Grieg Seafood — Earnings Release 2014

Nov 3, 2014

Grieg Seafood ASA

Q3 2014

Per Grieg jr. | Chairman of the boardAtle Harald Sandtorv | CFO/Acting CEOKnut Utheim | COO3 November 2014

Agenda

• •Highlights
• •Business Units (Regions)
• •Financials
• •Outlook

HIGHLIGHTS Q3 2014

Highlights Q3 2014

• •EBIT before FV adjustment of biomass of MNOK -63 in Q3 2014 .
• •EBIT before FV adjustment of biomass of MNOK 201 YTD.
• • Q3 EBIT effected by
• PD in Rogaland
• •Pacific salmon in BC
• Mature fish in Finnmark
• •Good seawater production in Finnmark, Scotland and BC.
• •Challenging environmental and health conditions in Rogaland.
• •Increased supply moving the prices down.
• •CEO resigning

griegseafood.comTekst

Financial highlights Q3 2014

	Q 3 2 0 1 4	Q 3 2 0 3 1	Y T D 2 0 1 4	Y T D 2 0 3 1
To l o ing inc ( T N O K ) ta t p era om e	5 9 9 0 5 7	5 8 4 7 1 5	1 9 7 3 2 1 2	1 7 2 9 3 3 1
O E B I T D A ( T N K )	2 9 4 2 8 -	1 0 9 3 2 7	2 9 9 9 7 2	3 6 2 3 9 1
O E B I T be for fa ir v lue d j. ( T N K ) e a a	-6 3 2 3 6	7 6 4 9 2	2 0 0 7 1 7	2 6 1 3 1 8
E B I T / kg ( N O K )	3, 7 8 -	5, 4 8	4, 1 1	6, 2 1
Ha lum ( ) t v to rve s o e ns g we	1 6 7 5 0	1 3 9 5 3	4 8 7 9 5	4 2 0 6 6

• •20% volume increase.
• •17% average decrease in realised prices.

BUSINESS UNITS(REGIONS)

Business units performance – Q3 2014

	Ro g a	lan d	F in	k nm ar	B	C	Sc o	lan d t
	Q 3 14	Q 3 3 1	Q 3 14	Q 3 3 1	Q 3 14	Q 3 3 1	Q 3 14	Q 3 3 1
Ha ( ) st wt rve g	2 0 6 8	3 0 9 9	6 9 3 3	5 5 5 6	2 8 9 9	2 8 15	4 8 5 0	2 4 8 3
Sa les M N O K	8 5	13 7	21 2	21 9	10 9	11 7	19 2	10 1

Business units performance – YTD 2014

GSF Rogaland

• • PD and high seawater temperature causing challenging production conditions.
• • Total write-down regarding PD in Q3 is MNOK 39.
• • Harvest early in the quarter affecting average price positive.
• • High production cost due to harvest from small site and AGD.
• •Stable lice situation

	Q 3 2 0 1 4	Q 3 2 0 1 3	Y T D 2 0 1 4	Y T D 2 0 1 3
Ha ( ) t t rve s g w	2 0 6 8	3 0 9 9	9 6 0 3	1 2 4 7 0
Sa les re ve nu es	8 4 7 6 5	1 3 7 2 0 6	4 2 5 5 8 2	5 2 1 3 9 0
E B I T	2 3 3 4 5 -	4 0 0 1 5	5 2 2 3 7	1 2 6 5 1 8
E B I T / kg	1 1, 2 9 -	1 2, 9 1	5, 4 4	1 0, 1 5
f w h ic h Ma ke N O K / kg ts o r	0, 9 7	1, 1 8	0, 8 3	0, 5 2

GSF Finnmark

• Mature fish has caused lower quality and consequently lower sales prices during Q3.
• Mature fish has also affected the production negatively.
• The total estimated negative P&L effect due to mature fish is MNOK 29.
• • Actions implemented to avoid mature fish in the future.
• • Escape from one site during Q3, total number of fish escaped was 11,100.
• •Seawater production according to plan.

	Q 3 2 0 1 4	Q 3 2 0 1 3	Y T D 2 0 1 4	Y T D 2 0 1 3
Ha ( ) t t rve s g w	6 9 3 3	5 5 5 6	2 0 6 6 6	1 7 3 4 1
Sa les re ve nu es	2 1 1 5 9 3	2 1 8 6 5 5	7 6 5 5 9 5	6 6 0 8 7 7
E B I T	1 1 1 7 -	5 3 2 2 9	1 6 7 7 5 9	1 6 6 3 5 4
E B I T / kg	0, 1 6 -	9, 5 8	8, 1 2	9, 5 9
f w h ic h Ma ke N O K / kg ts o r	0, 4 5	0, 1 3	0, 3 0	0, 1 6

GSF BC (Canada)

• • Weak result due to low prices and high cost regarding Pacific salmon.
• • Pacific salmon loss and write down of MNOK 25 in Q3.
• • Decision made to end the production of Pacific. Last harvest will be in Q3 2015.
• • All planned smolt stocking to return to a harvest volume in the area of 15,000 MT completed.
• • Algae bloom in July 2014 caused higher level of mortality.
• • Seawater production better than planned in Q3.

	Q 3 2 0 1 4	Q 3 2 0 1 3	Y T D 2 0 1 4	Y T D 2 0 1 3
Ha ( ) t t rve s g w	2 8 9 9	2 8 1 5	5 6 3 7	5 8 6 1
Sa les re ve nu es	1 0 8 7 1 0	1 1 6 6 9 6	2 3 3 6 7 9	2 6 8 2 5 1
E B I T	3 3 5 5 5 -	7 6 2 0 -	4 7 9 0 7 -	4 0 2 9
E B I T / kg	1 1, 5 7 -	2, 7 1 -	8, 5 0 -	0, 6 9

GSF Hjaltland (Scotland)

• •Stable costs vs. Q3 2013.
• • Seawater production according to plan.
• • New smolt facility being finalized. First incubation of eggs in Summer 2014 for Spring 2015 stocking.
• • Scottish sales through Ocean Quality UK, improved margin from market.

	Q 3 2 0 1 4	Q 3 2 0 1 3	Y T D 2 0 1 4	Y T D 2 0 1 3
Ha ( ) t t rve s g w	4 8 5 0	2 4 8 3	1 2 8 8 9	6 3 9 3
Sa les re ve nu es	1 9 2 3 8 4	1 0 1 0 3 3	5 4 9 5 5 1	2 6 6 2 2 3
E B I T	4 1 6 5	1 2 8	5 4 7 5 3	1 5 2 8 6 -
E B I T / kg	0, 8 6	0, 0 5	4, 2 5	2, 3 9 -
f w h ic h Ma ke N O K / kg ts o r	1, 0 0		0, 6 0

• • Good development in Norway:
• •Improved total margin.
• •Improved price achieved vs. market (NOS).
• • Stronger performance in Scotland:
• •Positive margin from sales.
• •Price achieved better than market (NOS + 2,5).
• •Contract share UK 20%.

Financials

Profit and Loss

A l l f ig in N O K 1, 0 0 0 ure s	Q 2 2 0 1 4	Q 2 2 0 1 3	Y T D 2 0 1 4	Y T D 2 0 1 3
To l o ing inc ta t p era om e	5 9 9 0 5 7	5 8 4 7 1 5	1 9 7 3 2 1 2	1 7 2 9 3 3 1
E B I T D A	-2 9 4 2 8	1 0 9 3 2 7	2 9 9 9 7 2	3 6 2 3 9 1
De ia ion d a isa ion t t t p rec an mo r	3 3 8 0 8 -	-3 2 8 3 6	-9 9 2 5 4	-1 0 1 0 7 3
E B I T be fo b iom d j re as s a	6 3 2 3 6 -	7 6 4 9 2	2 0 0 7 1 7	2 6 1 3 1 8
Fa ir v lue d j b io log ica l a ts a a ss e	1 7 6 8 -	3 1 8 5	-2 4 4 0 7 5	9 2 9 5 6
E B I T a f b iom d j. te r as s a	6 5 0 0 3 -	7 9 6 7 6	-4 3 3 5 8	3 5 4 2 7 5
S ha f p f i fro ies t re o ro m as s. co mp an	1 8 8	8 0 3	2 9 4 3	2 0 7 8
f Ne ina ia l t nc	-2 0 0 3 6	-1 2 8 5 3	-5 5 5 6 1	-5 5 8 8 9
Pr f i be fo t tax o re	8 4 8 5 1 -	6 7 6 2 6	-9 5 9 7 5	3 0 0 4 6 4
Es im d ion t te tax t a a	2 0 0 4 3	-1 5 4 8 9	2 5 2 9 1	-8 4 6 9 8
Ne f i in he io d t p t t ro p er	6 4 8 0 8 -	5 2 1 3 7	-7 0 6 8 5	2 1 5 7 6 6

Net financial

A l l f ig in N O K 1, 0 0 0 ure s	Q 3 2 0 1 4	Q 3 2 0 1 3	Y T D 2 0 1 4	Y T D 2 0 1 3
C ha in fa ir lu fro he d ing ins t t ng e s va e m g ru m e n s	2 2 6 6	2 4 2 0	3 3 7 7	4 9 7 1
Ne f ina ia l in t t t nc e re s	-1 8 6 3 7	-2 2 2 8 1	-6 4 4 3 2	-7 0 5 6 3
Ne in ( lo ) t c rre nc g a s s e s u y	5 0 3	9 5 3 5	1 1 4 8 7	1 6 0 7 4
D iv i d d e n s	0	0	4 7 4	4 6 8
Ne he f ina ia l e /- inc t t o r nc xp e ns e s o m e	-4 1 6 8	-2 5 2 8	-6 4 6 6	-6 8 3 9
N f i i l i t t e n a n c a e m	-2 0 0 3 6	2 8 -1 5 4	6 -5 5 5 1	8 8 9 -5 5

Investments

Cash Flow

Net Interest Bearing Debt

NIBD

M N O K	Q 3 2 0 1 4	Q 3 2 0 1 3
T L e r m o a n	8 7 8	5 8 0
R l i C d i t e o n g r e v v	0	3 2 5
B d o n	4 0 0	4 0 0
L i e a s n g	2 1 3	2 0 1
O h i b i d b t t t t e r n e r e s e a r n g e	3	1 2
C h l i b l a s c o s n g a a n c e -	-1 2 4	-2 2 7
N I B D	3 0 1 7	2 9 1 1

Balance sheet 1

A S S E T S	3 0. 0 9. 1 4	3 0. 0 9. 1 3
Go dw i l l o	10 7 6 3 5	10 5 6 28
L ice ns es	9 9 9 6 73	9 9 0 5 8 4
Ot he inta i b le a ets r ng ss	4 3 5 1	4 3 3 9
Pro lan d e ip ert t a nt p p n q me y, u	1 2 6 4 2 3 3	1 1 72 8 43
Inv in a itat d a d j int ies tm ts ntu es en ss oc e n o ve re co mp an	47 9 11	40 8 15
Ot he nt ts r n on -cu rre as se	1 5 0 9	1 6 0 4
To ta l n nt ts on -cu rre as se	2 4 25 3 1 3	2 3 15 8 1 3
Inv ies tor en	8 6 0 3 0	6 6 6 11
B io log ica l as ts se	1 3 79 72 8	1 2 6 2 7 8 0
Fa ir v lue b io log ica l as ts a se	15 5 41 5	22 0 3 5 4
Ac iva b le ts co un rec e	18 6 0 48	11 6 9 9 5
Ot he iva b les t re r c urr en ce	79 0 14	77 9 0 1
De iva d o he f ina ia l ins tes t tru nts r an r nc me	0	6 3 6
Ca h a d c h e iva len ts s n as q u	12 3 5 13	22 7 3 3 8
To l c ta nt ts ur re as se	2 0 0 9 74 7	9 2 6 1 7 14
To l a ta ets ss	3 0 6 0 4 4 5	2 8 8 2 8 4 4

Balance sheet 2

E Q U I T Y A N D L I A B I L I T I E S	3 0. 0 9. 1 4	3 0. 0 9. 1 3
S ha ita l re ca p	44 6 6 48	44 6 6 48
Tre S ha as ury res	-5 0 0 0	5 0 0 0 -
Re ine d e ing d o he ity ta t arn s a n r e q u	1 4 9 3 0 3 7	1 3 26 41 7
To l e ity ta q u	9 3 6 8 1 4 5	6 8 0 6 1 7 5
De fer d t l ia b i l it ies re ax	5 3 7 7 0 0	5 24 0 29
Pe ion d o he b l ig ion t at ns - a n r o s	3 41 1	7 9 0 2
Su bo d ina d loa te r ns	21 27 6	22 5 16
Bo ing d lea ing rro w s a n s	1 3 49 44 6	1 0 3 1 0 21
To l n l ia b i l it ies ta nt on -cu rre	1 9 11 8 3 3	1 5 8 5 4 6 8
S ho loa fac i l it ies rt-t erm n	13 2 8 0 6	48 2 4 5 0
Ac b le ts co un p ay a	3 5 8 9 48	3 3 0 45 2
Ta b le x p ay a	1 4 71	0
De iva d o he f ina ia l ins tes t tru nts r an r nc me	6 8 9 9	16 8 5 7
Ot he l ia b i l it ies t r c urr en	8 8 41 8	10 5 13 6
To l c l ia b i l it ies ta nt ur re	5 8 8 5 4 2	9 3 4 8 9 5
To l l ia b i l it ies ta	2 5 0 0 3 74	2 5 2 0 3 6 2
To l e ity d l ia b i l it ies ta q u an	4 4 3 5 0 6 0	4 2 8 8 4 2 8

Key financial indicators

	Q 3 2 0 1 4	Q 3 2 0 3 1	Y T D 2 0 1 4	Y T D 2 0 3 1
E B I T D A- i b f d j b i m a r g n e o r e a o m a s s	-5 %	1 9 %	1 5 %	2 1 %
E B I T- i b f d j b i m a r g n e o r e a o m a s s	-1 1 %	1 3 %	1 0 %	1 5 %
N I B D / E B I T D A b f d j b i e o r e a o m a s s	3, 2	4, 9	3, 2	4, 9
R O C E b f d j b i e o r e a o m a s s	-8 %	1 1 %	9 %	1 8 %
E i i t t q u y r a o	4 4 %	4 1 %	4 4 %	4 1 %

OUTLOOK

Harvest estimate

Gu i d ing 20 14 ( 1, 0 0 0 t ) on s g e w	Ro lan d g a	F inn k ma r	B C	Sc lan d t o	G S F Gr ou p
Q 1	2, 1	5, 8	1, 1	4, 1	1 3, 1
Gr h % t ow	5 0 % -	1 4 %	4 6 % -	6 6 %	5 % -
Q 2	5, 4	8, 0	1, 7	3, 9	1 9, 0
Gr h % t ow	5 %	1 8 %	5 2 %	1 7 4 %	3 2 %
Q 3	2, 1	6, 9	2, 9	4, 9	1 6, 8
Gr h % t ow	3 3 % -	2 5 %	3 %	9 5 %	2 0 %
Q 4	3, 0	6 5,	0, 6	0 7,	6, 2 1
Gr h % t ow	1 5 %	2 % -	3 2 % -	4 %	2 %
To l ta	1 2, 6	2 6, 3	6, 2	1 9, 9	6 5, 0
Gr h % t ow	1 6 % -	1 4 %	7 % -	5 2 %	1 2 %
2 0 1 5	2 0, 5	2 2, 0	1 3, 0	1 6, 5	7 2, 0
Gr h % t ow	6 3 %	1 6 % -	1 0 9 %	1 7 % -	1 1 %

• • Reduced 2014 guidance of 2,500 MT.
• •Mainly due to PD in Rogaland.
• •1,000 MT moved to 2015.
• • 2015 guidance of 72,000 MT.
• •Production in BC close to normal.
• • Finnmark/Scotland guiding down due to site/area structure, expected to increase in 2016.

Supply outlook

• Lower supply growth in Q4 (12% Q3 2014)
• •Global supply growth 2014 vs 2013 expected to be 8%
• Lower global supply growth (3%) in 2015 vs. 2014
• Norway stable growth rate:
• 2014: +5%
• 2015: +5% (1,130' MT)
• Chile form positive to negative growth rate:
• 2014: +22%
• 2015: -6% (485' MT)
• Canada from negative to positive growth rate:
• 2014: -6%
• 2015: +16% (135' MT)
• • UK – increased growth rate:
• 2014: +5%
• 2015: +8% (160' MT)

Global supply growth farmed salmon (YoY):

NOS (Norway) price development :

Outlook summary

• •Lower global supply growth in Q4 2014 and 2015, prices expected to move up.
• • Harvest volume guiding 2015 of 72,000 MT. Increasing 7,000 MT vs 2014. Growth expected to continue in 2016.
• CEO resigned in October 2014. Search for a successor has started.
• • GSF will increase focus on core activity.
• Production of HOG Atlantic salmon
• •Global sales organization
• •Increasing the quality and predictability of operational performance.

Main focus areas

Operational and

biological performance1.

• Reporting,
• Control,Management tools2.
• Human CapitalCorporate culture3.

4.Sales andMarket

• • Bio security and fish health
• •Systematic approach to operational improvements
• •From expansion to focus on continuous improvements
• •KPI based management system throughout organization
• •Link to personal performance targets and incentives
• •Integrate and harmonize
• •Utilize strength as one company.
• •Strive for improvements – every day
• •Sharing with pride (best practise, knowledge, information)
• •Become a market led company
• •Shift sales focus from traders to end customers
• •Utilize points of differentiation

Thank you !

APPENDIX

Share info

• − Number of shares
• •111.7 million (after full conversion of bonds in August 2009).
• − Last issues: Q2 2009
• •139 MNOK new share issue.
• − Subordinated convertible bond issue: Q1 2009
• •100 mill. convertible at NOK 4.00 per share within 31.12.2010.
• •85% converted in Q2 2009.
• •15% converted in Q3 2009.
• − EPS
• •0,47 NOK/share Q3 2013.
• •- 0,59 NOK/share Q3 2014.
• − Shareholder structure
• •Largest 20 have 94.10% of total no. of shares.

Shareholders

	No ha . s re s	%
G R I E G H O L D I N G S	5 5 8 0 1 4 0 9	49 9 7 % ,
D N B N O R M A R K E T S, A K S J E H A N D / A N A L Y S E	22 18 9 73 8	19 8 7 % ,
N O R D E A B A N K N O R G E A S A M A R K E T S	6 6 0 5 9 9 8	5, 9 2 %
K O N T R A R I A S	6 5 5 9 3 0 9	5, 8 7 %
Y S T H O L M E N	2 9 0 8 19 7	2, 6 0 %
O M H O L D I N G A S	2 6 10 0 0 0	2, 3 4 %
S T A T E S T R E E T B A N K A N D T R U S T C O.	1 2 76 75 3	1, 14 %
G R I E G S E A F O O D A S A	1 2 5 0 0 0 0	1, 12 %
K V A S S H Ø G D I A S	1 0 0 0 0 0 0	0, 9 0 %
V E R D I P A P I R F O N D E T D N B S M B	8 75 0 0 0	0, 78 %
S K A N D I N A V I S K A E N S K I L D A B A N K E N A B	8 5 0 74 2	0, 76 %
G R I E G S H I P P I N G I I A S	8 24 5 6 5	0, 74 %
S T O R E B R A N D V E K S T	44 7 7 13	0, 40 %
V E R D I P A P I R F O N D E T P A R E T O N O R D I C V A L	3 8 5 0 0 0	0, 3 4 %
H S B C B A N K P L C	3 73 42 8	0, 3 3 %
S T A T E S T R E E T B A N K & T R U S T C O M P A N Y	3 0 0 0 0 0	0, 27 %
G R I E G L T D A / S	21 7 3 9 0	0, 19 %
P I C T E T & C I E ( E U R O P E ) S. A	20 2 4 78	0, 18 %
M P P E N S J O N P K	20 0 0 0 0	0, 18 %
S K A N D I N A V I S K A E N S K I L D A B A N K E N A B	19 2 6 3 2	0, 17 %
To l 2 0 lar ha ho l de ta t s g es re rs	1 0 5 0 7 0 3 5 2	9 4, 1 0 %
To l ot he ta r	6 5 9 1 6 48	5, 9 0 %
To l n be f s ha ta um rs o re s	11 1 6 6 2 0 0 0	1 0 0, 0 0 %

Profit and Loss

All figu in NO K 1 000 res ,	Q 3 2 01 4	Q 3 2 01 3	YT D 2 01 4	YT D 2 01 3
To tal tin inc op era g om e	599 05 7	584 71 5	1 9 73 212	29 331 1 7
Sha f p rof it fr jo int tur re o om ven e	4 7 65	197	8 3 38	5 4 37
Cha in inv orie ent nge s	50 497	109 20 1	20 748	37 592
Raw rial nd abl d ate m s a con sum es use	373 06 0 -	336 26 4 -	892 68 0 -	731 19 3 -
Sa lari and l ex es pe rso nne pen ses	89 488 -	76 070 -	242 69 5 -	211 85 1 -
Oth atin er o per g e xpe nse s	221 19 8 -	172 45 3 -	566 95 2 -	466 92 4 -
EB ITD A	-29 42 8	109 32 7	299 97 2	362 39 1
Dep iatio nd isa tion ort rec n a am	33 099 -	32 330 -	97 199 -	99 044 -
Dep iatio nd isa tion of lice ort rec n a am nse s	709 -	505 -	2 0 55 -	2 0 28 -
Imp airm ent ad jus tme nts set on as s	0	0	0	0
EB IT b efo bio ad j re ma ss	-63 23 6	76 492	200 71 7	261 31 8
Fai lue ad j bio log ica l as set r va s	1 7 68 -	3 1 85	244 07 5 -	92 956
EB IT a fte r b iom ad j. ass	-65 00 3	79 676	43 358 -	354 27 5
Sha f p rof it fr ies re o om as s. c om pan	188	803	2 9 43	2 0 78
Net fin ial anc	-20 03 6	12 853 -	55 561 -	55 889 -
Pro fit be for and bi ad j e t ax om ass	83 084 -	64 441	148 10 0	207 50 8
Pro fit b efo re t ax	-84 85 1	67 626	95 975 -	300 46 4
Est ima ted atio tax n	20 043	15 489 -	25 291	84 698 -
Ne rof it in th eri od t p e p	64 808 -	52 137	70 685 -	215 76 6