AKVA group ASA 1Q 2011 financial reporting

Highlights

• Growth in operating revenues in 1Q to 253.4 MNOK versus 158.0 MNOK last year - up 60%, reports www.megafishnet.com with reference to AKVA Group.
• The EBITDA in 1Q was 22.8 MNOK compared to 0.5 MNOK last year. EBIT of 15,0 MNOK versus minus 7,0 MNOK in 1Q 2010
• The order backlog at the end of 1Q was 279 MNOK versus 267 MNOK at the end of 1Q last year
• Continued focus on cost, improving project management and customer service
• Focus on repositioning and long term development of AKVA as leading technology partner
• BoD propose rights issue to strengthen balance sheet, to gain momentum in development and positioning of AKVA for the future

In the comments below on the financial accounts, the 2010 figures are presented in parentheses following the 2011 stated values when included. AKVA group is organized into three business segments; Hardware (HW): Includes cages, barges, feed systems and other technology to operate fish farms, Recirculation (RAS): Includes the delivery of land based farms based on recirculation technology, Software (SW): includes software solutions and professional services related to this.

Operations and profit

Operating revenues in 1Q were 253.4 MNOK (158.0) with an EBITDA of 22.8 MNOK (0.5). The improvement is mainly related to higher volume. Depreciations and amortisations were 7.8 MNOK (7.5) resulting in an EBIT of 15.0 MNOK (-7.0).

Net financial cost in 1Q was 3.3 MNOK (2.2). The increase is mainly related to higher interest costs due to higher net interest bearing debt. Profit before tax was 11.2 MNOK which is an improvement of 20.9 MNOK from 1Q last year. Net profit was 10.1 MNOK (-5.3) after allowing for taxes of 1.7 MNOK (-3.8).

Hardware (HW)

HW had revenues in 1Q of 199.1 (117.9), which is 69% up from last year. The increase is mainly related to Norway, Chile and Export markets. EBITDA was 18.4 MNOK (2.6), resulting in an EBITDA margin of 9.2% (2.2)

1Q was marked by high delivery activity in Norway and Chile in particular but in general good activity in all major markets. Operationally there has been a strong focus on improving and strengthening the delivery organisation which is gradually improving.

Software (SW)

Operating revenue for SW in 1Q was 30.1 MNOK (25.9). The increase is related to higher revenues in Norway and Iceland. The EBITDA was in 1Q 4.8 MNOK (2.5) resulting in an EBITDA of 15.9% (9.5%).

In Norway the market for professional services has developed well. The activity on Iceland is exposed to the general economic situation in Iceland but has developed fairly well in particular for up-grade contracts.

Recirculation (RAS)

RAS had operating revenues in 1Q of 24.2 MNOK (14.2). The increase is related to higher delivery activity in 1Q than the year before. EBITDA was -0.3 MNOK (-4.5).

The main revenue flow in 1Q was related to several smaller sized projects. Operations are improving both in terms of engineering and project management, which will continue to be a strong focus.  In the market there is a growing interest in recirculation technology for production of smolt. Several of the major salmon companies have indicated plans to invest in such facilities.

Balance sheet and cash flow

The working capital in the group balance sheet, defined as non-interest bearing current assets less non-interest bearing current liabilities was 110.2 MNOK, up from 102.3 MNOK from the beginning of the year. The group has a continued focus on containing the working capital.

Net interest-bearing debt amounted to 164.2 MNOK at the end of 1Q versus 133.9 MNOK last year. Gross interest bearing debt amounted to 192.3 MNOK versus 177.4 MNOK last year. Cash and unused credit facilities amounted to 56.3 MNOK. Total assets and total equity amounted to 703.4 MNOK and 231.3 MNOK respectively, resulting in an equity ratio of 32.9%.

Investments in 1Q amounted to 4.8 MNOK of which 2.6 MNOK is capitalized R&D expenses in accordance with IFRS.

A waiver extending through 2Q 2011 relating to the financial covenants of the major credit facilities and loans was agreed with the company's main bank in 4Q.

Shareholder issues

Earnings per share for 1Q 2011 were 0.59 NOK (-0.31). The calculation is based on 17.222.869 shares average.

Trond Williksen assumed the position as CEO of AKVA group ASA on the 1st of March.

Market and future outlook

Market fundamentals in the salmon industry are good in Norway and other major salmon producing regions. In Chile in particular there has been a significant increase in the activity for AKVA group where revenues in 1Q2011 were almost 5 times the revenues in 1Q last year. Other markets have gradually become increasingly important for AKVA group.

The order backlog at the end of 1Q was 279 MNOK (267). The order inflow 1Q was 185 MNOK (216).

The measures implemented last year to control costs, improve operations, project management and logistics continues. Focus is on long term development of the group as a technology partner to the aquaculture industry, which implies a need to invest in our own core product portfolio and business areas in order to meet market requirements and improve customer satisfaction.

In order to strengthen the balance sheet, and thereby to gain momentum in the development and positioning of AKVA for the future, the board of directors propose to carry out a rights issue in June with expected gross proceeds of about MNOK 95. The rights issue of up to 8,611,434 new shares is fully underwritten by a consortium of shareholders at an issue price of NOK 11.00 per share. The subscription rights will be tradable on Oslo Stock Exchange in the subscription period. The board of directors will ask the shareholder meeting to be held on 19 May 2011 to grant the board the necessary powers to execute the rights issue.