q3 2016 presentation - akva groupir.akvagroup.com/investor relations/financial info...your...

Your Aquaculture Technology and Service Partner

Q3 2016 PresentationOslo - November 3rd, 2016

Trond Williksen, CEOEirik Børve Monsen, CFO


Agenda

Highlights

Financial performance

Outlook

1

2

3

Q&A4

Your Aquaculture Technology and Service Partner3

Highlights Q3 2016 - by CEO Trond Williksen


High market activity – growth strategy continued

4

Third quarter 2016 – Highlights

• Overall good financial performance - 10.8% EBITDA margin

• P&L growth softened by Americas and restructuring of AKVA group Denmark

• Growth strategy continues with acquisition of Sperre AS – the leading ROV provider, increased capacity in Helgeland Plast and increased presence in the Mediterranean

• High market activity – strong order inflow and best order backlog ever of MNOK 886

YTD 2016 – Highlights

• Best first nine months ever – revenue and EBITDA

• Strong financial position

• Dividend of NOK 0.75 per share paid in Q3 2016

9411 081

1 154

90 108 121

9,6 %

10,0 %

10,4 %

4,0 %

5,0 %

6,0 %

7,0 %

8,0 %

9,0 %

10,0 %

11,0 %

12,0 %

13,0 %

0

200

400

600

800

1 000

1 200

2014 - Q3 - YTD 2015 - Q3 - YTD 2016 - Q3 YTD

MN

OK

Operating revenue EBITDA EBITDA %


Stable performance and growth continues

5

+33%

+21%

41 38

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

MN

OK

EBITDA

355 354

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

MN

OK

Revenue


318417

187

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

MN

OK

Order Inflow

643

414 385 468

LBT283

LBT437

LBT417

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

MN

OK

Order Backlog

Growth in order backlog continues

6

+31%

+38%

886

697

820

- NOK 1.4 billion in order inflow YTD 2016

- In Q3 2015 the order backlog of Aquatec Solutions was included for the first time (with MNOK 187)

- 31% YoY growth in operational order inflow when adjusting for Aquatec Solutions


AKVA group – uniquely positioned for future growth

Leading technology solutions and service partner to the global aquaculture industry

Global presence -subsidiaries in 8 countries

768 employees

Market cap of NOK ~2076m and net debt of NOK 213m


Presence in all main farming regions

Map of activities & revenue per region, Q3 2016

Nordic

Americas

Export

77%

11%

12%


Strategic priority to increase the proportion of OPEX based revenue

OPEX based vs CAPEX based revenue, Q3 2016 Comments

• OPEX based revenue defined as our revenue booked as OPEX in our customers P&L

• Aim of increasing relative share of OPEX based revenue through software and services – by developing software, farming services, technology services and rental further

• Introduction of rental business model in Norway in late 2014. Successfully introduced in UK and Canada before the introduction in Norway

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

• AKVA Marine Services, our provider of diving, ROV and other services to the salmon farming sector (Farming Services)

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

CAPEX based revenue

69 %

OPEX based revenue

31 %


Revenue by product groups and species

10

Cage based technologies = Cages, barges, feed systems and other operational systems for cage based aquaculture

Software = Software and software systems

Land based technologies = Recirculation systems and technologies for land based aquaculture

By product groups – Q3 2016 By species – Q3 2016

Salmon = Revenue from technology and services sold to production of salmon

Other species = Revenue from technology and services sold to production of other species than salmon

Non Seafood = Revenue from technology and services sold to non seafood customers

Cage based69 %

Software9 %

Land based22 %

Salmon75 %

Other Species

11 %

Non Seafood

14 %


Acquisition of Sperre AS – the leading ROV producer

11

• Sperre AS becomes the “center of excellence” in AKVA group in terms of ROV technologies as well as relevant subsea technologies

• The intention and ambition is to develop undisputed industrial leadership in the ROV and subsea technology area within aquaculture

• AKVA group ASA acquires 66% of Sperre AS. Closing of the transaction will take place on November 4th, 2016

• The enterprise value for all the shares in Sperre AS is NOK 126.9 million. In addition AKVA will pay an adjustment amount based on the net debt and working capital position at closing

• AKVA group ASA have an option to buy the remaining shares after three years where the pricing is based on financial performance in the three year period

• The acquisition will be paid in cash and will be financed with a loan from Danske Bank


Changes in operational structure – LBT carved out as a separate Group entity

12

• retgrega

• eter

• ujdyyt

Service & Aftermarket CBT and LBT

CEOTrond Williksen

CFOEirik B Monsen

Technology & SWInge Forseth

Nordic Per A Hjetland

Americas Andrew Campbell

Exports Trond Severinsen

IR , Treasury and Group Controling

WISE lausnir

AKVA Group Software AS

Technology R&D

1HW R&D - AKVA Smart products

Strategic projects

AKVA Sales Nordic CBT

Project, production and

supply chain Nordic CBT

Service & Aftermarket

Nordic CBT and LBT

Helgeland Plast AS

AKVA Sales Americas CBT

-

Project, production and

supply chain Americas CBT

Service & Aftermarket Americas CBT

and LBT

AKVA group North America

AKVA Sales Exports CBT

Project and supply chain Exports CBT

AKVA group UK / EuropeDavid Thorburn

AKVA group Turkey(reports to David Thorburn)

QA Coordinator

AKVA Group Australasia

Group Marketing

AKVA Marine Services AS

Landbased TecnologyMorten Nilsen

Land Based Projects sales and delivery

AKVA Group DK

Plastsveis AS

Aquatech Solutions A/SAKVA group Services AS

(rental)

AKVA group Chile Ltd.

WISE Blue AS

Sistemas de Recirculation

Group HR

New group entity

Sperre AS

New unit


Helgeland Plast – expanding capacity

13

• Investing in new factory facility - expanding capacity on cage, boat and pipe

• More efficient boat production• HP will double the production capacity of Polarcirkel Boats during 2017

• Solved by streamlining and outsourcing parts of the production

• Will reduce delivery time significantly

• Gives us more flexibility

• Enable us to deliver to new customer groups

Picture: Illustration of new Longyearbyen harbor from Snøhetta

Picture: Remote controlled boat delivered to the Norwegian Army


Expansion into the Mediterranean - new office in Spain

14

• AKVA group is about to establish an office on the east coast of Spain

• Due to positive signs in the Sea Bass and Sea Bream market in the Mediterranean

• This office will strengthen our position in this region

• We will have service resources on the ground to support our customer base in the region


Deliveries into Iran

15

• AKVA group has worked actively in Iran for 2-3 years

• Second cage farm delivered (Bushehr Aramseyd Co. ReysaliDelvari Dam)

• Sales of both cage based and land based technology

• Government strategy: Grow cage farming by 200.000 tons in 5 years (Barramundi, Sea Bream, Rainbow Trout, Sturgeon, etc)

• Already issuing licenses, providing financing and setting deadlines for starting-up

• Equally big market both for cage based and land based technology


The project• Established in partnership with the companies Sinkaberg-Hansen AS

and Egersund Net AS – 33.3% of the shares each on February 1st, 2016 • 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

16

• ATLANTIS is in dialogue with the Directorate of Fisheries and we are waiting for a final decision regarding development licences


Financial performance Q3 2016 – by CFO Eirik Børve Monsen


Q3 2016 - Financial highlights

18

• Stabilizing on a higher EBITDA margin - 10.8% in Q3

• AKVA group’s diversified operations stabilize revenue and margins – makes the Group more robust

• On the negative side; • Americas with weaker performance YoY – due to challenging market conditions

(MNOK 8.7 in reduced EBITDA YoY in Q3)

• Restructuring of AKVA group Denmark - a step to make this a more efficient entity (MNOK 4.9 in negative EBITDA in Q3)

• Strong balance sheet

• A interim dividend of 0.75 NOK per share paid out in Q3 2016

-

50

100

150

200

250

300

350

400

450

1Q 2Q 3Q 4Q

2013

2014

2015

2016

MNOK


Q3 2016 - Financial highlights, continued

19

EBITDA EBITDA %

Stabilizing on a historical higher EBITDA-level both in NOK and in %

The medium term target of 10% EBITDA on a annual basis – achieved for the third quarter in a row

-

5

10

15

20

25

30

35

40

45

1Q 2Q 3Q 4Q

2013

2014

2015

2016

MNOK

0%

2%

4%

6%

8%

10%

12%

14%

1Q 2Q 3Q 4Q

2013

2014

2015

2016


160 167

58 36

59

42

277

244

10,5 %10,4 %

0%

2%

4%

6%

8%

10%

12%

0

50

100

150

200

250

300

2015 Q3 2016 Q3

CBT (Revenue & EBITDA %)

Nordic Americas Export EBITDA %

Cage Based Technologies

20

Nordic● Good performance in Q3

● A wide range of products continue to contribute financially – AKVAsmartproducts, Barges, Polarcirkel cages, service and rental

● The Farming Services area with AKVA Marine Services is performing well

Americas● Reduced activity in Americas this quarter - MNOK 8.7 in reduced EBITDA

YoY in Q3 and MNOK 23.2 in reduced EBITDA YoY YTD 2016

● Low activity in Chile – reduced service and technology sales due to challenging market conditions

● We have over the last years reduced our financial exposure in Chile significantly. The Chilean operation is now leaner and well prepared for an upturn in the market when this happens

● Canada with another slow quarter

● Australia - a small but profitable operation

Export● UK with another decent quarter – high level of OPEX based revenues

● Turkey continues with another very good quarter

● We experience increased activity in the Sea Bass and Sea Bream industry in the Mediterranean

● Export to emerging markets – small but profitable impact in Q3


Software

21

● Another good quarter

● AKVA group Software AS and Wise lausnir ehf – with improved performance YoY

● YTD improved performance, both topline and margins, despite divesting WiseDynamics in November 2015

● Software continues to invest in new product modules, which is expected to strengthen the financial performance of the SW segment further

24

29

7

31

132 33

26,1 %

24,3 %

7%

12%

17%

22%

27%

32%

0

5

10

15

20

25

30

35

2015 Q3 2016 Q3

SW (Revenue & EBITDA %)

Nordic Americas Export EBITDA %


Land Based Technologies

22

● Good performance in Aquatec Solutions and Plastsveis- and the high market activity continues

● Weak quarter for AKVA group Denmark A/S due to restructuring to make the unit more efficient (MNOK 4.9 in negative EBITDA in Q3). The work to improve and make this a more streamlined entity will continue into Q4

● Land based is becoming a significant part of the Group, with:

● 85% increase YoY in revenues YTD 2016

● 22% of total Group revenue in Q3

● 47% of total order backlog

● An area with high market activity

45

76

1

1

46

77

7,0 % 6,3 %

0%

10%

0

10

20

30

40

50

60

70

80

90

2015 Q3 2016 Q3

LBT (Revenue & EBITDA %)

Nordic Americas EBITDA %


P&L 2016 2015 2016 2015 2015

(MNOK) Q3 Q3 YTD YTD Total

OPERATING REVENUES 353,8 354,7 1 154,5 1 081,3 1 425,3

Operating costs ex depreciations 315,5 314,2 1 034,0 973,2 1 290,2

EBITDA 38,3 40,6 120,5 108,0 135,2

Depreciation 17,5 12,2 48,8 33,5 47,5

EBIT 20,8 28,4 71,7 74,5 87,7

Net interest expense -1,0 -0,8 -4,9 -3,6 -5,4

Other financial items -3,6 0,3 -15,0 0,3 -4,3

Net financial items -4,5 -0,5 -19,9 -3,3 -9,6

EBT 16,2 27,8 51,8 71,2 78,1

Taxes 5,5 8,0 16,0 20,4 19,7

NET PROFIT 10,8 19,8 35,7 50,8 58,4

Net profit (loss) attributable to:

Non-controlling interests 1,4 0,7 0,3 1,2 1,6

Equity holders of AKVA group ASA 9,4 19,2 35,4 49,6 56,8

Revenue growth -0,3 % 7,6 % 6,8 % 14,9 % 14,4 %

EBITDA margin 10,8 % 11,4 % 10,4 % 10,0 % 9,5 %

EPS (NOK) 0,36 0,74 1,37 1,92 2,20

Financials – Detailed P & L

23

• Increased depreciation mainly due to increased rental CAPEX and amortization

• Increased due to higher net debt

• Mostly currency and acquisition cost - higher than normal

• Minority shareholders from Q2 2016 and onwards (35%) in AKVA Marine Services AS and (49%) in Wise Blue AS


100

127 109

132

8,4 %

9,1 %

7,5 %

8,8 %

0 %

2 %

4 %

6 %

8 %

10 %

12 %

0

20

40

60

80

100

120

140

160

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

MN

OK

MNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOKMNOK

MNOK

Group financial profile – remains strongAvailable cash Working capital

+46 MNOK

Strong working capital level – despite record high activity

Due to strong capital discipline in the Group

Including a 90 MNOK credit facility in Danske Bank

183

144 147 157

226

160

230 203

165

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

MN

OK


Group financial profile – remains strong, continued

25

ROCE Equity

Two dividends paid during the last 12 months of total 45.1 MNOK

+43 MNOK

+5.6 percentage points

375 389 403 417 443 428 435 460 437

44,8 % 38,0 %37,1 %

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

50

100

150

200

250

300

350

400

450

500

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16

MN

OK

Total Equity Equity %

15,2 %

14,1 %

12,3 %

15,2 %13,9 %

14,7 %

17,8 %

14,0 %

12,4 %

3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16


Net debt/EBITDA of 1.4

26

Change in net debt (TNOK)Net debt (MNOK) and net debt/EBITDA

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)

Net debt 30.06.2016 172 172

EBITDA -38 287

Income taxes paid -447

Net interest paid 985

Capex paid 24 407

Acquisitions / Divestments 884

Paid dividend 19 376

Sale of fixed assets -

Currency effects 7 634

Other changes in working capital 26 768

Net change 41 319

Net debt 30.09.2016 213 491


Balance sheet

27

BALANCE SHEET 2016 2015

(MNOK) 30.09 30.09

ASSETS 1 179 1 163

Intangible non-current assets 411 340

Tangible non-current assets 138 88

Financial non-current assets 5 8

Inventory 178 209

Receivables 321 382

Cash and cash equivalents 126 136

LIABILITIES AND EQUITY 1 179 1 163

Equity 427 439

Minority interest 11 3

Long-term interest bearing debt 265 188

Short-term interest bearing debt 75 46

Non-interest bearing liabilities 402 487


CAPEX

28

Capex (TNOK) and capex / sales (%)

40 969

11 638

11 981

CAPEX breakdown 2016 YTD (TNOK)

Ordinary Rental Intangible (R&D)

11 017

18 633

10 994

16 037 15 871

32 853

23 114

17 067

24 407

3%

6%

3%4% 4%

10%

6%

4%

7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

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


Largest shareholders

29

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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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Outlook – by CEO Trond Williksen


Order backlog and inflow

31

Order backlog Order inflow

Highest order backlog ever

47% of total order backlog relates to Land based technology (LBT)

The strong market activity continues into Q4

414 385468

LBT283

LBT437

LBT417

0

100

200

300

400

500

600

700

800

900

1000

1Q 2Q 3Q 4Q

MNOK

NOK 1.4 billion in order inflow YTD 2016

In Q3 2015 the order backlog of Aquatec Solutions was included for the first time (with MNOK 187)

31% YoY growth in operational order inflow when adjusting for Aquatec Solutions

187

0

100

200

300

400

500

600

1Q 2Q 3Q 4Q

MNOK


Positive outlook maintained

32

● Good mid term outlook due to high market activity and large order backlog

● Good demand in the Nordic cage based segment continues

● Land based segment with growing activity - is expected to continue and is becoming a larger part of AKVA

● UK and Europe is expected to perform well going forward with growing order backlog

● Canada experience slightly less project sales so far compared to last year – moderate expectations going forward

● Still low expectations in Chile, but clear signs of improvement. Our financial exposure in Chile is reduced over the last years

● Turkey and Australia are expected to continue to perform well in the next quarters with good order backlog

● Exports to emerging markets with a more optimistic view than last year. Activity still expected to fluctuate due to nature of business

● We continue to actively seek strategic M&A opportunities within relevant segments

● We continue our effort to build service and after sales as a key business element in all markets and segments


Q & A

q3 2016 presentation - akva groupir.akvagroup.com/investor relations/financial info...your...

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