Mowi Asa · OSL:MOWI
Mowi Asa — Marine Harvest — Q1 2015 Earnings Presentation
51 slides from Mowi Asa's earnings presentation, Apr 30, 2015
Slide 1: Q1 2015 Presentation
marineharvest Q1 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: Satisfactory operational EBIT of NOK 932m
Satisfactory operational EBIT of NOK 932m - Strong contribution from Norway - Challenging market conditions in Americas = Convertible bonds converted to share capital = Quarterly dividend of NOK 1.30 per share - To be paid in the form of a repayment of paid in capital
Slide 4: Marine Harvest Group key figures
Marine Harvest G Qt 2015 Qt 2014 2014 f Reclassifed Operational revenue and other income 5652 5241 22 847 Operational EBIT" 932 970 3938 Cash flow from operations 669 1133 3.408 Net interest-bearing debt (NIBD) 7518 7511 9 268 Underlying EPS (NOK) ” 1.33 1.78 7.01 Net cash flow per share (NOK) ® 0.3
Slide 5: Weekly reference prices
_ ) ss a > 7 3 z 3 & a 2 A ry = Fee DAMIAN EU voce 5 mpd ? . poe of NY g ia i 2 er ‘oor ame "es ou aml zou. "oes Weekly reference prices ceenay eae ey ema = Prices in Europe at good levels despite weak Russian demand = Weak prices in Americas — North American supply growth = Currency fluctuations im
Slide 6: Price achievement by origin
Price achievement by origin 111% 100% roy 100% ak 98% 98% 80% 60% 40% 20% 0% Norwegian Scottish Canadian 9 Q1 2014 = Q1 2015 Contract share | 33% | ca | 0% Suparior share | 2% [ 20% | [ 26%
Slide 7: Operational EBIT development Q1 2014 to Q1 2015
4 io} 2 1100 1050 1000 850 800 750 700 35 -231 61 Op EBITQ1 MH Feed Farming Markets Consumer 2014 Products Other Op EBIT Q1 2015
Slide 8: Operational EBIT Salmon of Norwegian Origin
Qt 2014, Operational EBIT Salmon of Norwegian Origin 12014 - reclassified ve Q1 2015, Operational EBIT 839 707 Harvest volume 65203 85 107 Operational EBIT per kg 1287 12.83 = of which MH Markets 1.32 0.60 = of which MH Consumer Products 006.084 2 Exceptional items incl in op. EBT 113 ea Sc ae : Exc
Slide 9: Contracted volumes (HOG tonnes)
contracted volumes (HOG tonnes) ‘a2201 ‘as.2014 42014 an 2015 cans ‘as2015 ‘Realise consactvolumaslastquaters = Contacte volumes next quaers
Slide 10: Operational EBIT NOK per kg
NOK per kg x 14.95 13.73 12.87 hott Pee 12.83 11.53 10.85 | | South West Mid North Total = 2014Q1 =2015Q1
Slide 11: Operational EBIT Salmon of Scottish Origin
Operational EBIT Salmon of Scottish Origin Q1 2014 - reclassified vs Q1 2015 Operational EBIT 19 132 Harvest volume 7112 10468 Operational EBIT per kg 270 12.66 oT of which MH Markets 1840267 of which MH Consumer Products 002-028 Exceptional items incl in op. EBIT 4 0 Exceptional items per kg 061 0.
Slide 12: Operational EBIT Salmon of Canadian Origin
ION OF CANADIAN G1 2018 aN 204 Operational EBIT Salmon of Canadian Origin milion (Qt 2014. reclassified vs Qt 2015, Operational EBIT a 417 Harvest volume 10478 «6368 Operational EBIT per kg 490 18.42 ~ of which MH Markets oat 0.83 a = of which MH Consumer Products 0.00 0.00 Exceptional items incl in
Slide 13: Salmon of Irish and Faroese Origin
ION OF IRISH ORIGIN 2015, Q2014, [SALMON OF FAROESE ORIGIN oK mation 12015 4 2014 Operational EBIT ° 4 Operational EBIT -2 “4 Harvest volume 616 476 Harvest volume 0 2084 Operational EBIT per kg 0.76 884 Operational EBIT per kg 0.00 24.05 - of which MH Markets 000 © 0.00 of which MH Markets 000 O67
Slide 14: Consumer Products
‘CONSUMER PRODUCTS 3 milion 212015 ai 2014 Operating revenues Operational EBIT +2 - 63 Operatonal EBIT % 01% 30% Volume sold (tons product weight) «2581424875, Exceptional items ° ° Volume share salmon 69% 69% Revenue share salmon 74% 75% = Improvements year over year, but still not satisfactory ear
Slide 15: MH Feed
D Operating revenues Operational EBIT Operational EBIT % Feed sold volume Feed produced volume Exceptional items. = MH Feed impacted by low season and third party commitments - Third party feed supply contracts will diminish during 2015
Slide 16: Operational EBIT Salmon of Chilean Origin
Operational EBIT Salmon of Chilean Origin Disontinued Operation Qt 2014 vs Qt 2016 Operational EBIT = 104 119 Harvest volume 16067 17 741 Operational EBIT per kg 6.48 6.73 = of which MH Markets 3.06 0.95 ———s - of which MH Consumer Products 000 001 oo. Exceptional items incl in op. EBIT 51 a care Ex
Slide 17: First Quarter 2015: Financials, Harvest Volumes and Markets
First Quarter 2015 Financials, Harvest Volumes and Markets
Slide 18: Marine Harvest Group income statement
Marine Harvest Group Qt 2015 Qt 2014 2014 nion Reclassifed Operational revenue and other income 5652 5241 22847 Operational EBIT 932 970 3.938 Unrealized salmon derivatives 48 3 54 Change in unrealized intemal proft feed 1 0 -92 Net fair value adjustment of biomass, onerous contracts - “17 = 263 Res
Slide 19: Marine Harvest Group financial position
Marine Harvest Group Nc 31.03.2015 31.03.2014 31.12.2014) Non-current assets 16 004 16 459 18 662 Current assets 14144 15 234 18.294 Assets held for sale 5 982 1141 19 Total assets 36 130 32 834 36 974 Equity 18 387 16 399 14718 Non-current liabilities, 12269 11 988 16572 Current liabilities 4342 42
Slide 20: Net interest-bearing debt and cash flow
14 Reclassified NIBD beginning of period 9268 7791 T7381 Operational EBITDA 1178 1169 4796 Change in working capital cr 184 -913 Taxes paid 16 <9 =293 Other adjustments 52 =128 182 Cash flow from operations 669 1193 3.408 Net Capex 435 = 349 1578 Cash from disposal of assets held for sale ° ° 1182 O
Slide 21: 2015 cash flow estimates
= 2015 cash flow estimates - Working capital buildup NOK 900m * — Support further organic growth - Capital expenditures increased from NOK 1,700m to NOK 1,900m due to FX changes + NOK 1,100m — Maintenance + NOK 550m - Smolt and cleaner fish + NOK 250m - Other - Interest expenses NOK 270m - Tax payab
Slide 22: Dividend policy and NIBD target
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 23: EUR 555m Facility Agreement and bonds
= EUR 555m Facility Agreement - Maturity - Q4 2019 - Covenants: + 35% equity ratio - Accordion option for parties to agree increased size of facility by EUR 295m - Lenders: DNB, Nordea, Rabobank and ABN Amro = EUR 375m issued in April 2014 - Tenor 5 years, annual coupon 0.875%"), conversion price EU
Slide 24: Estimated supply volumes compared to Q1 2014
Estimated volumes | Compared to Q1 2014 Q12015 a1 2014] Volume % Q4 2014 ‘Suppliers Norway 258 600 235 800|[ 22700 8.6%] 300 705} Chile 128500 134800|| 6300 B -4.7%| 138 200] Scotland 32600 33 400] 800 B 2.4% 37 200] North America 28800 22 400] 6400 H 28.6% 31 500] Faroe Islands. 12200 16.000} -3800
Slide 25: Price development by region
Norway (1) Nok 40.72 130% EUR 88 77% Chie @ NOK 6479 52% UsDasS f73% Neth Amerca @) NOK 4127 s78% — USD532 354% Notes (1) Average suporor HOG pice pr kg (NASDAQ) (2 Average C tim pic per kg (Umer Bary Mam 2:31), equalent to NOK 42-1 and USO 4 HOG {@ Average stporar HOG pice per ka (Umer Bary Seale 1
Slide 26: Market demand comparison
112 month comparison umm pt Markets eu BOSD 167 40][ sa 200 He 7 2%]| 255 700]| aa 900 Bre BOD USA 92700 86900] 5800 B 6.7%] '87.900]| 358900 336 700] Brazil 25000 © 22600]| 3.400 TF 15.0% 24000] — ss.200 62200) ‘China / Hong Kong 16900 15 700| 120 © 7.6%) 17 600] 77300 87300) Russia 16600 — 28800]|
Slide 27: Harvest volumes by region (HOG tonnes)
2010 HOS tonnes (thousands) Total Teer 4310__1470___ 7800 4837 ___Fo0s 7036. P2104 e% 1022010 22014 195 20 Nevth America 3 2 2 35 32 26 0 1% OH 7% uk 29 2 34 35 34 a 2 ee) 6% oter 20 10 24 2 29 2 34 ced nm Total 306. 30 37 m8 20 a_i Pe 608 Eg
Slide 28: Supply growth by region and expectations
Norway 222 55 cy Cc 7 288 65 65 138 (268 Canada 33 6 6 7 1 2 10 7 19 “1 Scotland 43 10 8 14 6 49 7 cry 36 66 Other Units 2 3 4 6 6 18 1 2 8 1" Total 15 75 8 a 636 83 9 199374 Chite EJ 18 16 7 7 6 16 18 35 6s Total, adjusted ae 2h 107105 at 99 107 28h 40 Note (1) Includes discontinued operations = Q2
Slide 29: Favourable market and supply outlook in Europe
= Favourable market and supply outlook in Europe - Futures prices (NASDAQ) next 12 months at ca NOK 40 per kg * Monitoring the market conditions in the Americas closely = MHG supportive of Norwegian White Paper - Responsible approach by the Norwegian government - Improved biological control a prereq
Slide 30: Appendix
Appendix
Slide 31: Forming a leading player in the Chilean industry
= Forming a leading player in the Chilean industry - 165 thousand tonnes of salmonids — capacity of 260 thousand tonnes (HOG) - Infrastructure to support stand alone operations in region X and XI - 19 thousand tonnes of Tilapia — capacity of 25 thousand tonnes (WFE) = Major step towards a more susta
Slide 32: Chilean industry structure
250 g 200 le : oe Sto ~_ 97 92 89 ° 100 3 ae ca) 47 47 «47 os E50 Mit A237. 34-31 29-28-39 2 ; PETE anaes ye a Ss rs An s+ 90 8 ss yy ve S SSPE OHO FS KSS ite eS SL a HMM ¥ 1250 concessions in total Fragmented industry structure Biological challenges Lack of coordination and logistics
Slide 33: Q2 2015 contract shares and sales contract policy
= Q2 2015 contract shares (% of guided volume) - Norway 32% - Scotland 40% - Canada 0% SALES CONTRACT POLICY Min hedging rate (1)_Max hedging rate (1) Norway (2) (3) 15.0% 50.0 % Canada 0.0% 30.0% Scotland 40.0 % 75.0% Ireland 0.0% 30.0% Faroes 0.0% 30.0 % Weighted average T7.6% 50.8% Note: (1) Hedg
Slide 34: Price and global volume allocation to EU and US markets
PRICE AND GLOBAL VOLUME ALLOCATION TO THE EU MARKET PRICE & GLOBAL VOLUME ALLOCATION TO THE US MARKET F200 “ee & of vias Joon ii f vow HAMM] ls AA | Il... ELGLGLLGL ELGiRLGG PEGiGblad fii i sth America (3) NOK 41.27 478% USD532 64% Notes: (1) Average superior HOG price per kg (NASDAQ) (2) Average C
Slide 35: Global Farming full cost
Global Farming - full cost Qt 2014 - Reclassifed vs 1 2015 overs Volue tones} oe Operon 2 arse org NOK) ou pean Fam iets NOK
Slide 36: Key figures Q1 2015
Qi 2015 Qi 2014, ‘Operational revenue and ether income 5652 5241 2ea7 ‘Operational EBIT" 932 970 3.938 ‘Cash flow from operations 669 1133, 3.408 Not interest-bearing debt (NIBD) 7518 ren 9268 Undorying EPS (NOK)? 1.33 178 701 Net cash flow per share (NOK) ® 037 176 6.65 Roce ® 178% 19.2% 18.7% Hane
Slide 37: Operational EBIT by segment
(OPERATIONAL EBIT Mi FARMING 181 6 a 1 208 Mil SALES AND MARKETING Mi Markets % 8 4 oo ° 108 Mi ConeumerProdts H 2 ° ° ° 2 2 SUBTOTAL 2 2 a o-2 2 34 Mi Fees 1° 9 ther etties 4 1 TOTAL co io a ~— z 4 Hanest volume auited weight ton, salmon) sms 7112 1048 ° 2400 (Operational EBT por kg (NOK) sr 27 4B.
Slide 38: ef
ef
Slide 39: Development in harvest volumes
Slide 40: Capital expenditure
CAPITAL EXPENDITURE Maintenance level 400 200 0 2008 =2009 §=2010 92011 2012 2013 2014 2015
Slide 41: Working capital tie-up (NOK million)
2000 1500 1000 Working capital tie-up (NOK million) a g 8 2008 2009 2010 2011 2012 2013 2014 2015
Slide 42: Contractual repayments and interest expenses
4 fo} Zz 900 800 700 600 500 400 300 2011 2012 {Contractual repayments Interest expenses
Slide 43: Nova Sea
Nowe Sea 8% 34910 987998542 688184 123 150 148 287 = 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 (Q2) Marine Harv
Slide 44: Interest rate hedging policy
ant no RS atts OX 09 Dene aoe tounge sd intiin a POLICY: * — External interest bearing debt is distributed as follows: EUR 71%, USD 13%, GBP 4%, other currencies 12%. + Marine Harvest ASA shall hedge 70%-100% of the Group's long-term interest-bearing debt by currency with fixed interest or interest
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 two years. 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 Marine Ha
Slide 46: P&L effect of contracts maturing
2015 2016 PIL effect of contracts maturing in @1 Market value 31/12/2014 Chango (1) Market value 31/03/2015 131 846 161 916 “10 (MINOK) Canada Scotland Feed VAP Morpol Faroes Cold Water Species Asia uso BP EUR EUR EUR EUR Nok uso
Slide 47: Average currency rates and impact
Javerage rates 1CAD 1EUR 1GBP —1USD ‘Averge Q1 2015 6.2580 8.7318 11.7503 7.7594 Average Q12014 5.5273 8.3471 10.0830 6.0951 Javerage rates 1CAD 1EUR 1GBP 1USD Q1 2015 wQ12014 = 13.2% = 46% 165% 27.3% End of quarterrates 1CAD —1EUR 1GBP —_1USD| 38156. 311214 1.2% 3TH 8M BBM = Impact on Profit and Lo
Slide 48: IFRS fair value of biological assets
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: Tax losses carried forward
roup 31.12.2016 Recognised Unrecognised USA 6 ° 6 Poland 248 st 298 France 35 258 201 Germany 14 0 14 Chile ° 310 310 tly ° 4 4 Other 3 at 24 Total 368 eat 1010 The NOL’ will be used to offset taxave profit in the counties going forward “The utilisation of the deferred tax asset on NOL's gives rise
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 Purchase of own shares (up to 10% of share capital) + Maximum price: NOK 120 per share + Minimum price: NOK 7.5 per share
Slide 51: Estimated sensitivities on annual results
JESTIMATED SENSITIVITIES ON ANNUAL RESULTS OP. EBITEFFECT CASHFLOW EFFECT DRIVER INOK milion ‘Change in global average salmon pice of NOK 1 (1) 2) 440 403 Annual hanest volume ‘Change in total harvest volume of 10,000 tonnes (2) @) 100 982 Marginal volume ‘Change in global feed price of NOK 1 per kg