Akastor : Half Year Report 2024

AKASTOR

HALF YEAR RESULTS 2024

HIGHLIGHTS

• DRU arbitration concluded, with USD 176 million received in cash which resulted in accounting gain of NOK 1.3 billion in total in the first half year
• Net interest-bearing debt reduced by NOK 1.5 billion compared to year end 2023, with net interest-bearing items in a net cash position of NOK 831 million per end of June 2024
• Corporate bank facility amended and extended to June 2026. The facility, with a size of USD 30 million, was not drawn per end of period
• Approximately 3 million shares received in Odfjell Drilling in period pursuant to a warrant agreement
• HMH continues to deliver strong financials, with an LTM EBITDA (adj.) of USD 153 million per end of the second quarter, up 39% compared to last year
• HMH filed a confidential draft registration for a potential US IPO which may occur in the second half of 2024, pending market conditions
• Equity of NOK 5.5 billion per end of period, corresponding to NOK 20.2 per share, increased from NOK 14.5 per share per end of 2023 driven by final DRU settlement

KEY FIGURES

Akastor Group
	JUNE 30	DECEMBER 31
	2024	2023
Net capital employed (NOK million)	4 714	4 645
Net interest-bearing debt (NOK million)	(831)	675
Total shareholder return	+36%	+26%
Equity share	86%	66%

Net capital employed

NOK million, 30 June 2024

Book value per share

2 Akastor ASA - Half year results 2024

01. PORTFOLIO COMPANIES

HMH (50% ownership)

HMH reported revenues of USD 208 million in the second quarter, compared to USD 189 million in 2023. Revenues for the first half year were USD 401 million, compared with USD 374 million in the previous year. Adjusted EBITDA was USD 42 million in the quarter, corresponding to an adjusted EBITDA margin of approximately 20 percent. This compares to USD 34 million and a margin of 18 percent in the second quarter of 2023. For the first half year of 2024, adjusted EBITDA was USD 75 million, compared with USD 53 million in 2023.

Revenues from Aftermarket Services were USD 150 million in the quarter, up from USD 138 million in second quarter last year and USD 146 million in the first quarter this year, driven by increased service order trend and generally higher activity and volumes. Order intake within Aftermarket Services in the period was down 11 percent year-on-year driven by high rig reactivation service activities prior year and down 5 percent quarter-on-quarter.

Revenues from Projects, Products & Other were USD 58 million in the quarter, up from USD 51 million last year and USD 47 million in the first quarter this year primarily driven by higher activity within single equipment sale.

The equipment order backlog was USD 229 million per end of first half year, slightly down compared to last year driven by execution within Projects but partially mitigated by order intake within Products. Backlog was also somewhat down compared to first quarter this year driven by delivery on single equipment backlog in the period. HMH sees good prospects for growth in backlog in the second half of the year based on the current pipeline of opportunities within Products.

Net external debt per end of second quarter was USD 173 million.

In the second quarter, HMH announced that it had submitted a confidential first draft registration statement with the U.S. Securities and Exchange Commission ("SEC") relating to a proposed initial public offering in the US. The size and price range for the proposed offering have not yet been determined. The IPO may occur in the second half of 2024 after SEC review, pending market conditions.

HMH is a joint venture and accounted for using the equity method in Akastor's consolidated financial statements. The carrying amount of the joint venture is NOK 3 248 million as per end of the first half year based on preliminary financial information from the company.

AKOFS Offshore (50% ownership)

AKOFS Offshore reported revenues of USD 35 million in the second quarter compared to USD 28 million in 2023. The increase was primarily driven by Aker Wayfarer going off contract early in the second quarter last year, preparing for the new contract that commenced in third quarter 2023. Revenues for the first half year were USD 68 million, compared with USD 64 million in the previous year. EBITDA was USD 10 million in the quarter, compared with USD 3 million in 2023. For the first half year, EBITDA was USD 19 million, compared with USD 14 million in 2023.

Aker Wayfarer reported a revenue utilization of 99 percent in the second quarter while AKOFS Santos reported 72 percent in the same period, negatively affected by certain operational incidents and a planned maintenance stop in May. The utilization of AKOFS Santos improved through the quarter, with above 90 percent uptime in June, and the company expects improved utilization for the rest of the year.

AKOFS Seafarer reported a revenue utilization of 94 percent in the second quarter, affected by a shorter yard stay in May where the vessel was prepared for coiled tubing operations. Through the remaining part of the quarter, AKOFS Seafarer delivered solid uptime and operational performance on its coiled tubing campaign for Equinor. AKOFS Seafarer will go to yard in August for approximately two weeks to demobilize the coiled tubing equipment.

Going forward, AKOFS Offshore will continue its focus on utilization and operational performance.

The order backlog ended at USD 285 million.

AKOFS Offshore is a joint venture and accounted for using the equity method in Akastor's consolidated financial statements. The carrying amount of the joint venture is NOK 285 million as per end of the first half year.

3 Akastor ASA - Half year results 2024

DDW Offshore (100% ownership)

DDW Offshore reported revenues of NOK 57 million in the second quarter, increased from NOK 52 million last year. Revenues for the first half year were NOK 96 million, compared with NOK 98 million in 2023. EBITDA was NOK 15 million in the quarter, compared with NOK 14 million in 2023. For the first half year, EBITDA was NOK 7 million, compared with NOK 27 million in 2023. The first half year of 2024 was affected by lowered utilization as a result of two vessels undergoing Special Periodic Survey (SPS) in the period, partly mitigated by higher market rates for vessels in operation.

DDW Offshore owns three offshore AHTS vessels. In the second quarter, average utilization of the fleet was 51 percent.

Following a period between contracts in the first quarter, Skandi Emerald was on contract with Petrofac through the second quarter and delivered strong operations for the client and 100% utilization. The current contract ends in December 2024. Skandi Atlantic delivered a utilization of 33 percent in the quarter, affected by completion of her SPS in April before commencing a new contract with Chevron on June 1st. This contract lasts for 70 days, with an additional 110 days of options. Skandi Peregrino was reactivated after about four years in lay-up and completed her SPS in the second quarter, after which she has been operating in the spot market in Aberdeen since mid-May. With this, Skandi Peregrino delivered a utilization of 20 percent in the second quarter.

OTHER HOLDINGS

Other Holdings, as of June 30, 2024, mainly include

1.3 percent shareholding in Odfjell Drilling, 4.9 percent shareholdings in ABL Group, around 15 percent economic interest of NES Fircroft and 36 percent of the joint venture Føn Energy Services.

Akastor's economic interest in four drilling equipment contracts with Jurong Shipyard (DRU contracts) was concluded in the first half year through a final arbitration award and settlement whereby Akastor received a total amount of USD 176 million in cash as payment of termination fees, reimbursement of costs and interest compensation. As a result of the outcome of DRU arbitration, other income of NOK 630 million as well as interest income of NOK 717 million were recognized in the income statement in the first half year of 2024.

On May 31, 2024, Akastor received 3 023 886 shares in Odfjell Drilling Ltd., pursuant to a warrant agreement that was entered into in 2018. The settlement of the warrant agreement resulted in a financial gain of NOK 113 million

recognized as part of net financial items in the first half year. Odfjell Drilling is listed on the Oslo Stock Exchange. The investment in Odfjell Drilling is accounted for as a financial asset measured at fair value.

NES Fircroft, where Akastor holds around 15 percent economic interest, continued to deliver growth and revenues were up 12 percent year-on-year in the second quarter driven by improved performance across several geographies. NES Fircroft is accounted for as a financial asset measured at fair value, with a carrying amount of NOK 794 million as per end of the first half year.

In addition, Other Holdings include the Real Estate portfolio (subletting of office leasing contracts) as well as corporate and project expenses. EBITDA exclusive other income related to DRU arbitration award, was negative NOK 18 million in the second quarter and negative NOK 36 million for the first half year. In the previous year, EBITDA was negative NOK 18 million and negative NOK 48 million for the same periods, respectively.

4 Akastor ASA - Half year results 2024

02. AKASTOR GROUP

Performance

Akastor group's revenues and other income and EBITDA for the first half year of 2024 were positively affected by other income of NOK 630 million related to DRU arbitration award. Revenues and other income for the first half year were NOK 733 million, compared to NOK 132 million in the previous year. EBITDA was positive NOK 601 million for the first half year, compared to negative NOK 21 million in the previous year. The consolidated revenue and operating profit in Akastor only include financial performance of portfolio companies that constitute a minor part of Akastor's total net capital employed. HMH and AKOFS Offshore are classified as joint ventures and accounted for using equity method in the consolidated financial statements.

Net financial items were positive NOK 902 million for the first half year, which included interest compensation of NOK 717 million related to DRU arbitration award. Net profit from the equity-accounted investees was NOK 8 million in the first half year, compared to loss of NOK 173 million in 2023, mainly related to Akastor's share of net profit in HMH of NOK 134 million, offset by share of net loss in AKOFS Offshore of NOK 127 million.

Net profit from continuing operations was NOK 1 493 million for the first half year, compared to loss of NOK 125 million last year. Net profit from discontinued operations was NOK 4 million in the first half year related to gain adjustment on divestments in prior years.

The group reported net profit of NOK 1 496 million for the first half year of 2024.

Financial Position

Total assets of Akastor amounted to NOK 6.4 billion as of June 30, 2024, compared to NOK 6.0 billion as per year-end 2023.

Net cash flow from operating activities was positive NOK 1 820 million for the first half year, including proceeds of NOK 1 912 million related to DRU arbitration award. The cash flow from investing activities was negative NOK 315 million in the first half year, compared to positive NOK 135 million in the previous year which included proceeds of NOK 216 million from the settlement of Odfjell Drilling seller credit in 2023.

Net cash (excluding lease liabilities) was NOK 196 million at the end of the period. Net interest-bearing items were positive NOK 831 million, reduced by NOK 1.5 billion compared to Net interest-bearing debt of NOK 675 million at year-end 2023, mainly driven by cash proceeds of NOK 1.9 billion from the settlement of DRU arbitration award.

The liquidity reserve at the end of the period was NOK 880 million, with cash and cash equivalents of NOK 560 million and undrawn committed credit facilities of NOK 320 million.

Total equity amounted to NOK 5.5 billion as of June 30, 2024, while the equity ratio was 86 percent, up from 66 percent as at year-end 2023.

Related Party Transactions

Please see Note 13 for information about significant related party transactions.

5 Akastor ASA - Half year results 2024

Principle Risks and Uncertainty

Akastor and each of its portfolio companies are exposed to various forms of market, operational and financial risks that may affect the companies' performance, their ability to meet strategic goals and future obligations.

Akastor's risk management model is designed on the basis that Akastor is an investment company with an overall objective of securing its shareholders' investments and developing the group's assets in order to provide the shareholders with a solid return. Akastor's current investment portfolio is focused on the oilfield services industry. This focus is mainly driven by the company's experience, expertise and track-record within this industry. Although Akastor has a flexible mandate, it has traditionally not sought to spread risk by investing in different industries. Instead, Akastor has focused on mitigating its vulnerability to the risk environment inherent to the oilfield services industry through risk management.

The oil services industry is a volatile business segment impacted by macro trends such as global uncertainty caused by wars and conflicts, oil supply & demand, legislative regulations driven by sustainability concerns as well as inflation and interest. These issues impact Akastor's ability to execute value enhancing transactions, as we see that the runway on some transactions needs to be extended or delayed and that financing costs increase. On the other hand, this has been balanced and to a large degree been offset by solid performance from Akastor's portfolio companies combined with increased focus on the oil service industry as an important business to ensure energy security. In sum, Akastor's financial position has been strengthened and we believe that Akastor is well positioned to continue its strategy to make value enhancing transactions in a continued unstable market situation.

Our focus on climate risk continues in close dialogue with all portfolio companies (HMH and AKOFS Offshore in particular) with focus on ensuring that appropriate ISO certification is maintained and that proper reporting requirements are set and monitored. All portfolio companies are expected to prepare and be ready when Corporate Sustainability Reporting Directive (CSRD) is implemented.

On the operational side, risks are primarily addressed by securing new orders and sound project execution by the portfolio companies. Results also depend on costs, both the portfolio companies' own costs and those charged by suppliers. Akastor and its portfolio companies are also

exposed to financial risk under performance guarantees and financial guarantees issued, and financial market risks as further detailed below.

In addition, the portfolio companies, through their business activities within their respective sectors and countries, are also exposed to legal/compliance and regulatory/political risks, e.g. political decisions on international sanctions that impact supply and demand of the services offered by the portfolio companies, as well as environmental regulations. Moreover, we have over the recent years seen an increase in the threat faced from different forms of cyber risks such as e.g. risk of ransomware and phishing attempts. These are risk areas that are under continuous development and where it is important that Akastor and its portfolio companies continuously monitor this development and the risks associated.

Akastor is exposed to a variety of financial market risks such as currency risk, interest rate risk, tax risk, price risk, credit and counterparty risk, liquidity risk and capital risk as well as risks associated with access to and terms of financing. The objective of financial risk management is to manage and control financial risk exposures and thereby minimize potential adverse effects on Akastor's financial position. Following the outcome of the DRU arbitration and the corresponding impact on Akastor's financial position as described above, Akastor's financial risks have been reduced. Akastor's ability to position and perform value enhancing transactions going forward will still depend on its ability to obtain appropriate and affordable financing.

To manage and mitigate risks within Akastor, risk evaluation is an integral part of all business activities. As owner, Akastor actively supervises risk management in its portfolio companies through participation on the board of each portfolio company, and by defining a clear set of risk management and mitigation processes and procedures that all portfolio companies must adhere to. Akastor's Annual Report 2023 provides more information on risks and uncertainties.

The Akastor Share

The company had a market capitalization of NOK 4.4 billion on June 30, 2024. The company owned 1 813 974 own shares at the end of the first half year.

Fornebu, July 10, 2024

The Board of Directors and CEO of Akastor ASA

6 Akastor ASA - Half year results 2024

03. DECLARATION BY THE BOARD OF DIRECTORS AND CEO

The Board of Directors and the CEO have today considered and approved the consolidated condensed financial statements for the six months ended June 30, 2024, with comparatives for the corresponding period of 2023 for Akastor Group.

The Board has based this declaration on reports and statements from the group's CEO, the results of the group's activities, and other information that is essential to assess the group's position.

To the best of our knowledge:

• The consolidated condensed financial statements for the six months ended June 30, 2024 have been prepared in accordance with IAS 34 - Interim Financial Reporting and additional disclosure requirements under the Norwegian Securities Trading Act.
• The information provided in the financial statements gives a true and fair portrayal of Akastor Group's assets, liabilities, profit and overall financial position as of June 30, 2024.
• The information provided in the report for the first half 2024 provides a true and fair overview of the development, performance, financial position, important events and significant related party transactions in the accounting period as well as the most significant risks and uncertainties facing Akastor Group.

Fornebu, July 10, 2024

The Board of Directors and CEO of Akastor ASA

Frank O. Reite | Chairperson

Lone Fønss Schrøder | Deputy Chairperson

Svein Oskar Stoknes | Director

Kathryn M. Baker | Director

Henning Jensen | Director

Asle Christian Halvorsen | Director		Stian Sjølund | Director		Karl Erik Kjelstad I CEO

7 Akastor ASA - Half year results 2024

AKASTOR GROUP INTERIM FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED INCOME STATEMENT

			First half		Full year
NOK million	Note	2024	2023	2023
Revenues	6	103	116	267
Other income	4, 6	630	16	14
Revenues and other income		733	132	282
Operating expenses		(132)	(153)	(284)
Operating profit before depreciation, amortization and
impairment (EBITDA)		601	(21)	(2)
Depreciation, amortization and impairment		(15)	(14)	(28)
Operating profit (loss)		586	(35)	(31)
Net financial items	4,7	902	83	10
Profit (loss) from equity-accounted investees	9	8	(173)	(363)
Profit (loss) before tax		1 496	(125)	(384)
Tax income (expense)			(3)	-	-
Profit (loss) from continuing operations		1 493	(125)	(384)
Net profit (loss) from discontinued operations		4	113	122
Profit (loss) for the period		1 496	(12)	(262)
Attributable to:
Equity holders of Akastor ASA		1 496	(14)	(264)
Non-controlling interests		-	3	3
Basic/diluted earnings (loss) per share (NOK)		5.50	(0.05)	(0.97)
Basic/diluted earnings (loss) per share continuing operations (NOK)		5.48	(0.47)	(1.42)
Basic/diluted earnings (loss) per share discontinued operations (NOK)	0.01	0.42	0.45

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		First half		Full year
NOK million	2024	2023	2023
Net profit (loss) for the period	1 496	(12)	(262)
Other comprehensive income:
Currency translation differences	129	257	97
Currency translation differences, reclassification to income statement upon disposal	-	(2)	(2)
Share of OCI from equity-accounted investees	(70)	(9)	37
Net items that may be reclassified to profit or loss	59	246	131
Remeasurement gain (loss) net defined benefit liability	-	-	(8)
Share of OCI from equity-accounted investees	1	-	1
Net items that will not be reclassified to profit or loss	1	-	(7)
Total other comprehensive income (loss), net of tax	60	246	124
Total comprehensive income (loss) for the period, net of tax	1 556	235	(137)
Attributable to:
Equity holders of Akastor ASA	1 556	232	(140)
Non-controlling interests	-	3	3

8 Akastor ASA - Half year results 2024

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		June 30	December 31
NOK million	Note	2024	2023
Property, plant and equipment	8	358	231
Right-of-Use assets		4	7
Other non-current assets		1	1
Non-current interest bearing receivables		623	550
Equity accounted investees	9	3 550	3 439
Other non-current investments	10	1 248	1 051
Total non-current assets		5 785	5 279
Current operating assets		53	606
Current interest-bearing receivables		12	-
Current finance lease receivables		9	19
Cash and cash equivalents		560	144
Total current assets		634	769
Total assets		6 418	6 048
Equity attributable to equity holders of Akastor ASA		5 546	3 970
Total equity		5 546	3 970
Employee benefit obligations		77	82
Non-current liabilities and provisions		183	255
Non-current borrowings	11	262	236
Non-current lease liabilities		-	2
Total non-current liabilities		521	575
Current operating liabilities and provisions		233	339
Current borrowings	11	102	1 133
Current lease liabilities		16	32
Total current liabilities		352	1 504
Total equity and liabilities		6 418	6 048

9 Akastor ASA - Half year results 2024

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

The statement includes discontinued operations prior to their disposal unless otherwise stated.

					First half		Full year
NOK million	2024		2023	2023
Profit (loss) for the period	1 496		(12)	(262)
(Profit) loss for the period - discontinued operations	(4)		(113)	(122)
Depreciations, amortization and impairment continuing operations	15		14	28
Other adjustments for non-cash items and changes in operating assets and liabilities	312		51	60
Net cash from operating activities	1 820		(60)	(296)
Acquisition of property, plant and equipment				(112)		(0)	(9)
Payments related to sale of subsidiaries incl. adjustment for	prior years' divestments	(176)		(65)	(54)
Funding to equity-accounted investees				(37)		(33)	(119)
Proceeds from other investment	-		216	216
Proceeds from finance lease receivables	10		18	211
Cash flow from other investing activities	(0)		(1)	(9)
Net cash from investing activities	(315)		135	236
Changes in external borrowings				(1 082)		69	125
Payments of lease liabilities	(18)		(22)	(41)
Net cash from financing activities	(1 100)		48	85
Effect of exchange rate changes on cash and cash equivalents				10		2	-
Net increase (decrease) in cash and cash equivalents	415		125	25
Cash and cash equivalents at the beginning of the period	144		119	119
Cash and cash equivalents at the end of the period	560		244	144

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Contributed		Total equity	Non-
	equity and	Other	attributable
	retained	to the	controlling	Total equity
NOK million	earnings	reserves	parent	interests
Equity as of December 31, 2023	4 067	(97)	3 970	-	3 970
Total comprehensive income	1 496	60	1 556	-	1 556
Share-based payments in joint ventures	19	-	19	-	19
Equity as of June 30, 2024	5 583	(37)	5 546	-	5 546
Equity as of December 31, 2022	4 153	(97)	4 056	36	4 092
Total comprehensive income	(14)	246	232	3	235
Treasury shares transaction	2	-	2	-	2
Disposal of subsidiaries	-	-	-	(39)	(39)
Equity as of June 30, 2023	4 140	149	4 289	-	4 289

10 Akastor ASA - Half year results 2024