q2 2014 interim report presentation - agrinos q2 2014 interim rep… · •onboarding distributors...

Q2 2014 INTERIM REPORT PRESENTATION

AUGUST 28TH, 2014

CEO D. RY WAGNER AND CFO JØRGEN ANDERSEN

Cautionary statement on forward-looking

statements

Certain statements in this document constitute "forward-looking statements.'' All statements other than statements of historical facts included in this document, including those regarding our future financial position and results, business strategy, plans and objectives of management for future operations, including development plans and statements on industry growth are forward-looking statements. These statements may be identified by words such as "expects," "looks forward to," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "project" or words of similar meaning. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, business strategy, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. Factors that could cause our actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, changes in the political, economic or regulatory conditions in the markets in which we operate, and currency exchange fluctuations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

SECOND QUARTER 2014 INTERIM REPORT PRESENTATION | 2

Progress, sales growth and R&D expansion Highlights Q2 and YTD 2014

• In a transitional year for Agrinos, Q2 is marked by progress

• Experiencing growth and increased technology adoption in key geographies

• Sales revenue mainly driven by promising growth in the US and new partner in China

• Strengthening U.S. presence by moving corporate functions from Norway to the U.S.

• Expanding R&D activites to support commercial progress short and longer term

Left: Transplants treated with Agrinos technology. Right: Davis R&D facility location, U.S.


Sharpened focus on key markets and crops in

the Americas, Europe and Asia

USA

• Commercial sales since 2011 • Focus on high value crops and broad

acre • Experiencing growth through

expanding distributor relationships

Mexico

• Substantial HYT roll-out since 2012

• Focus on profitability • Exploring options

Brazil

• First sales in 2013 • Focus on high value crops and

broad acre • Onboarding distributors inn

preparation for sales growth

China

• Ccommercial sales since 2011 • High value crops and base crops • Growing with new fertilizer

partner and distributor

India

• Commercial sales since 2012 • Soybean, rice, potato focus • Onboarded three distributors

Malaysia/Indonesia

• Palm oil focus • Awaiting further trial results to

enable wider technology adoption and sales growth

Europe

• Commercial sales since 2011 • Focus on high value crops in

Spain through distributors


Financial summary Q2 2014 Key items

• Q2 recognized sales revenue of USD 3.9m in the quarter, up by USD 3.6m compared to Q1. The increase is driven by the US and China. No sales recognized in Mexico.

• Q2 analytically restated sales revenue of USD 5.9m in the quarter, driven by deployed volume of approx. 260 000 units in Mexico

• EBITDA pre earn-out: USD – 3.4m vs USD -6.5m in Q1, reflecting strong sales revenue growth in the quarter

• Q2 gross cash burn was USD 7.0m – in line with the gross cash burn of USD 6.9m in Q1. R&D expenditures of USD 1.1m in the quarter

• Number of employees reduced from 191 to 158 during the quarter. Plans implemented to further streamline the organization. USD 0.7m charged to P&L as redundancy costs to cater for reduction in manning and moving of corporate functions to the US.

• Cash collection of USD 3.9m in Q2, driven by the US, China and Mexico. Cash position ended at USD 15.7m, a reduction of USD 3.1m during the quarter.


Group H1’14 sales revenue on par with FY’13 Sales revenue development Q1’13 - Q2’14


Group sales revenue Quarterly and accumulative per year, USD million

1,3

0,7

1,1

1,4

0,3

3,9

1,3

2,0

3,0

4,4

0,3

4,2

-

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2

0,6

1,3 1,5 2,1

0,2

1,9

-

1,0

2,0

3,0

2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2

US sales revenue Quarterly and accumulative per year, USD million

0,7 0,7

1,6

2,3

0,1

2,2

-

1,0

2,0

3,0

2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2

RoW sales revenue Quarterly and accumulative per year, USD million

HYT Deployment Mexico Quarterly and accumulative per year, thousands units

492 871

1 210 1 495

358 617

-

1 000

2 000

2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2

• Strong growth in sales revenue. USD 4.2m YTD 2014 vs USD 2.0m YTD Q2 2013

• Weak deployment development in Mexico

Profit and loss Condensed consolidated (unaudited)

• Q2 recognized sales revenue of USD 3.9m - no revenue recognized for sales to distributors in Mexico in the quarter

• Cost of goods sold of USD 1.1m reflects the relatively high costs for volumes shipped to China

• Salaries and personnel costs impacted by the provisions of USD 0.7m due to reduction in manning and moving of corporate functions to U.S.

• R&D expenses amounted to USD 0.9m in the quarter. Other operating expenses impacted by reversal of previous provisions and general reduction in operational costs

• No earn-out recorded in the quarter due to weak results in the Mexican market

• EBITDA pre earn-out negative USD 3.4m


USD H1 2014 Q2 2014 Q1 2014 YE 2013

Sales revenue 4 189 525 3 859 964 329 561 4 392 522

Other operating revenue 390 915 115 415 275 500 4 942 853

Operating revenue 4 580 440 3 975 379 605 061 9 335 375

0

Cost of goods sold -1 213 780 -1 131 537 -82 243 -906 676

Salaries and personnel costs -6 461 988 -3 515 163 -2 946 825 -14 128 392

Depreciation and amortisation -1 323 391 -673 861 -649 530 -3 691 328

Other operating expenses -6 857 854 -2 753 128 -4 104 726 -75 514 401

Earn-out 0 0 0 6 710 264

Total operating expenses -15 857 013 -8 073 689 -7 783 324 -87 530 533

Operating income -11 276 573 -4 098 310 -7 178 263 -78 195 158

Net financial income / expense (-) 509 471 1 255 139 -745 668 8 341 919

Net income / loss (-) before taxes -10 767 102 -2 843 171 -7 923 931 -69 853 239

Tax expense -105 281 -105 281 0 916 631

Minority Interest -6 574 48 211 -54 785 -445 500

Net income / loss (-) -10 865 809 -2 996 663 -7 869 146 -68 491 108

Balance sheet – assets Condensed consolidated (unaudited)

• Inventories down to USD 11.3m at the end of the quarter, reflecting increased sales and no production in the quarter

• Accounts receivable up by USD 1.3m during the quarter. Includes invoiced interest costs and services in Mexico of USD 0.7m. Accounts receivable towards the distributors in Mexico ended at USD 21.3m in Q2

• Other receivables decreased to to USD 11.6m during the quarter. In the receivables figure is a recoverable VAT of USD 9.8m


USD 06.30.2014 03.31.2014 12.31.2013

Assets

Goodwill 7 940 390 8 442 550 8 658 890

Other intangible assets 1 782 122 1 835 122 1 894 907

Deferred Tax Asset 1 027 230 1 016 779 1 020 617

Total intangible assets 10 749 742 11 294 451 11 574 414

Land 77 073 76 206 76 480

Buildings 3 189 683 3 133 936 3 145 202

Improvements to leased premises 408 927 256 015 256 935

Vehicles 935 822 1 066 818 1 239 757

Machines, fixtures and fittings etc. 7 046 043 6 938 436 6 981 277

Accumulated depreciation -3 017 096 -2 780 847 -2 574 223

Total tangible fixed assets 8 640 452 8 690 564 9 125 428

Total non-current assets 19 390 194 19 985 015 20 699 842

Inventories 11 318 801 12 032 244 12 339 969

Total goods 11 318 801 12 032 244 12 339 969

Accounts receivable 25 483 052 24 154 804 22 058 279

Other receivables 11 586 665 12 535 900 12 822 622

Total receivables 37 069 717 36 690 704 34 880 901

Bank deposits, cash etc. 15 721 047 18 824 955 25 066 669

Total current assets 64 109 565 67 547 903 72 287 539

Total assets 83 499 759 87 532 918 92 987 381

Balance sheet – equity and liabilites Condensed consolidated (unaudited)

• There are only small changes to the total liabilities in the quarter

• Accounts payable decreased by USD 0.4m to USD 5.5m at the end of the quarter. A significant part of the amount is a liability vs the Mexican distributors

• Other current liabilities ended at USD 24.1m. Included in the figure is USD 11.5m classified as a deferred revenue accrual, VAT of USD 6.4m, accrued earn-out of USD 1.8m related to the acquisition of Bioderpac, contingent liabilities of USD 0.7m and redundancy and closing costs of USD 1.7m

• The equity ratio ended at 63% down from 65% at the end of Q1


USD 06.30.2014 03.31.2014 12.31.2013

Equity

Share capital 105 514 107 972 106 729

Premium reserve 156 187 461 159 825 772 157 989 676

Total paid in capital 156 292 975 159 933 744 158 096 405

Minority interests -612 908 -606 334 -513 503

Accumulated P&L -102 997 876 -102 495 881 -95 631 555

Total equity 52 682 191 56 831 529 61 951 347

Liabilities

Other non-current liabilities 525 610 533 711 630 233

Total non-current liabilities 525 610 533 711 630 233

Accounts payable 5 527 845 5 928 957 6 450 462

Current tax payable 622 254 700 921 874 421

Other current liabilities 24 141 859 23 537 800 23 080 918

Total current liabilities 30 291 958 30 167 678 30 405 801

Total liabilities 30 817 568 30 701 389 31 036 034

Total equity and liabilities 83 499 759 87 532 918 92 987 381

Cash flow Condensed consolidated (unaudited)

• The net cash flow from operating activities amounted to minus USD 2.9m in the quarter, a significant improvement compared to Q1

• Cash collection of USD 3.9m in the quarter, of which USD 1.5m was in the US and USD 1.3m in China

• Cash position of USD 15.7m at the end of the quarter


USD H1 2014 Q2 2014 Q1 2014 YE 2013

Cash flow from operating activities

Profit/Loss (-) before tax -10 767 102 -2 843 171 -7 923 931 -69 853 239

Depreciation and amortisation 1 323 391 673 861 649 530 3 691 328

Changes in inventories, receivables and payables -213 693 1 053 602 -1 267 295 63 193 270

Changes in other accruals/currency effects 374 302 -1 793 962 2 168 264 -31 537 077

Net cash flow from operating activities -9 283 102 -2 909 670 -6 373 432 -34 505 718

Cash flow from investment activities

Investments/disposals of tangible fixed assets 42 103 -186 137 228 240 -1 636 393

Changes in other investments 0 0 0 0

Net cash flow from investment activities 42 103 -186 137 228 240 -1 636 393

Cash flow from financing activities

Proceeds from borrowings (current and non-current) -104 623 -8 101 -96 522 363 241

Net proceeds from issuance of shares 0 0 0 26 646 951

Net cash flow from financing activities -104 623 -8 101 -96 522 27 010 192

Net change in cash and cash equivalents -9 345 622 -3 103 908 -6 241 714 -9 131 919

Cash and cash equivalents at beginning of period 25 066 669 18 824 955 25 066 669 34 198 588

Cash and cash equivalents at end of period 15 721 047 15 721 047 18 824 955 25 066 669

How the cash was spent in Q2’13 vs Q2’14


* Includes R&D CAPEX

Substantial reduction due to strategic refocus and streamlining

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

Cash burn Q2’14 USD million

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

Cash burn Q2’13 USD million

Gross cash burn reduced From USD 15.1m in Q1’13 to USD 7m in Q2’14


2013 2014

USD million Q1 Q2 Q3 Q4 Q1 Q2 Comments

Salaries 3,0 3,0 2,8 2,7 2,6 2,5 Salaries ex Bioderpac

Production 1,5 1,5 2,0 0,9 1,1 1,4 Q3-13 termination cost in Bioderpac, Q2-14 increase in packing cost

Other operating expenses 3,2 3,3 2,9 2,4 1,9 1,9 Includes office, warehouse, travel and external consultants costs

R&D 0,6 1,1 0,6 1,1 0,9 1,1 Includes R&D capex

CAPEX 0,9 0,3 0,1 0,0 0,0 0,1 Limited capex in Bioderpac going forward

Acquisition 0,6 0,0 0,0 0,0 0,0 0,0 No acquisition since Q1 2013

Other expenditures 0,3 0,4 0,2 0,6 0,3 0,2 Taxes, closing costs, other costs Gross cash burn per quarter ex Mexico sales commissions and financing 10,1 9,6 8,6 7,7 6,8 7,0

Financing of distributors (Mexico) 5,0 6,5 2,3 3,0 0,1 0,0 Financing reduced as from Q3 2013.

Gross cash burn per quarter ex sales commissions Mexico 15,1 16,1 10,9 10,7 6,9 7,0

Sales commission Mexico 0,0 0,1 1,3 0,0 0,0 0,0 Distribution agreement changed as from Q4 2013

Summary and outlook

• Q2 sales revenue of USD 3.9m, cash collection of USD 3.9m

• Sales revenue mainly driven by promising growth in the US and new partner in China

• Strengthening U.S. presence by moving corporate functions from Norway to the U.S.

• 2014 priorities: Commercial growth in the U.S. and select geographies, continued development of R&D and ensuring financial flexibility

Transplants treated with Agrinos’ technology, U.S., 2013


Additional information


Largest shareholders

June 30th, 2014

Num Shareholder Type Country Shares % 1 DEUTSCHE BANK AG NOM Germany 11 250 000 17,3 % 2 UBS AG NOM Switzerland 8 349 861 12,9 % 3 STATE STREET BANK AND TRUST CO. NOM U.S.A. 6 088 636 9,4 % 4 HAVFONN AS 4 849 383 7,5 % 5 STATE STREET BANK & TRUST COMPANY NOM U.S.A. 4 006 055 6,2 % 6 KORRIGAN INVESTMENT AS 3 807 769 5,9 % 7 KB MANAGEMENT AS 3 507 460 5,4 % 8 THOENG AS 2 043 025 3,1 % 9 SYNGENTA VENTURES PTE LTD Singapore 1 878 237 2,9 %

10 ANFAR INVEST AS 1 640 548 2,5 % 11 OP-EUROPE EQUITY FUND UK 1 405 000 2,2 % 12 THE BANK OF NEW YORK MELLON (LUXEM NOM Luxemburg 959 260 1,5 % 13 J.P. MORGAN CHASE BANK N.A. LONDON NOM UK 957 777 1,5 % 14 GOLDMAN SACHS & CO EQUITY SEGREGAT NOM U.S.A. 922 423 1,4 % 15 CITIBANK, N.A. NOM UK 846 680 1,3 % 16 SKAGEN VEKST 817 242 1,3 % 17 SNEFONN AS 813 297 1,3 % 18 PENSIONDANMARK EURO AKTIER II Belgium 745 390 1,1 % 19 JP MORGAN CHASE BANK, NA NOM 698 000 1,1 % 20 INVESCO PERP EUR SMALL COMP FD Belgium 588 285 0,9 % 20 Largest shareholders 56 174 328 86,6 %

280 Other shareholders 8 716 960 13,4 % Total outstanding shares 64 891 288 100,0 % Total Number of Shareholders 275


Board of Directors

Kristian Johansen, acting Chairman of the board Kristian Johansen joined the Board of Agrinos in November 2013. He is currently CFO of TGS-Nopec Geophysical Company ASA. Prior to joining TGS, Kristian was the Executive Vice President and CFO of EDB Business Partner ASA. Mr. Johansen also has experience from Executive positions in the Construction and Investment Banking industries. Johansen holds a MBA from University of New Mexico, USA. Mr. Johansen is a Norwegian citizen.

Morten Bergesen Morten Sigval Bergesen is the CEO of Havfonn AS, the Bergesen family’s investment company. The company seeks industrial value creation through active participation and long-term ownership in companies they invest in. Mr. Bergesen holds a Master of Science in Economics from the BI Norwegian School of Management. Prior to his current position, he was employed with Econ, Centre for Economic Analysis in Norway, focusing on logistics, trademark, value chain optimizations, industrial development, trade policies and innovation. Mr. Bergesen is currently the chairman of the board at IFM Immobillien AG, a publicly listed German real estate company and Bergehus Holding AS, and holds board seats in Arendal Fossekompani,, Cogen AS, Hafonn AS, in addition to the seat in Agrinos AS. Previously, Mr. Bergesen has held board seats in Roxar ASA, Grieg Cod Farming AS, Sonans AS, Jøtul AS and Selvaag Pluss Eiendom AS.

Gerardo Esquer Mr. Gerardo Esquer works as an Independent Consultant in Strategy and Finance. Previously he worked as CFO or CEO in subsidiaries of three large Mexican Public Companies: Aeromexico, Vitro and Promotora Ambiental. In his early professional years, Mr. Esquer worked as a field Engineer in manufacturing processes while earning his B.Sc. in Industrial and Systems Engineering at the ITESM in Monterrey, Mexico; where he also earned his MBA and lectured one course in Economics or Operations Research for nine years as Associate Professor. He also holds a M.Sc. in EE&OR from Stanford University and a M.Sc. in CCC at HEC Paris. In his professional career, Mr. Esquer has served in the Board of Directors of 20+ companies in four countries, and has jointly created 10+ companies in the Agricultural, Biotech, Environmental, Internet, Manufacturing and Airline Industries. Mr. Esquer is actively engaged in local community work.

Jean Baptiste Oldenhove, board member Jean Baptiste is a Principal at Treis Partners where he leads the Industrial Investment advisory practice. Jean Baptiste has experience in strategic and operational advisory to private equity, business services, industrial and financial services in different geographies, gained at Bain and Company, supplemented by an engineering/research background. He holds a MBA from Wharton. He is a Belgian citizen and is based in London.


Executive Management

Douglas Ry Wagner - Chief Executive Officer, Head of Americas excluding Mexico Wagner comes to Agrinos from Dow AgroSciences where he was Global New Ventures and Technology Leader for the past 4 years. His career before Dow is divided between 16 years in research, and 10 years managing research and platform development in technology-driven start-up companies.. Dr. Wagner received his B.Sc.in Botany and Plant Pathology from Michigan State University, and his Ph.D. in Genetics from University Washington. He spent 3 years as a researcher in the Division of Plant Industry, CSIRO, in Australia before joining the University of Oregon, where he became Professor of Biology. He then moved into business, becoming both VP Plant Genetics and Biotechnology at Exelixis, Inc., and Head of Exelixis Plant Sciences, before Exelixis Plant Sciences was acquired by Dow AgroSciences. Dr. Wagner is an author of over 30 research publications and over 50 issued patents and pending patent applications. He has also been an advisor to many international and national scientific forums across the world.

Rafael Paullada – Chief Operating Officer Rafael Paullada joined Agrinos in September 2013. He came from the position as Country Director for Ameco Panama and MCA Operations Director Site Services & Fleet for Ameco Services, a US company. Paullada has worked within senior management positions and has 28 years of experience from environmental services, production, operations, construction and EPC contracts. Previously he has worked as an independent consultant, as CEO and Corporate Director in subsidiaries of Promotora Ambiental, a public environmental Mexican company, acted as advisor to Engineering and Projects Contracting Sub Director in PEMEX and worked at a Mexican construction company within oil and steel projects in Trinidad and Tobago and in Houston, US. Paullada earned his B.S in Civil Engineering from Universidad Nacional Autonoma de Mexico (UNAM), and has furthermore a Business Administration certificate from Instituto Panamericano de Alta Direccion de Empresa (IPADE) and a Diploma in Financing of Large Investment Projects from Universidad Iberoamericana (UIA).

Jørgen Andersen - Chief Financial Officer ørgen K. Andersen has over 25 years of experience in resource based industries at large, international companies. He comes from the position as CFO at Marine Harvest, a global seafood group and the world’s largest producer of farmed salmon. Before his five years at this Oslo stock exchange listed company, Andersen was CFO, Oil & Energy in Norsk Hydro, a fortune 500 company at the time. In 2003, Andersen was responsible for the separation and listing of Norsk Hydro’s fertilizer operations, now Yara ASA. He joined Agrinos 1 September 2012

Kjetil Bøhn – Corporate Strategy Leader Kjetil Bøhn is a founder of Agrinos AS, Vice Chairman of the Board and Executive Director with the company. Mr. Bøhn holds a Master's degree from the Norwegian Business School in Bergen, and worked as a financial journalist before joining the telecommunications industry. Since then he has also held several board positions in both Norwegian and international companies, mostly within the mobile service industry and the mobile VoIP industry.

Kristian Østberg - Chief Legal Officer Mr. Kristian Østberg joined Agrinos in September 2011 and came from the position as general counsel of STX OSV AS, a subsidiary of the a global design and shipbuilding company STX OSV group, listed on the Singapore stock exchange. During more than 10 years in the role as in-house counsel Østberg has worked internationally with trade, shipping and investment projects, including eight years with responsibility for the legal aspects of the shipping and trading portfolios of Oslo stock exchange listed Norsk Hydro ASA. Mr. Østberg holds a law degree from the University of Oslo, Norway and resides in Oslo, Norway.

Ellen Cathrine Rasmussen – EVP, Head of EMEA and Asia, Head of HR Rasmussen joined Agrinos in October 2011, from her previous position of Vice President of Strategy at Norske Skog ASA, a publicly listed, global producer of newsprint and magazine paper. Previously, Mrs. Rasmussen spent eleven years with Norsk Hydro ASA, a publicly listed global supplier of aluminium where her final position was Senior Vice President, Strategy and Business Development. Before her business career, she spent five years as an Officer and later Advisor with the Norwegian Ministry of Trade and Industry. Mrs. Rasmussen is a Board member of the research institution SINTEF and of the Norwegian state enterprise for carbon capture and storage - Gassnova SF. Mrs. Rasmussen holds a Master’s degree in Economics from the University of Oslo and resides in Oslo, Norway.

Harald Bjørland - EVP Corporate Communications and IR Mr. Harald Bjørland joined Agrinos in May as EVP Corporate Communications and Investor Relations. Bjørland was previously a communication and IR advisor, assisting both large and small cap companies communicating efficiently with stakeholders and building trust. In particular he has worked with clean tech, fertilizer and energy clients, assisting them in different stages of the growth cycle. Bjørland has experience with taking several companies from the growth stage through the IPO and into the life as a stock exchange listed company.

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