Frøy ASA

Investor Presentation • May 12, 2021

Frøy ASA – 1Q21

12 May 2021

Important notice

This presentation (the "Presentation") has been prepared by Frøy ASA (the "Company" and together with its subsidiaries (the "Group"). This Presentation has been prepared for information purposes only. This Presentation does not constitute an offer to buy or subscribe for any shares in the Company.

This Presentation speak only as of its date, and the views expressed are subject to change based on a number of factors, including, without limitation, macroeconomic and equity market conditions, investor attitude and demand, the business prospects of the Group and other specific issues. This Presentation and the conclusions contained herein are necessarily based on economic, market and other conditions, as in effect on, and the information available to the Company as of, its date. This Presentation does not purport to contain a complete description of the Group or the market(s) in which the Group operates, nor does it provide an audited valuation of the Group. The analyses contained in this Presentation are not, and do not purport to be, appraisals of the assets, stock or business of the Group or any other person.

Neither the Company nor any of its affiliates (nor any of its or their respective directors, officers, employees, professional advisers or representative) makes any representation or warranty, express or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of such information. No responsibility or liability (whether in contract, tort or otherwise) is or will be accepted by the Company or any of its affiliates (or any of its or their respective directors, officers, representatives, employees, advisers or agents) as to, or in relation to, this Presentation.

This Presentation contains forward looking information. The words "believe", "expect", "could", "may", "anticipate", "intend" and "plan" and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this Presentation are forward-looking statements. Such forwardlooking statements involve known and unknown risks, uncertainties and other factors which may cause the Group's actual results, performance, achievements and value to be materially different from any future results, performance, achievements or values expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. No warranty or representation is given by the Company as to the reasonableness of these assumptions. Further, certain forward-looking statements are based upon assumptions of future events that may not prove to be accurate.

This Presentation is governed by and shall be construed in accordance with Norwegian law with Oslo District Court as legal venue.

Agenda

• 1. Frøy in brief
• 1. Highlights 1Q 2021
• 1. Operational review
• 1. Financial review
• 1. Outlook
• 1. Appendix

This is Frøy

Leading competence and infrastructure partner to the salmon farming industry

Provider of businesscritical salmon farming services

Frøy assists salmon farmers with maintaining efficient day-to-day farming operations at sea.

Team of 670 specialized aqua service professionals and a modern fleet of 85 vessels1

Long term partner with salmon farmers

+20-year track record of creating new efficient and sustainable solutions in cooperation with salmon farmers

Long term contracts with global leading salmon farmers. NOK 6.500 million backlog incl. options.

i i i i Scalable operational platform with multiple growth initiatives

Ongoing newbuild program est. minimum EBITDA contribution of NOK 250-310m

In dialogue with clients regarding new projects

Opportunistic approach to M&A

Returning excess capital to shareholders

Dividend policy backed by long term contracts and high cash conversion

Ambition to pay minimum 50% of net profit as dividend when NIBD/EBITDA on a fully invested basis is at or below 3.5x

1) Including newbuilds and chartered vessels.

Stable historical return profile

Stable historical returns without correlation to salmon prices

Return on capital employed

Note 1: ROCE defined as Operating profit / (Avg. Beginning and end of year fixed assets and net working capital)

Note 2: ROE defined as net income / (Avg. equity beginning and end of year)

Note 3: Historical ROCE graph based on: 2020 proforma, 2018 and 2019 consolidated financial statements for Frøygruppen AS, 2015-2017 aggregated NGAAP figures for Frøy Akvaservice AS, Frøy Akvaresurs AS, Frøy Vest AS, Frøy Nord AS, NCE AS, Stava Sjø AS, Evja AS, Frøy Rederi AS, Fisketransport AS. 2015-2017 figures are aggregated figures excluding eliminations.

Frøy´s 3 business segments

Wellboat

employees: 220

vessels: 19 (incl. Newbuilds)

Transport of live fish and biological treatments

Service

employees: 370

vessels: 62 (incl. newbuilds)

Installation, maintenance and cleaning of salmon farmers site infrastructure

i i i Sea transport

employees: 60

vessels: 4

Transport of salmon feed, frozen seafood and other cargo

Highlights 1Q 2021

8

Frøy – Q1 highlights

Listed at Oslo stock exchange

• First day of trading March 29
• 3.865 shareholders
• 120 employees acquired shares in the IPO

• Raised NOK 1.000 million new equity to finance existing newbuild program and new growth initiatives

• First quarter is a seasonally slow quarter

• Delivery of Reisa, wellboat newbuild with 3.200m3 capacity, Frøy Hild, large service vessel and the sea transport vessel Folla

• Signed 2.5-year TC contract for specialized delousing vessel and crew with Norwegian salmon farmer.

• Revenue NOK 356m

• EBITDA adj. for IPO costs of NOK 92m
• Backlog of NOK 6.500 million
• Bank refinancing ca. NOK 500m in a new 5-year term loan with a Nordic bank

Seasonality – 1Q normally the weakest quarter in the year

Seasonality

• Low sea temperatures during winter leads to slower biomass growth, less marine fouling and lower sea lice levels
• Lower activity level and demand during winter

Revenue split

• Time charter revenues stable
• Revenues from spot and framework agreements fluctuate with activity (more activity during summer and autumn)

Seasonality of revenue streams (NOKm)

Contract backlog NOK 6.500m

Firm revenue backlog incl options

Fixed backlog

• Total fixed revenue commitments of more than NOK 4.0 billion
• Wellboat fleet with weighted avg. backlog coverage of approx. 5 years1
• New contracts in service segment and additional equipment on newbuilds included in backlog 31.03.21

Options

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

Source: Company information 1) Calculated as of 31.03.21, weighting based on m3 capacity per vessel

Backlog (NOKm)

Operational review

Wellboat

Segment results

• Revenues and EBITDA increased compared to 1Q 2020 mainly as a result of the combination between Frøy and NTS in April 2020
• 1Q is a seasonally slow spot quarter as low sea water temperatures impact demand for transportation and biological treatments

Other

• Delivery of first vessel in newbuild program
• Reisa, wellboat with 3.200 m3 capacity delivered in January
• New contract: 3-year time charter contract + option with Måsøval

Wellboat segment	3 months ending 31.03.21	3 months ending 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	58	26
EBITDA %	32 %	24 %
Number of vessels	14	8
Number of vessels on fixed contracts	11	7

Service

Segment results

• The service segment was included in the Group from 2Q 2020
• 1Q is a seasonally slow quarter as low sea water temperatures result in less demand for cleaning of nets, cages and general maintenance

Other

• Positive quarter for new contracts
• New four-year framework agreement for cleaning of nets with a leading Norwegian salmon farmer announced in April

Service segment	3 months ending 31.03.21	3 months ending 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	-

Sea transport

Segment results

• 1Q 2021 revenue amounted to NOK 28 million vs. NOK 26 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

Other

• Folla was acquired and commenced operations for Frøy mid February

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

Financial review

Profit & loss

Highlights 1Q 21

• Total revenues of NOK 356 million
• EBITDA adjusted of NOK 92 million1
• Adj. EBITDA margin of 26%1 vs. EBITDA 1Q 2020 of 22%
• Combination of Frøy and the NTS aqua service entities in April 2020 (post 1Q20)

Cash flow

Highlights 1Q 21

• Cash flow from operations NOK 128 million
• Cash flow from investment activities NOK 831 million
• Ongoing newbuild program
• Cash flow from financing activities NOK 1.636 million
• Share issue with gross proceeds NOK 1.000 million
• New debt on newbuilds and from refinancing
• Net cash flow of NOK 933 million in the quarter

(NOK 1.000.000)	31.03.2021	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	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 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	-
Payments for the principal portion of the lease liability	-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

17

Balance sheet

Highlights 1Q21

• Increase in non-current assets due to investments in newbuilds
• Increase in cash and total equity following the share issue in the quarter
• Increase in gross interest-bearing debt to NOK 3.7 bn. due to drawdowns on debt related to newbuilds under construction
• Net interest-bearing debt NOK 2.642m
• Equity ratio 43%

Frøy ASA (NOK 1.000.000) 31.03.2021 31.03.2020 31.12.2020 Goodwill 688 687 Property, plant and equipment 4 395 1 755 3 618 Right-of-use assets 419 9 536 Pension assets 8 0 8 Investements in associates 24 24 25 Other financial assets 6 2 5 Total non-current assets 5 539 1 791 4 878 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 Share capital 86 19 70 Share premium 2 286 157 1 329 Other equity 517 409 547 Non-controlling interests 26 24 26 Total equity 2 916 609 1 971 Non-current interest-bearing liabilities 2 827 676 1 832 Non-current lease liabilities 273 7 372 Deferred tax liabilities 23 0 23 Total non-current liabilities 3 122 683 2 226 Current interest-bearing liabilities 536 474 649 Current lease liabilities 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 EQUITY AND LIABILITIES 6 836 1 889 5 241

Investments

Total investments

• Total newbuild program est. NOK 2.8 bn.
• 2021: 2.360m
• 2022: 335m
• 2023: 110m

Key events in 1Q21

• Delivery of wellboat newbuild Reisa and large service vessel Frøy Hild
• Signed newbuild contract for the Cermaq contract
• 6000m3 wellboat
• Estimated delivery Mid 2023
• Acquisition and rebuilding of Frøy Challenger (Scandi Texel)
• Acquisition of sea transport vessel Folla

Wellboat Service Sea transport

Financial position

Financing strategy

• Frøy finance its fleet and equipment with bank debt and leasing
• Debt financing secured before ordering large newbuilds
• Ambition to match repayment profile and useful life of assets
• Ambition to refinance 12 months in advance of maturity

Newbuild financing

• Bank and leasing debt secured on all newbuilds
• +/- 80% loan to value
• Repayment profile: 15-20 years on wellboats
• NIBOR + 175-185 bps

Debt maturities

• Annual regular installments on bank debt of approx. NOK 300 million on a fully invested basis

Loan Repayment Schedule

Outlook

Market outlook

Key market trends

Gradual increase in salmon farming volumes in Norway, Faroe Island, UK, Canada and Island

Increased complexity due to more exposed farming and larger equipment expected to drive demand for specialist competence and infrastructure

i i Production of larger smolt reduce the production time at sea and increase demand for wellboats

Farming in more exposed locations expected to increase demand for wellboats

Frøy observations

Seasonal uptick seen in second quarter in line with historical trend

High market activity expected in second and third quarter in line with historical seasonality

Expect continued strong demand in Frøy´s segments going forward

Frøy focus areas

Execute committed growth plan

Frøy to take delivery of newbuild program with 6 wellboats1 and 9 service vessels next 2 years

Expected minimum EBITDA contribution from newbuilds of NOK 250-300m

Develop new opportunities

Secure new contracts and expand scale and scope of operations where Frøy have a competitive edge

Opportunistically consider value accretive M&A

Maximize returns

Maintain a lean cost culture

Continuously focus on improving efficiency in operations

Ensure that new growth projects satisfies and preferably exceeds the minimum return on equity requirement of 10-18%1

Note: Target returns depend on client, project

Deliver stable and growing dividend to shareholders

Frøy ambition to deliver stable dividends payments

Minimum 50% of net profit to be paid as dividend provided that: I) The fully invested NIBD/EBITDA is below 3.5x and II) sufficient liquidity to meet future obligations

Note: 1 wellboat and 1 service vessel delivered during 1Q21

IPO primary proceeds of NOK 1,000 million

Listed on Oslo Børs since March 29 ²⁰²¹ Ticker FROY

Market cap NOK 5,2 billion

3,865 shareholders

Financial calendar

• May 12 2021: 1Q results
• Aug 26 2021: 2Q results
• Nov 11 2021: 3Q results

Research coverage

• Danske Bank
• Nordea
• Sparebank 1 Markets

Analyst

• Knut Ivar Bakken
• Herman Aleksander Dahl
• Christopher Robin Vinter

Share information 31.03.21

Total number of shares 31.03.21

• 86 348 605 shares outstanding

Total number of shares owned by 20 largest shareholders

• 90,4% of total number of shares outstanding

26

Appendix

Non-IFRS financial measures / Alternative Performance Measures

• 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.

APMs and Key Figures

Non-IFRS financial measures / Alternative Performance Measures

• 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 operating expenses (direct expenses, employee benefit expenses and other operating expenses), gain on sale of assets and IPO costs
• EBITDA and adjusted EBITDA is used by the management as measure the Groupʹs ability to service debt and finance investments. Management also believes the measure enables an evaluation of operating performance.

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
Gain on sale of assets	0	1
IPO costs	0	8
Adjusted EBITDA	30	92

APMs and Key Figures

Non-IFRS financial measures / Alternative Performance Measures

ROCE defined as last 12 months operating profit / (Avg. Beginning and end of year fixed assets and net working capital)

Net working capital defined as: Trade and other receivables – trade payables and other current liabilities

Calculations based on: 2020 proforma and 2018 and 2019 consolidated financial statements for Frøygruppen AS

ROE is defined as last 12 months net income / Avg. equity beginning and end of year

Calculations based on: 2020 proforma and 2018 and 2019 consolidated financial statements for Frøygruppen AS

2020 pro forma net profit is adjusted for loss on shares previously owned in Norway Royal Salmon of NOK 318.5 million

ROCE calculation	01.01.2018	2018	2019	2020
Operating profit		177	274	319
Fixed assets	1 656	1 732	2 056	4 154
Receivables	123	124	185	156
Payables	111	110	129	282
ROE		10 %	14%	10%

ROE Calculation	01.01.2018	2018	2019	2020
Net profit*		115	198	219
Equity	335	451	632	1971
ROE		29 %	37%	17%

Frøy subsidiaries - historical NGAAP financials

Frøy Rederi AS	2014	2015	2016	2017
EBIT	24	28	35	57
Fixed Assets	282	469	544	949
Receivables	5	11	12	20
Payables	3	5	36	8
Fisketransport AS	2014	2015	2016	2017
EBIT	5	6	1	2
Fixed Assets	8	6	4	2
Receivables	3	2	0	0
Payables	1	1	1	0
Frøy Akvaservice AS	2014	2015	2016	2017
EBIT	21	25	34	42
Fixed Assets	113	159	212	210
Receivables	15	13	18	25
Payables	5	5	14	20
Frøy Vest AS	2014	2015	2016	2017
EBIT	6	21	19	8
Fixed Assets	16	101	105	89
Receivables	3	17	16	19
Payables	3	6	4	6
Aggregated figures	2014	2015	2016	2017
EBIT	67	87	120	143
Fixed Assets	490	867	1020	1527
Receivables	29	51	51	85
Payables	14	28	81	45
NWC	16	23	-31	41
ROCE based on aggregated figures		12,5 %	12,7 %	11,2 %

Frøy Akvaressurs AS	2014	2015	2016	2017
EBIT	0	3	14	9
Fixed Assets	45	109	131	158
Receivables	0	3	1	5
Payables	0	2	17	2
Frøy Nord AS	2014	2015	2016	2017
EBIT	3	2	10	16
Fixed Assets	0	1	3	103
Receivables	0	1	1	11
Payables	1	7	4	6
Stava Sjø AS	2014	2015	2016	2017
EBIT	5	2	6	8
Fixed Assets	10	10	9	4
Receivables	2	2	2	4
Payables	1	2	4	2
Evja AS	2014	2015	2016	2017
EBIT	3	1	1	1
Fixed Assets	14	13	12	12
Receivables	0	0	0	0
Payables	0	0	0	0