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spk00: Hi, everyone, and welcome to the presentation of Aker's third quarter results 2023. My name is Fredrik Berge, and I'm head of investor relations. We will start today's presentation with Aker's president and CEO, Eivind Eriksson, who will take you through the quarterly highlights and recent developments in the portfolio. Our CFO, Saino Skarstoknes, will then take you through the quarterly financials in more detail. After the presentation, we will host a Q&A session, and you can submit your questions via the online platform during or after the presentation. And with that, I hand it over to Eivind Eriksson.
spk02: Thank you, Fredrik, and good morning, everyone. We're approaching the end of the year marked by an increasingly complex geopolitical landscape that is changing markets and business strategies in ways not seen for decades. Our task to create shareholder value is, however, unchanged. Our method of work is capital allocation and active ownership, including mergers and acquisitions as a tool for value creation. The third quarter was no exception. Looking back on an extraordinary third quarter through ARCA lenses, We experienced strong operations and high activity across the portfolio as we continued to progress on our strategy. We are continuing into the final months of the year with a strong momentum across our portfolio as we are executing on growth projects, driving progress towards higher and more sustainable energy production, leveraging new and existing partnerships, focusing on further diversification of upstream dividends, and continuously finding ways to develop and deploy digital solutions. Important strategic developments have taken place across the ARCA portfolio in recent months, in line with ARCA's strategy and focus on long-term value creation. AMSC sold its entire Drones Act fleet during the quarter, representing 10 of its 11 vessels, and paid a dividend of US$170 million following the transaction. Shortly after quarter end, Akersolutions reached a historic milestone when it closed the one-subsea joint venture transaction. This merger of SLB and Akersolutions' individual subsea businesses creates a much stronger combination. And one Subsea will, in my view, be the most prosperous Subsea company in the world, measured not only by the quality of its offering, but also its customer base and the global reach with the largest installed base of Subsea Christmas trees in the industry. ARCA Solutions will own 20% of this larger and significantly stronger subsea company and receives a total consideration of 700 million US dollars as part of the transaction. Going forward, the ownership in one subsea will be an important contributor to ARCA Solutions' cash flow. Another milestone after quarter-end was Arcus' agreement with Solsta Offshore, its secured lenders, and AMSC for an overall refinancing of Solsta. The refinancing will establish Solsta as a leading offshore operator with one of the most modern fleets of high-end vessels, significantly reduced financial risk, and a healthy balance sheet, including 4 billion Norwegian kroner of new equity, of which Akku will contribute a minimum of 2.25 billion and, and right, a further 750 million. At Aker, we see a strong market outlook globally for offshore supply vessels, both within oil and gas and for renewable energy. Combined with resolving the Solstads refinancing needs, the immediate deleveraging provides a solid basis for increased value creation with a clear ambition to initiate quarterly dividend payments already next year. In line with our strategy and what I have communicated previously, this will further strengthen and diversify upstream cash flow and dividends to ARCA. During the third quarter, Aker BP continued to deliver strong oil and gas production, coupled with high operational efficiency and industry-leading low emissions. I'm happy to say that the new field developments remain on track. Aker Horizons has had a challenging ride in recent months. A step in the right direction was, however, that the portfolio company Mainstreams Projects Finance Lenders voted to support the debt restructuring of the Andes portfolio in Chile. This is an important part of the ongoing process towards resolving the company's challenges in Chile. In our digital portfolio, Cognite continued its growth trajectory with revenue up 28% year on year, driven by this proportionate growth in SaaS revenues. And it's very positive to see that the company has delivered a revenue of more than 1 billion Norwegian kroner over the last 12 months. Another exciting event in our digital portfolio was Aramco Ventures investing in a 7.4% ownership stake in ACE. They are now evaluating the deployment of ACE's digital twin product on a selection of Aramco's large number of assets. In sum, this all demonstrates that we are progressing well on our strategic objectives. through active ownership and with a commitment to industrial development and partnerships. With a strong momentum across our portfolio, Arcus' focus is to keep a steady course and deliver long-term shareholder value. Hence, our board today announced the decision to pay a dividend of 15 kroner per share in the fourth quarter, This brings the total dividend paid to 30 Norwegian kroner per share for the full year. At the end of the quarter, Aker's net asset value was 64.1 billion kroner. This was an increase of close to 7 billion, or 12% from the second quarter. The increase was mainly driven by the value of our investment in Aker BP, as well as Aker Solutions and Aker Biomarine, partly offset by value reduction in Aker Horizons. The Aker share price increased 8.4% in the quarter to 659.5 kroner per share. This compares to a 6.3% increase in the Oslo Stock Exchange Benchmark Index and a 22.6% increase in the Brent oil price. Akers' value-adjusted equity ratio was 88% at the end of the period, and our liquidity reserve stood at 6.9 billion kroner, of which cash amounted to 1.5 billion. Akers' gross asset value stood at 73.1 billion at the end of the quarter, an increase by close to 7 billion from the previous quarter. Our industrial holdings portfolio accounted for 82% of the total gross asset value, while financial investments and cash accounted for 18%. RKBP remains the largest asset in our portfolio at 39.6 billion Norwegian kroner, representing 53% of our asset base. The company continues to be an important source of liquidity for Aker, delivering strong production levels and providing valuable upstream cash as we continue to invest in and develop our portfolio along macroeconomic trends. With 78% of our gross asset value in listed assets and cash, Aker's portfolio remains liquid. In total, renewables and green technology, software and seafood and marine biotech accounted for 21% of Aker's gross asset value in the quarter. Aker continued to experience strong operations and high activity across our portfolio during the third quarter, both in the bread and butter businesses and in our new ventures. And our portfolio remains well positioned along important global megatrends. Energy security, efficiency and transition continues to be a crucial macroeconomic importance in an increasingly complex geopolitical landscape. And it remains an important part of ARK's industrial portfolio. Data, software and automation already play a significant role in our portfolio. And industrial digitalization and artificial intelligence will undoubtedly play an increasingly important role globally going forward. Industries that were traditionally offline are connecting their operational technology at an increasing rate. And Akush, industrial software companies, Cognite in particular, are addressing this huge market potential in a big way. One example is our cybersecurity company Omni, working to address the rapidly increasing risk of cyber attacks on critical infrastructure in a shifting and volatile geopolitical landscape. Sustainable proteins and nutrition, including offshore fish farming, is another growing segment in our portfolio. The world needs to find solutions to produce healthier and more sustainable food and nutrition with less resources and with minimal environmental footprint. Salmar Aker Ocean is addressing this issue with the world's first offshore fish farm called Ocean Farm 1. To put it in perspective, this single facility holds up to 1.5 million salmon, which is the equivalent to nearly 30 million meals per year. In summary, the strong momentum continued across our portfolio during the third quarter, and our task to create shielded value remains unchanged. Our strategy and active ownership agenda through the year has been to execute on growth projects, especially in RKBP, while simultaneously driving growth in other segments, including increased and diversified upstream dividends to occur as a main strategic objective. This focus remains as we head into the final months of the year and into 2024. And I'm confident in ARK's strong portfolio composition, powered by evolving trends and robust long-term trajectories. That concludes my portion of today's presentation. I now hand it over to Sven-Oskar Stocknes, who will take you through the quarterly financials.
spk01: Thank you, Eivind, and good morning. I will start off spending a few minutes on Aker's financial investments before I go through the third quarter results in some more detail. The financial investments portfolio accounted for 18% of Aker's total assets, or 12.9 billion kroner, up 717 million from the previous quarter. This was mainly due to an increase in cash holdings of 578 million. As before, the main components on the financial investments are cash, listed financial investments, other equity investments, real estate, interest bearing receivables and non-interest bearing assets, all of which I will now go through in some more detail. Then as usual, starting with cash. Our cash holdings represented 2% of AUKUS gross asset value, or 1.5 billion kroner. This was up 578 million from the previous quarter. The cash inflows were primarily dividends received from Aker BP of 745 million and from AMSC of 32 million kroner, in addition to repayment of a 235 million kroner loan from Ace. The main cash outflows in the quarter were primarily payments for operating expenses and net interest of 219 million kroner, in addition to a loan issued to Aker Property Group of 165 million and an equity investment in Gaia of 34 million. Listed investments included in our financial portfolio represented about 3% of Aker's total assets at the end of the quarter, or 2.5 billion kroner. The total value of this portfolio increased by 131 million in the third quarter, mainly driven by value increases in Solsta Offshore and Acostor. During the quarter, ARCA posted a total dividend income from AMSC of 46 million. Next, other financial investments that combined represented 12% of Aker's gross asset value, or 8.9 billion in total. Aker's real estate holding, Aker Property Group, stood at a book value of 1.2 billion at the end of the quarter, up from 993 million in the previous quarter. The increase was driven by a loan issued of 165 million kroner. Interest-bearing receivables totaled 4.1 billion, including a 2 billion kroner loan and a 1.2 billion kroner convertible loan to Ocker Horizons. During the quarter, ACE repaid its loan to Ocker of 235 million. Interest-free assets totaled 1.6 billion, including a 1 billion kroner earnout from the sale of Ocker Energy in April of this year. Other equity investments remained at 1.6 billion. And a further breakdown of this value can be found in the supplemental schedules in the appendix of this presentation. Then let's move to the third quarter financial highlights for Aker ASA and holding companies. And let me start with the balance sheet. The book value of our assets totaled 31.1 billion, and in our accounts we used the lowest of historic costs and market values. This was up 83 million kroner in a quarter, mainly explained by an increase in cash of 578 million, a positive value change in Aker Biomarine of 358 million, and listed financial investments of 161 million. This was partly offset by a value decrease in ARCA Horizons of $1 billion. And the book value of our equity was $22.1 billion, up $178 million explained by the profit before tax in the quarter. The fair value adjusted assets or gross asset value totaled $73.1 billion. This was an increase of 6.8 billion in the quarter, mainly explained by the positive value development in Acker BP of 5.9 billion and in Acker Solutions of 834 million. Subtracting for debt, the net asset value was 64.1 billion at the end of the quarter. This equaled 862 kronor per share and the value-adjusted equity ratio was 88%. Ocker had total liabilities of 9 billion kronor at the end of the quarter that mainly consisted of bond debt and bank loans totaling 8.7 billion kronor. Ocker's financial position remains robust with a total liquidity buffer of 6.9 billion kroner, including undrawn credit facilities. Our net interest bearing debt was 2.7 billion at the end of the quarter, down from 3.3 billion in the previous quarter due to the increased cash position. Our loan-to-value was 10%, and 78% of our gross asset value is in listed assets and cash. In terms of our debt maturity profile, the average debt maturity at the end of the quarter was 2.9 years. We currently have 5 billion of bonds outstanding and our bank loans of 3.7 billion kroner consist of a US dollar denominated loan of 1.6 billion kroner, a Norwegian kroner denominated loan of 1 billion and a 1.1 billion kroner euro denominated Solskjaer loan. Taking into account available credit lines and extension options on the bank loans, the implicit maturity of the total loan portfolio is 4.1 years. Then to the income statement. The operating expenses in the third quarter were 97 million kroner. The net value change in the quarter was negative 533 million, mainly explained by value reductions in aqua horizons of 1 billion, offset by value increases in aqua biomarine of 358 million and listed financial investments of 161 million kroner. During the quarter, Aker booked a total dividend income from Aker BP and AMSC of 787 million kroner. Our net other financial items were positive 30 million, mainly explained by a net currency exchange gain of 81 million, partly offset by net interest expenses of 51 million. And the profit before tax was then 179 million kroner in the quarter. Thank you. That was the end of today's presentation. And we can then move on to Q&A.
spk00: Thank you, gentlemen. Now moving to Q&A. And as a friendly reminder to the audience, you can send questions through the online platform. So the first question referring to your CEO letter, Eivind, you discussed increasingly complex geopolitical landscape, which is changing markets and business strategies. Could you please elaborate a bit on how Acre navigates this environment and how does it impact your strategy or method of work?
spk02: Well, the main reference point is the ARCA strategy, which is unchanged. Part of the strategy is to allocate capital to global trajectories with significant growth throughout cycles. And the main global trend lines of relevance to Aker are a growing demand for energy, an expectation that more and more of the energy should be from renewable sources. And the third trajectory of relevance to us is digitalization and automation. And the fourth is increasing demand for proteins. So the question is, how does the current geopolitical turmoil impact both the said trajectories and our respective businesses within the various fields? And as far as ARCA-SA is concerned, the short answer is that we will stick to our current strategy. And at least the short term effect is increased opportunities rather than the other way around. So we see more and more opportunities in the energy space. So short and medium term, oil and gas seems to be by far the most prosperous segments. But longer term, the change to renewable energy is also unchanged. And in the software space, automation and digitalization seem to accelerate also in various industry segments held by cloud services and technologies like CDF. So overall, increased geopolitical risks, but so far without significant adverse impacts on the Acker portfolio, maybe rather the other way around.
spk00: Thank you. And a follow-up question related to your CEO letter where you also address cybersecurity in these volatile times with the risk of cyber attacks on critical infrastructure rapidly increasing. Are you seeing an interesting addressable market for your portfolio company Omni in this respect?
spk02: Cyber risk is nothing new. We have been as individuals and as industries exposed to cyber risk for several years already. But what has changed in recent years is increased exposure for industrial operations. So the hackers seem to be more and more interested in how they can impact industrial operations and ultimately take over control of an industrial facility. That's by far a more serious risk than being compromised on your email or your IT system. In order to detect and defend a business against the said cyber risk, technology is a very vital tool. Software tools also in this space need access to all relevant data. Hence the relevance of a technology like CDF. And the fact that Cognite has built that technology was also the reason why Telenor invited Cognite and Acre to the Omni joint venture. So it's early days. But talking about global trajectories, cyber risk is a very particular and rapidly growing segment within the digital space. And together with Telenor, I think we have identified some exciting opportunities to be pursued by Omni in the years to come.
spk00: Thank you. The next question is regarding ACE from Ola Ekanger at SEB. Good morning, very stellar performance from ACE in Q3. Can you provide some details around the significant step up in revenue and EBITDA margin?
spk02: ACE is in the process of developing its core technology in close collaboration with other Acker companies, Acker Solutions and AckerBP in particular. So the financials of ACE are partly a reflection of the development collaboration with other Acker entities. partly sale to third-party customers. And as far as the last quarter is concerned, it also divested certain software applications, which has boosted the quarterly results.
spk00: Next question from Johan Bergland. Given that you have a 67% stake in Acre Horizons, as well as having committed 3.2 billion NOC in debt instruments in Acre Horizons, are you considering to buy out the minority stake and refinance, which one could assume would be cheaper?
spk02: So, in the quarter, our main focus was to help Arc Horizons to turn around its business and manage some significant risks. Hence, we are pleased to share with the markets that Mainstream reached an agreement with its lenders in Chile and has established a fresh point of departure for value creation going forward. And we also appreciate the fact that Aquarizons is in the process of reducing costs and streamlining its portfolio, including focusing on a limited amount of hydrogen and ammonia projects in Norway, compared to the large number of opportunities the company pursued a few months ago. So, a more streamlined company, lower cost, restructured balance sheet will be important to create value going forward. We will never answer questions about individual future transactions, but generally speaking, Okko will apply the same allocation principle to any investment opportunities in our existing portfolio and externally. And that's partly potential for value creation and partly potential for dividend to Accura and other shareholders. And as far as dividend is concerned, Acro does not expect short or medium term dividend from Acro Horizons. So hence, Acro Horizons doesn't fit with all our allocation criteria. And we see more dividend potential from other portfolio companies.
spk00: Thank you. Talking about upstream dividends, We see a positive trend where you this year estimate 4 billion Norwegian kroner of upstream dividends, which is up from 2.8 billion last year and 2 billion the year before. So a very positive development. And in your presentation today, you said that increased and diversified upstream dividends to occur is a main strategic objective. Could you please elaborate a bit on your plans related to this? Sure.
spk02: As I just said, increased upstream dividend to ARCA is a main allocation criteria for ARCA ASA. And it's not new. We have pursued that strategy for some years now. And we highly appreciate the role ARCA BP has played and continues to play as a value driver and as a main source of upstream cash from ARCA. to Aker ASA. And the dividend strategy of Aker BP is, as you probably remember, to increase the dividend paid to Aker and other shareholders year by year. So a fantastic asset in our portfolio. Last quarter, we added Solstad to the portfolio exactly for the same reason. We see a potential to both create good shareholder value, but also to put the company finally in a dividend-paying position, which will short-term be balanced with repayment of debt, because the main lesson learned for that industry is that you need a rock-solid balance sheet to adopt to market volatility. With 4 billion Norwegian kroner in new equity, Solstad will be well positioned to manage both and attractive shareholders to us and other shareholders and to repay debts and hence fit very well into our allocation strategy going forward. The same line of argumentation, the same strategy will be applied to um the entire arc portfolio and to any external opportunity introduced to us in the years to come thank you well that's the final question that we have received from the audience here today so then i would like to thank you all for listening in and uh
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