Your Aquaculture Technology and Service Partner
Company presentationDecember 2016
Your Aquaculture Technology and Service Partner
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.
Each recipient and reader of this Company Presentation should consult with its own legal, credit, business or tax adviser as to legal, credit, business and tax advice. By receiving
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.
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
Agenda
Company
Market & trends
Financials
1
2
3
Your Aquaculture Technology and Service Partner
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
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rev
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OP
EX b
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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
Your Aquaculture Technology and Service Partner
Presence in all main farming regions
Map of activities Revenue per region YTD September 2016
Nordic
Americas
Export
Nordic79 %
Americas9 %
Export12 %
Your Aquaculture Technology and Service Partner
AKVA group serves all salmon farmers in the World
Customer examples Revenue per customer YTD September 2016
Customer 1
Customer 2
Customer 3
Other
Your Aquaculture Technology and Service Partner
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%
Your Aquaculture Technology and Service Partner
Agenda
Company
Market & trends
Financials
1
2
3
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
Industry stagnant phase
Industry phase development effects on technology demand
Your Aquaculture Technology and Service Partner
Cage farming development
SHELTERED EXPOSED OCEAN FARMING
SHORELINE
INCREMENTAL DEVELOPMENT:
• ENLARGEMENT AND
INCREASED ROBUSTNESS
INCREMENTAL DEVELOPMENT:
• BASED ON EXPERIENCES FROM AQUACULTURE
AND OFFSHORE INDUSTRY
Your Aquaculture Technology and Service Partner
Development of land based and closed containment technologies
SHORELINE
LAND BASED TECHNOLOGY
CLOSED CONTAINMENT TECHNOLOGY AT SEA
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
Agenda
Company
Market & trends
Financials
1
2
3
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
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 %
Your Aquaculture Technology and Service Partner
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 %
Your Aquaculture Technology and Service Partner
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)
Your Aquaculture Technology and Service Partner
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
Your Aquaculture Technology and Service Partner
Current dividend policy in AKVA group ASA
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• 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
Your Aquaculture Technology and Service Partner
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
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Your Aquaculture Technology and Service Partner
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