1$	$-0.09$	$-1,66$
Net interest bearing debt	$-15$	92.45	$-15$	92,45
Working Capital	104	102	104	102
Assets	2 2 4 2	1337	2 2 4 2	1337
Equity	416	481	416	481
Equity ratio	18.6%	36.0%	18.6%	36.0%

Order backlog

• External order backlog of approx. MNOK 4.642 (Q4 2017: 2.845)
• 2019 MNOK 3.101
• 2020 MNOK 1.297
• 2021 MNOK 244

Figures per segment

(MNOK)	Ship building Technology	Ship Design & Solutions	Power & Control	Fish Handling	Production & Services	Other	Havyard Group
Operating revenues, External	1575.1	155,5	65,21	372,5	90,2	124,5	2 3 8 2 9
Operating revenues, Internal	28,32	88,9	332,36	34,9	137,1	$-621,5$	0,0
Total operating revenue	1603,37	244,3	397,57	407,4	227,2	$-497,0$	2 3 8 2 , 9
Operating profit / loss EBITDA	5,51	66,0	$-25,00$	11,9	$-22,6$	$-13,9$	21,9
Depreciation	11,68	13,5	1,53	27,2	1,4	0,5	55,8
Operating profit/(loss) (EBIT)	$-6,16$	52,5	$-26,53$	$-15,3$	$-24,0$	$-14, 4$	$-33,9$
Net financial items	2,41	4,7	$-1,59$	$-5,4$	$-1,1$	$-40,8$	$-41,8$
Profit/(loss) from associate	0,00	0,0	0,00	0,0	0,0	$-6,7$	$-6,7$
Profit/(Loss) before tax	$-3,76$	57,2	$-28,12$	$-20,7$	$-25,1$	$-55,2$	$-75,7$
Income tax expense	$-1,04$	13,0	$-10,80$	0,4	$-0,8$	$-13,5$	$-12,8$
Profit/(Loss)	$-2,72$	44,2	$-17,32$	$-21,1$	$-24,3$	$-41,7$	$-63,0$

Balance sheet

	2018	2017
	unaudited urevidert
Non-current assets
Goodwill	141003	141 003
Licenses, patents and R&D	98 323	107144
Property, plant and equipment	203 236	233 440
Investment in associates	15 570	22 407
Loan to associates	4 0 0 0	12746
Investment in financial assets	27 186	27 603
Other non-current receivable	18 0 37	22 370
Total non-current assets	507 356	566 713
Current Assets
Inventory	151 854	115 184
Accounts receivables	193 567	136 077
Other receivables	152 236	104 923
Customer contracts, assets	875 140	208 355
Cash and cash equivalents	361852	206 068
Total current assets	1734649	770 608
TOTAL ASSETS	2 242 005	1 3 3 7 3 2 1

▪ Net interest bearing debt: MNOK -15*

• Working capital: MNOK 104
• Equity ratio: 18.6 %

* ex. Construction loans

Total equity	416 284	480 945
Non-controlling interest	82 436	100 246
Retained earnings	310 076	356 930
Treasury shares	$-3$	$-5$
Share premium reserve	22 535	22 535
Share capital	1 2 3 9	1239
Equity
	unaudited urevidert

Deferred tax liability	6 3 2 0	10.999
Derivatives	n	667
Bond loan	80,000	86885
Loans and borrowings, non-current	101 272	63 366
Liabilities to parent company	O	23 419
Other long-term liabilities	7689	2.250
Total non-current liabilities	195 280	187 585

Accounts payable	298 625	143 466
Taxes payable	O	8 196
Public duties payable	68 597	34 643
Construction loans	668 642	Ω
Bond loan (installments next period)	10 000	10 000
Loans and borrowings, current	7909	23 196
Customer contracts, liabilities	310 088	175 943
Other current liabilities	266 581	273 346
Total current liabilities	1630 441	668790
Total liabilities	1825722	856375
TOTAL EQUITY AND LIABILITIES	2 242 005	1 337 321

Cash Flow

	urevident
CASH FLOW FROM OPERATIONS
Profit/(loss) before tax	$-75713$	$-71$
Taxes paid		$-6$
Depreciation	55 848	29
Net interest	57312	1
Change in value financial derivatives	8 4 1 5	28
Change in bond loan (amortization)	$-141$	1
Profit/loss disposals property, plant and equipment	$-5000$
Impairment financial assets	18 645	ŧ
Share of (profit)/loss from associates	$-6712$	2
Changes in inventory	$-36669$
Net changes in construction loans	668 642	$-149$
Changes in accounts receivables	$-57490$	26
Changes in accounts payable	$-639243$	20
Changes in customer contracts, asset	155 159	15
Changes in customer contracts, liability	134 145	59
Changes in other current receivables/liabilities	$-34042$	1
Net cash flow from/(to) operating activities	226 438	$-14$

Positive CF from operations in 2018:
▪ Loss before tax
▪ Accruals regarding projects

Negative CF from Investments in 2018:

• Neg.effect of investment in intangible assets
• 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.

Net cash flow used in investing activities	$-93896$	$-36823$
Changes in long term receivables	$-22660$	17 640
Interest income		2 2 10
Dividends received		507
Disposal of financial assets	$-55000$	3 111
Investment in financial assets	$-225$	$-18310$
Investment in intangible assets	$-27320$	$-24670$
Disposal of property, plant and equipment	24 000
Investments in property, plant and equipment	$-12691$	$-17312$
CASH FLOW FROM INVESTMENTS	uleviueri

New long term debt	55 000	35 596
Repayment non-current debt	$-24868$	$-45.519$
Payment of loan in subsidiary (see note 10)	20 000
Cost renegotiation bond loan		$-1643$
Interest payment	$-26890$	$-14324$
Purchase/sale of treasury shares		270
Net cash flow from/ (used in) financing activities	23 241	$-25619$
Net change in cash and cash equivalents	155 783	$-77012$
Cash and cash equivalents at start of the year	206 068	266 057
Cash and cash equivalents from merger in subsidiary		17 023
Cash and cash equivalents at end of the period	361852	206 069
Restricted bank deposits at the end of the period	139 983	89 402
Available cash and cash equivalents at the end of the period 221 869		116 667

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

Average sick leave

• Last 18 months sick leave on 3.02 %
• In 2018 sick leave on 3.05 %

Injuries resulting in absence from work

• 1 injurie 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