Operating revenue in 3Q was 207 MNOK which is lower than same period last year. The period's EBITDA was 18.1 MNOK
Operating revenue year to date was 675 MNOK. The period's EBITDA was 62.5 MNOK, in line with last
Increased market uncertainty due to the escalating challenging sanitary situation in Chile and the global
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 3Q were 207.6 MNOK (236.6) and the EBITDA was MNOK 18.1 (22.0). Operating revenues YTD were 674.7 MNOK (695.4) and the EBITDA was MNOK 62.5 (62.8).
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 year to date showed a growth of 8% and the EBITDA 7%. The increase comes mainly from the Norwegian market.
For 3Q depreciation and amortisation amounted to 7.7 MNOK (6.2). EBIT in the period was 10.5 MNOK (15.9). Net interest expense was -4.0 MNOK (-2.0). Other financial income was
-0.1 MNOK (0.0). Profit before tax for the third quarter was 6.4 MNOK (13.9). Net profit after allowing for taxes of 2.2 MNOK (5.8) was 4.2 MNOK (8.2).
The depreciation and amortisation YTD amounted to 20.2 MNOK (17.2). EBIT in the period was 42.3 MNOK (45.6). Net interest expense year to date was -6.7 MNOK (-1.8). Other financial income was -2.2 MNOK (0.4) due to currency translational losses in 2Q. Profit before tax YTD was 33.5 MNOK (44.2). Net profit after allowing for taxes of 10.0 MNOK (12.4) was 23.4 MNOK (31.8).
Operations Technology (OPTECH)
The operating revenues for OPTECH in 3Q were 104.3 MNOK (106.9). The EBITDA for 3Q was 8.5 MNOK (10.7).The revenues YTD were 302.4 MNOK (313.2) and the EBITDA was 30.8 MNOK (29.2).
3Q 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 23% year to date and the EBITDA improved 25%. The growth is mainly driven by the Norwegian market.
Operationally OPTECH has continued focusing on customer service, product enhancement, organisational integration and general operational improvements.
Infrastructure Technology (INTECH)
The operating revenues in 3Q were 103.3 MNOK (129.7). The EBITDA in the period was 9.6 MNOK (11.3). The revenues YTD were 372.4 MNOK (382.2) and the EBITDA was 31.7 MNOK (33.6).
Due to the prevailing challenging situation in Chile the company in October decided to further downscale the operations at the cage manufacturing factory in Chile. This will be done through a reduction of staff to adapt to a lower customer demand going forward.
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 revenues in 3Q were 207.6 MNOK (236.9). The EBITDA in 3Q was 18.1 MNOK (22.0). Operating revenues YTD were 674.7 MNOK (623.9) and the EBITDA was MNOK 62.5 (58.9). The growth in revenues is mainly explained by the acquisition of Maritech and growth in the Norwegian market.
Depreciation and amortisation in 3Q amounted to 7.7 MNOK (6.2). EBIT in the period was 10.5 MNOK (15.9). Net interest expense for the third quarter was -4.0 MNOK (-2.0). Other financial expenses were -0.1 MNOK (0.0). Profit before tax for 3Q was 6.4 MNOK (13.9). Net profit after allowing for taxes of 2.2 MNOK (5.8) was 4.2 MNOK (8.2).
Depreciation and amortisation YTD 2008 amounted to 20.2 MNOK (14.9). EBIT in the period was 42.3 MNOK (43.9). Net interest expense was -6.7 MNOK (-1.6). Other financial expenses were -2.2 MNOK (-0.9). Profit before tax YTD was 33.5 MNOK (41.4). Net profit after allowing for taxes of 10.0 MNOK (11.6) was 23.4 MNOK (29.8).
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 199.3 MNOK up from 164.5 MNOK at the end of 2Q. The working capital increase is explained by the acquisition of Idema in June, slower progress of project deliveries in Chile due to the fish health situation, an increase in inventory related to slower order inflow in 3Q and slower reduction in receivables than expected. Measures have been implemented to normalise the working capital level and this is expected to be realised in the next 3-6 months.
Net interest bearing debt amounted to 145.7 MNOK at end of 3Q vs. 120.5 MNOK in 2Q. Cash and unused credit facilities amounted to 73.3 MNOK. Total assets and total equity amounted to 705.8 MNOK and 328.5 MNOK, respectively, resulting in an equity ratio of 46.5% at the end of 3Q 2008.
The equity is affected by a revaluation of goodwill related to the investment in Maritech ehf (Iceland) due to the depreciation of the Icelandic Kroner. Net investments (excl. effects of acquisitions) YTD 2008 amounted to 15.0 MNOK whereof 4.9 MNOK is capitalized R&D expenses in accordance with IFRS.
Earnings per share for 3Q 2008 were NOK 0.24 (0.48) and year to date in 2008 NOK 1.36 (1.84), the calculation is based on 17,222,869 shares average.
Market and future outlook
The current general economic outlook together with the challenging fish health situation in Chile increases the uncertainty about the market development in 2009.
The continued and escalating challenging fish health situation in the Chilean market is creating severe problems for large parts of the Chilean industry. We do not expect to see a material improvement in this market for the next 2-4 years. Based on this development substantial cost reduction measures have already been implemented in Chile.
The company will meet the increased uncertainty by cost reduction measures, protection of margins and reduced capital binding.
The company has strengthened its relative competitiveness and is thereby well positioned to further strengthen its market position.
The general underlying investment demand from the salmon farming industry in Norway and the UK remains strong, however the due to the global credit situation the uncertainty has increased also in these markets. The market outlook in Norway for recirculation smolt facilities has improved and is expected to lead to major deliveries going forward.
The business volume towards other species than salmon continues to expand according to strategic objectives, and the further outlook for into 2009 is healthy within this area.
The order backlog was 253 MNOK (335) at the end of 3Q 2008, which is a weakening of 82 MNOK compared to the same time last year. The decline is related to lower order inflow from the Norwegian and Chilean market. The prospects mass from the Norwegian market is at a higher level than the same time last year. However, it is uncertain as to what extent the global financial turmoil will cause limitations to the companies' ability and willingness to invest.
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 nine months 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.
Dated: 5 November 2008
AKVA group ASA
Knut Molaug, Chief Executive Officer
Phone: +47 51 77 85 40
Rolf Andersen, Chief Financial Officer
Phone: +47 51 77 85 48
AKVA group is the leading provider of technology to the global fish farming industry and the only with global distribution. The products consist of software systems, operational equipment and sensor systems, feed systems, cage systems and recirculation aquaculture systems.