Frøy ASA — Interim / Quarterly Report 2021

May 12, 2021

Frøy ASA – 1Q21 | May 2021

Frøy ASA

1Q 21

May 2021

Listed at Oslo stock exchange

• Raised gross proceeds of NOK 1.000 million in new equity to finance existing newbuild program and new growth initiatives
• First day of trading March 29
• Total of 3.865 shareholders as of 31.03.21
• 120 employees acquired shares in the IPO

Operational highlights

• Slow quarter in line with the normal seasonal pattern
• Delivery of Reisa, wellboat newbuild with 3.200m3 capacity
• Signed 2.5-year TC contract for specialized delousing vessel and crew with Norwegian salmon farmer

Financial highlights

• EBITDA of NOK 92 million adjusted for NOK 8 million IPO costs
• Backlog of NOK 6.5 billion including options
• Refinanced multiple smaller bank and leasing facilities into a NOK 500 million 5 year term loan

Key figures first quarter 2021

Key figures1	3 months ending 31.03.31	3 months ending 31.03.20
Financial (NOK million)
Contract revenues2	201	88
Framework revenues	45	0
Spot revenues	67	24
Fuel & other reinvoiced revenues3	43	19
Other revenues4	1	2
Total revenues	356	134
EBITDA5	84	30
EBITDA adjusted6	92	30
Net profit	-8	-1
Net cash flow from operating activities	128	28
Net cash flow from investing activities	-831	-81
Net cash flow from financing activities	1 636	-17
Total assets	6 836	1 889
Net interest bearing debt7	2 642	1 122
Equity	2 916	609
Profitability and capital structure
ROCE8	9 %
ROE9	13 %
Equity ratio	43 %	32 %
Vessels10
Wellboats	14	8
Large service vessels	12	-
Small service vessels	42	-
Transport vessels	4	4

1) This report is unaudited. Please refer to the appendix in this quarterly report for descriptions and reconciliations of alternative performance measures (non-IFRS measures) including definitions of key figures

2) Contract revenues includes time charter revenues, bareboat revenues and other fixed contract revenues

3) The group reinvoice fuel and other costs to clients when operating on time charter contracts

4) Other revenues include revenue related to sale of vessels and other non-allocated revenues

5) EBITDA: Operating profit plus depreciations and amortizations

6) EBITDA adjusted: EBITDA adjusted for gain on sale of assets and costs related to the IPO

7) Net interest-bearing debt: Total non-current interest-bearing liabilities, plus current interest-bearing liabilities, less cash

8) Annualized return on capital employed (ROCE) calculated based on operating profit last 12 months / average (property plant and equipment + right of use assets + inventory + trade receivables + other receivables - trade payables and other current liabilities)

9) Annualize return on equity (ROE) calculated as net profit last 12 months / average equity

10) Number of vessels at end of period

Financial results in the quarter

Group financial review

Frøy Gruppen AS was acquired by NTS ASA in a business combination at the acquisition date 3 April 2020. The former Frøy companies are thereby not fully reflected in the consolidated comprehensive income for the Group in 2020, but consolidated from 3 April.

The figures for 1Q 2020 include the former NTS aqua service entities Norsk Fisketransport AS (wellboats) and NTS Shipping AS (Sea transport). The service division and wellboats previously owned by Frøygruppen AS are not included in the 1Q 2020 figures. Further information regarding the business combination can be found in the company´s 2020 financial statements.

Profit and loss

(NOKm)	3 months ending 31.03.2021	3 months ending 31.03.2020
Revenue	355	134
Other income	1
Total revenue	356	134
Direct expenses (goods/services delivered)	50	33
Employee benefit expenses	113	38
Other operating expenses	110	33
Depreciation	73	20
Operating profit	11	10
Financial income	0	1
Financial expenses	22	11
Share of profit (loss) from associates	-1
Profit (loss) before tax	-13	-1
Taxes	5	0
Profit (loss) for the period	-8	-1

Total revenue in 1Q 2021 amounted to NOK 356 million. This is NOK 221 million higher than the revenue reported for 1Q 2020 mainly due to the combination of Frøy and the NTS aqua service entities in April 2020. The financial figures for 1Q 2020 reflects the revenues from the former NTS aqua service entities Norsk Fisketransport AS (wellboats) and NTS Shipping AS (Sea transport) and excludes the revenues from the former Frøygruppen entities.

1Q 2021 operating profit before financial items and taxes came to NOK 11. Recorded costs related to the IPO amounted to NOK 8 million. 1Q 2021 operating profit adjusted for costs related to the IPO came to NOK 18 million.

1Q 2021 EBITDA adjusted for IPO costs was NOK 92 million. The EBITDA margin adjusted for IPO costs was 26% vs. an EBITDA margin in 1Q 2020 of 22%. The EBITDA margin in first quarter is normally lower than for the full year, due to low activity across all business segments due to seasonality in the first months every year.

The service segment has higher seasonality than the wellboat segment due to lower share of fixed contracts. The comparable figures for 1Q 2020 does not include the service segment and the former Frøygruppen wellboats as the transaction between Frøy and NTS was completed April 3 2020.

Financial expenses increased to NOK 22 million in 1Q 2021. The increase in financial expenses from 1Q 2020 is related to increased debt following the business combination between Frøy and NTS, and as debt has been drawn on the newbuilds under construction.

Profit (loss) for the period ended at NOK -8 million vs. NOK -1 million in 1Q 2020.

Cash flow and net interest-bearing debt

Frøy had positive NOK 128 million cash flow from operations in 1Q 2021 vs. NOK 28 million in 1Q 2020.

Cash flow from investment activities was NOK 831 million in the quarter vs. NOK 80 million in the quarter 1Q 2020. Investments in 1Q 2021 relates to the ongoing newbuild program with wellboat newbuilds being the largest component.

The cash flow from financing activities amounted to NOK 1.636 million. In March, Frøy listed at Oslo Stock Exchange, in a transaction where the company raised gross proceeds of NOK 1.000 million in new equity. The Company refinanced several loan and lease facilities during the quarter resulting in a new large debt facility within the large service segment of NOK 502 million, in one vessel and one equipment tranche. The company has also drawn on new debt related to newbuilds under construction.

Net cash flow in the quarter amounted to NOK 933 million, compared with negative NOK 70 million in 1Q 2020. The cash position increased from NOK 149 million at the beginning of the period to NOK 1.082 million at the end of the quarter.

At the end of the quarter Frøy had total assets of NOK 6.836 million, up from NOK 5.241 million at the end of 2020. The increase in total assets vs. year end 2020 is due to an increase in book value of property, plant and equipment and increased cash position following the share issue in the quarter. Property, plant and equipment increased due to investments into the ongoing newbuild program and delivery of the new wellboat Reisa.

Gross interest-bearing debt increased in the quarter to approx. NOK 3.7 billion from approx. NOK 3.0 bn. at year end 2020. Net interest-bearing debt at the end of 1Q 2021 was approx. NOK 2.6 bn. vs. 2.8 bn. at year end 2020.

Frøy had an equity ratio of 43% at the end of 1Q 2021 up from 32 % at the end of 1Q 2020.

Segment overview

Frøy's segment structure

Wellboat segment

Transport of live fish and biological treatments

# employees 220

# vessels 19 (incl. newbuilds)

Service segment

Installation, maintenance and cleaning of salmon farmers site infrastructure

# employees: 370

# vessels: 62 (incl. newbuilds)

Sea transport segment

Transport of salmon feed, frozen seafood and other cargo

# employees: 60

# vessels: 4

Financial results

1Q 2021 revenue amounted to NOK 180 million. Revenues increased compared to 1Q 2020 mainly because of the combination between Frøy and NTS in April 2020. In January 2021 the new vessel Reisa was delivered from yard and commenced operations with Lerøy. Including Reisa, Frøy operated 14 wellboats in the quarter, 6 more than in 1Q 2020.

1Q is a seasonally slow quarter as low sea water temperatures impact demand for transportation and biological treatments carried out by the wellboat segment. The spot market was slow in the quarter in line with normal seasonality. As demand for wellboat services is at the seasonal low, Frøy strives to carry out necessary yard stays, scheduled rebuilding and periodic surveys. 8 vessels carried out yard stays during 1Q 2021.

		3 months ending 3 months ending
Wellboat segment	31 03 771	31.03.20
Contract revenues	115	75
Framework agreements
Spot	25	13
Fuel and other reinvoiced costs	40	18
Other
Total revenues	180	106
EBITDA	ਦ8	26
EBITDA %	32 %	24 %
Number of vessels	14	8
Number of vessels on fixed contracts	11	7

In 1Q 2021 Frøy had 11 vessels operating on fixed contracts vs. 7 vessels in 1Q 2020, leading to an increase in contract revenues. 1Q 2021 contract revenues ended at NOK 115 million vs. 1Q 2020 NOK 75 million. 1Q 2021 EBITDA of NOK 58 million increased compared to 1Q 2020 mainly due to the increased number of vessels following the combination of NTS and Frøy. Frøy signed a 3-year time charter contract + option with Måsøval during the quarter.

Financial results

1Q 2021 revenue amounted to NOK 150 million. EBITDA in 1Q 2021 amounted to NOK 31 million. The service segment was included in the Group from 2Q 2020.

1Q is a seasonally slow quarter for the service segment every year. Low sea temperatures during winter result in less marine fouling and demand for cleaning of nets and cages. Harsh weather conditions and less activity in general for salmon farmers impact demand for maintenance and installation of sites. The activity in 1Q 2021 was low, in line with normal seasonality. The spot market in North of Norway was slower than in 1Q 2020 with fewer new sites being installed. Activity picked up at the end of the quarter in all regions in line with the normal seasonal trend.

		3 months ending 3 months ending
Service segment	31.03.21	31.03.20
Contract revenues	78
Framework agreements	45
Spot	25
Fuel and other reinvoiced costs	3
Other	0
Total revenues	150
EBITDA	31
EBITDA %	21 %
Number of large service vessels	12
Number of small service vessels	42

Frøy had 54 vessels in operation at the end of the quarter, working on a combination of time charter contracts, framework agreements and spot work. Frøy Hild, a large service vessel with hybrid diesel electric engine was delivered from yard mid-March. The barge, Frøy Carrier, was sold during the quarter. During 1Q 2021 Frøy signed a 2.5-year time charter contract for a specialized delousing vessel and crew with a Norwegian salmon farmer. The design and engineering are put together by Frøy´s inhouse project team which includes a combination of veterinary, engineering and aqua service professionals. The vessel is scheduled to commence operations in August 2021.

All large service vessels, except for two, are booked on fixed time charter contracts through 2021.

Sea transport

Financial results

Frøy ASA – 1Q21 | May 2021

1Q 2021 revenue amounted to NOK 28 million vs. NOK 26 million in 1Q 2020. EBITDA in 1Q 2021 amounted to NOK 2 million vs. NOK NOK 3 million in 1Q 2020. The spot market for transport of cargo from the continent to Norway has been slow in the quarter, impacting the results in 1Q 2021 negatively compared to 1Q 2020.

Frøy had 4 vessels in operation at the end of the quarter. One of the vessels operates on a long-term time charter for transport of feed. The three remaining vessels operated in the spot market with transport of fish feed and frozen seafood. Market activity remained muted at the end of the quarter.

Sea transport segment	3 months ending 31.03.21	3 months ending 31.03.20
Contract revenues	8	13
Framework agreements
Spot	19	11
Fuel and other reinvoiced costs	0	1
Other	1	-
Total revenues	28	26
EBITDA	2	3
EBITDA %	8 %	12%
Number of vessels	4	4

On 15 February, Frøy took delivery of the acquired vessel Folla. The vessel went directly into operations with transport of frozen seafood. During the quarter Frøy has secured a time charter contract for transport of fish feed from June-November 2021. Frøy work to increase the share of fixed contracts and reduce the share of spot work in the sea transport segment.

Investments

Wellboat: In 1Q 2021 the newbuild Reisa was delivered from yard. As of 31.03.21 Frøy had 5 remaining wellboats under construction. Three of the vessels are scheduled to be delivered in 2021, one vessel during summer 2022 and one vessel during summer 2023. The vessels scheduled to be delivered in 2021 are expected to be delayed by 1-2 months. The two Havyard vessels are now expected to be delivered June/July 2021 and September/October 2021. The vessel built at Sefine is expected to be delivered in September 2021. Total Investments in new wellboats 2021-2023 is expected to be approx. NOK 2,240 million.

Service: In March 2021 the large diesel electric hybrid service vessel Frøy Hild was delivered from yard. As of 31.03.21 Frøy had 7 remaining service vessel newbuilds under construction. 6 vessels are scheduled to be delivered in 2021 and 1 vessel in 2022. In addition, the vessel Scandi Texel, to be renamed Frøy Challenger will be rebuilt to a specialized delousing vessel. Total Investments in the service segment 2021-2023 is expected to be approx. NOK 410 million.

Sea transport: The multi-purpose fish feed and frozen seafood vessel Folla was acquired in 1Q 2021. The vessel is planned to be rebuilt during 1Q 2022. Total Investments in the sea transport segment 2021-2022 is expected to be approx. NOK 150 million.

Total investments 2021-2023 related to the newbuild program is estimated to be approx. NOK 2.8 bn.

Financing

Frøy finance its fleet and equipment with bank debt and leasing.

Wellboats: Frøy has 5 new wellboats due for delivery, 3 in 2021, 1 in 2022 and 1 in 2023. All the wellboat newbuilds are funded by long term bank financing with approx. 80% loan to value. Repayment profile is 15-20 years with interest rate ranging from 1.75%-1.85% margin to NIBOR.

Frøy work to minimize risk related to financing and have historically secured debt financing before ordering new wellboats.

Of the approx. NOK1.1 billion in additional new debt during 1Q 2021, approx. NOK 460 million was related to instalments to the yards connected to wellboat newbuilds.

Service: The Company refinanced several loan and lease facilities during the quarter into a larger debt facility within the large service segment with one vessel and one equipment tranche. Generally, large service vessels are debt financed by loan facilities, while small service vessels are financed with leases. The new vessel financing is a 5 year facility of NOK 460 million with a repayment profile of 15 years and margin to NIBOR of 1.95%, while the equipment tranche is a 5 year term loan of NOK 45.5 million with a margin to NIBOR of 1.95%. Both are related to the large service segment. The small service segment is primarily funded by leasing facilities.

All 8 newbuilds are fully financed both by debt and equity.

Shipping: Frøy Shipping acquired Folla during the quarter. The vessels in Frøy Shipping are financed with bank debt with security in vessels.

Bank debt - repayment schedule

The repayment profile on the bank debt is shown for the rest of 2021 to 2024 below. We intend to refinance bank debt 12 months before maturity and are working to refinance the maturities in 2022. Instalments and the total interest-bearing debt will naturally increase the coming two years as the Group takes delivery of more vessels.

Installments Loan maturity

Order backlog

Order backlog is defined as the aggregate value of work on signed customer contracts, including options. Framework agreements and other agreements without fixed commitments or minimum value clauses are not included in the backlog figures. Management believes that the order backlog is a useful measure in that it provides an indication of the amount of customer backlog and committed activity in the coming period.

Total backlog

• As of 31.03.21 the total backlog amounted to NOK 6.5 billion including options

Fixed backlog

• Total fixed revenue commitments of approx. NOK 4.05 billion

Options

• Most fixed time charter contracts include extension options
• Total options of more than NOK 2.4 billion

Fixed Options

Backlog (NOKm)

Events after the close of the quarter

April 13 2021, Frøy signed a four-year framework agreement for cleaning of nets with a leading Norwegian salmon farmer. The agreement is the largest ever net cleaning agreement entered into by Frøy in terms of volume, value and contract length. Following a gradual implementation, Frøy will deliver all net cleaning services in Norway for the client. The agreement has an estimated total value of NOK 250-300 million over the contract period. The value of the contract will depend on the number of net cleanings carried out by Frøy during the term of the agreement which will depend on sea temperatures, the level of marine fouling on the nets and changes in the number pens for the salmon farmer. The contract is not included in the backlog figures.

Outlook

Results in the first quarter were impacted by normal seasonality with low activity during the winter months. Activity in the wellboat and service segments increased considerably during April as sea temperatures started to increase and as salmon farmers have started to prepare sites for a new production cycle, to release smolts to sea and carry out more regular maintenance, cleaning of nets etc. on the sites.

The spread of the corona virus and the wide range of control measures implemented to gain control of the virus has created increased risk and uncertainty globally. During first quarter 2021 Frøy have noted no material Covid-19 effects on its operations, except for the delayed newbuilds. The main risks related to Covid-19 are linked to the safety of our employees and interruption of our operations. Safeguarding employees and maintaining efficient service offering to clients are key priorities for Frøy. Frøy carefully monitor the development of the pandemic and have implemented measures to reduce the risk of outbreaks in line with local and national advice and guidelines.

According to Kontali Analyse 2022e supply growth of Norwegian salmon is expected to be around 4%. Frøy expect that demand for aqua services will continue to increase due to the underlying volume growth in salmon farming and stringent focus on minimizing environmental footprint and improving fish health.

Frøy expect to grow considerably in the coming years, based on the ongoing newbuild program and long-term contracts. Frøy strive to be the preferred long-term partner for salmon farmers through developing innovative, sustainable, and efficient competence and aqua service infrastructure.

Frøy´s key focus areas are to;

• Execute on the committed growth plan; Take delivery and deliver results from the newbuilds and rebuilds
• Develop new opportunities: Secure new contracts and develop new solutions
• Maximize returns on ongoing projects: Continuously improve efficiency and maintain cost leadership
• Deliver stable and growing dividends to our shareholders

Distributing dividends to its shareholders is an essential part of Frøy´s financial strategy. As the Group raised NOK 1.000 million in new equity in March 2021, the Board has not found it appropriate to distribute a dividend based on the 2020 results. The ambition is to pay a dividend based on the 2021 results. The Group´s dividend policy states that a dividend of minimum 50% of net profit shall be paid when the Group expect that the financial gearing, on fully invested basis, is at or below NIBD/EBITDA 3.5x and the Group has sufficient liquidity to meet future obligations.

Frøya, 11 May 2021

Dagfinn Eliassen

Svein Sivertsen Chairman of the Board Board Member Harry Asmund Bøe

____________________ ____________________ ____________________

Board Member

Anne Sofie Utne Board Member

Helge Gåsø CEO

____________________ ____________________ ____________________

Hege Aasen Veiseth Board Member

Consolidated statement of comprehensive income

Frøy ASA

(NOK 1.000.000)	Note	3 months ending 31.03.2021	3 months ending 31.03.2020
Revenue		355	134
Other income	3	1	-
Total revenue		356	134
Direct expenses (goods/services delivered)		50	33
Employee benefit expenses		113	38
Other operating expenses		110	33
Depreciation		73	20
Operating profit		11	10
Financial income		0	1
Financial expenses		22	11
Share of profit (loss) from associates		-1
Profit (loss) before tax		-13	-1
Taxes		5	0
Profit (loss) for the period		-8	-1
Profit or loss for the period attributable to:
Equity holders of the parent		-9	-2
Non-controlling interests		1	1
Total		-8	-1
Other comprehensive income
Net gain (loss) on cash flow hedges		9	-18
Total comprehensive income for the period		1	-19
Total comprehensive income for the period attributable to:
Equity holders of the parent		-0	-19
Non-controlling interests		1	1
Total		1	-19

Consolidated statement of financial position

Frøy ASA

(NOK 1.000.000)	Note	31.03.2021	31.03.2020	31.12.2020
ASSETS
Non-current assets
Goodwill		688		687
Property, plant and equipment		4 395	1 755	3 618
Right-of-use assets	4	419	9	536
Pension assets		8	0	8
Investments in associates		24	24	25
Other financial assets		6	2	5
Total non-current assets		5 539	1 791	4 878
Current assets
Inventory		12	7	8
Trade receivables		160	28	156
Other receivables		43	26	49
Cash and cash equivalents		1 082	37	149
Total current assets		1 297	99	362
TOTAL ASSETS		6 836	1 889	5 241
EQUITY AND LIABILITIES
Equity
Paid-in equity
Share capital		86	19	70
Share premium		2 286	157	1 329
Total paid-in equity		2 372	176	1 399
Other equity		517	409	547
Total retained earnings		517	409	547
Non-controlling interests		26	24	26
Total equity		2 916	609	1 971
Non-current liabilities
Non-current interest-bearing liabilities		2 827	676	1 832
Non-current lease liabilities	4	273	7	372
Deferred tax liabilities		23	0	23
Total non-current liabilities		3 122	683	2 226
Current liabilities
Current interest-bearing liabilities		536	474	649
Current lease liabilities	4	89	2	103
Subordinated loan related parties		-	1	1
Trade payables and other current liabilities		169	99	282
Taxes payable		4	22	9
Total current liabilities		798	597	1 043
Total liabilities		3 920	1 281	3 269
TOTAL EQUITY AND LIABILITIES		6 836	1 889	5 241

Consolidated statement of cash flows

Frøy ASA

(NOK 1.000.000)	Note	3 months ending 31.03.2021	3 months ending 31.03.2020
Cash flows from operating activities
Profit or loss before tax		-13	-1
Income taxes paid		-12	-1
Gain/loss on disposal of property, plant and equipment	3	1	-
Depreciation and impairment		73	19
Finance income		-0	-
Finance expenses		22	-
Changes in working capital		119	4
Other changes		-63	6
Net cash flows from operating activities		128	28
Cash flows from investing activities
Purchase of property, plant and equipment		-843	-83
Purchase of intangible assets		-0	-
Proceeds from investments in financial assets		-	-
Proceeds from sale of property, plant and equipment		12	-
Dividends		-	2
Interest received		-	-
Net cash flow from investing activities		-831	-81
Cash flow from financing activities
Proceeds from borrowings		1 117	1
Repayment of borrowings		-406	-16
Issue of Share Capital		1 000	-
Transaction cost		-26	-
Total cash payments for lease liabilities	4	-26	-
Interest paid		-22	-
Payments of dividends		-	-3
Net cash flow from financing activities		1 636	-17
Net change in cash and cash equivalents		933	-70
Cash and cash equivalents, beginning of period		149	107
Cash and cash equivalents, end of period		1 082	37

The consolidated statements of cash flows are prepared using the indirect method.

Consolidated statement of changes in equity

Attributable to the equity holders of the parent
(NOK 1.000.000)	Share capital	Share premium	Total paid in equity	Retained earnings	Net gain (loss) on cash flow hedges	Other Equity	Non controlling interests	Total Equity
								1
At 31.12.2020	70	1 329	1 399	563	-16	547	26	971
Profit or loss for the period			-	-9		-9	1	-8
Other comprehensive income			-		9	9		9
Total comprehensive income	-	-	-	-9	9	-0	1	1
Issue of Share Capital	16	984	1 000			-		1 000
Transaction cost		-26	-26			-		-26
Group Contribution				-30		-30		-30
At 31 March 2021	86	2 286	2 372	524	-7	517	26	2 916
At 31.12.2019	0	-	0	-	-			0
Profit or loss for the period			-	-2		-2	1	-1
Other comprehensive income			-		-18	-18		-18
Total comprehensive income	-	-	-	-2	-18	-19	1	-19
Acquisition of a subsidiary	19	157	176	428		428	23	627
At 31 March 2020	19	157	176	426	-18	409	24	609

Notes

NOTE 1: General information and significant accounting policies

The consolidated financial statements of the Group for 1Q 2021 were authorised for issue in accordance with a resolution of the Board of Directors on 11 May 2021.

The consolidated financial statements of the Group comprise consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity, and related notes. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by The European Union ("EU") and interpretations approved by the EU, including IAS 34. The report does not include all information required in a complete annual report and should therefore be read in conjunction with the Group´s recent financial statements for 2020. The financial report for first quarter 2021 is unaudited.

Presentation currency and functional currency

The consolidated financial statements are presented in Norwegian Kroner (NOK), which is also the functional currency of the parent company. For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

Significant accounting judgements, estimates and assumptions

The preparation of the consolidated financial statements in accordance with IFRS and applying the chosen accounting policies requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed on an ongoing basis.

NOTE 2: Operating segments

The Group operates within three main segments: wellboats, service and sea transport. The remaining of the Group's activities and business are shown in "Elimination and non-allocated" column below. These activities are mainly related to the administrative and financial components of the entity's revenue generating segments.

31.03.2021	Wellboat	Service	Sea transport	Elimination and non allocated	01.01.2021- 31.03.2021
Contract revenue	115	78	8		201
Framework agreements		45			45
Spot	25	25	19	-1	67
Fuel and other reinvoiced costs	40	3	0		43
Other			1		1
Total revenues	180	150	28	-1	356
Depreciation	33	35	5	1	73
Operating costs	121	119	26	6	272
Operating profit	25	-4	-2	-8	11
Financial income	0	0	0	0	0
Financial expenses	12	7	2	2	22
Share of profit (loss) from associates			-1	-	-1
Earnings before tax	13	-11	-5	-10	-13
Tax		-5	0	0	-5
Net income	13	-6	-5	-10	-8
Balance sheet items					31.03.2021
Assets	3 287	1 534	428	1 587	6 836

Liabilities 2 331 1 108 327 154 3 920 Equity 956 426 100 1 433 2 916

	Wellboat	Service	Sea transport	Elimination and non allocated	01.01.2020- 31.03.2020
31.03.2020
Contract revenue	75	-	13		88
Framework agreements		-			-
Spot	13	-	11		24
Fuel and other reinvoiced costs	18	-	1		19
Other		-		2	2
Total revenues	106	-	26	2	134
Depreciation	16	-	4	1	20
Operating costs	81	-	23	1	105
Operating profit	10	-	-1	0	10
Financial income	0	-	1	-0	1
Financial expenses	8	-	3	0	11
Share of profit (loss) from associates		-			-
Earnings before tax	2	-	-3	0	-1
Tax		-	0	0	0
Net income	2	-	-3	0	-1
Balance sheet items					31.03.2020
Assets	1 538	-	329	22	1 889
Liabilities	1 015	-	233	32	1 281
Equity	523	-	96	-11	609

NOTE 3: Other income

Gains or losses that arise from sale of property, plant and equipment are calculated as the difference between net sales price and the booked value of the asset.

Other income
	31.03.2021
Gain related to sale of PP&E	0,6
Other	-
Total other income	0,6

NOTE 4: Right-of-use assets and lease liabilities – IFRS 16

The Group's leased assets 1Q 2021

The Group leases several assets, mainly ships and vessels. Leases of land and buildings generally have lease terms between 5 and 10 years, while motor vehicles and other equipment generally have lease terms between 3 and 7 years.

Right-of-use assets	Service boats	Land and buildings	Other machines and equipment	Total
Carrying amount 01.01.2021	416	17	104	536
Additions			4	4
Additions from acquisitions	-	-	-	-
Depreciations	-10	-1	-9	-20
Termination of contracts	-91			-91
Gains and losses	-10			-10
Carrying amount 31.03.2021	304	16	99	419
Remaining lease term or useful life	10 years	10 years	3-5 years
Depreciation plan		Straight-line

The Group's lease liabilities 1Q 2021

Changes in the lease liabilities	Total
Total lease liabilities at 01.01.2021	475
New leases recognised during the period	4
Total cash payments for lease liabilities	-30
Interest expense on lease liabilities	4
Termination of contracts	-91
Total lease liabilities at 31.03.2021	361
Current lease liabilities in the statement of financial position	89
Non-current lease liabilities in the statement of financial position	273
Total cash outflow during the period	-30

The Group's leased assets 1Q 2020

Right-of-use assets	Total
Carrying amount 01.01.2020	10
Depreciations	-1
Carrying amount 31.03.2020	9

The Group's lease liabilities 1Q 2020

Changes in the lease liabilities	Total
Total lease liabilities at 01.01.2020	10
Total cash payments for lease liabilities	-1
Interest expense on lease liabilities	0
Total lease liabilities at 31.03.2020	9
Current lease liabilities in the statement of financial position	2
Non-current lease liabilities in the statement of financial position	7
Total cash outflow during the period	-1

NOTE 5: Related party transactions

All transactions within the Group or with other related parties are based on the principle of arm's length. The following table provides the total amount of transactions that have been entered into with related parties (outside the Group) for the relevant financial period:

		Other related parties*			Entity under common control	Parent company
Related party transactions 01.01.2021 -31.03.2021 and balances 31.03.2021	Siholmen AS	Gåsø Næringsutvikling AS	Frøy Utvikling AS	Frøy Sjøstransport AS	Midt-Norsk Havbruk AS	NTS ASA	Total
Related party balances Current trade and other receivables from related parties Current loans and borrowings from related parties Current trade and other payables to related parties Non-current loans and borrowings from related parties		39,0				55,7	- 55,7 - 39,0 -
Related party transactions Sales to related parties Purchases from related parties (incl. Management fees) Interest paid to related parties Interest received from related	0,4		0,2	0,1	0,2	0,0 2,4	- 0,3 3,1 -
parties							-

* Other related parties consist of entities that are considered related parties to the CEO.

NOTE 6: Major shareholders as of 31.03.21

Name of shareholder	No. of shares	%
NTS ASA	64 053 520	74,2 %
State Street Bank and Trust Comp	4 454 500	5,2 %
Trøndelag Helgeland Invest AS	1 140 300	1,3 %
HSBC Bank Plc	1 119 098	1,3 %
The Northern Trust Comp, London Br	825 662	1,0 %
Gåsø Næringsutvikling AS	819 672	0,9 %
Amble Investment AS	631 147	0,7 %
Skandinaviska Enskilda Banken AB	600 000	0,7 %
Skipsinvest AS	549 180	0,6 %
BNP Paribas Securities Services	473 413	0,5 %
The Bank of New York Mellon SA/NV	414 649	0,5 %
Verdipapirfondet Pareto Investment	409 836	0,5 %
Verdipapirfondet Fondsfinans Norge	409 000	0,5 %
Skandinaviska Enskilda Banken AB	350 000	0,4 %
Nordea Bank ABP	328 735	0,4 %
Aars AS	327 868	0,4 %
GH Holding AS	327 868	0,4 %
LIN AS	327 868	0,4 %
Credit Suisse (LUXEMBOURG) S.A.	271 299	0,3 %
Linvard Invest AS	262 295	0,3 %
Total 20 largest shareholders	78 095 910	90,4 %
Total Other	8 252 695	9,6 %
Totale number of shares 31.03.2021	86 348 605	100,0 %

At the end of the quarter Frøy ASA had 86 348 605 shares outstanding and 3 865 shareholders.

NOTE 7: Overview of commitments related to the newbuild program

Frøy´s ongoing newbuild program consists of new vessels and rebuilding of vessels in the wellboat and service segment. In the wellboat segment the newbuild program consists of 6 wellboats, where 1 vessel has been delivered in 1Q 2021, 3 more are scheduled for delivery in 2021, 1 in 2022 and 1 in 2023.

In the service segment the newbuild and rebuild program consists of 9 vessels under construction and rebuilding where 1 has been delivered, 7 are scheduled for delivery in 2021 and 1 in 2022.

NOKm	2 021	2 022	2 023
Wellboat	1 839	290	110
Service	412
Total	2 251	290	110

The sea transport vessel Folla was acquired in 1Q 2021 and the company is planning to rebuild the vessel in 2022 (please see section "investments" in the report for more information). Folla is not included in the overview of commitments.

NOTE 8: Financial instruments

At the end of the quarter the group had 3 interest rate swap agreements qualifying and booked as cash flow hedges. The fair value of the agrements is calculated as the discounted value of the derivatives future cash flows with the market rate as of 31.03.21.

NOK million	31.03.2021	31.12.2020
Fair value of interest rate swap / booked value	15	9

Appendix: Non-IFRS financial measures / Alternative performance measures

To enhance investorsʹ understanding of the Groupʹs performance, the Group presents certain measures that might be considered as alternative performance measures (ʺAPMʺ) as defined by the European Securities and Markets Authority (ʺESMAʺ) in the ESMA Guidelines on Alternative Performance Measures 2015/1057.

An APM is defined as a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in IFRS. The Group is of the view that the APMs provide investors relevant and specific operating figures which may enhance their understanding of the Groupʹs performance.

The non-IFRS financial measures/APMs presented herein are not measurements of performance under IFRS or other generally accepted accounting principles and investors should not consider any such measures to be an alternative to: (a) operating revenues or operating profit (as determined in accordance with IFRS or other generally accepted accounting principles), as a measure of the Groupʹs operating performance; or (b) any other measures of performance under generally accepted accounting principles. The non-IFRS financial measures/APMs presented herein may not be indicative of the Groupʹs historical operating results, nor are such measures meant to be predictive of the Groupʹs future results.

The Company believes that the non-IFRS measures/APMs presented herein are commonly reported by companies in the markets in which it competes and are widely used by investors in comparing performance on a consistent basis without regard to factors such as depreciation, amortisation and impairment, which can vary significantly depending upon accounting methods (particularly when acquisitions have occurred), business practice or based on non-operating factors. Accordingly, the Group discloses the non-IFRS financial measures/APMs presented herein to permit a more complete and comprehensive analysis of its operating performance relative to other companies and across periods, and of the Groupʹs ability to service its debt. Because companies calculate the non-IFRS financial measures/APMs presented herein differently, the Groupʹs presentation of these non-IFRS financial measures/APMs may not be comparable to similarly titled measures used by other companies.

The non-IFRS financial measure/APMs are not part of the Companyʹs consolidated financial statements and are thereby not audited. The Company can give no assurance as to the correctness of such non-IFRS financial measures/APMs and investors are cautioned that such information involve known and unknown risks, uncertainties and other factors, and are based on numerous assumptions. Given the aforementioned uncertainties, prospective investors are cautioned not to place undue reliance on any of these non-IFRS financial measures/APMs.

The Group has defined and explained the purpose of the following APMs:

EBITDA AND ADJUSTED EBITDA

EBITDA is defined as total revenue less operating expenses (direct expenses, employee benefit expenses and other operating expenses).

Adjusted EBITDA is defined as total revenue less gain on sale of assets, operating expenses (direct expenses, employee benefit expenses and other operating expenses) and IPO costs

EBITDA is used by the management as measure the Groupʹs ability to service debt and finance investments. Segment result is defined as adjusted EBITDA. Management believes the measure enables an evaluation of operating performance and a basis to allocate resources to the segment. For 1Q21 adjustment include costs related to the IPO and NOK 1.000 million equity raise.

Reconciliation of adjusted EBITDA – NOK millions

NOKm	31.03.20	31.03.21
Total revenue	134	356
Direct expenses	33	50
Employee benefit expenses	38	113
Other operating expenses	33	110
EBITDA	30	84
Less gain on sale of assets	0	1
IPO costs	0	8
Adjusted EBITDA	30	92

EQUITY RATIO

Equity ratio is defined as total equity divided by total assets. Equity ratio is used by the management to measure the group´s solidity.

	31.03.2021	31.03.2020
Equity	2 916	609
Total equity and liabilities	6 836	1 889
Equity ratio	43 %	32 %

Net interest-bearing debt

Net interest-bearing debt is defined as non-current interest-bearing liabilities + non-current lease liabilities + current interest-bearing liabilities + current lease liabilities – cash and cash equivalents

	31.03.2021	31.03.2020
Non-current interest-bearing liabilities	2 827	676
Non-current lease liabilities	273	7
Current interest-bearing liabilities	536	474
Current lease liabilities	89	2
Cash and cash equivalents	1 082	37
Net interest-bearing debt	2 642	1 122

ROE- Return On Equity

Return on equity (ROE) calculated as net profit last 12 months / average equity. ROE is used by the management to measure the group´s profitability.

	31.03.2021	31.03.2020
Equity	2 916	609
Net profit last 12 months	223
ROE	13 %

ROCE- Return On Capital Employed

Return on capital employed (ROCE) calculated based on operating profit last 12 months / average (property plant and equipment + right of use assets + inventory + trade receivables + other receivables - trade payables and other current liabilities). ROCE is used by the management to measure the group´s profitability.

	31.03.2021	31.03.2020
Property, plant and equipment	4 395	1 755
Right-of-use assets	419	9
Inventory	12	7
Trade receivables	160	28
Other receivables	43	26
Trade payables and other current liabilities	169	99
Capital employed	4 860	1 727
Avg. Capital employed	3 293
Operating profit last 12 months	291
ROCE	9 %

Order backlog

Frøy operating revenues consist of time charter agreements, bareboat agreements and spot agreements that normally include the rental of ships and crew. The time charter agreements include an agreed ship capacity for a defined period, as well as manning of ships.

The future minimum lease payments (lease revenues) under non-cancellable operating leases as of 31 March 2021 are, as follows:

Future minimum lease and customer revenues	31.03.2021	31.03.2020*
0 to 1 years	936 046
- Lease revenue share	570 489	154 698
- Customer contract share	365 557
1 to 2 years	829 280
- Lease revenue share	528 558	141 528
- Customer contract share	300 722
2 to 3 years	651 718
- Lease revenue share	423 646	96 282
- Customer contract share	228 072
3 to 4 year	452 192
- Lease revenue share	285 974	72 804
- Customer contract share	166 218
4 to 5 years	380 662
- Lease revenue share	236 662	52 200
- Customer contract share	144 000
More than 5 years	802 713
- Lease revenue share	502 313	195 900
- Customer contract share	300 400
Total lease and customer contract	4 052 611
Total lease revenue share	2 547 642	713 412

* For 2020 only the lease revenue share is shown