Mowi Asa · OSL:MOWI
Mowi Asa — Marine Harvest — Q1 2014 Earnings Presentation
51 slides from Mowi Asa's earnings presentation, May 1, 2014
Slide 1: Q1 2014 Presentation
Q1 2014 Presentation * . oe if
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, production capacity, expectations of the com
Slide 3: Q1 2014 highlights
= Record high operational EBIT of NOK 1,090 million = All time high prices in Norway and Canada = Result partly offset by contract coverage and high costs in Norway = Agreement to divest UK farming assets to meet EC remedies = Proceeds of GBP 122.5m expected = Partial refinancing through issuance of
Slide 4: Group key figures
‘Group -m: ‘Operational revenue and other income 5968 3736 19230 Operational EBIT 1.090 482 3212 Cash flow from operations 1211 381 2023 [Net interest-bearing debt (NBD) 7511 e314 778 LUnderying EPS. (NOK)? 1.80 070 5.38 [Net cash flow por share (NOK) 175 0.19 038 ROcE” 21.5% 140% 185% Hanest volume
Slide 5: Weekly reference prices
60 20 18 so io 40 Mg 3 nk g = = 30 105 z 2 5 = 2% on 8 a3 10 2 ° ° 2007 2008-2009: «20102011202 2013S2ond Weekly reference prices sre Horny (806 ee Che (Cum eta Mam pre Noah Amer HOS Seat) Global supply growth ~4% Strong prices in all markets Price of Canadian salmon in Seattle outperformed Chilean
Slide 6: Operational EBIT per kg by region
Norwegian Scottish Canadian Chilean @Q1 2014 m1 2013 comeswe] we [| ems Tm Tm wow om | om Lm Tews
Slide 7: Operational EBIT Norwegian origin
Operational EBIT NorweglanOrgin i 2013 vs @1 2014 Operational EBIT 708 397 Harvest volume 95107 47302 Operational EBIT per kg 1282 8.39 aaa of which MH Markets 058 057 - of which NH VAP Europe 024-028 - of which Morpol 059 ona Exceptional items incl in op. EBIT 7 22 Exceptional items per kg 136-068
Slide 8: Contract volume
Contract volume (HOG tonnes) a 8 8 8 i nai Cr asa sani on 015 ‘Realise contact volume ast quarts Contracted volumes ner quarters
Slide 9: Norway harvest volume by region
15.98 16.00 13.73 1400 12.82 12.00 10.85 10.00 9.19 _ ere eas 00 7.79 7.82 6.00 4,00 2.00 South West Mid North Total 52014 Q1 =2013 Qt Harvest volume| 12.315 17310 11.596 13.886 55,107 Superior share 91% 95% 92% 27% 91%
Slide 10: Scottish origin
NOF SCOTTISH ORIGIN Operational EBIT Scottish Orgin Q1 2013 vs Qt 2014 Operational EBIT 1330075 Harvest volume 10468 9568 Operational EBIT per kg 1268 7.87 of which MH Markets 267 094 - of which NH VAP Europe 035-006 - of which Morpol 007 na Exceptional items incl in op. EBIT 0 0 Exceptional items p
Slide 11: Salmon of Canadian origin
ISALMON OF CANADIAN ORIGIN 12014 a1 2013 Operational EBIT wm Bt Operational EBIT Canadian Orgin Q1 2013 vs Qt 2014 Harvest volume 6968 12232 Operational EBIT per kg 1910 6.63 of which MH Markets 181 085 = - of which MH VAP Europe 0.00 0.00 - - of which Morpol 000 na Exceptional items incl in op. EBI
Slide 12: Salmon of Chilean origin
ISALMON OF CHILEAN ORIGIN : Qt 2014 Qt 2013 Operational EBIT 119-52 Operational EBIT Chilean Orgin 1 2013 vs.@1 2014 Harvest volume 17741 8259 Operational EBIT per kg 673 6.27 = = of which MH Markets 095 0.50 - of which MH VAP Europe 001 0.00 = of which Morpol 0.00 ona Exceptional tems inc! in op. E
Slide 13: Salmon of Irish and Faroese origin
ISALMON OF IRISH ORIGIN ISALMON OF FAROESE ORIGIN OK mition 12014 Qt 2013 ox Qt 2014 at 2013 Operational EBIT 4 8B Operational EBIT a 13 Harvest volume 476 1.456 Harvest volume 2084 1218 Operational EBIT per kg 870 12.26 Operational EBIT per kg 20.98 11.00 + of which MH Markets 014 065 = of which MH
Slide 14: MH VAP Europe
IMH VAP EUROPE 212014 Qt 2013 Operational EBIT VAP Europe Qt 2013 vs.@1 2014 Operating revenues 1135 905 Operational EBIT -2 -18 Operational EBIT % 22% 2.0% Volume sold (tons product weight) 14049-13538 Exceptional items ° 0 Volume share salmon 62% 58% -_ = Revenue share salmon 71% 65% Gross margin
Slide 15: Morpol
Operating revenues Operational EBIT -38 ona Operational EBIT % 37% na Volume sold (tons product weight) 11358.=na Exceptional items ona Volume share salmon 92% na Revenue share salmon 89% na = Inability to fully pass through high raw material costs = ~80% raw material purchased in the spot market =
Slide 16: Feed plant capacity and investment
= 220 thousand tonnes capacity — 60% of MHG requirement in Norway = ~NOK 800m investment - Completion June/July 2014
Slide 17: First Quarter 2014: Financials, Harvest Volumes and Markets
First Quarter 2014 Financials, Harvest Volumes and Markets
Slide 18: Income statement and key figures
‘Operational revenue and other income ‘5868 3736 19230 Operational EBIT 1080 482 321 Unrealsed gains on salmon dersatnes 3 7 20 Feirelue adustmert on biological assets 208 eae 1795 ‘Onerous contacts provsions 87 18 125 Restructuring costs 0 ° 2273 Non-operatona egal issues ° 0 74 Incomerioss fom ass
Slide 19: Financial position
Marine Harvest Gi Non-current assets 16 459 14665 16.497 Current assets 15.234 10241 16172 Assets held for sale 1141 ° 1.059 Total assets 92 834 24 908 33.728 Equity 16.999 12564 16348 Non-current labltios 11 988 9674 12051 Current liabilities 4260 2668 5140 Liabilities held for sate 187 ° 190 Total
Slide 20: Net interest-bearing debt and cash flow
1.14 1.13 2013 'MIBD beginning of period 7781 so 5301 Operational EBITDA 136 oz 3975 Change in working captal eZ = 4749 Taxes paid -96 “7 118 (ther agjustments 5] 2 87 {Gash flow from operations a2 35 2023 Capex 375 oa 4902 (ther imestments 2 “675 -572 {Gash flow from investments 378 4 088 2am Net i
Slide 21: 2014 cash flow estimates
* 2014 cash flow estimates = Working capital buildup NOK 800m = Requirements for commencing operations in feed plant = Organic growth farming — Scotland and Canada = Capital expenditures NOK 1,700m = NOK 1,000m ~ Maintenance = NOK 500m — Structural investments — organic growth and strengthen assets
Slide 22: Financing update
= EUR 775m Facility Agreement Maturity — Q1 2016 (extended from Q1 2015) Lenders: DNB, Nordea, Rabobank and ABN Amro Covenants: Declining NIBD/EBITDA(1) ratio + 3.25 up to 022014 + 3.00 thereafter 40% equity ratio Facility to be downscaled as a result of recent convertible bond issuance Convertible
Slide 23: Estimated global harvest volumes
Estimated volumes ‘Compared to Q1 2013 t. volume: 2013 Qt 2014 a1 2013) volume °% ‘Suppliers Norway 736,000 _232,200|[—__ 3,800 16% 308,800] Chile 130,800 109,400) 21,400 TB 19.6% 115,700] ‘Scotland 29,800 28,400] 1,400 F 4.9% 41,100] North America 23,600 32,200|| 8,600 § -26.7%| 28,300] Faroe Islan
Slide 24: Salmon prices
[NOK per ke (Oslo) 30 20 10 Be z ug ng w 2 ee ‘i a3 2 ° 2007 2008-2009 2010S 2011201220180 ‘Weekly reference prices in Mian) ference rie Noth meri (HOG Sete) erway (1) 170% ite) ze Nath Aretea om (hea sper HO pce perk (FCA Ot) (2) Arage Com pce perk (Une Bary Mam 23), eqnalent to NOK 40.0 and USD 6.
Slide 25: Markets
Markets eu USA Russia Brasil (China / Hong Kong Japan ‘South Korea/Taivan Uraina ‘Sum main markets ‘Other markets Total all markets Inflow to US from Europe Inflow to EU from Chile 12 month rolling Lm pm 7200 162300] 800 FF O5K][—__2aSg00][ Bia 700 822,709 88,700 83.400] 5,300 6.4%] 85,800|] 338,700
Slide 26: Industry supply outlook
Industry supply outlook 200820092010 201120122013, HOG tonnes (thousands) Roway 657 770 850 05 10551029 Chie 363 215 "7 199 328 at North America 125 124 128 124 140 12 uc 123 130 129 139 143 142 Other eI 88 20 103 123 124 Total 347428310 1a7i___ 4799 1.839 222008 22009 22010 G22011 Qz2012 22013 ESTI
Slide 27: Salmon supply growth
Salmon sp Norway ar Cy 53 69 222 55 68 141 264 Growth % 25% 16% % 18% 1% 61% 16% 19% Chile (1) 8 ° 6 4B 18 6 ar 60 Growth % 18% 100% 40% 28% 30% 115% 25% 34% 110% Canada 2 9 6 6 3 6 7 16 29 Growth % 15% 16% 25% ATH 18% 48% 05% 31% 12% Scotland 10 8 14 2 48 10 6 24 50 Growth % % 17% 6% 78% 20% % 61%
Slide 28: Outlook and strategic focus areas
= Strong demand expected to continue = Forward prices of NOK 38.8 per kg for Q2-Q4 2014 = However, higher supply growth expected for remainder of year = Strategic focus areas = Successful development of green-field feed capacity = Acquisitions in Norway and Chile = Integration of Morpol = High sea l
Slide 29: Appendix
Appendix
Slide 30: Q2 2014 contract shares and sales contract policy
Q2 2014 contract shares (% of guided volume) + Norway 33% + Scotland 46% = Canada 0% = Chile 17% | SALES CONTRACT POLICY Min hedging rate (1) Max hedging rate (1) Norway @) 8) 25% 50.0% Chile @) 25% 50.0% Canada 00% 30.0% Scotland 40.0% 75.0% Ireland 0.0% 30.0% Faroos 0.0% 30.0% Weighted average 221
Slide 31: Price and global volume allocation
230010 RICE AND GLOBAL VOLUME ALLOCATION TO THE EU MARKET oar mi ll Be BE ORES G1 2013 Market) Nomay (1) Nok 4856 216% — EURSSS Che (2) NOK 6157 31e% USD 1010 Neth America (3) NOK 5020 521% © USDB24 Notes: (1) erage superior HOS price perky FCA Ost) (@) Average C thm rice per kg (Umer Bay Miami 23 8
Slide 32: Development in global price achievement
Development in Global Price Achievement {at soures of origin) Global Farming -full cost Qt 2013 vs Qt 2014 ‘Group EO perk NOH) 2205 6a Contin tem Farming NO) a 6m Cnet tom Markets (NO) osx ost contin ftom VAP (NOR) an on contin tom Mop rocesing NOR) aa m= Croup Harvest Volume tonnes) ss 0035 Operati
Slide 33: Key financial figures
‘Operational revenue 5858 3738 19.230, Operational EBITDA 1316 0x2 3075 Operational EBIT 4080 482 3212 eer 986 1168 4652 ‘Net francial items 2 165 “1204 Prati or los forthe period 786 753 2522 ‘Gash fow fom operations a2 35 2023 Tara assets Seas 24005 Ea ‘Net inerest-bearing debt (NBD) 7511 e314 779
Slide 34: Operational EBIT
‘OPERATIONAL E81T Mi FARMING mr 4 2 100 Mil SALES AND MARKETING Mi Markets 2 25 0 a ° 1 3 s MiVAP Europe 8 4 ° ° ° ° 8 3 Moral Processing 3 ° ° ° 0 6 3 SUBTOTAL a a TT z 2 other ents a a TOTAL, a a TE z za Hanest volume gutted weight fons (mon) a a a ec} 2208 ‘Operational EBIT per kg (NOK) 12 107s 8
Slide 35: MH Farming
MH FARMING 20s okt Ce er) 3008 hn vae Europe “7 ‘ ° ° + 8 rs eral Processing 6 8 ° ° ° 6 2 e susToTaL 0 a8 a a ir aE’ TOTAL 0 a8 9) 5 0 8 a Hanest vue gutted waht tens (samen) maw sao Se ~*C RDC e772 Operon at a NOK) nS a ee a TS 078 ot MH Ma oe ©2818 Oa 101 “Shams un VaP Eee 27 00 = 0m Soma amo on
Slide 36: Operational EBIT reconciliation
‘ie ov ot eed asetartangbies ‘Coracon to opaataral ETT Fon SET (peratonal ET mel coreston tom S3Me (pertnal EBTAg el contibton om SSK 58 Tanestaolume samen intone gaied wage Boulsccooot Bo B80 00888
Slide 37: Harvest volumes by region
Norway 1082 chiles) sa Canade 388, Seotand 314 other @) 108 Tol) Hee wart BET 278627 640 885701 289473 1 ee 51 630 1409 2640 mo 97 98 99° 0 40283 sot 7 150258 688 Bo 106 106 83 foe 402 122 6257 64 70 156 280 soz 02 4 0 G7 aad 08 ne 17 10s 150 240 488 43 4436 37 47 tes 27 2032 264084160 Bae — Bey var
Slide 38: Secondary processing
Total revenue TL 071314 98H 88S AAT OHHH MBS AD AAI 1857 SIT EBTOALeforefarvalue adjustments S437 ey to) sass corr 2 470 8 8 2 us mS mS "ANALYTIEATDRTA SECONDARY PROCESSING Processedvolume, product weight 16221 15817 16273 22423 A7AI6 IZAK9 114K 18890 IGOKS 14579 15,110 23013 19.389 17869 19.065 27.
Slide 39: Capital expenditure
NOK million rpeaed 8és8ss8 sssse8s ° CAPITAL EXPENDITURE | | | | 7 2008 2009 2010 2011 2012 2013 2014 Estimate Estimate
Slide 40: Working capital tie-up
2000 1500 1000 500 Working capital tie-up (NOK million) -500 -1000 2008 2009 2010 2011 2012 2013 2014 Estimate
Slide 41: Contractual repayments and interest expenses
500 2011 2012 2013 2014 [Contractual repayments L_ Interest expenses
Slide 42: Dividend policy
The dividend level shall reflect the present and future cash generation potential of the Company Marine Harvest will target a net interest-bearing debt/equity ratio of less than 0.5x When target level is met, at least 75% of the annual free cash flow after operational and financial commitments will
Slide 43: Nova Sea 48%
Nova Sea 48% 34529 34910 9.987 6542 43 122 a7 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 2013 dividends of NOK 40m (Q2) Marine Harvest’s share
Slide 44: Debt volume hedged and interest rate hedges
DEBT VOLUME HEDGED AND FDED RATES OF INTEREST RATE HEOGES (MARCH.MARC#) CURRENCY euRm uso m cep m Other NOK) 14847 Market aus of IRS contracts in MNO (21/0/14) [aq Mark to marke austen efect in Dierence infed ve foating rate celled in cash in Qt [=e Notes: (2) MHG choses March asthe stating month fe
Slide 45: 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 one year. The annual hedging shall be evenly distributed across the months of the year. = USD/CAD * Marine Harvest shall not hedge the USD/CAD exposure. » USD/CLP
Slide 46: Current hedging portfolio
CURRENT PORTFOLIO 2014 150 822 2015, 58 847 PIL effect of contracts in @1 40 (MINOK) _ Market value 31/12/2013 0 Change (1) 8 Market value 31/03/2014 a2 Note: (1) Quarterly changes in market value booked against equity until maturity Faroes KK Cold Water Species NOK Asia uso Morpol EUR
Slide 47: Currency rates and impact
CAD 1EUR 1GBP — 1USD ‘Averge Q1 2014 55273 83471 10.0830 6.0951 ‘Average Q1 2013, 55778 7.4277 87289 5.6228 av Qn 2014 ate 1GBP _ 1USD wQI214 09% 124% 155% BAM End of quarter rates 1 1GBP _ 1USD SUBS. 311213 5.1% 15% 08% «1.6% = Impact on Profit and Loss (versus Q1 2013) = Currency impact on net fin
Slide 48: Fair value of biological assets under IFRS
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 49: Deferred tax assets on tax losses
Recognised Unrecognised Chile 186 ° 186 USA 58 3 61 Germany 58 ° 58 The Netherlands 49 0 49 Ireland 36 0 36 France 20 148 166 Poland 18 Mt 129 Vietnam 12 27 39 Other 1 5 16 Total 448 292 740 = Most of the deferred tax assets have been recognised on the statement of financial position = The NOL's wil
Slide 50: 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 = Targeted authority to increase share capital = Issuance of up to 82m shares in one or more occasion = Authority may on
Slide 51: Estimated sensitivities on annual results
JESTIMATED SENSITIVITIES ON ANNUAL RESULTS OP. EBITEFFECT CASH FLOW EFFECT INOK million Change in global average salmon price of NOK 1 (1) 405 3702) Annual hanest volume Change in total hanest volume of 10,000 tonnes @) © 552) Marginal volume ‘Change in global feed price of NOK 1 per kg 490 (4) 635