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
F-430 NRS Finnmark (14) F-430 T-359 T-302 Nord-Senja (3 ) N or Seafood (2 ) T-302 T-359 Wils gård FO (3 ) T-359 Sjurelv (2 ) N-234 Kris toffersen (6 ) Kleiva (4 ) T-470 Sørollnesfisk (3 ) T-436 N-1041 Lovundlaks (4 ) N-1041 NT-167 ST-106 E mils en Fisk (6 ) Refs nes Laks (4 ) NT-167 ST-106 M ås øval FF (2 ) ST-106 ST-106 M ås øval FO (7 ) NRS-Group (25) O wned and c ontrolled by N RS A ssociated companies (9 ) N RS owners hip < 5 0 % H-109 Lingalaks (7 ) H-220 Fylkesnes (3 ) H-109 M embers (49) P artnering contracts H-220 NRS-Feøy (6 ) H-220 T O TAL N RS: 8 3 licenses H-220 Eidesvik (3 ) H-220 Kors havn (1 ) H ellesund (2 ) H-220
Development of volumes from NRS Huge unutilized farming capacity in 2009, which will be almost utilized in 2014 80 000 70 000 External Volumes NRS-Farming 62 200 68 000 80 000 70 000 60 000 57 500 60 000 50 000 40 000 30 000 20 000 10 000 0 49 500 50 500 47 200 45 500 39 000 39 500 37 000 35 500 36 500 32 000 39 000 39 500 40 700 29 000 32 300 35 100 25 200 21 000 18 500 10 500 3 200 4 400 6 000 6 500 2006 2007 2008 2009 2010 2011 2012 2013 2014 50 000 40 000 30 000 20 000 10 000 0 6
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 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 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. 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) 9
Region North KEY FIGURES Q1 Q1 (NOK '000) 2014 2013 Operational EBIT pr kg farming 18,71 Operating revenues 639 705 437 008 Operational EBIT * 86 642 44 097 10,09 13,65 12,31 12,78 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 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 26,00 24,00 22,00 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Production Cost - NORTH 25,35 25,16 25,21 24,83 23,33 20,00 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 10
Region South KEY FIGURES Q1 Q1 (NOK '000) 2014 2013 Operating revenues 54 561 89 612 Operational EBIT pr kg farming 15,40 Operational EBIT * 5 987 5 923 10,03 9,86 Volume harvested (tonnes) 428 932 6,59 6,60 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 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 * EBIT pre fair value adjustments and non-recurring items incl. allocated margin from sales 34,00 Production Cost - SOUTH 33,25 Operational EBIT per kg farming NOK 15.40 Margin from Sales down by NOK 1.17 per kg compared with Q1 13 32,00 30,00 28,00 26,00 27,34 29,90 26,70 30,02 Sales price FCA packing station up by NOK 14.72 per kg from Q1 13. 24,00 22,00 20,00 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 11
AGENDA: Share price performance Current setup Highlights for the period NRS and Market Outlook Regional development New licenses 13
Harvesting estimates 2014: 29.000 tonnes (+ 15%) 30,0 29,0 25,0 20,0 25,2 4,7 SOUTH NORTH 6,2 15,0 10,0 5,0 0,0 11,1 9,7 20,5 1,2 22,8 3,1 5,4 0,4 2,8 9,9 5,0 6,6 1,5 1,3 FY-13 Q1-14 Q2-14 Q3-14 Q4-14 FY-14 2 000 Volume hedged 2014 (tonnes) 1 500 1 000 1 222 1 508 1 781 1 698 Smolt release FY 13 FY 14 (Mill no.) ACT EST 500 - Q1-14 Q2-14 Q3-14 Q4-14 North 5,9 6,6 South 1,7 1,7 Total 7,6 8,3 14
Export growth the last 4 quarters from Norway 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. 32% 14% 3% 3% -4% -2% -12% -20% EU-27 France Russia Poland Japan Greater China Others In total Q2/2013 Q3/2013 Q4/2013 Q1/2014 15
Global supply in tonnes 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 2 300 000 2 100 000 1 900 000 Global supply of salmon (2003 to 2014E) 1 700 000 1 500 000 1 300 000 1 100 000 900 000 700 000 500 000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 16
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 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 - Volumes Region NORTH Growth Y/Y: 17% 37 787 37 139 31 035 29 728 27 870 25 930 24 505 23 564 23 642 22 093 16 637 16 859 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 90 000 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000-50 697 54 667 72 423 Volumes Region CENTRAL Growth Y/Y: 7% 82 397 65 504 65 339 76 275 77 036 58 699 60 789 73 578 75 650 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 70 000 60 000 50 000 40 000 40 994 48 220 48 255 Volumes Region SOUTH Growth Y/Y: 8% 64 000 61 961 57 538 56 699 52 513 44 673 51 758 48 017 56 627 30 000 20 000 10 000 - Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 19
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 Green licenses Group C NRS has applied for 1 license at MNOK 10 for NRS Finnmark Decision to be made within June 21
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
Thank you HOVEDKONTOR: NORWAY ROYAL SALMON ASA Olav Tryggvasonsgt. 40 Postboks 2608, Sentrum 7414 TRONDHEIM Telefon: +47 73 92 43 00 E-post: nrs@salmon.no SALGSKONTOR: NORWAY ROYAL SALMON ASA Gravane 8 Postboks 110 4662 KRISTIANSAND S Telefon: +47 38 12 26 66 E-post: nrs@salmon.no DATTERSELSKAP: NRS FINNMARK AS Markedsgt. 3 Postboks 1154 9504 ALTA Mobil: +47 928 96 202 E-post: per.magne.bolgen@salmon.no NRS FEØY AS 5548 FEØY Mobil: +47 994 48 090 E-post: stein.ove.tveiten@salmon.no NOR SEAFOOD AS 9381 TORSKEN Telefon: +47 77 85 53 08 Telefaks: +47 77 85 53 10 Mobil: +47 905 73 554 E-post: wilsgaa@online.no Norway Royal Salmon ASA NO 864 234 232 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: nords-as@online.no 26