Marel — Investor Presentation 2015

Nov 23, 2015

iMareI Innovation Through Partnership®

MPS Acquisition & Stable long-term financing

23 November 2015

Investor Presentation

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iMareI Innovation Through Partnership®

Transaction Highlights

Arni Sigurdsson, head of Strategy and Corporate Development

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Highlights

mPS

meat processing systems

carrel

Innovation Through Partnership

• Marel has agreed to acquire MPS meat processing systems for €382 million on a debt and cash-free basis
• Parallel Marel secured close to €670 million senior long term financing for the group at favorable terms and conditions
• MPS is a leader in primary processing solutions for the pork and beef industry and in innovative solutions in waste water treatment and food logistics
• Large installed base and strong global sales and service network
• MPS and Marel are a strong fit in market presence, manufacturing footprint and product portfolio
• Marel will become a full line solutions provider in meat
• MPS has achieved solid growth and profitability in recent periods
• Forecasted 2015 revenue close to €150 million and EBITDA around €40 million
• Completion is subject to anti-trust approvals and closing is expected in Q1 2016

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iMareI Innovation Through Partnership®

Acquisition Rationale

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Great Strategic and Cultural Fit

marel
Innovation Through Partnership®

• MPS and Marel have been in partnership over the past few years
• Marel will become a full line supplier in meat with the acquisition of MPS
• MPS is a strong player in primary processing in meat
• Marel is a major player in secondary and further processing with overarching software
• Complementary geographical presence and product portfolio results in increased economies of scale and cross selling opportunities
• Better serving the customer need and adding value to our customers
• Strong management and highly skilled employees with long tenure

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Balanced business profile

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Segment breakdown – before acquisition

Revenue Sept YTD 2015

• Poultry
• Fish
• Meat
• FP
• Other

Adj. EBITDA Sept YTD 2015

• Poultry
• Fish
• Meat
• FP
• Other

Segment breakdown – post acquisition*

Pro Forma Revenue Sept YTD 2015

Pro Forma adj. EBITDA Sept YTD 2015

*Assuming that all MPS revenues and EBITDA are attributable to Meat

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Full Line Supplier

marel Innovation Through Partnership

• MPS will close capability gaps and make Marel a full line provider in the meat industry
• Similar to when Marel acquired Stork Food Systems and became a leading global provider of high-tech solutions to the poultry industry
• Great platform to serve customers’ needs better and invest in further growth

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iMareI Innovation Through Partnership®

MPS

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Mark

Enarel

Innovation Through Partnership

Pork and poultry large and growing markets

Meat consumption – Global development by type

Million tonnes

• Pork consumption is growing globally
• China represents roughly 50% of global pork consumption
• Commercial pork primary processing is at a relatively high level in developed markets
• Still estimated to be at relatively low level in China and Russia (45% and 74%)
• Poultry will be the growth driver of meat consumption, especially due to its low price

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CI Marel Innovation Through Partnership

MPS is a market leader in Primary Processing

• Leading supplier in design, manufacturing and implementation of:
• Systems for primary processing
• Blood collection
• Food logistics systems
• Wastewater treatment systems
• Aftersales services and spares
• All segments profitable
• Large installed base
• Close to 2,000 active customers globally
• 5,000+ executed projects in 100+ countries
• Operates a manufacturing plant in China and the Netherlands

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Proven and Experienced Management

marel
Innovation Through Partnership

• Under the leadership of MPS’s management revenue growth and profitability have been strong
• Best in class engineering and project management
• Great food processing and technology know-how
• Long tenure and low turnover of employees
• Flat and agile organization resulting in quick reactions to changing market conditions
• Headquartered in the Netherlands with total employees of 670, thereof 150 in China

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Complimentary Market Presence

marel Innovation Through Partnership

• Manufacturing site and sales office
• Sales office
• Countries served from local sales offices
• Countries served through MPS headquarters supported by local agents

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cararel Innovation Through Partnership

Optimal manufacturing footprint

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iMareI Innovation Through Partnership®

Financing

Linda Jonsdottir, CFO

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MPS Financial Highlights

marel
Innovation Through Partnership®

• Strong revenue growth of 9% per annum in FY 11A-15E
• Order book equivalent to 12 months equipment and solution sales
• Consistent high profitability
• Efficient manufacturing platform
• Lean organization
• Large installed base
• High cash conversion
• High order book and business model of prepayments results in negative working capital
• Attractive return on capital

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marel Innovation Through Partnership

Solid operational performance with strong cash flow

• Year to date Adj. EBIT €78 million or 12.6% [9M 2014: EBIT €33 million 6.4%]
• Marel has streamlined its operations and focused its product portfolio
• Discontinued low margin business accounts for 30 million annually and is not included in the accounts since Q2 2015
• Marel has optimized its manufacturing footprint leading to improved margins
• Year to date revenue is €617 million compared with €513 respectively during same period last year
• Order book has good product and geographical mix and now stands at €188 million compared with €169 million in Q3 2014

EBITDA improvement and strong cash flow has driven Net Debt/adj. EBITDA down to 1.1 in Q3 2015

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Key enablers for the acquisition of MPS

marel

Innovation Through Partnership®

• Strong balance sheet
• At the end of Q3 Net debt /adj. EBITDA was 1.12x EBITDA compared with target of 2-3x EBITDA
• Good business performance of Marel
• Commercially strong product portfolio, focused market approach and tailwind in markets delivering strong performance
• Successful refocusing program with substantial improvements in profitability
• Strong cash flow
• Fully secured funding
• €670 million senior facility

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iMareI Innovation Through Partnership

Steep deleveraging of the company since 2008

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One company – One senior financing

Marel Innovation Through Partnership

• Parallel to the announced acquisition Marel has secured long-term senior financing arranged by Rabobank
• The approximately €670 million senior loan facilities have maturity in November 2020 and its terms and conditions are in line with current market terms and current senior facility
• The facility has three tranches
• €450 million in amortizing loan with annual €30 million in amortization
• $100 million in bullet loan
• €125 million in revolving facility

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Financial position remains strong

Marel Innovation Through Partnership

• The financing provides Marel strategic and operational flexibility to support growth and value creation going forward
• The financial position of Marel remains strong and the financial leverage (Net debt/EBITDA) ratio is anticipated to be around 3x at closing
• Management of MPS will invest c. €16m of their proceeds in Marel shares
• Transaction closure is only subjected to clearance from the anti-trust authorities
• Advice from both works’ councils has been rendered
• Until the closing of the transaction, each company will continue to operate independently, and perform their business as usual

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Disclaimer

marel Innovation Through Partnership

This Presentation is being furnished for the sole purpose of assisting the recipient in deciding whether to proceed with further analysis of this potential opportunity. This Presentation is for informational purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any securities, or as an invitation, inducement or intermediation for the sale, subscription or purchase of securities.

The information set out in this Presentation may be subject to updating, completion, revision and amendment and such information may change materially. Even though Marel hf. has given due care and attention in the preparation of this Presentation, no representation or warranty, express or implied, is or will be made by Marel hf. as to the accuracy, completeness or fairness of the information or opinions contained in this Presentation and any reliance the recipient places on them will be at its own sole risk. Without prejudice to the foregoing, Marel hf. does not accept any liability whatsoever for any loss howsoever arising, directly or indirectly, from use of this Presentation or its contents or otherwise arising in connection therewith. Any recipient of this Presentation is recommended to seek its own financial advice.

There is no representation, warranty or other assurance that any of the projections in the Presentation will be realized. The recipient should conduct its own investigation and analysis of the business, data and property described herein. Any statement contained in this Presentation that refers to estimated or anticipated future results or future activities are forward-looking statements which reflect current analysis of existing trends, information and plans. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially and could adversely affect the outcome and financial effects of the plans and events described herein. As a result, the recipient is cautioned not to place undue reliance on such forward-looking statements.

Transactions with financial instruments by their very nature involve high risk. Historical price changes are not necessarily an indication of future price trends. Any recipient of this Presentation are encouraged to acquire general information from expert advisors concerning securities trading, investment issues, taxation, etc. in connection with securities transactions.

This Presentation and its contents are confidential and may not be further distributed, published or reproduced, in whole or in part, by any medium or in any form for any purpose, without the express written consent of Marel hf. By accepting this Presentation the recipient has agreed, upon request, to return promptly all material received from Marel hf. (including this Presentation) without retaining any copies. In furnishing this Presentation, Marel hf. undertakes no obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies therein which may become apparent.

The distribution of this Presentation, or any of the information contained in it, in other jurisdictions than the Republic of Iceland may be restricted by law, and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of any such other jurisdictions.

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marel Innovation Through Partnership

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