Aker Asa A Shs

Hi everyone, and welcome to the presentation of Aaker's first quarter results 2024. 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 Eriksen, who will take you through the quarterly highlights and recent developments in the portfolio. Our CFO, Svein Oskar Stoknes, 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. Aker closed the first quarter with high activity across the portfolio and with continued momentum for growth. Important strategic initiatives are progressing as part of our active ownership agenda for long-term value creation. Two of the main events during the quarter were the completion of the refinancing of Solstad and the agreement between Arca Carbon Capture and SLB to combine their respective carbon capture businesses in a new and stronger joint venture. I'll come back with more details around this on separate slides. During the quarter, AKI BP continued to deliver strong oil and gas production, coupled with industry-leading low emissions and low production costs. The company's field development projects are progressing well, and construction activity is ramping up at multiple sites in Norway and abroad. As part of AKI BP's largest ever field development program, The HANS project has been completed and production started in April this year. The field development program will significantly lift Aki BP's production levels as the projects continue to start up over the coming years. Moving on to Aki Solutions. In the first quarter, the company delivered high revenue growth and improved profitability as several of its ongoing projects reached progress milestones. With an increasing activity level, solid order backlog and high tendering activity, the company has better visibility on activity the next few years than ever before. Over to Aker Biomarine, which continued its positive development, delivering both increased revenues and margins in the first quarter, as well as increased krill production volumes. In February, Aker Biomarine announced that it has initiated a process to explore strategic alternatives for the business area feed ingredients. which is the world's largest krill harvester and producer of krill meal. This is in line with Aker's ownership agenda of maximizing shareholder value of creation over time. Aker Horizon is facing continued negative capital market sentiment for the renewable sector. However, during the first quarter, the company advanced on several projects. Mainstream Renewable Power is currently progressing the construction of several projects across countries including Chile, South Africa and the Philippines. Mainstream's cost improvement program has also started to yield positive results, showing around 30% improvement year-over-year. In total... ArcHorizon's portfolio of development projects increased by 3.4 gigawatts during the quarter to 22.6 gigawatts, with 10 gigawatts of these having the greatest potential for near-term value creation. And after quarter end, Acosta received a positive arbitration settlement of 108 million US dollars, including reimbursement of legal costs related to a dispute with Yurong Shipyard. The amount excludes interest payments, which will be resolved in due course. We also had another exciting announcement last week. with appointment of Christian Rynding Tønnesen as new senior partner and CEO of ICP Infrastructure. Over the last 14 years, Christian has held the role as CEO of Statkraft, Europe's largest producer of renewable energy and a leading player in global energy markets. I've had the privilege of knowing and collaborating with Christian for many years, and he brings with him a unique network, solid knowledge, and a proven track record that ICP will benefit greatly from moving forward. In sum, ARCA experienced strong operations and high activity across the portfolio during the quarter, and we demonstrated continued progress on our strategic objectives, including further deepening of our partnership with SLB through the joint venture in carbon capture, which I'll come back to. Arcus' commitment to long-term industrial development and shareholder value creation remains firm. Moving forward, our approach will be even more focused. We will concentrate on larger portfolio companies within key global megatrends that has the potential for secular growth, good profitability and cash flow generation. Instead of spreading our effort across multiple sectors and companies, We will devote more time and resources to companies where Arcus' industrial ecosystem can make a difference and continue to generate value. When allocating capital, we will give priority to cash-yielding investments that also generate a running return in the form of dividends or interest income. contributing meaningfully to our objective of increased and diversified upstream cash. Our method of work will include assessing strategic alternatives, divestments, and reinvestment opportunities, both within our listed portfolio and within more recent startups in which Aker has invested early-stage capital. The aim is both to increase our ability to seize value-adding investment opportunities and to ensure continued predictable dividends to shareholders in the years to come. Our objective is to achieve an annual growth in net asset value of at least 10% after dividends and to pay 2-4% of the net asset value in our annual dividends to shareholders. At the same time, we also have the ambition to reduce our net interest-meaning debt from today up to 2027 from around 5 billion Norwegian kroner. Let me share two recent events that illustrate our more focused approach. During the quarter, we continue to further strengthen our collaboration with SLB by forming a joint venture between Aaker Common Capture and SLB. This transaction marks another important step to Aaker and SLB's existing partnerships within Subsea with Aaker Solutions and within Digitalization with Cognite. Aker Carbon Capture and SLB will benefit from having highly complementary technology portfolios and a broader geographical presence. This transaction will accelerate international expansion, growth, and help bringing carbon capture solutions to market more quickly and more economically. The combined company will be owned 80% by SLB and 20% by Aker Carbon Capture. At closing, SLB will pay 4.12 billion kroner in cash to Aker Carbon Capture for the 80% ownership. In addition, Aker Carbon Capture will retain 400 million Norwegian kroner in cash and will, in addition, be entitled to performance-based payments of up to 1.36 billion kroner, subject to certain milestones. Then to Solstad. 11.4 billion kroner of bank debt was refinanced in January this year, and a total of 3.25 billion kroner of new equity has been injected, of which Aker contributed 2.25 billion kroner and AMSC 1 billion kroner. The next step is 750 million kroner share issue in Solsta Maritime, planned in June, guaranteed by Aker, where all shareholders in Solsta offshore outside Aker will be able to invest in Solsta Maritime on the same terms as Aker. Following the share issue, the intention is to list Solsta Maritime at the latest within the following 12 months with one of the industry's most modern fleets of high-end vessels a healthy balance sheet and backed by up the aqua group's substantial industrial competence source the maritime is well positioned for growth with the strong offshore market as a backdrop The company's ambition is to initiate quarterly dividend payments during the second half of this year. Now, taking a closer look at Arcus' gross asset value, which stood at 71.7 billion kroner at the end of the quarter. 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 kroner, accounted for 16% of the total. From the first quarter onwards, our investments in Solsta is part of Aker's industrial holdings segment. As previously stated, a key strategic objective for Akku remains to continue to increase and diversify upstream dividends over time. As part of this, and backed by a positive market outlook, Solsta is well positioned to provide valuable upstream cash to Akku moving forward. With 74% of our gross asset value in listed assets and cash, our portfolio remains liquid. Moving on to the development in Aker's net asset value, which ended the quarter at 60.4 billion Norwegian kroner. This was down from 63.2 billion last quarter. The reduction was mainly driven by our investment in Aker BP, with a value reduction of 2.6 billion kroner in the period. This was partly offset by a positive value change for our investment in Aker Biomarine by 1.2 billion kroner. Next, the share price development. In the first quarter, Aker share price decreased by 6.4% to 623.5 kroner. This compares to a 1.6% increase in the Oslo Stock Exchange Benchmark Index and a 12.7% increase in the Brent Oil Price. ARKY's value-adjusted equity ratio was 84% at the end of the period. In summary, ARKY started the year with high activity across the portfolio. Although Arcus' strategy and commitment to long-term industrial development stays firm, our approach will be more focused moving forward. The key words are larger portfolio companies, prioritizing cash-yielding investments, evaluating strategic alternatives, and increasing and diversifying upstream cash. Our method of work will remain active ownership and capital allocation, including mergers and acquisitions. Some of our main priorities continue to be supporting ARCA BP and ARCA Solutions execution of the record-large field development projects, supporting continued development and growth in our software portfolio, and continue to pursue strategic initiatives that will drive value across our portfolio. In sum, this all support of a target of increased shareholder value creation moving forward. That concludes my portion of today's presentation. I now hand it over to Sven-Oskar Stocknes, who will take us through the quarterly financials.

Thank you, Eivind, and good morning. I will start off spending a few minutes on Aker's financial investments before I go through the first quarter results in some more detail. And as Eivind mentioned, please note that our investments in Solstad have been moved from the financial investments segment to industrial holdings, and historical numbers have been represented. The financial investments portfolio accounted for 16% of AUKUS total assets, or 11.6 billion kroner, up 712 million 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 Acre's gross asset value or 699 million kroner. This was down 75 million from the previous quarter. The cash inflows were primarily changed in net debt of 2.2 billion kroner and dividends received of 855 million kroner, of which 842 million from Acre BP and 13 million from AMSC. The change in net debt was related to the issuance of a new 1.25 billion Norwegian kroner denominated bond and a draw on credit facilities of 2.6 billion. This was offset by a 0.5 billion down payment on the Aker 15 bond and a full repayment of the Solskjaer loan of 1.2 billion. The main cash outflows in the quarter were primarily investments in portfolio companies of 2.4 billion, of which 2.25 billion in Solstar Maritime, and loans to portfolio companies of 449 million, of which 276 billion to Cognite and 95 million to Acastor. And cash outflow for operating expenses and net interest were 286 million kroner in the quarter. Listed investments included in our financial portfolio represented about 2% of Aker's total assets at the end of the quarter, or 1.7 billion kroner. This was a decrease of 199 million from the previous quarter, mainly driven by our investment in Philly Shipyard. And again, as a reminder, our investment in Solsta Offshore is now reported as part of industrial holdings, and the comparative figures have been represented. Next, other financial investments that combined represented 13% of Acre's gross asset value, or 9.1 billion in total. Aker's real estate holding, Aker Property Group, stood at a book value of 1.4 billion at the end of the quarter, up from 1.3 billion in the previous quarter. The increase was driven by a loan issued to Aker Property Group of 40 million in the quarter. Interest-bearing receivables totaled 4.6 billion, up from 4.1 billion in the previous quarter. The increase was mainly driven by a loan issued to Cognite of 276 million, in addition to a loan of 95 million to Acostor. The total amount of interest-bearing receivables include a 2 billion kroner loan and a 1.3 billion convertible loan to Acre Horizons. Other equity investments totaled 2.1 billion up from 1.6 billion in the previous quarter. The increase was mainly driven by an increased investment in ICP of 159 million kroner and value increase of our investment in CT of 124 million. Then let's move to the first quarter financial highlights for Aker ASA and holding companies. And let me start with the balance sheet. The book value of our assets totaled 34.2 billion, up 3.8 billion kroner in the quarter, partly explained by the investment in Solstam Maritime of 2.25 billion and value increase in Akka Biomarine of 1.2 billion. This was partly offset by a value decrease in Akka Horizons of 583 million kroner. And in our accounts, we used the lowest of historic cost and market values. The book value of our equity was 21.8 billion kroner, up 1.4 billion, explained by profit before tax in the quarter. The fair value adjusted assets, or gross asset value, totaled 71.7 billion, and subtracting for debt, the net asset value was 59.3 billion at the end of the quarter. This equaled 798 kroner per share after allocation for dividend, and the value-adjusted equity ratio was 83%. Ocker had liabilities of 12.4 billion kroner at the end of the quarter that mainly consisted of bond debt and bank loans totaling 10.9 billion kroner. The liabilities at quarter end also includes the 1.2 billion kroner dividend allocation for 2023, representing 15.5 kroner per share, and this dividend was distributed end of April. Ocker's financial position remains robust, with a total liquidity buffer of 5.5 billion kroner, including undrawn credit facilities. The net interest-bearing debt was 5 billion at the end of the quarter, up from 3.1 billion in the previous quarter, mainly due to the investment in Solsta Maritime. Our loan-to-value was 14%, and 74% of our gross asset value is in listed assets and cash. In terms of our debt maturity profile, the weighted average debt maturity was 3.1 years at the end of the quarter. During the quarter, we have successfully issued a new 1.25 billion kroner senior unsecured bond maturing in 2029 at competitive terms. In conjunction with the bond issue, we also bought back a nominal amount of 0.5 billion of the 2 billion kroner Aker 15 bond, maturing in November this year. In addition, we repaid the 100 million euro Solstein loan at maturity in the quarter. We have also established another 2 billion kroner RCF with a key relationship bank in the quarter, with half of it maturing in 2027 and the other half in 2029. This increases our total RCF capacity up to 10 billion kroner. We have drawn 2.6 billion from our total credit facilities during the quarter, and at quarter end we had 5.7 billion of bonds outstanding and bank loans of 5.2 billion kroner. In April, we successfully issued a new seven-year bond of 500 million kroner, repurchased another 75 million of the Acre 15 bond, extending the maturity on the other two bank loans and added new extension options. Taking these subsequent changes into consideration, combined with available credit lines and the extension options on the bank loans, the implicit maturity of our total loan portfolio would be more than five years. Then to the income statement. The operating expenses in the first quarter were 106 million kroner. During the quarter, Aker booked a total dividend income from Aker BP and AMSC of 859 million. The net value change in the quarter was positive 800 million, mainly explained by value increases in Aker Biomarine of 1.2 billion and CT of 124 million. This was partly offset by value decreases in occurrences of 583 million and a cost of 72 million. Our net other financial items were negative 145 million, and the profit before tax was then 1.4 billion kroner in the quarter. Thank you. That was the end of today's presentation, and we can then move on to Q&A.