Bakkafrost P/f · OSL:BAKKA

Bakkafrost P/f — Bakkafrost — Q4 2012 Earnings Presentation

36 slides from Bakkafrost P/f's earnings presentation, Feb 27, 2013

1. Slide 1: Q4 2012 Fourth Quarter Bakkafrost Group

   Q4 |2012 FOURTH QUARTER BAKKAFROST GROUP CEO Regin Jacobsen | CFO Teitur Samuelsen Oslo, February 27th 2013

2. Slide 2: Disclaimer

   DISCLAIMER  This presentation includes statements regarding future  No representation or warranty (expressed or implied) is results, which are subject to risks and uncertainties. made as to, and no reliance should be placed on, the Consequently, actual results may differ significantly from fairnes

3. Slide 3: Summary of Q4 2012

    SUMMARY OF Q4 2012  MARKETS AND SALES  FINANCIAL HIGHLIGHTS  SEGMENT INFORMATION  GROUP FINANCIALS  INVESTMENTS  OUTLOOK Klaksvík is the second largest town of the Faroe Islands. The town is located on Borðoy, which is one of the northernmost islands. The first settlement at Klaksvík dates b

4. Slide 4: Bakkafrost – the largest fish farming company in the Faroe Islands

   BAKKAFROST – THE LARGEST FISH FARMING COMPANY IN THE FAROE ISLANDS  Largest salmon farming company in the Faroe Islands  ~71% of harvest volumes in 2012  50% of farming licenses  Harvested 13,044 tgw in Q4 2012 (11,538 tgw in Q4 2011) ~110km  Feed sale of 25,047 tonnes in Q4 2012* (23,612 tonne

5. Slide 5: Summary of Q4 2012

   SUMMARY OF Q4 2012 Market  Supply of Atlantic Salmon increased by ~ 12% in Q4 2012 compared to Q4 2011  Differentiation strategy has been successful also in the fourth quarter in 2012 Operational key figures  Improved operational EBIT by 115% from DKK 45.9 million in Q4 2012 to 99.2 million in Q4

6. Slide 6: Markets and Sales

    SUMMARY OF Q4 2012  MARKETS AND SALES  FINANCIAL HIGHLIGHTS  SEGMENT INFORMATION  GROUP FINANCIALS  INVESTMENTS  OUTLOOK Klaksvík is the second largest town of the Faroe Islands. The town is located on Borðoy, which is one of the northernmost islands. The first settlement at Klaksvík dates b

7. Slide 7: Markets & Sales

   MARKETS & SALES Balanced sale to 4 main markets Sales Q4 Q4 by markets 2012 2011 2012 2011  The strong demand from Eastern Europe and Far East continues in Q4 2012 with a total share of 39% the EU 41% 59% 50% 60% revenues (24% in Q4 2011) USA 20% 17% 16% 23%  EU market all time low at 41% of total

8. Slide 8: Global Markets

   GLOBAL MARKETS Spot prices on fresh salmon 4-5 [NOK/kg HOG] 50  Compared with 2011, salmon price were in average 23% 45 lower first 9 months of 2012 (~8 NOK/kg), but increased 40 in average 10% in Q4 2012 (~2.5 NOK/kg) compared with same period in 2011 35 30  Despite an global increase in supply o

9. Slide 9: Global Demand of Atlantic Salmon Increased

   GLOBAL DEMAND OF ATLANTIC SALMON INCREASED Global demand of Atlantic Salmon  The demand of salmon had an impressive (1000 tonnes wfe) growth in all markets. 2012 Growth 2011 Growth 2010  Emerging markets had the highest growth 2012 2011 Market share rate EU 916 17% 782 6% 737  Supply of farmed At

10. Slide 10: Global Supply Growth of Atlantic Salmon Coming Down

    GLOBAL SUPPLY GROWTH OF ATLANTIC SALMON COMMING DOWN Global supply of Atlantic Salmon (whole fish equivalent –wfe)  The supply growth is expected to come down from 22% down to 4% in 2013  Since Chilean harvest of Atlantic salmon hit the bottom in 2010, harvest has almost tripled. The rapid growth

11. Slide 11: Financial Highlights

     SUMMARY OF Q4 2012  MARKETS AND SALES  FINANCIAL HIGHLIGHTS  SEGMENT INFORMATION  GROUP FINANCIALS  INVESTMENTS  OUTLOOK Klaksvík is the second largest town of the Faroe Islands. The town is located on Borðoy, which is one of the northernmost islands. The first settlement at Klaksvík dates b

12. Slide 12: Financial Highlights

    FINANCIAL HIGHLIGHTS Q4 Q4 Satisfying results at the given price level (DKK million) 2012 2011 2012 2011 Operating revenues 582.1 397.2 1,855.5 1,321.1  Increased revenue driven by increased Operational EBITDA 119.8 68.8 403.3 402.5 salmon prices and growth in harvested Operational EBIT 99.2 45.9 3

13. Slide 13: Key Financials, Group

    KEY FINANCIALS, GROUP Q4 Q4  Increased cash flow from operations – due to (DKK million) 2012 2011 increased harvest and improved salmon Cash flow from operations 103.8 86.7 prices, but hampered by increased tax payments and increased inventory. Total assets* 2,570.9 2,301.8 NIBD* 806.9 816.8  Tota

14. Slide 14: Segment Information

     SUMMARY OF Q4 2012  MARKETS AND SALES  FINANCIAL HIGHLIGHTS  SEGMENT INFORMATION  GROUP FINANCIALS  INVESTMENTS  OUTLOOK

15. Slide 15: Farming – Harvest Volume

    FARMING – HARVEST VOLUME Q4 Q4 [tgw]* 2012 2011 2012 2011 Harvested volume West 5,590 5,737 20,847 9,586  Harvested volumes up by 32% from 9,905 tgw in Q4 2011 to 13,044 tgw in Q4 2012 North 7,454 4,168 23,494 21,052  North region 57% of the harvested quantity Total 13,044 9,905 44,341 30,638 comp

16. Slide 16: Farming – Operational Performance

    FARMING – OPERATIONAL PERFORMANCE (DKK million) Q4 2012 Q4 2011 Revenues and margin Operating revenues 435 249  Revenues increased in Q4 2012 compared with Q4 2011 from DKK 249 million to DKK 435 million Operational EBIT 84 9  Margin increased from 4% in Q4 2011 to 19% in Q4 Operational EBIT margi

17. Slide 17: Smolt Transfer

    SMOLT TRANSFER Smolt transfer increased 7% in 2012 Smolt transfer 2008 - 2013E [million pcs] compared with 2010 The smolt transfer is planned to increase from 12 2011 to 2013E by 16%. In 2013 the smolt release will be lower than in 2012 due to available sites 10 Smolt release can take place each mon

18. Slide 18: Segment VAP

    SEGMENT VAP Q4 2012 Q4 2011 (DKK million) Operating revenues 154 127  Increased revenue due to higher volumes Operational EBIT 11 34  Operational EBIT margin narrowed to 8% in Q4 2012 compared to 27% in Q4 2011, when contract prices Operational EBIT margin 7% 27% were unchanged and spot prices dec

19. Slide 19: Segment Fish Meal, Oil and Feed

    SEGMENT FISH MEAL, OIL AND FEED  Revenues increased 7% due to higher sold quantity Meal, Oil and Feed in Q4 2012 compared with Q4 2011  EBITDA margin reduced due to increased raw Q4 Q4 material prices (DKK million) 2012 2011  Raw material intake for fishmeal/oil production 8,982 Operating revenue

20. Slide 20: Group Financials

     SUMMARY OF Q4 2012  MARKETS AND SALES  FINANCIAL HIGHLIGHTS  SEGMENT INFORMATION  GROUP FINANCIALS  INVESTMENTS  OUTLOOK

21. Slide 21: Group Profit and Loss

    GROUP PROFIT AND LOSS Q4 Q4  Revenue up 47% corresponding to DKK 185 (DKK million) 2012 2011 2012 2011 million) due to: Operating revenues 582 397 1,856 1,321  Improved marked prices Operational EBITDA* 120 69 403 402  Harvest salmon volumes up 13% due to organic growth Operational EBIT* 99 46 32

22. Slide 22: Balance Sheet

    BALANCE SHEET  Balance sheet impacted by the sale of Faroe (DKK million) 2012 2011 Farming, which is not consolidated any more, but Intangible assets 294 370 an associate Property, plant and equipment 813 829  Investments in PPE of DKK 42 million in Q4 and for 91 36 Financial assets 2012 DKK 115 m

23. Slide 23: Cash Flow

    CASH FLOW Cash flow impacted by seasonal growth Q4 Q4 YTD YTD (DKK million) 2012 2011 2012 2011 Cash flow from operations 104 87 283 410  Increased cash flow from operations in Q4 2012, due to increased harvest and improved salmon Cash flow from investments -45 -27 -67 -723 prices, but hampered by

24. Slide 24: Bonds Issued in Q1 2013

    BONDS ISSUED IN Q1 2013 Bakkafrost entered the Norwegian bond marked  Bond’s raised in Q1 2013 of NOK 500 million,  3m NIBOR + 4,15% swapped into DKK and CIBOR 3m + 3,94%  Swapped into DKK to reduce currency risk.  DKK is Bakkafrost’s functional currency Purpose of the bond issue:  Increase sou

25. Slide 25: Overview over Financing

    OVERVIEW OVER FINANCING Financing of the Group NIBD and available funding  Total funding increased from DKK 953 million to DKK1,453 million 1600 1400  Bond NOK 500 million due Feb 2018 (swapped into DKK) 1200  Instalment loan of DKK 400 million, repayable with DKK 25 million each quarter 1000 800

26. Slide 26: Dividend

    DIVIDEND Dividend proposal Dividend history  The board will propose a dividend on DKK 2.00 (NOK ~ 1.97) per share to the AGM 2012 2011 2010 Dividend (DKK mill.) 97 48 191 Dividend policy  Competitive return through: DPS (DKK) 2.00 1.00 3.91  Dividends Adj. EPS** (DKK) 5.01 5.26 3.96  Increase in

27. Slide 27: Dividend

    DIVIDEND Dividend proposal for 2012 DPS in % of adj. EPS * 100% 99% 90%  DPS of DKK 2.00 per share (NOK 1.98) 80% ~40 % of adjusted EPS 70%  For 2010 - 2012 is 49% of adj. EPS paid out as dividend 60% 49% in addition to a significant acquisition made in 2011 50% 40% 40%  Double DPS in 2012 compar

28. Slide 28: Investments

     SUMMARY OF Q4 2012  MARKETS AND SALES  FINANCIAL HIGHLIGHTS  SEGMENT INFORMATION  GROUP FINANCIALS  INVESTMENTS  OUTLOOK

29. Slide 29: Planned Investments in 2012 and 2013

    PLANNED INVESTMENTS IN 2012 AND 2013 Investments in PPE (DKK millon) Unchanged forecast on investments in PPE 200  Investments in 2012 at DKK 115 million and 150 increased investments in 2013 to DKK 170  The investments are made in: 100  Hatchery division 50  Fish meal/oil and feed 0 2008 2009 2

30. Slide 30: Outlook

     SUMMARY OF Q4 2012  MARKETS AND SALES  FINANCIAL HIGHLIGHTS  SEGMENT INFORMATION  GROUP FINANCIALS  INVESTMENTS  OUTLOOK

31. Slide 31: Outlook

    OUTLOOK  Good market outlook for Bakkafrost’s products  Increase in supply expected to be lower then increase in demand  25% of expected volumes for 2013 contracted today as VAP products  Increased spot prices may give short term losses for VAP products  Estimated harvest of 45,000 tonnes gwt.

32. Slide 32: Thank You!

    THANK YOU! Kunoyarnes Bakkafrosts fishfarm A-12

33. Slide 33: Faroe Islands

    FAROE ISLANDS  18 islands – 1,387 km2  48,285 inhabitants (March 1st 2012)  Home rule – within the Kingdom of Denmark  Part of the Danish monetary union, Danish krone (DKK)  Key sectors (% of wage earners, 2011)  Service/public admin.: ~38%  Private service: ~33%  Fishing industry: ~15%  GD

34. Slide 34: Monthly Exchange Rates

    MONTHLY EXCHANGE RATES BAKKAFROST / Q4 PRESENTATION 2012 Page 34

35. Slide 35: Vestmanna - Gøtuvík

    VESTMANNA - GØTUVÍK MHG Bakka Benefits from the switch (*)  Improved fallowing system  Better biological security Luna  Bakka controlling a larger area  Part of the North area Vestmanna Gøtuvík Faroe Farming *) Subject to Governmental approval BAKKAFROST / Q4 PRESENTATION 2012 Page 35

36. Slide 36: Largest Shareholders

    LARGEST SHAREHOLDERS 20 largest shareholders Share price development since listing in NOK SALMAR ASA NOR 25,21 2013 Jacobsen Oddvør FRO 9,40 Jacobsen Johan Regin FRO 9,19 UBS AG ZURICH A/C OMNIBUS-DISCLOSE CHE 5,09 NOM TF ÍLØGUR P/F FRO 5,02 PARETO BANK ASA NOR 4,66 FØROYA LÍVSTRYGGING FRO 2,55 JPMO

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