Aker ASA Third-quarter results 2018 Aker ASA Third-quarter results 2018 2 Third-quarter 2018 highlights Financial key figures Key events in the quarter (Aker ASA and holding companies) nn Aker BP entered into an agreement with Total E&P Norge to nn The net asset value (“NAV”) of Aker ASA and holding companies acquire its interest in a portfolio of 11 licenses on the Norwegian (“Aker”) increased by 10.8 per cent in the third quarter to NOK Continental Shelf (“NCS”) for a cash consideration of USD 205 63.3 billion, compared to NOK 57.1 billion as per 30 June 2018. million. The portfolio includes four discoveries with net recoverable Per-share NAV amounted to NOK 852 as per 30 September 2018, resources of 83 mmboe. compared to NOK 769 at the end of the second quarter. nn Aker BP announced that the Johan Sverdrup partnership nn The Aker share increased 17.8 per cent to NOK 734 in the third submitted the plan for development and operations (“PDO”) for quarter. This compares to a 6.7 per cent increase in the Oslo Stock Phase II of the field development. Production start is planned for Exchange’s benchmark index (“OSEBX”). fourth quarter 2022. The investment cost is estimated to NOK 41 billion. Aker BP has 11.57 per cent working interest in the field. nn The value of Aker’s Industrial Holdings portfolio rose to NOK 67.1 nn Akastor completed the sale of 50 per cent of its shares in AKOFS billion in the third quarter, from NOK 61.2 billion at the end of the Offshore to Mitsui & Co. (“Mitsui”), and Mitsui O.S.K Lines (“MOL”), second quarter. The increase is primarily explained by a NOK 6.8 which each will own 25 per cent of the shares. The transaction billion value increase of the Aker BP investment. The value of released USD 146 million, including interest, in cash to Akastor. Aker’s Financial Investments portfolio stood at NOK 5.4 billion at the end of the third quarter, compared to NOK 5.1 billion as per nn Ocean Yield announced the expiry of the charter contract for 30 June 2018. FPSO Dhirubhai-1. Reliance Industries decided not to exercise the option to purchase the FPSO. Hence, Ocean Yield is actively nn Aker’s liquidity reserve, including undrawn credit facilities, stood pursuing new contract opportunities or sale of asset. at NOK 4.5 billion as per 30 September 2018. Cash and liquid fund investments amounted to NOK 1.4 billion at the end of the third quarter, on par with prior quarter. nn The value-adjusted equity ratio was 87 per cent which compares to 86 per cent as of 30 June 2018. Main contributors to gross asset value Net asset value and share price (NOK billion) (NOK per share) Representing 91 per cent of total gross asset value of NOK 72.5 billion 900 800 Aker BP 700 Ocean 600 Yield 500 Dividend Aker Solutions 400 NAV per share 300 Share price Aker BioMarine 200 100 Akastor 0 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 01020304050 The balance sheet and income statement for Aker ASA and holding companies (Aker) have been prepared to show the financial position as a holding company. Net asset value (NAV) is a core performance indicator at Aker ASA. NAV expresses Aker’s underlying value and is a key determinant of the company’s dividend policy (annual dividend payments of 2-4 per cent of NAV). Gross asset value is determined by applying the market value of exchange-listed shares, while book value is used for other assets. Net asset value is gross asset value less liabilities. Aker ASA Third-quarter results 2018 3 Letter from the CEO Dear fellow shareholders, Our highly experienced Aker Energy team is a prerequisite for man- aging the particularities in doing business in Ghana, and patience is In the third quarter, Aker's extended its positive development with needed in order build a robust foundation in a region quite different Net Asset Value up NOK 6.2 billion (10.8 per cent) to NOK 63.3 bil- from Norway. lion. Aker’s share price rose 17.8 per cent, which compares to 6.7 per cent for the reference index. The results are largely explained Aker’s oil service companies are moving in the right direction. Aker by our investment in Aker BP, which added substantial value to Solutions is on track to deliver on phase two of its cost efficiency Aker again this quarter. Overall, Aker’s portfolio companies con- program and is securing important contracts in a competitive market. tinue to perform well and focus remain on further value creation Year-to-date, Aker Solutions has won approximately 20 per cent of through a combination of operational excellence, value accretive all subsea tree awards globally. That is a strong achievement, and it transactions and attractive dividend payments to shareholders. shows that Aker Solutions has responded to the downturn well by in- creasing its competitiveness. Akastor completed the transaction with We acknowledge, however, that we are also exposed to external fac- Mitsui to divest 50 per cent of the shares in AKOFS Offshore and is tors that we do not control. Subsequent to quarter end the sentiment currently close to being debt free, net of cash. Kvaerner continues to in the capital markets shifted to the negative, and both share prices operate well with strong execution, albeit margins came short of prior and oil prices have fallen. Aker’s portfolio comprises 91 per cent listed quarter due to project phasing and limited margin recognition on pro- assets, and our values are impacted by broader market corrections, jects in early phase. fluctuating commodity prices, and underlying developments in the markets our portfolio companies are exposed to. Ocean Yield reported for the first time over 100 million dollars in quar- terly adjusted EBITDA. Since the IPO in 2013, Ocean Yield has deliv- A key priority over the last years has been to establish strong balance ered a total return of 239 per cent to its shareholders and the issue sheets and liquidity reserves in Aker and across our portfolio compa- price has been repaid in full through distribution of dividends. After nies in order to withstand turbulent times. A robust capital structure 10 years of solid performance on the MA-field in India, FPSO Dhirub- also enables us to seize new value accretive investment opportunities hai-1 ended its contract with Reliance in September. Focus now is to when they arise. We do not need to go further back in time than the re-contract the asset and Ocean Yield is engaging with several parties recent downturn in the oil and gas sector to demonstrate our financial to secure new employment. strength and ability to invest countercyclical. Experience also tells us that by maintaining a robust financial platform we avoid distraction as In Cognite, a team of 130 brilliant software professionals are working it allows our portfolio companies to remain fully focused on improving on digital solutions that are transforming oil and gas and other asset operations and delivering tangible value to customers. heavy industries. With a unique data platform, delivering real-time and historical data to customers in a split second, Cognite is changing In 2016, we said that if you do not believe in the future of oil and gas the way companies operate and engage with customers and suppli- industry, you should sell your shares in Aker. The statement turned out ers on a day-to-day basis, and over time this translates into tangible to be a rather valuable (implicit) investment advice. Our consistency cost savings results. As part of the strategy to diversify the revenue and countercyclical approach have been beneficial to shareholders. base and build scale, Cognite is increasingly gaining traction with new Despite the market correction in the fourth quarter, Aker’s share price clients. In the third quarter, Lundin was signed as a new customer. In is still up 57 per cent year-to-date. Not a bad return after all. only two years time, Cognite is reporting annual run-rate revenues of around NOK 160 million and is cash positive. Not bad for a start-up Aker’s portfolio companies continue to perform well, and in line with software company! our ownership agenda. Aker BP reached another milestone in the quarter by reporting USD 1.0 billion in revenues. I can hardly believe Finally, Aker BioMarine is also on track to deliver a strong 2018 after a anyone would have predicted that a few years ago! Growth through somewhat disappointing 2017. Volumes in the omega-3 market have transactions and maturing the existing portfolio is a central part of seen a recovery, following recent years decline, and for Aker BioMa- Aker BP’s value agenda. Over the last months, two new transactions rine that has translated into approximately 30 per cent year-on-year totaling USD 455 million have been announced. First, an agreement to volume growth for its high-end product Superba. Year-to-date, Aker acquire 11 licenses from Total E&P Norway, a portfolio that includes BioMarine has generated USD 31 million in EBITDA, up from USD 17 four discoveries with net recoverable resources of 83 mmboe in close million in the same period last year, positively impacted by improved proximity to existing production hubs. Second, an agreement to ac- operations and scale. quire Equinor’s 77.8 per cent interest in the King Lear discovery. By developing King Lear as a satellite to the Ula field, Aker BP estimates Countercyclical capital allocation and M&A have added a lot of val- a total resource addition of more than 100 mmboe net to the company.