- Operating revenue in 2Q was 260 MNOK. The period's EBITDA was 28.0 MNOK an improvement by 40% compared to 2Q last year.
- Operating revenue for 1H was 467 MNOK. The period's EBITDA was 44.3 MNOK a growth of 9% compared to 1H last year.
- The general outlook for the next 6 months remains steady, however the challenging fish health situation in Chile point towards continued uncertainty.
- The acquisition of Idema Aqua AS was finalised. AKVA is thereby taking the leading role also in net cleaning systems and light systems for the aquaculture industry.
In this report all pro-forma accounts are presented as if Maritech were acquired 1 January 2006, unless otherwise stated. Idema Aqua is included from 1 June 2008. In the comments below on the financial accounts, the 2007 figures are presented in parentheses following the 2008 stated values when included.
Operations and profit (pro forma)
Operating revenues in 2Q were 259.8 MNOK (243.6) and the EBITDA was MNOK 28.0 (20.1). The increase is mainly determined by the Norwegian market. Operating revenues in 1H were 467.1 MNOK (458.8) and the EBITDA was MNOK 44.3 (40.7).
When comparing the revenues and operational results with 2007 the numbers are affected by the disposal of the Marel distribution that took place in September 2007. Adjusted for this the revenues showed a growth of about 12.5% and the EBITDA about 18.5%.
The results were negatively affected by the weakening of the USD affecting OPTECH margins negatively in Chile.
For 2Q depreciation and amortisation amounted to 6.5 MNOK (5.9). EBIT in the period was 21.6 MNOK (14.1). Net interest expense was -1.4 MNOK (0.1). Other financial income was -1.8 MNOK (0.2). Profit before tax for the second quarter was 18.3 MNOK (14.4). Net profit after allowing for taxes of 5.3 MNOK (3.6) was 13.0 MNOK (10.8). The increase in tax percentage compared to the same time last year is due to a reduction of the earnings in Chile, thus a relatively larger portion of the earnings are made in countries with a higher taxation rate.
For 1H depreciation and amortisation amounted to 12.5 MNOK (11.0). EBIT in the period was 31.8 MNOK (29.7). Net interest expense year to date was -2.6 MNOK (0.2). Other financial income was -2.1 MNOK (0.3). Profit before tax for the first half year was 27.1 MNOK (30.2). Net profit after allowing for taxes of 7.8 MNOK (6.6) was 19.2 MNOK (23.6).
AKVA group Chile has changed the accounting currency from USD to Chilean pesos (CLP). Prior to having instruments in place for CLP hedging a major depreciation of CLP versus USD lead to a one-off currency loss of about 1.6 MNOK in 2Q. Hedging is now established to minimise future currency exposure according to standard company policy.
Operations Technology (OPTECH)
The operating revenues for OPTECH in 2Q were 105.4 MNOK (108.7). The EBITDA for 2Q was 16.5 MNOK (9.5). For 1H the revenues were 198.1 MNOK (206.3) and the EBITDA was 22.3 MNOK (18.5).
2Q 2008 revenues compared to same period last year are affected by the disposal of the Marel distribution agreement done in September last year. Adjusted for this disposal the OPTECH business showed a growth of about 22% for 1H and
the earnings improved about 40%. The growth is mainly driven by the Norwegian market. In 1H margins are also affected by the continued weakening of the USD in 2008.
Operationally OPTECH has been focusing on customer service, product enhancement, organisational integration and general operational improvements.
Infrastructure Technology (INTECH)
The operating revenues in 2Q were 154.4 MNOK (134.8). The EBITDA in the period was 11.5 MNOK (10.6). For 1H the revenues were 269.0 MNOK (252.4) and the EBITDA was 22.0 MNOK (22.2). As for OPTECH the growth is mainly driven by the Norwegian market.
Operations in INTECH continue to focus on achieving economies of scale benefits in the main production facilities in Norway and Chile.
Operations and profit (legal accounts)
Operating revenue in 2Q increased strongly to 259.8 MNOK (226.2) representing an increase of 15%. The EBITDA in 2Q was 28.0 MNOK (19.1). Operating revenues in 1H were 467.1 MNOK (386.9) and the EBITDA was MNOK 44.3 (36.9). The growth in revenues is mainly explained by the acquisition of Maritech and growth in the Norwegian market.
Depreciation and amortisation in 2Q amounted to 6.5 MNOK (5.1). EBIT in the period was 21.6 MNOK (13.9). Net interest expense for the second quarter was -1.4 MNOK (0.0). Other financial expenses were -1.8 MNOK (-1.0). Profit before tax for 2Q was 18.3 MNOK (13.0). Net profit after allowing for taxes of 5.3 MNOK (2.8) was 13.0 MNOK (10.2).
Depreciation and amortisation in the first half of 2008 amounted to 12.5 MNOK (8.8). EBIT in the period was 31.8 MNOK (28.1). Net interest expense was -2.6 MNOK (0.4). Other financial expenses were -2.1 MNOK (-1.0). Profit before tax for 1H was 27.1 MNOK (27.5). Net profit after allowing for taxes of 7.9 MNOK (5.8) was 19.2 MNOK (21.6).
Balance sheet and cash flow
Working capital in the group balance sheet, defined as non-interest bearing current assets less non-interest bearing current liabilities was 164.5 MNOK up from 138.1 MNOK at the end of 1Q. The working capital increase is mainly explained by the high activity level in the Norwegian market in 1H and the acquisition of Idema in June. Net interest bearing debt amounted to 120.5 MNOK at end of 2Q vs. 52.2 MNOK in 1Q. Cash and unused credit facilities amounted to 102.2 MNOK. Total assets and total equity amounted to 714.2 MNOK and 335.5 MNOK, respectively, resulting in an equity ratio of 47.0% at the end of 2Q 2008. Net investments in 1H 2008 amounted to 9.6 MNOK whereof 3.8 MNOK is capitalized R&D expenses in accordance with IFRS.
Earnings per share for 2Q 2008 were NOK 0.76 (0.63) and for 1H 2008 NOK 1.12 (1.37), the calculation is based on 17,222,869 shares average.
Acquisition of Idema Aqua
In March the company signed a binding Letter of Intent to acquire 100% of the shares in the company Idema Aqua AS. The company is one of the leading suppliers of underwater net cleaning systems and lighting systems for the fish farming industry. The agreement was consummated 3 June and Idema Aqua is included in the accounts from June 2008.
Market and future outlook
The general market outlook towards the salmon farming industry in Norway remains satisfactory. However, due to the continued challenging fish health situation in the Chilean market, the market for INTECH products in this region is significantly affected by capital expenditure restrictions with most of the customers, which is also affecting the OPTECH business and is expected to continue for the remainder of 2008 and into 2009. The other salmon markets, Scotland and Canada are generally developing positively.
The strong growth towards other species than salmon continues to expand according to strategic objectives, and the further outlook for 2H 2008 is good within this area.
The order backlog was 305 MNOK (375) at the end of 2Q 2008, which is a weakening of 70 MNOK compared to the same time last year. The decline is mainly due to lower order inflow for INTECH in the Chilean market. Thus the general outlook for the next 6 months remains reasonably steady, however the challenging fish health situation in Chile point towards continued uncertainty.
Statement from the Board and Chief Executive Officer
We confirm that, to the best of our knowledge, the condensed set of financial statements for the first half year of 2008, which have been prepared in accordance with IAS 34 Interim Financial Statements gives a true and fair view of the Company's consolidated assets, liabilities, financial position and results of operations, and that the interim management report includes a fair review of the information required under the Norwegian Securities Trading Act section 5-6 fourth paragraph.
AKVA group is the leading provider of technology to the fish farming industry and the only with global distribution.
The products consist of software, sensor systems, feed systems, recirculation systems and cage systems.