Understanding the wildfish harvesting business. Webjørn Barstad CEO HAVFISK ASA

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Julius Stokes
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1 Understanding the wildfish harvesting business Webjørn Barstad CEO HAVFISK ASA

2 HAVFISK ASA Agenda The Global Picture Supply side Markets From science to individual vessel quotas Norwegian fisheries and HAVFISK Outlook

3 The Global Picture Supply side

4 World capture production stable at «maximum potential»

8 The most important white fish species from the fisheries White fish catch E (1000 tonnes) Alaska Pollock Hakes Atlantic Cod Haddock Saithe Source: Kontali Analyse Pacific Cod Hoki

9 Catch by nations and species (mt) Nation Alaska Pollock Catch by nation and species 2014 Atlantic cod Hake Saithe Haddock SBW Pacific cod Hoki TOTAL Chile Argentine USA Canada Russia Norway Iceland Faroe Islands EU Namibia South Africa Japan/S-Korea New Zealand Others Total Source; National statistics/ka-est. E 2015

10 The Global Picture Markets

11 1000 NOK Source: Kontali Analyse Main whitefish fisheries by first hand value E Alaska Pollock Atlantic cod Hake Haddock Saithe Pacific cod Hoki SBW

12 The world market of whitefish The global volume of groundfish - Where is it consumed? (2014 E) 50 % 45 % 47 % 40 % 35 % 30 % 25 % 20 % 15 % 10 % 5 % 0 % 14 % 12 % 9 % 8 % 7 % 5 % 2 % EU North America Asia Russia South America Japan Africa Others Source: Kontali Analyse

13 EU country split - whitefish consumption tonnes R.W. White Fish Cod Alaska Pollock Haddock Saithe Hakes Hoki Total Germany UK Spain France Scandinavia (SE, DK, FI) Poland Be/Ne/Lux Portugal Italy Others Top 3 Markets 1 Germany UK Germany UK Scandinavia Spain France 2 UK Spain France Scandinavia Be/Ne/Lux Italy Scandinavia 3 Spain Scandinavia Poland Be/Ne/Lux France Portugal Poland Source: Kontali Analyse

14 Vessel quotas From science to individual vessel quotas

15 How is the vessels quota decided? Annual quota advice from the relevant scientific institution Interna<onal Council for the Explora<on of the Sea Species by species scien<fic advice Problem: Fish don t care about borders in the sea Solution: Agreement on total allowable catches (TAC) and quota sharing between nations through annual bi- or multilateral negotiations Based on scien<fic advice End result: na<onal TACs for various species

16 How is the vessels quota decided? Bi-lateral fisheries agreements involving Norway: Russia / Norway EU / Norway Greenland / Norway Faroe Islands / Norway Iceland / Norway Multi-lateral fisheries agreements where Norway is part (and participate in fisheries): NEAFC NAFO CCAMLR

17 How is the vessels quota decided? National TAC from agreements - Allocations for science, political purposes etc = TAC available to commercial fishing fleet Divided between variety of vessel groups according to long term quotasharing agreement within the Norwegian Fishermens Association - Different agreed shares from species to species

18 How is the vessels quota decided? Trawler groups quota share (eg. Cod 33%) allocated with an equal quota size per individual vessel quota Total of ~88 individual vessel quotas in trawl group (Cod) One vessel can hold up to 4 quotas

19 Norwegian fisheries and HAVFISK

20 Ocean area > 6 x land area

21 Norway as a fishing nation Modern, efficient, well managed, sustainable World fishing nation no. 10 by volume (largest in Europe) World fishing nation no. 2 by export value The worlds largest Cod stock EU 31 mt pr fisherman Norway 255 mt pr fisherman Vessels Positioned for profitability Number of cod trawl vessels Norway Source: Fiskeridirektoratet

saithe, haddock) 7 Barents Sea shrimp licenses + 1 Greenland

22 Company overview Key facts Norway s largest harvesting company and quota holder 11% of the Norwegian whitefish quota (cod, saithe, haddock) 7 Barents Sea shrimp licenses + 1 Greenland 10 operational trawlers Three new vessels delivered in 2013 and 2014

23 Norwegian fishing companies The 35 largest fishing companies in 2014 (gross catch value in mill. NOK) MNOK

Facilities are operated by sister company Norway

24 Company overview Key facts 390 employees Ownership to fish industry facilities in northern Norway Facilities are operated by sister company Norway Seafoods Listed on Oslo Stock Exchange Aker ASA 73,25 %

25 Financials Results 2014 & Q Year 2014 Operating Revenues: MNOK EBITDA: 299 MNOK (28 %) EBITDA per kilo: 5,0 NOK Equity ratio: 35 % Q Operating Revenues: 257 MNOK EBITDA: 84 MNOK (34 %) EBITDA per kilo: 6,1 NOK Equity ratio: 36,2 % Volume 2014: mt (~ mt live weight) Q3 figures 6 November

26 Key value drivers HFISK

27 Value drivers Historic price trend - Cod Strong supply growth and financial downturn in key markets have negative impact on cod prices. Cod-prices appears to have bottomed out in Q1/2013 Export prices for frozen cod h/g in NOK. Source: Norwegian Seafood Council

28 Value drivers Cost breakdown (based on 2014 figures) % of revenue Cost (MNOK) Cost % % % 32 3% 57 6% 61 6% Personnel Freight/ packaging Fuel Fishing gear Maintenance Administration Drivers Low fixed sum per day Main personnel cost is in % of catch value Percentage of catch value Cost per kilo Cost per day in operation Average consumption for a freezing trawlers = litres/ day Cost per day in operation Average of NOK/day Cost per day in operation Fixed cost : yearly maintenance in ship yards Fixed cost Overhead cost, administration, insurance 28

29 Value drivers Catch efficiency Significant increase in catch efficiency Change in fleet Availability of fish New vessels: improvement in catch efficiency flexibility to par<cipate in alterna<ve fisheries

30 Value drivers Sensitivities price and catch efficiency main factors Catch efficiency EBITDA at different catch rates Price NOK 1.0 EBITDA / kg ,000 10,000 15,000 20,000 25,000 Catch rate per day (Kg) Price Increase Personnel cost Other costs Increased EBITDA Catch rates above 10,000 kg / day yield margin of around 60% Price increase of 1.0 NOK/kg will give additional EBITDA of around 0.6 NOK/kg

31 «Virtual tour» at Gadus Neptun

32 Outlook HFISK

33 HAVFISK Outlook Quotas 2016 Cod - same level as in 2015 Haddock + 9 % Saithe + 7 % Q3 presenta<on 6 November am Hotel Con<nental Oslo Industry Handbook rela<ons/reports and presenta<ons

for sustainable fisheries Fish is an environmentally friendly source of protein Source: Prof Ray Hilborn,

34 Outlook Long term mega trends Health, convenience, environment and ethics Fish is an important source of protein, vitamins and minerals The Norwegian fishing for cod, haddock and saithe is certified by MSC standard for sustainable fisheries Fish is an environmentally friendly source of protein Source: Prof Ray Hilborn, University of Washington Growing focus on fish in retail customer demands drives convenience Aker Seafoods invests in the future!

Outlook Long term mega trends The Food Gap Challenge towards 2050 69% increase in food production will be necessary

35 Outlook Long term mega trends The Food Gap Challenge towards % increase in food production will be necessary The world needs more seafood - less than 10 percent of food consumption is sea-based HAVFISK ca 200 mill meals per year

36 Disclaimer This Presenta<on includes and is based, inter alia, on forward- looking informa<on and statements that are subject to risks and uncertain<es that could cause actual results to differ. These statements and this Presenta<on are based on current expecta<ons, es<mates and projec<ons about global economic condi<ons, the economic condi<ons of the regions and industries that are major markets for HAVFISK ASA including subsidiaries and affiliates. These expecta<ons, es<mates and projec<ons are generally iden<fiable by statements containing words such as expects, believes, es<mates or similar expressions. Important factors that could cause actual results to differ materially from those expecta<ons include, among others, economic and market condi<ons in the geographic areas and industries that are or will be major markets for HAVFISK`s businesses, fish prices, market acceptance of new products and services, changes in governmental regula<ons, interest rates, fluctua<ons in currency exchange rates and such other factors as may be discussed from <me to <me in the Presenta<on. Although HAVFISK ASA believes that its expecta<ons and the Presenta<on are based upon reasonable assump<ons, it can give no assurance that those expecta<ons will be achieved or that the actual results will be as set out in the Presenta<on. HAVFISK ASA is making no representa<on or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presenta<on, and neither HAVFISK ASA nor any of its directors, officers or employees will have any liability to you or any other persons resul<ng from your use.

Pareto Investor & Finance Seminar «Key value drivers in whitefish harvesting» Webjørn Barstad, CEO HAVFISK ASA

Pareto Investor & Finance Seminar «Key value drivers in whitefish harvesting» Webjørn Barstad, CEO HAVFISK ASA HAVFISK ASA Agenda HAVFISK in brief Key financial deliveries Value-drivers Outlook Company