Q1 On track with a good start of the year
AKVA group is on track and has completed the best first quarter ever. Revenue in Q1 2016 ended on 393 MNOK (325 MNOK) with an EBITDA of 40 MNOK (27 MNOK). First quarter EBITDA margin was 10.1% (8.2%). All business segments have made positive contributions to the first quarter result. The order backlog at the end of the quarter of 697 MNOK is also the highest ever.
"AKVA group is on track with a good start of the year both operationally and financially. The resent year's transformation of AKVA group to become a better performing and more diversified Group is reflected in the Q1 results. All our three business segments now contribute to the good financial performance", says CEO of AKVA group ASA Trond Williksen.
Cage Based Technology (CBT)
Nordic CBT had a good performance in Q1. January and February is traditionally the last two months of the low season in the Nordic CBT segment. A wide range of products continue to contribute to the good financial performance. Main drivers were the AKVAsmart products (sensors and feed systems), Barges and Polarcirkel cages.
We experienced low activity in Chile in Q1, as expected. Our revenue in Chile in Q1 was mostly related to service sales. Canada had a similar start of the year as last year. Our Canadian operation is a lean and efficient operation. Australia continues to be a small, but profitable operation.
UK had a decent start of the year and continues to have a high level of OPEX based revenue. Turkey had a very good start of the year and is experiencing increased activity in the Sea Bass and Sea Bream industry. Export to emerging markets experienced a slow quarter, but with increasing 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.
AKVA group Software AS had a good start of the year and Wise lausnir ehf experienced improved performance year on year in Q1. 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 represented 20% of total Group revenue in the first quarter and LBT have had a significant improved performance year on year in Q1. Plastsveis AS is on track with a good start of the year.
Aquatec Solutions A/S also had a good performance in Q1. AKVA group Denmark A/S had a decent quarter, but there is still potential for further improvements financially.
We have experienced continued good market activity throughout the first quarter of 2016. The order inflow in Q1 2016 was 441 MNOK (367 MNOK). The order backlog at the end of Q1 2016 was 697 MNOK (547 MNOK). This is the highest order backlog ever for AKVA group. The large Land based contract of ~MNOK 186 (MDKK 150) announced in a stock notice on April 4th, 2016 is not included in the Q1 2016 order backlog. It will be included in the Q2 order backlog in the next quarterly report.
The balance remain very strong. Working capital as a percentage of 12 months rolling revenue is 4.3% (10.8%). We are able to maintain a very low working capital despite record high activity. Cash and unused credit facilities amounted to record high 230 MNOK at the end of Q1 (147 MNOK).Total assets and total equity amounted to 1,117 MNOK (942 MNOK) and 435 MNOK (403 MNOK) respectively, resulting in an equity ratio of 39% (43%) at the end of Q1.
AKVA Marine Services AS - our new Farming Services vehicle
AKVA group ASA acquired 58% of AD Offshore AS on April 7th, 2016. The acquisition of AD Offshore AS was a natural step in AKVA group's strategy to strengthen its position in the service segment to the aquaculture industry. We expect the market for farming services to the aquaculture industry to grow in the coming years as well as we will see a consolidation of the players. Through this acquisition AKVA group ASA will be well positioned to participate in this development. AD Offshore AS also holds significant synergies with our existing activity in this segment. The process of merging YesMaritime AS and Rogaland Sjøtjenester AS with AD Offshore AS is expected to be finalized in Q2 2016. AKVA group ASA will own 65% of the new merged company and the name of the new entity will be AKVA Marine Services AS. AKVA Marine Services AS will be a lean and effective player in the Farming Services industry and will cover the Farming Services market in Rogaland and Hordaland.
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 the higher level of activity is expected to continue. The Land based segment is becoming a larger part of AKVA group. UK and Canada experienced slightly less project sales so far compared to last year. Despite this both entities are expected to perform well in 2016. We have continuing low expectations in Chile due to the challenging situation for our Chilean customers. Our exposure in Chile has reduced over recent 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.
About AKVA group
AKVA group is a technology and service partner to the aquaculture industry worldwide. The company has around 669 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: 11 May 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