Company presentation - AKVA Group relations/financial info/other... · Presentation This Company...

Your Aquaculture Technology and Service Partner

Company presentationDecember 2016


Important Information About this Company Presentation

This Company Presentation has been prepared by AKVA group ASA ("AKVA group" or the "Company") for information purposes only, and does not constitute investment advice

or an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person. Any recipient or reader of this Company Presentation contemplating to make

an investment in the Company must rely on their own examination of the Issuer, including the merits and risks involved.

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or accessing this Company Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and

that you will conduct your own analysis and are solely responsible for forming your own opinion of the potential future performance of the Company’s business.

The information contained in this Company Presentation has not been independently verified. No representation or warranty (express or implied) is made as to the accuracy or

completeness of any information contained herein, or any oral information provided in connection therewith, and it should not be relied upon as such. The Company accepts no

liability whatsoever arising directly or indirectly from the use of this Company Presentation.

This Company Presentation is current as of 12 December 2016. Nothing herein shall create any implication that there has been no change in the affairs of AKVA group since such

date. This Company Presentation contains forward-looking statements relating to the Company's business, the Company's prospects and other forward-looking statements.

Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects",

"predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this

Company Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely opinions and forecasts which are subject to risks,

uncertainties and other factors that may cause actual events to differ materially from any anticipated development.


AKVA group highlights

• Undisputed #1 supplier of technology and services to the aquaculture sector

• Salmon farming is driven by high demand, high prices and increased technological sophistication

• New salmon farming growth to come from land-based and more exposed locations with higher technological requirements

• AKVA group is well positioned for continued growth and margin improvement – active dividend policy


Agenda

Company

Market & trends

Financials

1

2

3


AKVA group – uniquely positioned for future growth

Cage-based Land-based

• Plastic and

steel cages

Infra-structure

Feed systems, sensors

and cameras

Technology and farming services

• Land-based facilities

Land-based equipment

1 2

4

Software3

CA

PEX

bas

ed

rev

en

ue

OP

EX b

ase

d r

eve

nu

e

Leading technology solutions and service partner to the global aquaculture industry

Global presence -subsidiaries in 8 countries

768 employees

Market cap of NOK ~2100m and net debt of NOK 213m*as of 30.09.2016


Presence in all main farming regions

Map of activities Revenue per region YTD September 2016

Nordic

Americas

Export

Nordic79 %

Americas9 %

Export12 %


AKVA group serves all salmon farmers in the World

Customer examples Revenue per customer YTD September 2016

Customer 1

Customer 2

Customer 3

Other

http://www.australis-seafoods.com/

http://www.australis-seafoods.com/


Strategic priority to increase the proportion of software and service-related revenue

Revenue reoccurring vs technology YTD September 2016 Comments

• Introduction of rental business model in Norway. Already successfully introduced in UK and Canada

• Rental is an “all inclusive service” providing for instance light or picture for an agreed period of time (2 to 5 years duration) - reduced CAPEX and reducing operational work from the customer

• Acquisition of YesMaritime in 2014, a provider of diving, ROV and other services to the salmon farming sector (Farming services)

• Development of Farming Services still in an early stage –opportunity for consolidation

• Aim of delivering more than 30% of revenue through software and services – by developing software, farming services, technology services and rental further

CAPEX based

revenue;74 %

OPEX based revenue;

26%


Agenda

Company

Market & trends

Financials

1

2

3


Aquaculture is becoming increasingly technology-intensive

Source: Salmon farmer annual reportsNotes: 1) Based on reported farming capex and harvest volumes for Marine Harvest, Salmar, Cermaq, Lerøy, Grieg, NRS and Bakkafrost, 2015 figures are based on company guidance

Farming capex, NOK/kg harvested 1) Comparison of cage in 1980 to cage in 2014

4,0

1,6

2006 2015

+2.5x


Driving forces – salmon industry

SHORELINE

The exponential challenge of the coastal zone

• SALMON LICE

• CONCENTRATION OF STAKEHOLDER INTEREST

• WATER QUALITY

• AVAILABLE SPACE FOR EXPANSION

• ENVIRONMENTAL IMPACTS OF CONCENTRATED ACTIVITIES

EXPOSED SITES FARMING

LAND BASEDFARMING


Industry entering into a stagnant phase – with rapidly increasing costs

-

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1992 2015

Sales volume

M. T

on

s liv

e w

eigh

t (W

FE)

Pro

du

ctio

n c

ost

(N

OK

/kg)

0

5

10

15

20

25

30

35

40

45

50CAGR 12-15

+0,1 %

Source: Deloitte, Directorate of fisheries


Industry stagnant phase

Industry phase development effects on technology demand


Cage farming development

SHELTERED EXPOSED OCEAN FARMING

SHORELINE

INCREMENTAL DEVELOPMENT:

• ENLARGEMENT AND

INCREASED ROBUSTNESS

INCREMENTAL DEVELOPMENT:

• BASED ON EXPERIENCES FROM AQUACULTURE

AND OFFSHORE INDUSTRY


Development of land based and closed containment technologies

SHORELINE

LAND BASED TECHNOLOGY

CLOSED CONTAINMENT TECHNOLOGY AT SEA


ATLANTIS SUBSEA FARMING AS

16

• Established in partnership with the companies Sinkaberg-Hansen AS and Egersund Net AS – 33.3% of the shares each

• Purpose of developing submersible fish-farming facilities for salmon on an industrial scale

• Has applied for six development licences to enable large-scale development and testing of the new technology and operational concept

• Through its innovative development work, ATLANTIS aims both to contribute to better and more sustainable use of current farming sites as well as to enable use of more exposed sites than is currently possible. The goal is to achieve production gains and improve fish welfare by submerging the facilities, as they will be far less exposed to the environmental and physical conditions than in a surface position

• Although ATLANTIS represents a significant leap forward in terms of innovation, it is also an objective for the concept to keep costs at a level that helps strengthen the industry's competitive position. The aim is also that the technology and operating methods developed through ATLANTIS can be made available and adopted by the industry relatively quickly


The growing global movement to participate in sustainable aquaculture

The progressive regions:

Salmon

Sea Bass & Sea Bream

Other Species – emerging regions

Middle East:Offshore – Saudi , Oman, Iran (Caspian)Lakes/Dams – IranLand Based – UAE, Saudi, Oman, Iran

Sub-Sahara Africa:Offshore – Mauritius, MozambiqueLakes/Dams – Lesotho, Ghana, SE AfricaLand Based – SE Africa

Asia:Offshore – Indonesia, Malaysia, Japan, South Korea, India, Sri LankaLakes/Dams – China, VietnamLand Based – China, Thailand, Malaysia, Indonesia, Vietnam


Cycle development

Time

Continued growth expected – still in early stage of development

Cycle development

Oil

Aqua

Growth drivers

• The salmon industry is still the frontier. Analysts expects limited volume growth in salmon farming in 2014-2020. This implies high salmon prices which is the prime driver for growth in the technology and service industry

• Additional growth from increased regulation, adding complexity and adding need for compliance

• Additional growth from other species and regions

• Additional growth from maturation of the industry – the players are getting more specialized


AKVA group is the undisputed #1 technology and service provider to the aquaculture sector

CagesAquaculture machinery

Water engineering

Software & ITService & Support • AKVA group is the

undisputed #1 supplier to the aquaculture industry

• Complete offering increasingly seen as positive by customers

• Scale provides technological advantage

• Holds the most well-known brands in the industry

• Present in all main markets

Revenue, NOKm


Agenda

Company

Market & trends

Financials

1

2

3


AKVA group has seen operational revenue growth of 87% from 2012 to 2016

Notes: 1) 2012 for software is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

AKVA group revenue Comments

803 9897

724 1 071 1 021

2014

657

132

2013

9452

2012 1)

919

973

1 425

1 246

• Growth in cage-based driven both technology sales and reoccurring revenues

• Growth in land based due to high activity in the market. The acquisition of Plastsveis AS in April 2013 and Aquatec Solutions AS in September 2015 also contribute to growth

• Software with steady organic profitable growth

Cage-basedLand-basedSoftware

167

106

2015

222

CAGR+17%

2016LTM September

338

139

1 499


Target of 10% near-term EBITDA margin –further potential longer term

Notes: 1) 2012 FY for software is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

AKVA group EBITDA-margin across segments Comments

• Mid-term target of 10% EBITDA margin is achieved

• Land-based margin continue to increase due to restructuring of business segment and recent acquisitions of new companies

• AKVA group margins set to increase with increasing portion of Software and Services

9%

-11%

-3%

Cage-based

9%

4%3%

Group

8%

5%4%

Software

14%

20%

15%

Land-based

0%

2014 20132012 1)

10%

2015

6%

20%

9%8%

20%

10%

2016 LTM September


Operational leverage is a driver for increased margins

Notes: 1) 2012 is excluding a one of gain of MNOK 29 related to the sale of the Norwegian Maritech business

AKVA group gross margin and SG&A 1) Comments

• Relative cost base has improved over the last years

• Hands on in all operations constantly challenging cost development in all units

• The number of FTE’s decreased in 2013 and 2015 due to cost focus and controlled reduction of exposure in Chile

• The number of FTE’s has increased in 2014 and 2016 mostly due to the acquisition new companies

Figures in '000 NOK2012 2013 2014 2015 2016 LTM

September

Revenue 802 530 918 670 1 246 059 1 425 338 1 498 582

COGS 587 833 674 770 928 395 1 041 212 1 095 504

Gross margin 214 697 243 900 317 664 384 127 403 078

GM in % 26,8 % 26,5 % 25,5 % 26,9 % 26,9 %

OPEX 185 881 196 995 214 299 248 967 255 428

EBITDA 28 816 46 905 103 365 135 159 147 650

EBITDA in % 3,6 % 5,1 % 8,3 % 9,5 % 9,9 %

# FTE 650 566 726 670 768

OPEX/Revenue 23,16 % 21,44 % 17,20 % 17,47 % 17,04 %


Strong financial profile

Equity, Working Capital and ROCE % Comments

• Constant focus on balance sheet performance in all Group units

• Strong balance sheet KPIs

• Focus on improving ROCE

323 771 325 274 338 856 389 252

428 432 437 788 WC

ROCE %

0 %

5 %

10 %

15 %

20 %

25 %

-

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

2011 2012 2013 2014 2015 2016 YTD

Equity WC ROCE %


Strong financial profile

Net debt (MNOK) and net debt/EBITDA Comments

• Bank debt refinanced in January 2014 with improved terms and conditions

• Low financial gearing

• Financially positioned for further growth, both organically and through M&As

44

89 82 76

98

136

71

172

213

0,4

0,9 0,8

0,7 0,8

1,0

0,5

1,1

1,4

-

1,0

2,0

3,0

4,0

- 2

28

58

88

118

148

178

208

238

268

Q3 - 2014 Q4 - 2014 Q1 - 2015 Q2 - 2015 Q3 - 2015 Q4 - 2015 Q1 - 2016 Q2- 2016 Q3- 2016

Net interest bearing debt NIBD/EBITDA(12months rolling)


Order backlog is all-time high

AKVA group order backlog Comments

• All time high order backlog at the end of Q3 2016

• Increased order backlog over the last years

• Delivery time of backlog is 1 to 18 months with most of the delivery in the first six months

• Increased portion of land based gives a longer duration in the order backlog

• Some seasonal pattern of increasing backlog in Q4 and Q1 and decreasing backlog in Q2 and Q3, however with more land based and service activity we expect less seasonal variations in P&L and order inflow during the year

200

100

0

600

300

400

500

4Q3Q2Q

NOKm

1Q

201520132012 2014

700

2016

800

900


Current dividend policy in AKVA group ASA

27

• The Company’s main objective is to maximize the return on the investment made by its shareholders through both increased share prices and dividend payments

• A dynamic dividend policy was launched in 2014. Based on the financial performance and outlook the company aims to pay out dividend according to the two step policy twice every year, after the first half and the second half of the year.

• A two step policy:

• The dividend level shall reflect the present and expected future cash generating potential of AKVA group. AKVA group will target a net interest-bearing debt/equity ratio of less than 0.5x

• When the target debt vs. equity level is met, at least 60% of the annual free cash flow after operational and financial commitments is intended to be distributed as dividend

Applicable statutory restrictions shall be observed

Dividend details (in NOK)

Year Cash

Dividend per

share

Total cash

dividend

Payment date

2016 0.75 19 400 000 Q3 2016

2015 1.00 25 800 000 Q4 2015

2014 1.00 25 800 000 Q4 2014

2008 1.00 17 200 000 Q2 2008


More than 1100 shareholders from 21 countries - 30. September 2016

28

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Share development

Origin of shareholders, 5 largest countries

20 largest shareholdersNo of shares % Account name Type Citizenship

13 203 105 51,1 % EGERSUND GROUP AS NOR

3 900 000 15,1 % WHEATSHEAF INVESTMENTS LIMITED GBR

969 049 3,8 % VERDIPAPIRFONDET ALFRED BERG GAMBA NOR

554 000 2,1 % SKANDINAVISKA ENSKILDA BANKEN S.A. Nominee LUX

489 417 1,9 % EIKA NORGE NOR

484 470 1,9 % STATOIL PENSJON NOR

350 356 1,4 % VERDIPAPIRFONDET DNB SMB NOR

334 300 1,3 % MP PENSJON PK NOR

317 411 1,2 % VPF NORDEA KAPITAL NOR

300 000 1,2 % MERTOUN CAPITAL AS NOR

238 692 0,9 % OLE MOLAUG EIENDOM AS NOR

230 608 0,9 % VPF NORDEA AVKASTNING NOR

173 550 0,7 % ROGALAND SJØ AS NOR

172 961 0,7 % DAHLE BJØRN NOR

172 094 0,7 % ARCTIC FUNDS PLC BEL

139 535 0,5 % VERDIPAPIRFONDET EIKA ALPHA VPF NOR

125 608 0,5 % STATOIL FORSIKRING A.S NOR

122 595 0,5 % J.P. MORGAN LUXEMBOURG S.A. Nominee GBR

115 354 0,4 % FORTE TRØNDER NOR

114 752 0,4 % MOLAUG OLE NOR

22 507 857 87,1 % 20 largest shareholders

3 326 446 12,4 % Other

25 834 303 100,0 % Total number of shares as per 30.09.2016

No of shares % Origin No of shareholders

20 180 381 78,1 % Norway 1037

4 148 809 16,1 % Great Bri ta in 26

638 537 2,5 % Luxembourg 4

235 519 0,9 % USA 11

217 742 0,8 % Belgia 6

413 315 1,6 % Other 82

Total number of shareholders: 1166 - from 21 different countries

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okt. 15 nov. 15 des. 15 jan. 16 feb. 16 mar. 16 apr. 16 mai. 16 jun. 16 jul. 16 aug. 16 sep. 16

Last 12 monthsTrading volumeShare price

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AKVA group highlights

• Undisputed #1 supplier of technology and services to the aquaculture sector

• Salmon farming is driven by high demand, high prices and increased technological sophistication

• New salmon farming growth to come from land-based and more exposed locations with higher technological requirements

• AKVA group is well positioned for continued growth and margin improvement – active dividend policy

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