Grieg Seafood — Earnings Release 2014

Aug 19, 2014

Grieg Seafood ASA

Q2 2014

Morten Vike | CEO

Atle Harald Sandtorv | CFO

19 August 2014

Agenda

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

HIGHLIGHTS Q2 2014

griegseafood.com

Tekst

Highlights Q2 2014

• EBIT before FV adjustment of biomass of NOK 123.8m in Q2 2014 (NOK 133.7m in 2013).
• •EBIT before FV adjustment of biomass of NOK 263.9m in 1H 2014 (NOK 184.8m in 2013).
• •Underlying reduction in cost levels in Scotland and Canada. Stable costs in Norway.
• Good seawater production in all regions in Q2. Challenging environmental and health conditions in Rogaland and Canada in July.
• Weak price realization in Q2, harvesting profile skewed towards June and Pacifics in Canada.
• •Market remains firm with demand at a good level.
• •Refinancing completed. Strengthened financial position. Free liquidity increased by NOK 500m.
• Harvest volume increased by 32% to18 950 tons in Q2 (14 397 tons).

Financial highlights Q2 2014

	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
T l i i ( T N O K ) t t o a o p e r a n g n c o m e	7 5 0 5 0 9	6 2 7 5 3 0	1 3 7 4 1 5 5	1 1 4 4 6 1 5
O E B I T D A i l ( T N K ) t o p e r a o n a	1 5 6 8 4 7	1 6 7 8 6 3	3 2 9 3 9 9	2 5 3 0 6 4
E B I T i l ( T N O K ) t o p e r a o n a	1 2 3 8 1 2	1 3 3 7 4 7	2 6 3 9 5 4	1 8 4 8 2 7
E B I T i l / k ( N O K ) t o p e r a o n a g	6, 5 3	9, 2 9	8, 2 4	6, 5 7
H l ( ) t t a r v e s v o u m e o n s g w e	1 8 9 5 0	1 4 3 9 7	3 2 0 4 5	2 8 1 1 2

• •32% volume increase.
• •8% average decrease in realised prices.
• •Norway: EBIT of 9.89 per kg.

BUSINESS UNITS(REGIONS)

Business units performance – Q2 2014

	Ro g a	la d n	F in	k nm a r		B	C	S t c o	la d n
	Q 2 1 4	Q 2 3 1	Q 2 1 4	Q 2 3 1	Q 2	1 4	Q 2 3 1	Q 2 1 4	Q 2 3 1
Ha ( ) t t rve s g w	5 3 9 7	5 1 3 3	7 9 5 8	6 7 3 0	1	6 8 5	1 1 0 7	3 9 1 0	1 4 2 7
Sa les M N O K	2 3 0	2 2 0	2 9 8	2 6 4		6 4	7 4	1 5 8	6 8

griegseafood.com7

Business units performance – YTD 2014

	Ro g a	la d n		F in nm	k a r	B	C	S t c o	la d n
	Y T D 1 4	Y T D 1 3	Y	T D 1 4	Y T D 1 3	Y T D 1 4	Y T D 1 3	Y T D 1 4	Y T D 1 3
Ha ( ) t t rve s g w	7 5 3 5	9 3 7 1	1	3 7 3 3	1 1 7 8 5	2 7 3 8	3 0 4 6	8 0 3 9	3 9 1 0
Sa les M N O K	3 4 1	3 8 4		5 5 4	4 4 2	1 2 3	1 5 2	3 5 7	1 6 5

GSF Rogaland

• •Stable prices vs. Q2 2013.
• • Skewed harvest profile negatively affecting average price in Q2 2014 vs. market.
• •Stable costs vs. Q2 2013.
• •Substantially lower costs vs. Q1 2014.
• • Seawater production negatively affected beginning of Q3 due to PD.
• • Total of 5 PD positive sites. 3 new beginning of Q3.
• • PD related mortality on 2 sites with larger fish in beginning of Q3:
• •One off charge of appr. NOK 24m in Q3.
• • Reduced and postponed harvest affecting 2014.

	Q 2 2 0 14	Q 2 2 0 13	Y T D 2 0 14	Y T D 2 0 13
Ha ( ) t wt rve s g	5 3 9 7	5 1 3 3	7 5 3 5	9 3 7 1
Sa les re ve nu es	2 3 0 3 3 7	2 2 0 0 2 0	3 4 0 8 1 7	3 8 4 1 8 4
E B I T a d j	5 5 2 3 5	5 2 3 8 8	7 5 5 8 2	8 6 5 0 3
E B I T a d j / kg	1 0, 2 3	1 0, 2 1	1 0, 0 3	9, 2 3
f w h ic h Ma ke N O K / kg ts o r	0, 9 6	0, 3 5	0, 7 9	0, 4 9

GSF Finnmark

• • Reduced prices compared to Q1 2014 and Q1 2013.
• • Skewed harvest profile negatively affecting average price in Q2 2014 vs. market.
• •Stable costs vs. Q1 2014 and Q2 2013.
• • Grieg Seafood Finnmark nominated to be awarded 4 new green licenses. Final allocation pending appeals.
• •Better than planned seawater production.
• • Roy-Tore Rikardsen new regional director from July 2014.

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

GSF BC (Canada)

• • Weak result as expected:
• • Low underlying production causing abnormally high unit costs following 2012 furunculosis outbreak.
• • NOK 4m one-off charge relating predominantly to frozen stock write-down of Coho.
• • All planned smolt stocking to return to a harvest volume in the area of 15,000 MT completed.
• • Production in smolt facility significantly improved and in line with expectations.
• • Algae bloom in July 2014 caused higher level of mortality:
• •NOK 4.5 one-off charge in Q3 2014.
• • Early harvest of the two affected sites planned.
• • Some reduction in 2014 harvest and early 2015.

	Q 2 2 0 14	Q 2 2 0 13	Y T D 2 0 14	Y T D 2 0 13
Ha ( ) t wt rve s g	1 6 8 5	1 1 0 7	2 7 3 8	3 0 4 6
Sa les re ve nu es	6 4 0 3 3	7 4 2 8 9	1 2 2 5 9 5	1 5 1 5 5 5
E B I T a d j	8 6 2 8 -	6 6 7 3	1 4 3 5 2 -	1 1 6 4 9
E B I T a d j / kg	5, 1 2 -	6, 0 3	5, 2 4 -	3, 8 2

GSF Hjaltland (Scotland)

• •Substantially lower costs vs. Q2 2013.
• •Considerably lower realised prices vs. Q2 2013.
• • Weaker price realisation in Q2 2014 than Norway:
• •Strongly skewed towards June.
• • Continued weaker price realisation vs. market.
• • Continued positive biological and operational development. Continued improvements expected.
• •Better than expected seawater production.
• • New smolt facility being finalized. First incubation of eggs in Summer 2014 for Spring 2015 stocking.
• • Steps taken to integrate Scottish sales in Ocean Quality expected to improve price realisation going forward.

	Q 2 2 0 14	Q 2 2 0 13	Y T D 2 0 14	Y T D 2 0 13
Ha ( ) t wt rve s g	3 9 1 0	1 4 2 7	8 0 3 9	3 9 1 0
Sa les re ve nu es	1 5 8 4 8 5	6 7 7 8 9	3 5 7 1 6 7	1 6 5 1 9 0
E B I T a d j	8 9 7 0	8 1 4 4 -	5 0 5 8 8	1 5 4 1 4 -
E B I T a d j / kg	2, 2 9	5, 7 1 -	6, 2 9	3, 9 4 -
f w h ic h Ma ke N O K / kg ts o r	1, 1 5 -		0, 5 6 -

Ocean Quality AS (sales Norway/UK – associated company – 60%)

• • Good development in Norway:
• •Improved price realisation vs. market
• •Improved total margin.
• • Weak performance in Scotland:
• •First fully operational quarter (Q2 2014) after integration into Ocean Quality.
• •Weak average price realisation, but improving trend.
• •Price realisation below market and negative total margin in UK.

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

Net financial

O A l l f ig in N K 1, 0 0 0 ur es	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
C h i f i l f h d i i t t a n g e s n a r a e r o m e g n g n s r m e n s v u u	-3 8 5	2 6 1 2	1 1 1 1	2 5 5 1
N f i i l i t t t e n a n c a n e r e s	-2 3 8 5 9	-2 2 2 6 8	-4 5 7 9 5	-4 8 2 8 2
N i ( l ) t e c u r r e n c y g a n o s s e s	1 2 8 5 8	6 9 1 0	1 0 9 8 4	6 5 3 9
D i i d d e n s v	4 7 4	4 6 8	4 7 4	4 6 8
N h f i i l /- i t t e o e r n a n c a e p e n s e s n c o m e x	-1 5 7 2	-3 1 1 2	-2 2 9 8	-4 3 1 1
N f i i l i t t e n a n c a e m	1 2 4 8 5 -	1 5 3 9 0 -	3 5 5 2 5 -	4 3 0 3 5 -

Investments

Cash Flow

Net Interest Bearing Debt

NIBD

O M N K	Q 2 2 0 1 4	Q 2 2 0 1 3
T L e r m o a n	9 0 0	6 0 6
R l i C d i t e o n g r e v v	0	4 2 5
B d o n	4 0 0	4 0 0
L i e a s n g	2 1 1	2 0 6
O h i b i d b t t t t e r n e r e s e a r n g e	4	1 2
C h l i b l a s c o s n g a a n c e -	-2 0 7	-2 8 9
N I B D	1 3 0 8	1 3 6 0

Balance sheet 1

A S S E T S	3 0. 0 6. 1 4	3 0. 0 6. 3 1
Go dw i l l o	10 7 6 6 2	10 5 28 2
L ice ns es	1 0 0 0 26 8	9 8 1 8 3 3
Ot he inta i b le a ets r ng ss	4 4 0 0	4 2 8 3
Pro lan d e ip ert t a nt p y, p n q u me	1 2 24 43 7	1 1 49 79 2
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 42 8	3 9 8 14
Ot he nt ts r n on -cu rre as se	1 7 49	2 6 24
To l n ta nt ts on -cu rre as se	2 3 8 5 9 4 3	2 2 8 3 6 2 9
Inv ies tor en	5 9 3 75	6 9 8 6 6
B io log ica l as ts se	1 3 6 5 5 6 5	1 1 25 9 8 7
Fa ir v lue b io log ica l as ts a se	15 8 8 8 8	21 3 3 9 2
Ac iva b le ts co un rec e	23 2 8 5 9	17 2 9 3 8
Ot he iva b les t re r c urr en ce	76 18 9	5 8 3 3 1
De iva d o he f ina ia l ins tes t tru nts r an r nc me	1 6 74	27 1
Ca h a d c h e iva len ts s n as q u	20 6 5 46	28 9 3 41
To l c ta nt ts ur re as se	2 1 0 1 0 9 6	1 9 3 0 1 27
To l a ta ets ss	4 4 8 7 0 3 9	4 21 3 75 6

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 6. 1 4	3 0. 0 6. 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 5 5 8 9 48	1 2 5 1 8 22
To l e ity ta q u	2 0 0 0 9 6 5	6 9 3 0 1 47
De fer d t l ia b i l it ies re ax	5 5 7 4 48	5 0 0 9 40
Pe ion d o he b l ig ion t at ns - a n r o s	3 3 8 2	7 7 9 2
Su bo d ina d loa te r ns	22 0 71	22 0 11
Bo ing d lea ing rro w s a n s	1 3 71 72 1	1 0 5 9 8 73
To l n l ia b i l it ies ta nt on -cu rre	1 9 5 4 6 2 2	1 5 9 0 6 15
S ho loa fac i l it ies rt-t erm n	13 1 3 6 0	5 8 3 41 9
Ac b le ts co un p ay a	28 4 6 24	22 7 3 8 0
De iva d o he f ina ia l ins tes t tru nts r an r nc me	13 8 76	14 5 28
Ot he l ia b i l it ies t r c urr en	9 9 9 16	10 4 3 44
To l c l ia b i l it ies ta nt ur re	5 3 1 8 2 2	9 2 9 6 71
To l l ia b i l it ies ta	2 4 8 6 44 4	2 5 2 0 2 8 6
To l e ity d l ia b i l it ies ta q u an	4 4 8 7 0 3 9	4 21 3 75 6

Key financial indicators

	Q 2 2 0 1 4	Q 2 2 0 3 1	Y T D 2 0 1 4	Y T D 2 0 3 1
f E B I T D A i b d j b i -m a r g n e o r e a o m a s s	2 1 %	2 7 %	2 4 %	2 2 %
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 6 %	2 1 %	1 9 %	1 6 %
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	2, 3	1 0, 7	2, 3	1 0, 7
R O C E b f d j b i e o r e a o m a s s	1 6 %	1 8 %	1 7 %	1 3 %
E i i t t q u y r a o	4 5 %	4 0 %	4 5 %	4 0 %

OUTLOOK

Harvest estimate

Gu i d ing 2 0 1 4 ( 1, 0 0 0 ) ton s g e w	Ro lan d g a	F in k nm ar	B C	Sc la d t o n	G S F Gr ou p
Q 1	2, 1	5, 8	1, 1	4, 1	1 3, 1
G h % t ro w	-5 0 %	1 4 %	-4 6 %	6 6 %	-5 %
Q 2	5, 4	8, 0	1, 7	3, 9	1 9, 0
G h % t ro w	5 %	1 8 %	5 2 %	1 7 4 %	3 2 %
Q 3	2, 0	6, 1	3, 3	2 4,	6 1 5,
G h % t ro w	-3 7 %	1 0 %	1 7 %	7 1 %	1 2 %
Q 4	5, 0	6, 7	0, 5	7, 7	1 9, 9
G h % t ro w	9 1 %	1 6 %	-4 8 %	1 4 %	2 4 %
T l t o a	1 4, 5	2 6, 5	6, 5	2 0, 0	6 7, 5
G h % t ro w	-4 %	1 5 %	-4 %	5 2 %	1 6 %

• • Reduced 2014 guidance of 1,500 MT due to:
• •Increases in Finnmark and Scotland due to improved production.
• •PD Rogaland (4,000 MT) and postponed harvesting – partly postponement till 2015.
• •Algae bloom and early harvest in Canada – also slight reduction in 2015.

26

Supply outlook

• Higher supply growth (7%) in 2014 vs. 2013 (winter temperatures), but not above long-term demand growth.
• Supply growth increased as expected in Norway in Q2. Expected reduced supply growth from Q4 2014.
• Market expected to be well balanced also in 2015, with only marginal global supply growth.
• • Norway (increased supply due to winter temperatures):
• 2013: -3%
• 2014: +7%
• Chile Lower growth rate:
• 2013: +29%
• 2014: +12%
• UK Limited growth:
• 2013: -1%
• 2014: +4%
• Canada No or limited growth:
• •2013: -16%
• 2014: 0%

NOS (Norway) price development :

Outlook summary

• • Russia imposed 1 year ban on a.o. Norwegian salmon and trout from August 2014:
• Expected near term supply increase and price reduction in other markets.
• • Change in trade patterns (redirection of sales from e.g. Chile to Russia) and continued good demand growth in other markets expected to gradually bring the market back in good balance.
• • Growth (seawater production) in Norway normalised in the Summer following an unseasonally warm winter with very high growth. Some signs of reduced overall feeding in Norway.
• 2014 global supply growth expected at 7%, in line with long-term historical demand growth. Only marginal increase in global supply expected for 2015.
• Grieg Seafood expects 2014 harvest volume of 67,500 MT. A reduction/postponement of 1,500 MT vs previous guiding.
• •Q3 2014 harvest volume expected at 15,600 MT (+12% on Q2 2013).
• • Refinanced credit facility increases free liquidity with NOK 500m. Secures funding of Grieg Seafood's growth plans.

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
• •0,79 NOK/share Q2 2013.
• •- 0,57 NOK/share Q2 2014.
• − Shareholder structure
• •Largest 20 have 94.32% 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 B A N K A S A	22 18 0 73 9	19 8 6 % ,
K O N T R A R I	6 9 45 27 3	6, 22 %
N O R D E A B A N K N O R G E A S A	6 6 0 4 9 9 8	5, 9 2 %
Y S T H O L M E N	2 8 6 8 19 7	2, 5 7 %
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.	28 1 2 8 1 6	1, 15 %
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 %
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 %
V E R D I P A P I R F O N D E T D N B S M B	6 40 0 0 0	0, 5 7 %
S T O R E B R A N D V E K S T	44 3 6 70	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	41 6 71 1	0, 3 7 %
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 5 0 0 0 0	0, 3 1 %
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	27 25 2 0	0, 23 %
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 6 3 5 5	0, 18 %
M P P E N S J O N P K	20 0 0 0 0	0, 18 %
To l 2 0 lar ha ho l de ta t s g es re rs	0 3 3 2 1 5 17 1	9 3 2 % 4,
To l ot he ta r	6 3 44 8 6 8	5, 6 8 %
To l n be f s ha ta um rs o re s	6 6 2 0 0 0 11 1	0 0, 0 0 1 %

Profit and Loss

All fig s in NO K 1 000 ure ,	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 tal ati in op er ng co me	75 0 5 09	627 53 0	1 3 74 155	1 1 44 615
Sh of ofit fro m j oin t v ent are pr ure	1 7 31	1 9 96	3 5 73	5 2 40
Ch e in inv ori ent ang es	41 770 -	11 705 -	29 708 -	71 609 -
Ra ials d c ab les ed ter ma an ons um us w	28 9 9 34 -	234 50 6 -	51 9 6 50 -	394 93 0 -
Sa lari and l ex es pe rso nne pe nse s	78 32 7 -	66 36 5 -	153 21 0 -	135 78 2 -
Oth ting er op era ex pe nse s	185 36 1 -	149 08 6 -	34 5 7 60 -	294 47 1 -
EB ITD A	156 84 7	167 86 3	329 39 9	253 06 4
De cia tion d a rtis atio pre an mo n	31 975 -	33 21 8 -	64 100 -	66 714 -
De cia tion d a rtis atio f lic pre an mo n o ens es	1 0 60 -	899 -	-1 34 6	1 5 23 -
Imp air dju nt a stm ent ets me s o n a ss	0	0	0	0
EB IT be for e b iom dj as s a	123 81 2	133 74 7	263 95 4	184 82 7
Fai alu dj bio log ica l as set r v e a s	195 59 4 -	12 995	242 30 9 -	89 772
EB IT aft bio ad j. er ma ss	-71 78 2	146 74 2	21 645	274 59 8
Sh of ofit fro ies are pr m a ss . co mp an	1 0 86	85	2 7 55	1 2 75
Ne t fi cia l nan	-12 48 6	15 39 0 -	35 525 -	43 035 -
Pro fit be for d b iom dj e t ax an as s a	112 2 41	118 2 44	23 83 1 1	143 06 6
Pro fit bef ta ore x	-83 18 2	131 43 6	11 125 -	232 83 8
Est ima ted ion ta xat	20 714	43 66 1 -	5 2 48	69 20 9 -