Aker Asa A Shs

Hi, everyone, and welcome to the presentation of Aaker's fourth quarter results 2023. My name is Fredrik Berge, and I'm head of investor relations. We will start today's presentation with Aaker's president and CEO, Eivind Eriksson, who will take you through the quarterly highlights and recent developments in the portfolio. Our CFO, Svano 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. Thank you, Fredrik, and good morning, everyone.

We demonstrated progress across several key metrics in the fourth quarter and delivered positive value to our shareholders through both share price increase and dividends. Important strategic initiatives are progressing as part of our active ownership agenda in line with ARCA's strategy and focus on long-term value creation. In line with our strategy and what I have communicated previously, one of our key strategic objectives is to strengthen and diversify upstream dividends in Aker. This work has yielded results and upstream dividends amounted to 4.4 billion kroner last year. This represents an increase of almost 60%. from the year before, and our focus on this objective will continue as we embark on 2024. During the quarter, ARCA continued further deepening its long-term collaboration with SLB, as ARCA Solutions closed its one subsidy transaction. Arca Solutions now owns 20% of a global subsea technology and solutions provider, uniquely placed for growth and value creation. Arca Solutions delivers strong operational results in the fourth quarter. The current focus remains on core operations to deliver a solid and predictable project execution of its record-high order backlog. and position the company for future profitable growth with a selective approach to its high tender pipeline. For our solutions, maintaining a strong balance sheet will be increasingly important as projects are becoming larger in value and are often entering into partnerships with other companies. And Akku's ownership agenda continues to be focused on further developing Akku Solutions as a digitally driven engineering and project business, and maintaining a predictable dividend policy over time. Another crucial milestone was reached after the quarter-end, when the refinancing of Solsta was completed. With the refinancing, we have created a robust industrial platform establishing Solstheim Maritime as an offshore operator with one of the most modern fleets of high-end vessels, significantly reduced financial risk, and a healthy balance sheet. I'll come back to this in a separate slide. During the quarter, RKBP continued to deliver strong oil and gas production coupled with high operational efficiency and industry-leading low emissions. The company also announced a 9% increase in dividends in 2024. For 2023, RKBP achieved oil and gas production of 457,000 barrels of oil equivalents per day. For 2024, the company expects to produce between 410,000 and 440,000 barrels per day. This is due to a natural decline in existing fields and some uncertainty as to how long the major Johan Svedrud field can maintain the current elevated production level, which is higher than its originally designed capacity. However, worth highlighting, We are currently investing in RKBP's largest ever field development program, which I'm pleased to say remains on track. This will significantly lift RKBP's production levels as the projects start up over the coming years. Despite the recent non-binding ruling by the Oslo District Court, RKBP continues to execute on its project portfolio in accordance with the permissions granted. The Norwegian state has appealed both the main ruling and the temporary injunction to the Court of Appeal. Given that more than 80% of today's global energy consumption comes from fossil fuel resources, it would strike me as a paradox if the legal system were to be utilized by NGOs as a hindrance for the lowest emission producers. Moving to Arctic Biomarine. The company delivered a 21% revenue growth in 2023 and recently announced it has initiated a process to explore strategic alternatives for its feed ingredients segment. This business unit is the world's largest quill harvester and producer of quill meal, a premium ingredient used in aquaculture feed, as well as in pet food and in crude oil for human consumption. Archive Horizons has been through a challenging period. However, an important step in the right direction was the conclusion of Mainstream's debt restructuring in Chile, providing a stable financial foundation for its UNDES portfolio. In sum, we experienced strong operations and high activity across the portfolio and demonstrated continued progress on our strategic objectives, including deepening our partnership with SLB through one subsidy. With a good momentum across our portfolio, ARCA's focus is to keep a steady course and deliver long-term shareholder value. Hence, the ARCA Board has decided to propose a cash dividend for fiscal year 2023 and this tranche being set at 15.5 Norwegian kroner per share. In line with our policy, a second tranche will be considered by our board in the second half of this year. If the additional dividend equals the proposed ordinary dividend, the total dividend paid during 2024 will be 31 Norwegian kroner per share. This equals 4.7% yield to the share price and 3.6% of the net asset value at the year end 2023. Akers net asset value ended the fourth quarter at 63.2 billion Norwegian kroner. However, adjusting for dividends, The quarter ended at 64.3 billion, which was a slight increase in net asset value from the previous quarter. This was largely driven by our investments in AKE BP and AKE Biomarine, increasing by 1.2 billion kroner combined. For the full year, our net asset value decreased 2.2% before dividends paid. The main positive value drivers in our portfolio were Aker BP, Aker Solutions and Aker Biomarine, which combined increased by 3.6 billion kroner. This was, however, offset by a value reduction in Aker's license of 4 billion kroner. And, as mentioned earlier, We also paid 2.2 billion kroner of dividends to our shareholders during the year. As a reminder, our unlisted assets are reported at the lowest of historical cost and market values. During the year, the reported book value of unlisted companies, including Ace, Cognite and Salmaid Aker Ocean, was not changed. However, There were several positive developments across our unlisted portfolio through the year. Let me give you a few examples. Salmar Aker Olsen successfully completed its first production cycle of Salmon, reporting its first quarterly revenue figure of 173 million Norwegian kroner. Cognite released its generative AI product Cognite AI, and progressed further with several important customers and partnerships during the year. And I am pleased to share that Kongnet delivered an annual revenue exceeding 1 billion Norwegian kroner for the first time in 2023, an increase of 25% from the prior year. ACE also continued its positive momentum in 2023, And after quarter end, I'm pleased to see Ace has been awarded a large contract with BP. The Aker share price increased by 3.3% in the fourth quarter, with dividend added back, and ended the year at 666 kroner per share. This compares to a 1.2% increase in the Oslo Stock Exchange benchmark index and a 16% decrease in the Brent oil price. And the Ockridge Value Adjusted Equity Ratio was 88% at the end of the period, before allocation of dividends. Now, taking a step back and looking at the bigger picture, it can perhaps be more interesting to reflect on the development of ARCA over a longer time period. After all, our task has always been, and continues to be, to create shareholder value over time. It's quite clear to see that ARCA has delivered a positive development in our net asset value over time, and the ARCA share price has followed a similar development. Translating this into numbers, I'm proud to say that we have grown our net asset value from only 8 billion kroner in 2004 to 63 billion today. By summing up, we have delivered 25% average annual shareholder return with dividend added back since the company was relisted in September 2004 until today. And this compares to a 10% average annual return on the Oslo Stock Exchange benchmark index over the same time period. Switching to dividends. Aker aims to pay a steadily rising dividend over time and as already mentioned. we increased our dividend payments to 30 kroner per share in 2023. In the bigger picture, over the past 15 years, we have delivered almost 14% average annual growth in dividends paid to shareholders. In nominal terms, This means we have distributed close to 18 billion kroner of dividends to our shareholders over this time period. And we are not stopping here. Our policy remains, which is to pay 2-4% of net asset value also moving forward. over to gross asset value, which stood at 72.1 billion kroner at year end. The industrial holdings portfolio, valued at 60 billion kroner, accounted for 84% of the total gross asset value, while financial investments and cash, valued at 12 billion, accounted for 16% of the total. During the quarter, we decided to book an impairment of the US$97 million earnout related to the sale of Peckham Energies in April of last year. As the final investment decision on the project has taken longer than previously anticipated, a full impairment was booked at the year end. Aker BP remains the largest asset in our portfolio at 39.5 billion kroner, representing just over half 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. A key strategic objective for Acure remains to continue to increase and diversify upstream dividends across our portfolio over time. With 78% of our gross assets value in listed assets and cash, Acure's portfolio remains liquid. Over to the refinancing of Solsta and Aker's investments in Solsta Maritime, which was completed on the 16th of January this year. Despite some noise surrounding the transaction, we have together with Solsta succeeded in creating a shareholder value for all stakeholders involved. In a critical situation as time was running out before 11.4 billion Norwegian kroner of senior debt was due to expire in March 2024. The agreement between Solstad and Aker, MSC, D&B and Exfin ensured a complete and holistic solution to the company's significant financial challenges, to the benefit of all shareholders, and has created a robust industrial platform for growth. 11.4 billion kroner of bank debt has now been refinanced. A total of 3.25 billion kroner of new equity has been injected in Solstad, of which Aker contributed 2.25 billion kroner and AMSC 1 billion kroner. And a 750 million kroner share issue, fully guaranteed by Aker, is planned. for the second quarter of this year, where all other shareholders in Solsta Offshore will be able to invest in Solsta Maritime on the same terms as Arkit. The refinancing has ensured valuation for all stakeholders. All original lenders have been repaid in full. A robust capital structure has been established. And close to 13,000 shareholders have, from the announcement in October last year until completion in January this year, enjoyed a positive return of 14%. On top of this, the shareholders will receive the value of the subscription rights in Solsta Maritime. Solsta, and its roughly 2,500 employees, can now look ahead to a strengthening of the offshore market. With one of the industry's most modern fleets of high-end vessels and a healthy balance sheet, Solsta Maritime is positioned for growth. For Aker. Solskjaer remains a solid industrial platform for further growth and value creation, aligned with our strategic objective of diversifying and increasing upstream dividends. Backed by the Arca Group's significant industrial competence and a positive market outlook, both within oil and gas and renewables, we have a clear ambition to initiate dividends to shareholders in the second half of 2024. Furthermore, Aker increased its stake in Solsta Offshore from 23 to 32.9% in December 2023 to ensure completion of the refinancing. In summary, Aker continued to experience strong momentum and high activity during the quarter, and our portfolio remains well positioned along important global megatrends. Aker's strategy and commitment to long-term shareholder value creation stays firm. Our method of work remains active ownership and capital allocation, including M&A. In 2024, we will continue to execute on growth projects, especially those involving Aker BP and Aker Solutions. and continue to pursue strategic initiatives that will drive value across our portfolio. With Cognite and ACE, we see an immense potential for industrial companies to unlock greater productivity, reduce costs, and increase quality of large capital projects. Utilizing Cognite and ACE's digital solutions will continue to be a key priority for ARCA-BP and ARCA solutions as they carry out their major new field developments. As we embark on 2024, we face a complex macroeconomic environment with political and economic uncertainties beyond our control. However, it's important to remember that challenges often give rise to opportunities. By leveraging our robust foundation, we are well positioned to continue to navigate with the resilience and agility to seize potential opportunities moving forward. That concludes my portion of today's presentation. I now hand it over to Sven-Oskar Stoknes, who will take you through the quarterly financials. Thank you, Erwin, and good morning. I will start off spending a few minutes on Auker's financial investments before I go through the fourth quarter results in some more detail. The financial investments portfolio accounted for 16% of Auker's total assets, or 12 billion kroner, down one billion from the previous quarter. 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 1% of AUKUS cross-asset value, or 774 million kroner. This was down 680 million from the previous quarter. The cash inflows were primarily dividends received from AKBP of 821 million and from AMSC of 963 million, including the dividends from the TRS agreements. The main cash outflows in the quarter were primarily dividend paid of 1.1 billion, in addition to loans to and investments in portfolio companies of 655 million, of which a 404 million investment in Solstad Offshore and a 155 million kroner loan to Aker Property Group. Cash outflow related to the renewal of the total return swaps in AMSC totaled 479 million, excluding the dividends received. And cash outflow for operating expenses and net interest were 237 million kroner in the quarter. Listed investments included in our financial portfolio represented about 4% of Aker's total assets at the end of the quarter, or 2.9 billion kroner. The total value of this portfolio increased by 404 million in the fourth quarter, mainly driven by increased value and investments in Solsta Offshore. After quarter-end, the Solsta refinancing was successfully completed. Consequently, Aker's ownership in Solsta Maritime will be presented as part of industrial holdings starting from Q1 2024. During the quarter, ARCA received a total dividend income from AMSC of $963 million, including from the TRS agreements. And the value increase of the investment in Philly Shipyard in the quarter was $138 million. Next, other financial investments that combined represented 11% of Acre's gross asset value, or 8.2 billion in total. Acre's real estate holding, Acre Property Group, stood at the book value of 1.3 billion at the end of the quarter, up from 1.2 billion in the previous quarter. The increase was driven by a loan issued to Acre Property Group of 155 million kroner, related to the completion of the new office building, Accra Tech House. Interest billing receivables totaled 4.1 billion on par with the previous quarter, including a 2 billion kroner loan and a 1.2 billion kroner convertible loan to Accra Horizons. Other equity investments totaled 1.6 billion, also on par with the previous quarter, and included a value increase of the investment in CT of 104 million in the period, offset by a write-down of the investment in Aberli of 104 million. Interest-free assets decreased to 601 million kroner, down from 1.6 billion in the previous quarter. The decrease was mainly driven by the impairment of the $97 million US dollar denominated earnout related to the sale of Pekin energies. Then let's move to the fourth quarter financial highlights for Aker ASA and holding companies. And let me start with the balance sheet. The book value of our assets totaled $30.4 billion. down 678 million kroner in the quarter, partly explained by the mentioned peak in energy's impairment of 97 million US dollars, partly offset by a value increase of the investment in Arkiboy Marine of 456 million kroner. And in our accounts, we use the lowest of historic cost and market values. The book value of our equity was 20.4 billion kroner, down 1.7 billion, explained by dividend paid in the fourth quarter of 1.1 billion, and allocation of ordinary dividend for 2023 of 1.2 billion. This was partly offset by profit before tax in the quarter of 0.6 billion kroner. The fair value adjusted assets or gross asset value totaled 72.1 billion. Subtracting for debt, the net asset value was 62.1 billion at the end of the quarter. This equaled 835 kroner per share after allocation for dividend. And the value adjusted equity ratio was 86%. ARCA had liabilities of 10 billion kroner at the end of the quarter that mainly consisted of bond debt and bank loans totaling 8.6 billion. The liabilities at year-end also includes the 1.2 billion kroner dividend allocation for 2023, representing 15.5 kroner per share. And as I even mentioned, the Board of Directors is proposing that the annual general meeting authorizes the Board to pay a potential additional cash dividend during 2024 based on the 2023 annual accounts in line with previous year's practice. Ocker's financial position remains robust with a total liquidity buffer of 6.3 billion kroner, including undrawn credit facilities. The net interest-bearing debt was 3.1 billion at the end of the quarter, up from 2.7 billion in the previous quarter due to a lower cash position. Our loan-to-value was 11%, and close to 80% of our gross asset value is in listed assets and cash. In terms of our debt maturity profile, the average debt maturity was 2.6 years at the end of the quarter. Taking into consideration available credit lines and extension options on our bank loans, the implicit maturity of our total loan portfolio was 3.9 years. At quarter end, we had 5 billion of bonds outstanding and bank loans of 3.6 billion kroner. Our drawn bank loans consisted of a U.S. dollar-denominated loan of 1.5 billion kroner a Norwegian kronor denominated loan of 1 billion, and a 1.1 billion kronor euro denominated Solskjern loan. Relating to current year's debt maturities, we have, after quarter-end, successfully issued a new 1.25 billion kronor senior unsecured bond, maturing in 2029 at competitive terms. In conjunction with the bond issue, we also bought back a nominal amount of 504 million of the 2 billion kroner Acre 15 bond maturing in November this year. In addition, we have established another 2 billion kroner RCF with a key relationship bank, with half of it maturing in 2027 and the other half in 2029. This increases our total RCF capacity up to 10 billion kroner. Following these changes, the average debt maturity today is 3.1 years or implicitly 4.3 years when including available credit lines and extension options. Then to the income statement. The operating expenses in the fourth quarter were 106 million kroner. During the quarter, Aker booked a total dividend income from Aker BP and AMSC of 1.8 billion. The net value change in the quarter was positive 337 million, mainly explained by value increases in Aker Biomarine of 456 million and CT of 104 million. This was partly offset by value decreases in ARCA Horizons of $109 million and Aberlea of $104 million. Our net other financial items were negative $1.4 billion, mainly explained by the mentioned peak in energies impairment of $97 million in the quarter, in addition to a loss on the AMSC-TRS agreements of $328 million. And the profit before tax was then 584 million kroner in the quarter. Thank you. That was the end of today's presentation, and we can then move on to Q&A.

Thank you, Sain Oscar. So your first question is about NGOs. So, Eivind, in your CEO letter, you discuss the increasingly active role of NGOs and underline the importance of recognizing the complexity of energy systems. In light of the ongoing court case in Norway, do you think the NGOs are being too impatient in what they see as a lack of climate action? And how does Aker navigate this new and evolving environment?