Mowi Asa · OSL:MOWI
Mowi Asa — Marine Harvest — Q3 2015 Earnings Presentation
46 slides from Mowi Asa's earnings presentation, Oct 28, 2015
Slide 1: Q3 2015 Presentation
Q3 2015 Presentation
Slide 2: Forward-looking statements
This presentation may be deemed to include forward-looking statements, such as statements that relate to Marine Harvest’s contracted volumes, goals and strategies, including strategic focus areas, salmon prices, ability to increase or vary harvest volume, the anticipated business combination between
Slide 3: Operational EBIT of NOK 720m
Operational EBIT of NOK 720m Good contribution from Norway Record results by Feed Preparation costs Rosyth ~ EUR 3m (Consumer Products) Strong demand in Europe and Asia Challenging market conditions in Americas Quarterly dividend of NOK 1.40 per share
Slide 4: Marine Harvest Group - main figures
Marine Harvest Group - main figures ID YTD oe 932014 aa 2015 3 2014 Operational revenue and other income 6910 6202 19399 18 633 25-496 Operational EBIT” 720 912 2270 3222 4254 Cash fow from operations 591 875 1857 3410 3944 Net interest-bearing debt (NIBD) 8742 7230 8742 7230 9268 Underlying EPS. (N
Slide 5: Weekly reference prices
Weekly reference prices NOK per kg (Oslo) 8 USD per Ibs (Miami and Seattle) oO 2010 2014 2012 2013 2014 2015 Reference price Norway NOK (NASDAQ average superior Oslo, GWEIkg) Reference price Chile USD (Umer Barry average D-trim 3-4 lbs FOB Miami) Reference price Canada USD (Umer Barry average superi
Slide 6: Price achievement by origin
Price achievement by origin 113% 114% 120% 107% 105% 704% Tai a ue 100% 10% 60% 40% 0% 0% Norwegian Scottish Canadian Chilean ™Q3 2014 ™Q3 2015 Contract share 43% 34% 0% 9% [Superior share 93% 92% 91% 87%
Slide 7: Operational EBIT bridge Q3 2014 to Q3 2015
NOK million 1200 800 600 400 200 53 -314 912 | 57 720 15 3 — OpEBIT MHFeed Farming Markets Consumer Other Op EBIT Q3 2014 Products Q3 2015
Slide 8: Operational EBIT Salmon of Norwegian Origin
Operational EBIT Salmon of Norwegian Origin Q3 2015 vs Q3 2014 Operational EBIT 595 624 1000 Harvest volume (GWT) 8873 64209800 — Operational EBIT per kg (NOK) 10.11 om - of which MH Markets 133 1.03 400 - of which MH Consumer Products 0.43 0.78 300 Exceptional items incl in op. EBIT 167 -118 Except
Slide 9: Contracted volumes
Contnracted volumes (GWE tons) 25 000 20000 15 000 10 000 5000 0 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 ™Realised contract volumes last quarters Contracted volumes next quarters
Slide 10: Norway: Operational EBIT/kg per region
NOK per kg Norway: Operational EBIT/kg per region South mQ3 2014 11.49 10.93 10.76 10.11 9.80} 9.28 9.76} 9.71 8.32 6.67) West Mid North Total Q3 2015
Slide 11: Salmon of Scottish Origin
SALMON OF SCOTTISH ORIGIN mn z Operational EBIT Salmon of Scottish Ne oS 205 ee OS 20 Origin G3 2015 vs Q3 2014 Operational EBIT 402 437160 140 Harvest volume (GWT) 16 586 13740 co Operational EBIT per kg (NOK) 614 9.95100 = ~ of which MH Markets 287 21080 of which MH Consumer Products 015 = 03180 E
Slide 12: Salmon of Canadian Origin
ISALMON OF CANADIAN ORIGIN. Operational EBIT 2 33 Harvest volume (GWT) 8668 = 7 052 Operational EBIT per kg (NOK) 1.36 4.70 - of which MH Markets 1.18 0.59 - of which MH Consumer Products 0.00 0.00 Exceptional items incl in op. EBIT “11 5 Exceptional items per kg (NOK) 127-065 Price achievementrefer
Slide 13: Salmon of Chilean Origin
|SALMON OF CHILEAN ORIGIN NOK mation Operational EBIT Salmon of Chilean Origin Q3.2015 vs Q3.2014 Operational EBIT - 120 101 Harvest volume (GWT) 18425 16736 Operational EBIT per kg (NOK) 6.50 6.06 - of which MH Markets 1.29 1.54 - of which MH Consumer Products 0.00 0.00 Exceptional items incl in op
Slide 14: Salmon of Irish Origin
‘SALMON OF IRISH ORIGIN mitton 03.2015 03.2014 032015 032014 Operational EBIT 2B 6 Operational EBIT -2 42 Harvest volume (GWT) 3411-2419 Harvest volume (GWT) 0 = 3086 Operational EBIT per kg (NOK) 8.10 258 Operational EBIT per kg (NOK) na 13.48 - of which MH Markets 004 0.11 - of which MH Markets na
Slide 15: Consumer Products
Consumer Products CONSUMER PRODUCTS NOK million 3.2015 3.2014 Operating revenues Operational EBIT Operational EBIT % Volume sold (tons product weight) 25116 24251 Exceptional items 0 ° Volume share salmon 73% 74% Revenue share salmon 78% 78% = Results impacted by low season and preparation costs of
Slide 16: Feed
Operating revenues Operational EBIT Operational EBIT % Feed sold volume Feed produced volume Exceptional items = Record quarterly volume, revenues and EBIT * Low biomass of anchovies in Peru - Increasing market prices for fish oil and fish meal - MHG covered for fish meal through Q4 2015 and for fis
Slide 17: Third Quarter 2015: Financials, Harvest Volumes and Markets
Third Quarter 2015 Financials, Harvest Volumes and Markets
Slide 18: Marine Harvest Group
Marine Harvest Group ‘Operational revenue and other income Operational EBIT” 1! 912 2270 3m 4754 LUnreaized salmon demaves 16 7 co 18 54 Change in unrealized interna proft feed 2B 37 7 a 2 [Net fr value aqustment of biomass, onerous contacts 350 74 = 982 814 487 Restucturing costs =10 5 138 0 58 (Ot
Slide 19: Financial position
Non-current assets 19816 16924 18 662 Current assets 17 833. 14829 18 294 Assets held for sale 9 41 19 Total assets 37 657 31793 36974 Equity 17906 14193 14718 Non-current liabilities 13.790 12897 16572 Current liabilities 5.962 4703 5684 Total equity and lial 37 657 31793 36974 Net interest-bearing
Slide 20: Cash flow and net interest-bearing debt
Marine Harvest Group 3 2015, 32014 = -YTDG3.15 YTD. 14 2014 NIBD beginning of period 7685 -6 990 9 268 7791 7791 Operational EBITDA 1042 4160 3196 3.921 522 Change in working capital 308 158 588 7 “724 Taxes paid -28 55 508 208 -295 Other adjustments 114 2 246 -205 -261 Cash flow from operations 59
Slide 21: 2015 cash flow estimates
= 2015 cash flow estimates - Working capital buildup: Revised up to NOK 1,300m mainly due to FX + Support further organic growth - Capital expenditures unchanged of NOK 1,900m + NOK 1,100m — Maintenance + NOK 550m - Smolt and cleaner fish * NOK 250m - Other - The remaining amount of USD 18.5m in con
Slide 22: EUR 805m Facility Agreement
= EUR 805m Facility Agreement - Maturity - Q4 2019 - Covenants: * 35% equity ratio - Accordion option EUR 45m - Lenders: DNB, Nordea, Rabobank and ABN Amro = EUR 375m issued in April 2014 - Tenor 5 years, annual coupon 0.875%"), conversion price EUR 10.2927 = NOK 1,250m bond issued in February 2013
Slide 23: Estimated supply volumes by supplier
Estimated volumes {Compared to Q3 2014] Est. volumes Suppliers Q3 2015 Q32014§ Volume % Q2 2015 Norway 273900 277200 -3300 B -1.2% 267 500 Scotland 45 700 43 400 2300 F 5.3% 36 900 Faroe Islands 17 600 17 400 200 F 1.1% 17 400 Ireland 4000 3500 500 F 14.3% 4100 Total Europe 341200 341 500 300 B 0.1%
Slide 24: Market prices and weekly reference prices
Change v: Q3 2015 Change vs| NOK 32014 __Market (4) Q3 2014 Norway (1) NOK 40.72 16.0% EUR 445 5.0% Chile (2) NOK 28.28 51% USD 3.56 20.1% Chile, GWE (3) NOK 31.92 1.5% USD 3.88, 25.1% North America (4) NOK 19.39 7.3% USD 2.36 18.5% North America, GWE (3) NOK 37.60 3.6% USD 4.58 21.3% Notes: (1) NAS
Slide 25: Global volume by market
Global volume by market marineharvest Estimated volumes] Compared to Q3 2014 Markets Q3 2015 _Q32014} Volume Est. volums 12 month comparison 2 2015 L™ P™ % Eu 248500 23630012200 BH 5.2% 235600 966 200897 800 7.6% Russia 29900 34400 © -4500 J -13.1% 24900 109800 140200 -21.7% Other Europe 20700 21900
Slide 26: Supply estimates 2015 and 2016
Estimates 2015 |Gwetonnes (thousands) Low _Yivgrowth Nonway 3% uw 1% Faroes 7% “Total Europe Lh Chile North America 5% “Total Americas Sh other 2% Total 042012 a4: ESTIMATES 4 2015 NEtonnes (thousands) High _@iG growth] Nonway 238 % uc 44 21% Forces 22 4% “Total Europe 364 1% chile 145 5% North Amer
Slide 27: Harvest volume guidance
24.2014 5 G2 2015 G32015 a4 2015 265 Chile 2 ® 6 v wv 68 6 8 6 6 56 canada 33 6 6 7 7 2 10 2 ° 9 0 #2 Scotland 4s 10 8 14 5 4 7 2 7 6 256 other Units 12 3 4 6 5 1 3 3 5 ee Total ua 2 1 tT 05 ee ne nr = 2015 reduced guidance from 430,000 tons GWE to 425,000 tons GWE - Chile decreased by 3,000 tons du
Slide 28: Market balance expected to remain tight
Market balance expected to remain tight Future prices (NASDAQ) have increased to NOK 44 per kg next 12 months Robust consumer demand in Europe and underlying demand in Asian markets positive Continued weak American price achievement in Q4 2015 Quarterly dividend of NOK 1.40 per share
Slide 29: Appendix
Appendix
Slide 30: Quarterly dividend policy
The quarterly dividend level shall reflect the present and expected future cash flow generation of the Company To this end, a target level for net interest bearing debt is determined, reviewed and updated on a regular basis When the target is met, at least 75% of the annual free cash flow after oper
Slide 31: Q4 2015 contract shares and sales contract policy
= Q4 2015 contract shares (% of guided volume). - Norway 51% - Scotland 42% - Canada 0% - Chile 4% SALES CONTRACT POLICY Min hedging rate (1)_Max hedging rate (1) Norway (2) (3) 225% 50.0% Chile (3) 225% 50.0 % Canada 0.0% 30.0 % Scotland 40.0 % 75.0% Ireland 40.0 % 100.0% Faroes 0.0% 30.0% Weighted
Slide 32: Sources of origin Q3
‘SOURCES OF ORIGIN QTD z otland Canada ‘OPERATIONAL EBIT Chile ireland Faroes FARMING ‘SALES AND MARKETING Markets 8 43 10 24 ° a 5 159 ‘Consumer Products 2 A o ° 4 ° 8 41 SUBTOTAL 595 302 2. 120 2 =2 m7 633 Feed B 3 ‘other entities ? 4 4 TOTAL 3 Wz ae Eg To. 7 Hanwst volume (GWT, salmon) sees 18588
Slide 33: Operational EBIT year to date
OPERATIONAL EBIT FARMING 1787 o = 388 nm 3 1630 SALES AND MARKETING Markets 216 a 28 oo 0 2 a ae Consumer Products 56 4 0 ° 2 0 25 a7 SUBTOTAL 2.060 168 9 235 0 5 6 2474 Feed 8 8 Other enttos ® B =23 TOTAL 2060, ee [J Ea ca z =z ZH Havest volume (GWT, salmon) 18113 36049 © 2072847732 975 ° 309 598 O
Slide 34: eon ore sesrenpbiee
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Slide 35: Total
Total Norway 1682. 714 Chile 908754 Camda 395 36.4 Scotland 34-223 Other () 408 _ 11.8 Total “S098 “R66 Tot 217 382 358 a7 150 Bara 87 Total Total 27S 2883 479-535 591 808 2228 2580652 B10 S99 Bag 2870 m0 283 59 M41 23 7S 181132 18a 183k mo 2122 82 57 a m7 0S 6 87 03 400 m2 308 wa 7 4a 971 124 186 1
Slide 36: Capital expenditure
CAPITAL EXPENDITURE Maintenance level £ 1000 3 2 800 600 400 200 10) 2008 2009 2010 2011 2012 2013 2014 2015 3
Slide 37: Working capital tie-up
Working capital tie-up (NOK million) 2.000 1000 -500 -1 000 Til tT 2008 2009 2010 2011 2012 2013 2014 2015
Slide 38: Contractual repayments and interest expenses
NOK million [Contractual repayments Interest expenses 2011 2012 2013 2014 2015
Slide 39: Nova Sea 48%
Nova Sea 48% 34910 38739 © 11955 10.454 13.4 123 106 13.7 Leading integrated salmon producer in Northern Norway 33.33 wholly owned licenses 4 partly owned licenses Marine Harvest has an ownership in Nova Sea of ~48% through direct and indirect shareholdings 2014 dividends of NOK 150m (paid in Q2- 15
Slide 40: Interest rate hedging
‘rer qucK m Mate ae ofS centats in MNOK 2089) Mato matt austen enet n Diteence neds foatng tested in cashin as (OMG choses March ste statng mentor at new terest heogng contacts (2)Oee steoak vue ater tain rss curency swaps io accour. (@)Frarcing magn otirctted (@)Quatanycrangen mare ae toked ganst P
Slide 41: Currency hedging policy
POLICY = EUR/NOK - Marine Harvest shall hedge between 0% and 30% of its assumed annual expenses in NOK against the EUR with a horizon of two years. The annual hedging shall be evenly distributed across the months of the year. USD/CAD - Marine Harvest shall hedge between 0% and 30% of its assumed ann
Slide 42: Strategic currency hedging
|STRATEGIC CURRENCY HEDGING 2015 44 8.50 2016 176 9.13 2017 146 9.32 PIL effect of contracts maturing in Q3 35 (MINOK) NOK Market value 30/06/2015 4 Change (1) 199 Market value 30/09/2015 188 Norway Chile Canada Scotland Feed VAP Morpol Faroes Cold Water Species Asia EUR usp usp GBP EUR EUR EUR EUR
Slide 43: Biological assets fair value under IFRS (IAS 41)
Under IFRS (IAS 41) the company is required to value biological assets at a fair market value. During the second half of 2011, the largest salmon farming companies in Norway, with support from audit firms, formed an industry working group where the objective was to reach a converged and improved com
Slide 44: Net operating losses and deferred tax assets
Marine Harvest Group 31.12.2014 Recognibed ulwschgiieed err USA 69 0 69 Poland 248 51 298 France 35 256 291 Germany 4 0 14 Chile 0 310 310 Italy 0 4 4 Other 3 a 24 Total 368 eat 4010 * The NOL’s will be used to offset taxavle proft in the countries going forward * The utilisation of the deferred tax
Slide 45: Board proxies given at the AGM
The Board was given the following proxies at the AGM General share capital increase (up to 10% of share capital) + Proxy to set aside shareholders pre-emption right to subscribe Purchase of own shares (up to 10% of share capital) * Maximum price: NOK 140 per share + Minimum price: NOK 7.5 per share
Slide 46: Estimated sensitivities on annual results
ESTIMATED SENSITIVITIES ON ANNUAL RESULTS OP.EBITEFFECT CASHFLOW EFFECT DRIVER NOK million Change in global average salmon price of NOK 1 (1) (2) 425 390 Annual harvest volume Change in total harvest volume of 10,000 tonnes (2) (3) 100 92 Marginal volume Change in global feed price of NOK 1 perkg (4