Nekkar — Interim / Quarterly Report 2021

Aug 26, 2021

Q2/H1 2021 financial results

Preben Liltved, CEO Kristoffer Lundeland, CFO

26 August 2021

Disruptive technologies, sustainable results

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An investment in the Company involves significant risk, and several factors could adversely affect the business, legal or financial position of the Company or the value of its securities. For a description of relevant risk factors we refer to the Company's annual report for 2019, available on the Company's website www.nekkar.com. Should one or more of these or other risks and uncertainties materialize, actual results may vary significantly from those described in this Presentation. An investment in the Company is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment.

This Presentation contains certain forward-looking statements relating to inter alia the business, financial performance and results of the Company and the industry in which it operates. Any forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts and are subject to risks, uncertainties and other factors that may cause actual results and events to be materially different from those expected or implied by the forward-looking statements. The Company cannot provide any assurance that the assumptions underlying such forward-looking statements are free from errors nor do any of them accept any responsibility for the future accuracy of opinions expressed in this Presentation or the actual occurrence of forecasted developments.

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Nekkar ASA Q2 2021 highlights

Highlights Q2 2021

• Revenue of NOK 121.8 million (Q2 2020: 63.8)
• Operational EBITDA of NOK 39.2 million (14.6) *
• EBIT of NOK 37.4 million (25.8)
• Three shipyard solutions projects successfully commissioned during quarter
• Promising sea testing of Starfish closed fish cage
• Kicked off wind turbine installation innovation project

Events subsequent to quarter

• Three new upgrade/spare parts contracts for Shipyard Solutions, totaling NOK 41 million in contract value

Nekkar ASA

Disruptive technologies, sustainable results

Leverage unique and recognized drilling and lifting heritage and execution ability from "Drilling Bay" in Kristiansand, within:

To develop disruptive technologies that can make high-growth industry sectors, such as aquaculture and renewables, even more sustainable and profitable

Nekkar in brief

NOK 360 million revenue company (2020)

63 employees

Headquarter in Kristiansand, Norway

Listed on Oslo Stock Exchange (NKR)

Utilise unique Nekkar competence to unlock productivity and sustainability gains in high-growth industry sectors

Digital business models to capitalise on unique hard-tech to unlock and drive value from SaaS revenue potential

DIGITAL SOLUTIONS

Shipyard solutions

Three shiplift projects successfully delivered in second quarter SHIPYARD SOLUTIONS

Project #1

• Shiplift with transfer system
• Client in Pakistan

Project #2

• Shiplift with control system from Intellilift/Syncrolift
• Client in Qatar

Project #3

• First batch of trolley system
• Main batch remaining
• Client in USA

Service – moving from ad-hoc to long term lifecycle partnership

Shipyard solutions | Key financials

Revenues (MNOK) Revenues and operational EBITDA margin (%) 0 50 100 150 200 250 Revenues +65%

H1 2019 H2 2019 H1 2020 H2 2020 H1 2021

Shipyard solutions | Order intake and backlog

Order intake per half-year period Order backlog* development H1 2019 H2 2019 H1 2020 H2 2020 H1 2021

NOK 41 million in new upgrade and service won so far in Q3 (subsequent to second quarter)

Control system upgrade

• Customer in Spain
• Syncrolift contract, Intellilift to deliver completely new control and drive systems
• Contract value: NOK 18 million

Sale of transfer trolleys in storage

• Trolleys currently stored in Italy
• Sold to client in Turkey
• Contract value: NOK 10 million
• Healthy margin

Spare parts order

• Customer in Singapore
• Contract value NOK 13 million

Nekkar's Starfish matches Norwegian government's ambitions for fish farming

From the aquaculture strategy document "An ocean of opportunities":

Facilitate increased digitalization and data sharing for profitable and sustainable development of the fish farming industry

Facilitate technological development contributing to solve environmental and area challenges in aquaculture, including the impact of salmon lice and the spread of disease

Continue to facilitate aquaculture at sea

Consider stronger incentives for fish farmers to improve fish health and welfare

On 24 August 2021, Norwegian Ministry of Trade, Industry and Fisheries also announced plans to establish a new permit scheme in order to solve environmental challenges and to be able to use new areas along the coast

Sustainable aquaculture with closed technologies in sea

Starfish closed cage fish farming

Protection against sea lice increase fish welfare and dramatically reduction in Opex

Lower risk of escape due to dual safety

Collection of waste contributes to circular economy – sludge will be turned into value

Digital systems = better control, increased growth and reduced Opex

Significantly lower energy consumption than land-based fish farming

Starfish pilot test at Hidra in Flekkefjord: progressing according to plan

Concept tests: Q1-Q4 2021

Circulations units & flow

Regulation, monitoring & software:

• Cameras under and over water level
• Compressors
• Flow sensors

Sludge treatment system

• GPS for external data (wind etc.)

Inlet pipes / water pressure Ocean current measurement

1 of 4 inlet pipelines installed and in operation. No 2,3 and 4 to be installed in Q3

Installed and operation

To be installed Q3/Q4

Production started of full-size Starfish – ready for testing early 2022

First unit tested

Most equipment installed:

testing and data generation ongoing

SkyWalker – the future wind turbine installation RENEWABLES

Increased weather window due to guided lift

Possible to reduce tower oscillation

Reduced turbine installation time

Smaller installation footprint required

Turbines can be larger and installed higher

Low or zero emission machine

Easier transport to site Technology based on active heave compensation (AHC)

Remotely controlled, unmanned lifting platform

RENEWABLES

SkyWalker – the future wind turbine installation tool

• Innovation Norway 21.5 MNOK funding approved (Q1)
• Cooperation with turbine OEM and Fred Olsen Renewables

Project progress

• Concept design development complete
• Detailed design ongoing (Q2-Q4)
• Production started of scale model (1:20) to be tested in Q4 2021
• Test of prototype on site

Nekkar ASA Financial highlights

Consolidated statement of profit and loss

Nekkar ASA	Unaudited Q2		Unaudited H1		Audited Full-Year
MNOK	2021	2020	2021	2020	2020
Revenue	122	64	215	130	359
Reported EBITDA	38	27	55	2	77
Operational EBITDA1	39	15	56	19	71
EBIT	37	26	54	1	75
EBITDA %	31.5 %	41.6 %	25.8 %	1.8 %	21,5 %
Op. EBITDA % 1	32.2 %	22.9 %	26.1 %	14.9 %	19,9 %
Order intake	-	428	16	437	701
Order backlog	975	1,110	975	1,110	1,167
EPS (NOK)	0.35	0.28	0.48	0.01	-0.33

1 Excl. losses/gain on FX contracts not qualifying for hedge accounting

• Second quarter revenue of MNOK 122, representing an increase of 90% year-on-year
• First half 2021 revenueof MNOK 215 compared to MNOK 130 in 2020, equivalent to an increase of 65%
  • Revenue growth driven by high activity in Shipyard Solutions
• Second quarter operational EBITDA of MNOK 39 compared to MNOK 15 in 2020
  • Loss on FX hedging contracts amounted to MNOK 0.9 in the second quarter of 2021 compared to a gain of MNOK 12 in 2020
• First half 2021 operational EBITDA of MNOK 56 compared to MNOK 19 in 2020. Operational EBTIDA margin of 26.1% and 14.9% respectively.
  • Strong first half 2021 performance driven by Shipyard Solutions
• Healthy order backlogof MNOK 975 at the end of the second quarter
• Capitalized development costs (R&D capex) of MNOK 14 in the first half 2021 compared to MNOK 2 in 2020
• Second quarter earnings per share of NOK 0.35 compared to NOK 0.28 in 2020

Nekkar ASA Balance sheet

Condensed consolidated statement of financial position

(NOK 1 000)	Unaudited	Unaudited	Audited
	30.06.2021	30.06.2020	31.12.2020
Deferred tax assets	33 092	35 368	34 204
Goodw ill	16 643	16 643	16 643
Intangible assets	35 519	18 526	26 840
Tangible assets	14 099	6 657	12 300
Total non-current assets	99 354	77 195	89 987
Inventories	10 687	9 930	5 412
Trade receivables	61 693	189 444	36 643
Accrued, non-invoiced production	31 087	9 868	22 382
Other short-term receivables	25 679	7 260	35 810
Bank deposits	200 157	256 048	367 850
Total current assets	329 303	472 549	468 096
Total assets	428 657	549 745	558 084

(NOK 1 000)	Unaudited	Unaudited	Audited
	30.06.2021	30.06.2020	31.12.2020
Share capital	11 695	11 617	11 695
Other equity	224 982	206 940	173 903
Non-controlling interests	18 397	16 787	17 879
Total equity	255 074	235 345	203 477
Deferred tax	563	641	599
Lease liabilities	4 010	-	4 550
Total non-current liabilities	4 572	641	5 149
Trade payables	19 800	15 781	24 616
Prepayments from customers / deferred rev.	113 851	255 027	187 469
Current lease liabilities	1 257	300	950
Other current liabilities	34 103	42 649	136 423
Total current liabilities	169 011	313 757	349 458
Total liabilities	173 583	314 398	354 607
Total equity and liabilities	428 657	549 745	558 084

Nekkar ASA

Cash flow statement

Condensed consolidated statement of cash flow

(NOK 1 000)	Unaudited	Unaudited	Audited
	H1 2021	H1 2020	2020
Cash flow from operating activities
Profit (loss) before tax	52 933	2 242	71 717
Adjustments for:
Depreciation / impairment	1 508	1 225	2 746
Net financial items	852	-1 191	2 909
Income tax paid	-	-	-245
Change in net w orking capital	-106 496	-6 107	56 738
Net cash flow from operating activities	-51 204	-3 831	133 866
Cash flow from investment activities
Acquisition and expenditures of fixed/intangible assets	-16 979	-2 260	-12 083
Disposal of discontinued operation	-98 337	-	-13 964
Net cash flow from investment activities	-115 316	-2 260	-26 046
Cash flow from financing activities
Proceeds from issuance of share capital	-	-	2 829
Payment of lease liabilities	-322	-	-837
Net financial items	-852	1 191	-2 909
Net cash flow from financing activities	-1 173	1 191	-918
Net change in cash and cash equivalents	-167 693	-4 900	106 902
Cash and cash equivalents at the start of the period	367 850	260 948	260 948
Cash and cash equivalents at the end of the period	200 157	256 048	367 850

• Operating cash flow of MNOK -51 representing a decrease of MNOK 47 from the previous year
• Cash flow from investments of MNOK -115, highly impacted by the settlement of the Cargotec / MacGregor arbitration
• Cash flow from financing of MNOK -1.2 compared to MNOK 1.2 from the previous year
• Credit facilities as per 30 June 2021 were in total MNOK 350, which includes a guarantee- and derivatives facility with Nordea
  • At the end of the first half 2021, Nekkar had drawn MNOK 174 of the guarantee facility
• Net cash position of MNOK 200 as per 30 June 2021, of which MNOK 10 is held as a deposit for FXderivative exposures in DnB and MNOK 3.5 is restricted deposits related to employee's tax withholding.

Nekkar ASA Disruptive technologies, sustainable results

Summary Q2 2021 and outlook

Summary Outlook

Very strong financial performance in quarter

Solid long-term order backlog of NOK 975 million, despite no order intake in second quarter

Progression as planned for Starfish and SkyWalker development projects xx

Shipyard solutions: Lower newbuild order intake in 2021, but Nekkar expects project awards in H2 2021

Expected growth in service/upgrade revenues

Aquaculture: Continue development and testing of circulation systems and digital platform for monitoring and controlling Starfish cage

Full-size version planned to be ready for testing in early 2022

Renewables: Kick-off of wind installation innovation project

Design and model testing of technology solution in Q3 and Q4

Digital: Solid leads on oil & gas SaaS projects

Third of three first Syncrolift projects commissioned in Q3

Nekkar ASA Alternative performance measures

INTRODUCTION TO ALTERNATIVE PERFORMANCE MEASURES (APMs)

Nekkar Group (Nekkar) discloses alternative performance measures in addition to those normally required by IFRS. Nekkar is of the opinion that APMs are providing enhanced insight into the operations and prospects of the company. APMs are used as an integral part of the management and board of directors' key performance measure reporting and controls. Furthermore, securities analysts, investors and other interested parties frequently use such performance measures.

BASIS FOR PREPARATION

This presentation provides financial highlights for the second quarter and first half of 2021 for Nekkar ASA. The consolidated financial statements for H1 2021 have been prepared in accordance with IAS 34 Interim Financial Statements, however the interim accounts do not include all the information required for a full financial statement and should therefore be read in connection with the audited consolidated financial statements of 2020.

The interim financial figures are not audited.

PROFIT MEASURES

EBITDA is short for "earnings before interest, taxes, depreciation and amortisation" in the consolidated income statement.

Nekkar defines "Operational EBITDA" as EBITDA excluding losses/gain on FX contracts not qualifying for hedge accounting.

EBIT is short for "earnings before interest and taxes". EBIT corresponds to "operating profit/loss" in the consolidated income statement.

Margins such as EBITDA and EBIT are used to compare relative profit between periods. The margins are calculated as EBITDA or EBIT divided by revenue.

ORDER INTAKE MEASURES

Order intake and order backlog are presented as APMs as they are indicators of the company's revenue generation and operations in the future.

Order intake includes new signed contracts in the period, in addition to expansion of existing contracts and any cancellations of contracts. For newbuild contracts, the order intake is based on the signed contract value excluding potential options and change orders.

Order backlog represents the estimated value of remaining work for signed newbuild contracts and does not include the value of service orders.

nekkar.com