Nekkar — Investor Presentation 2021

Feb 18, 2021

H2 and full-year 2020 interim results presentation

Preben Liltved, CEO Kristoffer Lundeland, CFO

18 February 2021

Disruptive technologies, sustainable results

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The Presentation has been produced by Nekkar ASA (the "Company") for information purposes only and does not in itself constitute, and should not be construed as, an offer to sell or a solicitation of an offer to buy any securities of the Company in any jurisdiction. The distribution of this Presentation may be restricted by law in certain jurisdictions, and the Recipient should inform itself about, and observe, any such restriction. Any failure to comply with such restrictions may constitute a violation of the laws of any such jurisdiction.

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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.

This Presentation speaks as at the date set out on herein. Neither the delivery of this Presentation nor any further discussions of the Company shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not assume any obligation to update or revise the Presentation or disclose any changes or revisions to the information contained in the Presentation (including in relation to forward-looking statements).

This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts.

Nekkar ASA H2 2020 highlights

Highlights H2 2020

• NOK 230 million in revenues, up 41% vs H2 2019
• Operational EBITDA*-result of NOK 52 million (= EBITDA-margin of 22.6%)
• Record high order backlog of NOK 1,167 million at year-end
• Secured USD 30 million contract for shipyard solutions
• Solid financial position
• Started preparations for ocean testing of "Starfish" closed fish cage at Hidra outside Flekkefjord, Norway
• Completed pre-study of wind installation technology
• Signed lease agreement for new office and workshop for Syncrolift at Vestby, Norway

Events subsequent to year-end

• NOK 94 million settlement in the Cargotec / MacGregor arbitration. The settlement amount is included in loss from discontinued business of NOK 104 million in the statement of profit and loss
• Ocean testing started for "Starfish" closed fish cage

Nekkar ASA Disruptive technologies, sustainable results

• NOK 360 million revenue company (2020)
• Strong financial performance: 19.9% EBITDA-margin in 2020
• Strong operational cash flow, no interest-bearing debt
• 63 employees
• Listed on Oslo Stock Exchange (NKR)
• Headquartered in Kristiansand, Norway

Nekkar in brief New strategic direction

Leverage unique and recognised "drilling bay" heritage and execution ability in Kristiansand, within:

• Engineering
• Electrification
• Automation
• Digitalisation

To develop disruptive technologies that can make highgrowth industry sectors even more sustainable

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

Common value levers

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

DIGITAL SOLUTIONS

Nekkar's digital solutions being leveraged across multiple industries

Shipyard solutions

Syncrolift in brief Client offering

• Market leader for shiplifts and transfer systems to repair and newbuilding yards (~75% market share)
• Customized Syncrolift installations lift vessels up to 30,000 tonnes
• Installed base of ~200 systems globally

• Extensive service and aftermarket growth opportunity

• Systems for ship handling and docking

• Improves yard productivity and operations
• Reduce man-hours, increased precision, smarter way of working

Shipyard solutions | Key financials

Revenues (MNOK) Revenues and operational EBITDA margin (%): FY 2016-2020 0 50 100 150 200 250 H1 2019 H2 2019 H1 2020 H2 2020 +46%

Shipyard solutions | Order intake and backlog

Order intake per half-year period Order backlog* development: FY 2016-2020

Political drive towards closed caged fish farming

Norwegian authorities view closed fish cages as solution to solve environmental problems, including:

• Sea lice
• Escapes
• Mortality rate

Canadian authorities have announced plan to phase out open cage fish farms in British Columbia by 2025

Client offering

Nekkar's response to aquaculture industry requirements

Utilising Digital Solutions competence to increase productivity

• Fully digitalized and automated closed fish cage
• Remotely managed and fully automated operations
• Software platform for remote surveillance, data acquisition, bio analytics and production control
• Open-source control system that enables easy integration of third-party vendors: Gives customers flexibility in choosing best software and hardware products to be used with the cage
• Significantly reduced opex
• Unique combination of disruptive technologies and automation sensor legacy will be building blocks for future SaaS offerings

Reducing environmental impact and operating expenditure

• Water intake from deeper water layers prevent salmon lice
• Automated closed solution that enables collection of up to 90% of biological waste
• Double protection against escapes
• Cage produced in soft materials, is recyclable and designed to optimize logistics
• Lower energy consumption
• No chemicals required to clean cage

"Starfish" – a closed technology improving fish welfare, production economics and environmental impact

• Innovation agreement with Lerøy
• Partly funded by Innovation Norway
• Tank testing successfully completed at SINTEF in 2020
• Ocean testing of Starfish pilot to start at Hidra, South Norway, March 2021

Renewables: Nekkar's next target industry

• Developing a highly disruptive installation technology

Targeting wind power Basis for market entry

• Nekkar's Digital Solutions competence within electrification, automation and digitalisation
• Developing fully automated and remote-controlled installation technology
• Offshore engineering competence

Objectives Status

• Reduced CO2 emissions
• Reduced footprint in nature (forest areas etc)
• Increased installation productivity
• Lower costs

• Remove height limitation for turbine installation

• Pre-study completed together with reputable, international industry partners

• Technology undergoing patent approval

Nekkar ASA Financial highlights

Revenues

Operational EBITDA

Order intake

Nekkar ASA Financial highlights

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

• Second half revenue of MNOK 230, representing an increase of 41% year-on-year
• Full-year revenue increased by ~35% compared to 2019
• Second half operational EBITDA of MNOK 52 compared to MNOK 50 in 2019
• Full-year operational EBITDA of MNOK 71 versus MNOK 51 in 2019. Operational EBITDA margin of ~20%
• Gains on FX hedging contracts amounted to MNOK 23 in second half and the full-year 2020 effect was MNOK 6
• Earnings per share for 2020, continued operations, of NOK 0.67 compared to NOK 0.46 in 2019.
• Result from discontinued operations of MNOK -104 in 2020 which includes a settlement agreement of MNOK 94. Earnings per share incl. discontinued operations of NOK -0.33.

Nekkar ASA Disruptive technologies, sustainable results

Summary and outlook

Summary Outlook

Solid financial results in H2 2020

Strong cash flow, solid financial position

Record high order backlog

Arbitration settlement means Nekkar can focus on the future instead of the past xx

Expected lower newbuild order intake in 2021 Expected growth in service/upgrade revenues

Aqua: Extensive "Starfish" prototype testing in H1 2021 Preparations for test with biomass

Renewable: Kick-off of wind installation innovation project Design and model testing of technology solution

Digital: Solid leads on oil & gas SaaS projects Planned commissioning of 3 x Syncrolift projects

Appendix

Nekkar ASA

Statement of profit and loss

Condensed consolidated statement of comprehensive income

(NOK 1 000)	Unaudited	Audited	Unaudited	Unaudited
CONTINUED BUSINESS	2020	2019	2H 2020	2H 2019
Revenue from projects	359 467	266 614	229 567	162 988
Total operating revenue	359 467	266 614	229 567	162 988
Cost of goods sold	198 224	144 952	127 668	76 451
Other operating costs	89 860	70 379	49 897	36 552
Other losses / (gains)	-5 990	15 182	-23 095	15 182
EBITDA	77 372	36 100	75 097	34 803
Depreciation	2 746	3 026	1 521	1 662
Operating profit (EBIT)	74 626	33 074	73 576	33 141
Net finance	-2 909	27	-4 101	3 613
Profit/loss before tax	71 717	33 102	69 475	36 755
Tax	896	-15 874	454	-15 891
Profit/loss from continued business	70 821	48 976	69 021	52 646
DISCONTINUED BUSINESS
Profit/loss from discontinued business	-103 718	148 116	-103 718	113 415
Profit/loss for the period	-32 897	197 091	-34 697	166 061
Attributable to equity holders of the company	-36 238	195 833	-37 301	169 660
Attributable to non-controlling interests	1 829	1 259	1 091	-3 599
COMPREHENSIVE INCOME
Net result for the period	-32 897	197 091	-34 697	166 061
Currency effects	-	-	-	-
Total comprehensive income	-32 897	197 091	-34 697	166 061
Attributable to equity holders of the company Attributable to non-controlling interests	-34 726 1 829	195 833 1 259	-35 788 1 091	169 660 -3 599
Earnings per share (NOK) Diluted earnings per share (NOK)	-0,33 -0,33	2,07 1,91	-0,34 -0,34	1,63 1,55
Earnings per share - Continued Business (NOK)	0,67	0,52	0,65	0,56
Diluted earnings per share - Continued Business (NOK)	0,67	0,46	0,65	0,50

• Second half revenue of MNOK 230, representing an increase of 41% year-on-year
• Full-year revenue of MNOK 359 representing an increase of ~35% compared to 2019
• Second half EBITDA of MNOK 75 is impacted by gains on FX hedging contacts which is presented as other losses/(gains)
• Operational EBITDA of MNOK 52 in the second half and full-year of MNOK 71 in 2020 versus MNOK 51 in the previous year
• Operational EBITDA margin of ~23% in the second half and ~20% in full-year 2020
• A bad debt provision of MNOK 13, related to accounts receivables, is included in other operating costs in 2020.
• Loss from discontinued business of MNOK 104 in the second half. This includes the global settlement of MNOK 94 in the Cargotec / MacGregor arbitration, in addition to transaction related external and internal costs.
• Earnings per share for 2020, continued operations, of NOK 0.67 compared to NOK 0.46 in 2019.
• Earnings per share including loss from discontinued operations of NOK -0.33.

Nekkar ASA Balance sheet

Condensed consolidated statement of financial position

(NOK 1 000)	Unaudited	Audited
	31.12.2020	31.12.2019
Deferred tax assets	35 368	35 367
Goodwill	16 643	16 643
Intangible assets	26 840	16 633
Tangible assets	6 224	6 528
Right-of-use assets	6 076	584
Total non-current assets	91 151	75 755
Inventories	5 412	6 886
Trade receivables	36 643	38 260
Accrued, non-invoiced production	24 082	12 371
Other short-term receivables	27 254	21 822
Bank deposits/cash	367 850	260 948
Total current assets	461 241	340 287
Total assets	552 392	416 042

(NOK 1 000)	Unaudited	Audited
	31.12.2020	31.12.2019
Share capital	11 695	11 617
Other equity	173 903	205 878
Non-controlling interests	17 879	16 050
Total equity	203 477	233 545
Deferred tax	1 763	675
Lease liabilities	4 550	-
Total non-current liabilities	6 313	675
Trade payables	24 616	14 005
Prepayments from customers	189 169	109 293
Current lease liabilities	950	600
Other current liabilities	127 867	57 923
Total current liabilities	342 602	181 821
Total liabilities	348 915	182 496
Total equity and liabilities	552 392	416 042

Nekkar ASA Cash flow statement

Condensed consolidated statement of cash flow

(NOK 1 000)	Unaudited	Audited
	2020	2019
Cash flow from operating activities
Profit (loss) before tax	71 717	33 102
Adjustments for:
Depreciation / impairment	2 746	3 026
Interest expense	78	3 457
Interest income	-1 509	-7 259
Other Financial Items	4 341	3 775
Income tax paid	-245	-189
Change in net current assets	56 738	22 574
Net cash flow from operating activities	133 866	58 250
Cash flow from investment activities
Acquisition of Subsidiary - net of Cash acquired	-	-8 354
Acquisition and expenditures of fixed/intangible assets	-12 083	-13 311
Cash distribution from divested companies	-	-59 346
Disposal of discontinued operation	-13 965	-
Proceeds from sale of investments	-	553 562
Net cash flow from investment activities	-26 046	472 551
Cash flow from financing activities
Proceeds from issuance of share capital	2 829	2 092
Dividends paid	-	-422 450
Disbursement on short-term/ long-term debt	-	-198 375
Payment of lease liabilities	-837	-592
Interest received	1 509	7 259
Interest paid	-78	-3 457
Other Financial items	-4 341	-3 775
Net cash flow from financing activities	-918	-619 298
Net change in cash and cash equivalents	106 902	-88 498
Cash and cash equivalents at the start of the period	260 948	349 445
Cash and cash equivalents at the end of the period	367 849	260 948

• Operating cash flow of MNOK 134 representing a significant increase from the previous year
• Cash flow from investments of MNOK 26 includes net capitalized expensed of MNOK 11 related to ongoing R&D investments
• Cash flow from financing of MNOK 0.9 includes issuance of share capital in relation to employee share program
• Credit facilities as per 31 December 2020 were in total MNOK 350, which includes a guarantee- and derivatives facility with Nordea
• At the end of the second half 2020, Nekkar had drawn MNOK 184 of the guarantee facility
• Net cash position of MNOK 368, of which MNOK 10 is held as a deposit for FX-derivative exposures in DnB

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 half of 2020 for Nekkar ASA. The financial information is not reported according to the requirements in IAS 34 (Interim Financial Reporting) and the 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.

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