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NORWAY ROYAL SALMON Trondheim, 04 June 2014
Klaus Hatlebrekke, COO
AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
2
AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
4
NRS Finnmark (14)
Nord-Senja (3)
Wilsgård FO (3)
Nor Seafood (2)
Kris toffersen (6)
Sørollnesfisk (3)
Kleiva (4)
Lovundlaks (4)
Emilsen Fisk (6)
Refsnes Laks (4)
Måsøval FF (2)
Måsøval FO (7)
Lingalaks (7)
NRS-Feøy (6)
E idesvik (3)
Fylkesnes (3)
Korshavn (1) Hellesund (2)
NRS-Group (25)
O wned and controlled by NRS
A ssociated companies (9)
NRS ownership < 50 %
Members (49)
Partnering contracts
TO TAL NRS: 83 licenses
Sjurelv (2)
F-430
T-302
T-359
T-359
N-234
N-1041
NT-167
ST-106
ST-106
ST-106
H-109
H-220
H-220
H-220
H-220 H-220
T-436
T-470
F-430
T-359
NT-167
ST-106
H-220
H-109
T-302
N-1041
Development of volumes from NRS
3 200 4 400 6 000 6 500
10 500
18 500 21 000
25 200
29 000
32 300 35 100
39 500 40 700 39 000
32 000
36 500
37 000
39 000
35 500
39 500
45 500 47 200
49 500 50 500
57 500
62 200
68 000
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
2006 2007 2008 2009 2010 2011 2012 2013 2014
External Volumes
NRS-Farming
6
Huge unutilized farming capacity in 2009, which will be almost utilized in 2014
AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
7
Highlights in Q1 2014:
The best margins in NRS’ history – EBIT/kg Farming North of 18.71
– EBIT/kg Farming South of 15.40
– ROCE rolling past 4 quarters of 29.3 %
Continued strong salmon market driven by increased demand and low supply growth – Historically high salmon prices throughout the quarter
– Promising outlook with historically high forward prices
Favourable refinancing with increased flexibility – Total bank facility of MNOK 900
NRS is nominated for 10 new green licenses – 9 licenses in Troms and Finnmark at MNOK 10 ea (Group B)
– 1 license in Rogaland (intended for Troms) at MNOK 56 (Group A)
– Potential capacity growth of 40 %
8
Highlights in Q1 2014
Average salmon price (NASDAQ) up 32 % from Q1 last year with significant positive impact on operational EBIT
Harvested volume unchanged and sold volume up by 3 % from Q1 last year
Operational EBIT MNOK 87.1 in Q1 14
– ROCE 29.3 %
– Operational EBIT per kg Farming NOK 18.45
– Loss on fixed price contracts of MNOK 10.2
Negative fair value adjustment of MNOK 61.3
Positive cash flow from operations with MNOK 102
Equity ratio increased in Q1 14 to 47.8 % from 42.4 % due reduced total capital.
9
KEY FIGURES Q1 Q1
(NOK '000) 2014 2013
Operating revenues 695 371 527 593
Operational EBITDA 96 306 52 633
Operational EBIT 1) 87 057 44 781
Income from associates 2 522 2 810
EBIT 28 325 92 425
EBT 12 307 84 034
EPS (NOK) 2) 1,05 0,58
ROCE 3) 29,3 % 5,5 %
Op. cash flow 102 016 -7 219
Capital expenditure 8 355 17 017
Net interest-bearing debt 367 359 603 883
Equity ratio 47,8 % 38,1 %
Volume harvested (HOG) 5 435 5 405
Operational EBIT per kg Farming 18,45 9,48
Op. EBIT per kg Sales inc. contracts -1,40 -0,23
Total operational EBIT per kg 17,04 9,26
Volume sold 13 978 13 574
1) EBIT pre fair value adjustments and non-recurring items
2) Earnings per share pre fair value adjustments
3) ROCE: Return on average capital employed based on 4-quarters
rolling operational EBIT / average (NIBD + Equity - Financial assets)
Region North
Operational EBIT per kg farming NOK 18.71 – Margin from Sales down by NOK 1.17
per kg compared with Q1 13
– Sales price FCA packing station up by NOK 10.50 per kg from Q1 13
10
KEY FIGURES Q1 Q1
(NOK '000) 2014 2013
Operating revenues 639 705 437 008
Operational EBIT * 86 642 44 097
Volume harvested (tonnes) 5 007 4 473
Operational EBIT per kg Farming 18,71 10,09
Op. EBIT per kg Sales inc. contracts -1,40 -0,23
Total operational EBIT per kg 17,30 9,86
* EBIT pre fair value adjustments and non-recurring
items incl. allocated margin from sales
10,09
13,65 12,31 12,78
18,71
Q1 13 Q2 13 Q3 13 Q4 13 Q1 14
Operational EBIT pr kg farming
23,33
25,35
24,83 25,16 25,21
20,00
22,00
24,00
26,00
Q1-13 Q2-13 Q3-13 Q4-13 Q1-14
Production Cost - NORTH
Region South
Operational EBIT per kg farming NOK 15.40 – Margin from Sales down by NOK 1.17
per kg compared with Q1 13
– Sales price FCA packing station up by NOK 14.72 per kg from Q1 13.
11
KEY FIGURES Q1 Q1
(NOK '000) 2014 2013
Operating revenues 54 561 89 612
Operational EBIT * 5 987 5 923
Volume harvested (tonnes) 428 932
Operational EBIT per kg Farming 15,40 6,59
Op. EBIT per kg Sales inc. contracts -1,40 -0,23
Total operational EBIT per kg* 14,00 6,36
* EBIT pre fair value adjustments and non-recurring
items incl. allocated margin from sales
6,59
10,03
6,60
9,86
15,40
Q1 13 Q2 13 Q3 13 Q4 13 Q1 14
Operational EBIT pr kg farming
27,34
29,90
26,70
30,02
33,25
20,00
22,00
24,00
26,00
28,00
30,00
32,00
34,00
Q1-13 Q2-13 Q3-13 Q4-13 Q1-14
Production Cost - SOUTH
AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
13
20,5
5,0 1,3
6,6 9,9
22,8
4,7
0,4
1,5
3,1 1,2
6,2 25,2
5,4 2,8
9,7 11,1
29,0
0,0
5,0
10,0
15,0
20,0
25,0
30,0
FY-13 Q1-14 Q2-14 Q3-14 Q4-14 FY-14
SOUTH NORTH
Harvesting estimates 2014: 29.000 tonnes (+ 15%)
14
1 222
1 508
1 781 1 698
-
500
1 000
1 500
2 000
Q1-14 Q2-14 Q3-14 Q4-14
Volume hedged 2014 (tonnes)
Smolt release FY 13 FY 14
(Mill no.) ACT EST
North 5,9 6,6
South 1,7 1,7
Total 7,6 8,3
General Market Outlook Strong demand for Atlantic salmon in Q1 as prices were approx. 30 % above last year’s level, while Norwegian supply increased 3 % and global supply 4 %.
EU growth in line with Norwegian supply growth, due to strong demand from UK, Holland, Spain, Sweden etc. France and Poland imported less salmon and seems affected by the high prices in Q1.
Russia and Ukraine is also reducing imports due to prices and increased risk.
Improving demand from Asia and the US in Q1. Strong growth from Greater China, which saw a 14 % import growth from Norway. US doubled volumes vs last year.
15
3%
-12%
-20%
-4% -2%
14%
32%
3%
EU-27 France Russia Poland Japan Greater China Others In total
Exp
ort
gro
wth
th
e la
st 4
qu
arte
rs
fro
m N
orw
ay
Q2/2013 Q3/2013 Q4/2013 Q1/2014
General Market Outlook
We expect 5-8 % global supply to be manageable at attractive prices. – Growth in Q1 driven by Chile
– Growth from Q2-Q4 driven by Norway
New licenses will have limited effect for 2014/2015 and full effect from 2016/2017
16
500 000
700 000
900 000
1 100 000
1 300 000
1 500 000
1 700 000
1 900 000
2 100 000
2 300 000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E
Glo
bal su
pp
ly in
to
nn
es
Global supply of salmon (2003 to 2014E)
AGENDA:
Share price performance
Current setup
Highlights for the period
NRS and Market Outlook
Regional development
New licenses
17
Geographical margin development (OSE listed)
EBIT margins pr kg has been highest in the Northern region the last period
Norway Royal Salmon has close to 80% of our own farming operation in the Northern Region
Y/Y growth past 12 quarters OSE-listed companies
19
22 093
16 637 16 859
31 035
24 505 23 564 23 642
37 787
29 728
25 930 27 870
37 139
-
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Volumes Region NORTHGrowth Y/Y: 17%
50 697 54 667
72 423
82 397
65 504 65 339
76 275 77 036
58 699 60 789
73 578 75 650
-
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Volumes Region CENTRALGrowth Y/Y: 7%
40 994
48 220 48 255
57 538
52 513
61 961
56 699
64 000
44 673
51 758 48 017
56 627
-
10 000
20 000
30 000
40 000
50 000
60 000
70 000
Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13
Volumes Region SOUTHGrowth Y/Y: 8%
GREEN LICENSES
20
Green licenses – Group B
1 license at MNOK 56 to be awarded to NRS Feøy – One new green license to be awarded
– One existing license to be converted into green
– Both green licenses to be moved to and operated in Troms
NRS Feøy (Region South) – Reduced from 6 to 5 licenses
NRS has achieved better operational results in Region North – Historically 3 - 4 NOK/kg lower production cost in Region North
21
Green licenses – Group C NRS has applied for 1 license at MNOK 10 for NRS Finnmark – Decision to be made within June
Green licenses – Group A
NRS is nominated for the following green licenses: – NRS Finnmark: 5
– Nor Seafood: 2
– Nord Senja Laks: 2
Criteria: Reduction of sea lice and minimizing negative influence on wild salmon
For each new license, one existing license to be converted into green within 2 years.
In addition, Wilsgård Fiskeoppdrett AS (37.5%), has also been nominated for 2 new green licenses in group A.
22
A game changer for NRS
Existing licenses
Group B
Group A
Green licenses after
conversion
Standard licenses after
conversion
Total no of
licenses
NRS-Finnmark 14 5 10 9 19
Nor Seafood 2 2 4 0 4
Nord-Senja Laks 3 2 6 1 7
NRS - Region NORTH 19 9 20 10 30
NRS - Region SOUTH 6 1 5 5
NRS-Farming 25 1 9 20 15 35
Likely future company structure:
– NRS Finnmark
– NRS Troms
– NRS South
23
Operational implementation
Pending final allocation
2,5 years from start-up to full operational effect
Estimated gradual need for working capital of MNOK 200
Estimated Capex MNOK 100 gradually
Additional bank facilities of MNOK 200 agreed.
Production cost expected to be marginally influenced
Smolt production plant to be realized through partnership
NRS will return with more detailed information regarding our operational concept for the green licenses when the allocation process is finalized.
24
And finally
Future growth in the industry is dependent on sustainable solutions.
The new licenses will permanently change NRS and the industry towards more sustainable development.
NRS is motivated and ready for the challenge of being in the forefront of sustainable aquaculture!
25
Norway Royal Salmon ASA NO 864 234 232
Thank you HOVEDKONTOR:
NORWAY ROYAL SALMON ASA Olav Tryggvasonsgt. 40 Postboks 2608, Sentrum 7414 TRONDHEIM Telefon: +47 73 92 43 00 E-post: [email protected] SALGSKONTOR:
NORWAY ROYAL SALMON ASA Gravane 8 Postboks 110 4662 KRISTIANSAND S Telefon: +47 38 12 26 66 E-post: [email protected] DATTERSELSKAP:
NRS FINNMARK AS Markedsgt. 3 Postboks 1154 9504 ALTA Mobil: +47 928 96 202 E-post: [email protected] NRS FEØY AS 5548 FEØY Mobil: +47 994 48 090 E-post: [email protected] NOR SEAFOOD AS 9381 TORSKEN Telefon: +47 77 85 53 08 Telefaks: +47 77 85 53 10 Mobil: +47 905 73 554 E-post: [email protected] NORD SENJA LAKS AS 9373 BOTNHAMN Telefon: +47 77 84 85 86 Telefaks: +47 77 84 85 93 Mobil: +47 911 23 613 E-post: [email protected]
26