AKVA group ASA : 2Q 2016 financial reporting
Improved performance and growth continuesAKVA group is on track and has completed the second quarter with good overall performance. Revenue in second quarter 2016 ended on 408 MNOK (402 MNOK) with an EBITDA of 43 MNOK (41 MNOK). Second quarter EBITDA margin was 10.4% (10.2%). With the exception of Americas, all business segments and regions are performing well in the second quarter. AKVA group is ending the quarter with the highest order backlog ever of 822 MNOK.
"AKVA group continues to be on track and has completed the best second quarter and first half ever with regards of revenue, EBITDA and order backlog. The resent year's transformation of AKVA group to become a better performing and more diversified Group is reflected in the Q2 results. Operationally and financially AKVA group is well positioned for further growth. The half yearly dividend of 0.75 NOK per share to be paid out in Q3 underlines our solid financial position", says CEO of AKVA group ASA Trond Williksen.
Cage Based Technology (CBT)
Nordic CBT had a good performance in Q2. A wide range of products continues to contribute to the good financial performance. Main drivers were the AKVAsmart products (sensors and feed systems), barges, Polarcirkel cages, service and rental.
We have experienced reduced activity in Americas this quarter compared to same quarter last year resulting in a reduced EBITDA year on year of 8 MNOK. There has been low activity in Chile in Q2 and we have also experienced reduced service sales in the quarter. Canada had an unusually slow quarter with some shift of deliveries and revenue to next quarters. Australia continues to be a small, but profitable operation.
UK had a decent first half of the year and continues to have a high level of OPEX based revenue. Turkey had a very good first half of the year and we are experiencing increased activity in the Sea Bass and Sea Bream industry in the Mediterranean. Export to emerging markets experienced a decent quarter with increased activity in some markets, especially in Iran. Emerging markets are dominated by a few but large contracts and this gives variations in the P&L quarter by quarter.
Software has ended another good quarter. Both AKVA group Software AS and Wise lausnir ehf experienced improved performance year on year in Q2. Wise Blue AS, a Norwegian subsidiary of Wise lausnir ehf, is a small but profitable business. Software continues to invest in new product modules, which is expected to strengthen the financial performance of the software segment further.
Land Based Technology (LBT)
LBT have had a significant improved performance year on year in Q2. Both Plastsveis AS and Aquatec Solutions A/S had a good first half of 2016. AKVA group Denmark A/S had another decent quarter, but there is still potential for further improvements financially. The land based segment ended the quarter with a record high order backlog and has after Q2 2016 53% of the total order backlog in the Group. Land based increased its revenues year on year with 74% and was 23% of total revenues in Q2 2016, hence land based is becoming a significant part of AKVA group.
We have experienced continued good market activity throughout the second quarter of 2016. The order inflow in Q2 2016 was 533 MNOK (348 MNOK). The order backlog at the end of Q2 2016 was 822 MNOK (493 MNOK). This is the highest order backlog ever for AKVA group.
The balance remains very strong. Working capital as a percentage of 12 months rolling revenue is 7.5% (10.6%). We are able to maintain a very low working capital despite record high activity. Cash and unused credit facilities amounted to record high 203 MNOK at the end of Q2 (157 MNOK).Total assets and total equity amounted to 1,180 MNOK (1,007 MNOK) and 460 MNOK (417 MNOK) respectively, resulting in an equity ratio of 39% (42%) at the end of Q2.
AKVA Marine Services AS - our new Farming Services vehicle
The merger process of AKVA group's farming services entities (YesMaritime AS, Rogaland Sjøtjenester AS and AD Offshore AS) was completed in June 2016. AKVA group ASA owns 65% of AKVA Marine Services AS. The acquisition process with Techno Dive AS announced in May 2016 has been terminated, however we are actively seeking other strategic opportunities. We expect the farming services market to grow in the coming years and we expect a consolidation of the players. AKVA group is well positioned to participate in this development and will pursue several opportunities.
Atlantis Subsea Farming AS
In partnership with the companies Sinkaberg-Hansen AS and Egersund Net AS, AKVA group ASA established the company Atlantis Subsea Farming AS on February 1st, 2016 with the purpose of developing submersible fish-farming facilities for salmon on an industrial scale. Atlantis Subsea Farming AS has applied for six development licences to enable large-scale development and testing of the new technology and operational concept.
Atlantis Subsea Farming AS is in dialogue with the Directorate of Fisheries and we are waiting for a final decision.
A dividend of NOK 0.75 per share will be paid out in Q3 2016. Total dividend pay out in Q3 2016 will be 19.4 MNOK. The dividend is in accordance to AKVA group's current dividend policy. For further details on dividend please read the full second quarter report and/or a separate stock notice regarding dividend.
We have a good mid term outlook due to high market activity and the large order backlog. The activity level is particularly high in the Nordic market segment. The good demand in the Nordic cage based segment continues, with a shift towards sale of technology for more efficient production. The land based segment has experienced increased activity and improved margins. This trend is expected to continue and the land based segment is becoming a larger part of AKVA group. 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 and we have moderate expectations in this market going forward. We still have low expectations in Chile, but there are some positive signs towards the end of the year. Our exposure in Chile is reduced compared to prior years. Our Turkey and Australian operations are expected to continue to perform well in the next quarters with a good order backlog. Exports to emerging markets have seen a more optimistic start of the year than last year. The activity is still expected to fluctuate due to the nature of the business. We continue our effort to build service and after sales as a key business element in all our markets and segments. AKVA group is actively seeking strategic M&A opportunities within relevant segments.
About AKVA group
AKVA group is a technology and service partner to the aquaculture industry worldwide. The company has around 750 employees, offices in 8 countries and a total turnover of NOK 1.4 billion in 2015. We are a public listed company operating in one of the world's fastest growing industries and supply everything from single components to complete installations, both for cage farming and land based aquaculture. AKVA group is recognized as a pioneer and technology leader through more than 30 years. The Corporate Headquarter is in Bryne Norway.
Dated: 17 August 2016
AKVA group ASA
Chief Executive Officer
Phone: +47 51 77 85 00
Mobile: +47 91 63 01 73
Eirik Børve Monsen
Chief Financial Officer
Phone: +47 51 77 85 00
Mobile: +47 91 63 98 31
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)