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spk00: Hi, everyone, and welcome to the presentation of Aaker's Third 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, Øyvind Eriksson, who will take you through the quarterly highlights and recent developments in the portfolio. Our CFO, Sveino Skaustoknes, will then take you through the quarterly financials in more detail. After the presentation, we will host a prepared Q&A session. And in case you have further questions or feedback, please do not hesitate to get in contact after the presentation. And with that, I hand it over to Eivind Eriksson.
spk02: Thank you, Fredrik, and good morning, everyone. Let me start by revisiting AHQ's three main strategic priorities. One, increased cash flow with a focus on increased dividends, both received and paid. 2. A more focused portfolio of investments, over time prioritizing fewer companies with potential for secular growth, good profitability and cash flow generation. Net asset value, where our objective is to achieve an annual growth of at least 10% on average over the years. Aker ended the third quarter with a more streamlined and cash-generative investment portfolio. In line with our commitment to deliver value to shareholders, we announced this morning that our board has proposed to pay an additional 35.5 Norwegian kroner per share in cash dividend and to enhance our dividend policy to 4-6% of net asset value annually. The dividend announced today comes in addition to the 15.5 kroner per share paid in the second quarter. In total, we are distributing 3.8 billion kroner, or 51 kroner per share, in cash dividend to our shareholders this year. despite a decrease in our net asset value this quarter, primarily due to lower oil prices. These actions reflect how ARCU plays to its strengths, including active ownership and transactional capabilities to drive value creation. I will get back to this in a moment, but I first want to mention a few recent transactions in the portfolio that highlight how this is yielding results. First off, Aki Biomarine distributing an extraordinary dividend of 3.9 billion kroner following the closing of the feed ingredients transaction with American Industrial Partners, or AIP. Next, Aker Solutions Board has proposed 10 billion kroner of extraordinary dividends to shareholders after seeing strong operations over time and receiving all proceeds from the one subsidy JV transaction with SLB. Aker will receive 4.1 billion kroner in upstream cash from the extraordinary dividend payment. And lastly, Solsta Maritime announcing it will start paying quarterly dividend to shareholders, starting with 233 million kroner for the third quarter. As a result of this, an American shipping company has also increased its quarterly dividends to 0.6 kroner per share. In total, 22 million kroner to occur. In sum, these transactions, as well as steady dividends from Aker BP, means that upstream cash to Aker is estimated to be north of 11 billion kroner this year, a strong increase from 4.4 billion last year, 2.8 billion in 2022, and a negative cash from where we started back in 2009. Now, back to this morning's announcement on a new dividend policy of 4-6% of net asset value, up from 2-4%. ARKR's objective of 10% annual net asset value growth implies growing dividends with growing net asset value. As you can see from the graph, ARKR has a strong track record of dividend distributions. Today's announced decision is rooted in a commitment to a balanced approach to capital allocation, ensuring continued investment in growth opportunities, maintaining a solid, transparent and liquid balance sheet, while delivering consistent returns to our shareholders. Furthermore, The recommendation aims to balance dividend payments, operational costs, and net finance expenses with upstream dividends to sustain and enhance Aker's credit profile. This strategy reflects our objective to offer an attractive dividend to shareholders by preserving financial flexibility, investment capacity, and maintaining Aker's investment grade rating. Moving on to the share price development. In the third quarter, the energy sector was negatively impacted by the 15.3% decrease in the Brent oil price. We felt the effects of this in our portfolio, and the ARCA share decreased by 10.9% in the quarter to 548 kroner. In the same period, the Oslo Stock Exchange Benchmark Index decreased by 0.4%. While the graph on this slide shows the impact of market volatilities and external factors, including fluctuating Brent prices on our share price over the last three years, it's worth highlighting that including today's announced cash dividend, Acre has distributed an accumulated dividend of 122 kroner per share in the same period. Aker's value-adjusted equity ratio was 86% at the end of the period. Since Aker's relisting in 2004, shareholders have enjoyed an annual return of 24%. For the third quarter, our net asset value ended at 57 billion kroner, down from 63.9 billion last quarter. The decrease was mainly driven by RKBP, our largest investment, being impacted by the mentioned decline in the Brent oil price. Year-to-date, the net asset value has decreased from 63.2 billion to 57 billion after dividends paid. Again, largely driven by our investment in Aki BP, which decreased by 6.7 billion kroner in the period. This was somewhat offset by a value increase in Aki Biomarine during the period of 3.3 billion kroner. Now, taking a closer look at Aki's gross asset value, which stood at 66.2 billion kroner at the end of the quarter. The industrial holdings portfolio, valued at 55 billion, accounted for 83% of the total, while financial investments and cash, valued at 11 billion, accounted for 17% of the total. With 70% of our gross asset value in listed assets and cash, our portfolio remains liquid. Our ownership agenda is centered around value creation backed by a strong track record in distribution of dividends to shareholders. Recent transactions and announcements, as previously mentioned, clearly demonstrates our commitment to this strategy. Despite short-term fluctuations in value, RKBP remains a cornerstone of our portfolio, making up nearly half of our gross asset value. The company continues to demonstrate strong operational performance. As the graphs on this slide demonstrate, AgriBP has improved its production efficiency, lowered production costs and emissions, matured resources to reserves, and added new resources to its portfolio. The field development projects are progressing as planned, and the terving field was successfully put on production five months ahead of schedule. Moreover, the great Johan Svedrid field, in which AKBP holds 31.6% stake, continues to outperform expectations. With a 95% production efficiency among the highest in the world, CO2 emissions of just 0.67 kg per barrel, nearly 90% below the global average, and a production cost of approximately $2 per barrel, the field has been a highlight in the European oil industry, and continues to be a key contributor to delivering secure and reliable energy to Europe. RKBP expects the field to produce at peak levels well into 2025. All in all, based on its solid track record, both in production and exploration, coupled with its clear growth path, Aker BP will continue to be a significant value driver in Aker's portfolio. Now, let's take a closer look at some of our unlisted assets, starting with Aquaculture and Salmar Aker Ocean. The fish farming industry has experienced slow supply growth driven by biological challenges, environmental concerns and regulatory constraints. At the same time, global demand has increased strongly, driven by population growth and increasing preference for healthy food and sustainable protein sources. This imbalance in supply and demand is projected to continue moving forward. Salmar Aker Ocean is addressing several of the challenges related to traditional fish farming with its innovative semi-offshore and offshore technologies. With its existing production facilities, the current harvesting capacity is 13,000 tons of salmon. The company's second generation semi-offshore facility is already in the feed phase targeting 8 000 tons of additional capacity in the medium term the company has successfully completed four production cycles in total delivering impressive results including four time lower mortality rates than traditional salmon farming with nine times fewer lice treatments The grow out period is also significantly faster compared to traditional farming. This means improved fish welfare, which again will result in high value, and we are confident in continued growth and expansion both for offshore and semi-offshore operations. Additionally, the results bolster plans for a future IPO aimed at further driving Salmar Ocean's ambitious growth strategies. Aker appreciates the fact that Salmar has left with Salmar Aker Ocean the opportunity to pursue this exciting future for the fish farming industry. Next, Cognite. The company's strong commercial development continued in the third quarter with revenue up 23% compared to the same period last year. More importantly, Annual Recurring Revenue, or ARR for short, marked a new all-time high by increasing to 92 million USD. Comparing this to the same period last year, ARR is up by as much as 44%. Given that this important matrix indicates what lies ahead, it means we expect revenue and profitability to increase moving forward. with the growing share of software-as-a-service contracts in the revenue mix. Furthermore, the company is enjoying increased demand for its AI product offering, Atlas AI, in the market. I have previously discussed how AI is nothing short of a game-changer for Cognite. By leveraging AI technologies, companies can improve decision-making processes, reduce costs and increase productivity, which is why, as companies evolve, the next generation of operations must prioritize accessible, usable and valuable data beyond traditional closed ecosystems. I have also mentioned the investments made to expand Cognite's presence in North America, and the company recently decided to move its headquarters to the US. Needless to say, the US is the global epicenter for the tech industry. The US market offers strategic advantages in terms of access to customers, partners, talent, innovation, and in driving economies of scale. We believe this will be a significant strength for Cognite and boost long-term performance. In conclusion, as we navigate complexities of global markets, our commitment to growth, innovation and generating shareholder value remains unwavering. We are used to managing volatilities, including those inherent to our industries. Moving forward, the key words are focused, optimized portfolio investments, evaluating strategic alternatives using our transactional capabilities and industrial network, increasing dividend and net asset value growth, which all supports our target of delivering attractive shareholder value creation. We are distributing 35.5 kroner per share in cash, bringing the total dividend paid in 2024 to 51 kroner per share, or 3.8 billion kroner in total. Additionally, we are increasing our dividend policy for the first time since 2004 to 4-6% annually of net asset value. Looking ahead, we will continue to build on our strong foundation, delivering long-term value for our shareholders and contributing positively to the industries and communities we serve. That concludes my portion of today's presentation. I now hand it over to our CFO, Svein Oskar, who will take you through the third quarter financials.
spk01: Thank you, Øyvind, and good morning. I will start out spending a few minutes on Akers Financial Investments before I go through the third quarter results in some more detail. The Financial Investments portfolio accounted for 17% of Akers total assets or 11.3 billion kronor, down 908 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 Aker's cross-asset value or 625 million kronor. This was up 167 million from the previous quarter. The cash inflows were dividends received of 4 billion kronor, of which 3.1 billion from Aker Biomarine 894 million from Aker BP and 14 million from AMSC. The main cash outflows in the quarter included debt repayment of 1.9 billion kroner, in addition to net investments in portfolio companies totaling 1.5 billion kroner, largely due to our investment in feed ingredients. Additionally, there were net loans to portfolio companies of 108 million kronor. Cash outflow for operating expenses and net interest were 286 million kronor in the quarter. Listed investments included in our financial portfolio represented about 3% of Aker's total assets at the end of the quarter, or 2.1 billion kronor. This was down 389 million from the previous quarter, driven by value decreases on all our listed financial investments. As a reminder, our investment in Solsta Offshore is reported as part of industrial holdings from Q1 2024 and the comparative figures have been represented. Next, other financial investments that combined represented 13% of Aker's gross asset value, or 8.6 billion in total. Interest-bearing receivables totaled 4.2 billion, down from 4.4 billion in the previous quarter, and include a 2 billion kronor loan and a 1.3 billion kronor convertible loan to Aker Horizons. The net decrease in the quarter was mainly due to an impairment of receivable from a non-core asset. Other equity investments totaled 1.7 billion, down from 2.1 billion in the previous quarter. The decrease was mainly due to a negative value adjustment of our investment in ICP of 234 million kroner in the quarter. Non-interest bearing assets totaled 0.6 billion down from 0.9 billion last quarter, primarily due to a negative value adjustment of 137 million on the AMSC's total return swaps and the conversion of a 119 million kroner non-interest bearing receivable in real estate to equity investments. Then let's move to the third quarter financial highlights for Aker ASA and holding companies. And I will start with the balance sheet. As a reminder, in our accounts, we use the lowest of historic cost and market values. And as previously mentioned, we have received 3.1 billion kroner in dividends from Aker Biomarine in the quarter. This dividend is partly booked as financial income, with 1.3 billion kroner recorded in the income statement, and partly as a repayment of capital, reducing the book value of our investment in Aki Biomarine by 1.8 billion. At quarter end, the book value of our investments amounted to 27.9 billion kroner, a decrease of 386 million during the quarter. This reduction is primarily explained by the mentioned 1.8 billion repayment of capital from Aker Biomarine, in addition to negative value adjustments of our investments in Akastur by 280 million, Solsta Offshore by 264 million and in ICP by 234 million. This reduction is partly offset by the reinvestment in feed ingredients of 1.6 billion. In addition, an interest being receivable of 0.7 billion has been converted to equity related to real estate. The book value of our equity was 24.7 billion kroner at quarter end, up 580 million, explained by profit before tax in the quarter. The fair value adjusted assets or gross asset value totaled 66.2 billion. Subtracting for debt, the net asset value was 57 billion at the end of the quarter. This equaled 767 kronor per share and the value adjusted equity ratio was 86%. Aker had liabilities of CKR 9.2 billion at the end of the quarter that mainly consisted of bond debt and bank loans totalling CKR 8.9 billion. Aker's financial position remains robust with a total liquidity buffer of CKR 7.9 billion, including undrawn credit facilities and liquid funds. The net interest-bearing debt was 4.1 billion at the end of the quarter, down from 5.2 billion in the previous quarter. Our loan-to-value was 13%, and 70% of our gross asset value is in listed assets and cash. In terms of our debt maturity profile, the weighted average debt maturity was 3.2 years at the end of the quarter. During the quarter, we have repaid bank loans of 1.9 billion kroner and the Acre 15 bond will be repaid on maturity later this month. Taking available credit lines and the extension options on the bank loans into consideration, the implicit maturity of our total loan portfolio would be more than 5 years. And Aker's BBB minus investment grade rating was reaffirmed by Scope in August. Then to the income statement. The operating expenses in the third quarter were 106 million kroner. During the quarter, Aker booked a total dividend income from Aker Biomarine, Aker BP and AMSC of 2.2 billion. As already mentioned, the total cash dividend from Aki Biomarine is partly booked as financial income with 1.3 billion kronor and partly as repayment of capital, reducing the book value of our investment in Aki Biomarine by 1.8 billion. The net value change in the quarter was a negative of 974 million, mainly explained by value decreases in McAstor of 280 million, Solsta Offshore of 264 million and ICP of 234 million. Our net other financial items were negative of 494 million, mainly explained by impairment charges of non-core assets of 221 million and negative value adjustment on the AMSC-TRS agreements of 150 million. And the profit before tax was then 577 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. So, Eivind, starting off with your largest asset, AcroBP. The Johan Seidrup field continues to deliver impressive production levels. What would you reflect on regarding the field's development so far and moving forward?
spk02: Johan Sverdrup is probably the most attractive offshore oil field in the world and a great asset in the RKBP portfolio. Johan Sverdrup continues to outperform expectations and plans and we expect the current production levels to go far into next year. And even more importantly, it's a field with the lowest cost and the lowest CO2 emissions per barrel produced in the world. So we are grateful about the fact that AKBP owns 31.6% of Johan Svedrup.
spk00: Then over to Acre Solutions with the exciting 10 billion kroner dividend announced last week. It seems like an impressive conclusion to the transformative 1 sub C transaction. Any reflections to share?
spk02: Well, the 1 sub C transaction was important to Acre Solutions and Acre Solutions streamlining and focus on the new core business. But even more importantly, together with SLB, we created what I believe is by far the best subsea production system company in the world. And Akir Solutions kept a 20% shareholding in the one subsea joint venture. So we are now even more focused on how OneSepsi continues to develop and how we expect the value on the Arco Solutions 20% stake to perform in the years to come. So a great transaction, but also a very, very exciting OneSepsi company created together with our good partners at SLB.
spk00: All right, thank you. And over to Aker Carbon Capture. The company stated it is in the process of determining its future strategy and structure, including the conclusion for the use of proceeds from the SLB transaction. What is Aker's view on the use of proceeds?
spk02: Well, we appreciate that the Accu Carbon Capture Board is prudently considering the balance sheet and their strategy going forward. And reading media, it sometimes looks like investors expect us to empty ACC and move on with a 20% stake only. But we should keep in mind that we have a responsibility as a 20% shareholder to support the company also going forward. So I appreciate that SSE has guided the market as they have done so far, but it's also important that they take the time needed in order to make the right decisions.
spk00: Right. Speaking of dividends, you announced today a significant dividend of 35.5 kroner per share. And at the same time, you are increasing Akers dividend policy. Anything to share on the background for this exciting news?
spk02: Well, that's a consequence of the strategy pursued the last period of time to focus on fewer, larger and dividend paying and portfolio companies going forward. We have a target to generate 10% growth in our net asset value year over year. That combined with an even more attractive dividend policy. payment of dividend in the range between 4% to 6% of NAV annually. Makes the value proposition by Aker to shareholders even more attractive going forward. Definitely.
spk00: On the topic of strategy, in your CEO letter today, you discuss Aker's strategic priorities. What are your main focus areas moving forward?
spk02: Well, this is in line with what we have talked about in the past. So basically nothing changed other than the fact that we are executing on our strategy to streamline the portfolio, focusing on larger, fewer and dividend paying holdings, which enables us to pay an even more attractive dividend to Aker ASA shareholders.
spk00: Thank you. And the final question around Salmar Aker Ocean, which has delivered impressive results from its production cycles so far. In your presentation, you mentioned an IPO could be an option for the future. Anything you could say about potential timing on this?
spk02: Well, first and foremost, I think it's very exciting to see how the Salma-Iraq Ocean develops and how we have already proven that the efficiency of fish farming offshore and semi-offshore is competitive compared to conventional fish farming. with far better results, also measured by fish health and pollution. As far as IPO is concerned, the mindset is the same in Sandmar Aker Ocean as it is throughout the Aker portfolio. For us, it's important to make our portfolio companies IPO ready, and then a market will decide on timing.
spk00: Thank you very much. That was the end of our presentation today. Thank you all for listening in.
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