SECOND QUARTER 2013 REPORT

Transcription

1 Morpol ASA SECOND QUARTER 2013 REPORT Highlights for the quarter Group operating EBIT margin (1.4) percent Processing EBIT margin at (10.2) percent Sales prices increases continued to lag behind raw material price increases Processing sales volume growth strong Another strong quarter for farming

2 HIGHLIGHTS Key figures 3 months ended 6 months ended EUR thousand Revenue EBITDA EBITDA% 1.8% 9.0% 0.9% 10.5% Operating EBIT ( ) ( ) Operating EBIT% (1.4%) 5.5% (2.6%) 6.9% Operating EBIT pre transaction costs ( ) ( ) Operating EBIT pre transaction costs % (1.4%) 5.6% (2.6%) 6.9% Total assets Equity Equity ratio 38.4% 42.5% 38.4% 42.5% Net interest bearing debt ( ) ( ) ( ) ( ) Processing Operating EBIT ( ) ( ) Volume sold, excl. contract processing (thousands) Increase in volume year on year 20.7% 19.8% 20.9% 9.0% Farming (salmon) Operating EBIT * Volumes sold (thousands, gwe) EBIT per kg * Before FV adj. and impairment of goodwill Results Q2 2013/Q Results Q2 2013/Q (change) Gross profit Operating EBIT EBIT Profit before tax Q Q Net profit Gross profit Operating EBIT EBIT Profit before tax Net profit Morpol ASA Quarterly Report 2

3 FINANCIAL REVIEW Revenue Morpol s consolidated operating revenue in Q amounted to EUR million, which was higher by EUR 35.2 million in comparison to operating revenue generated in the same period last year. Both segments farming as well as processing recorded increased revenues from sales of goods. Gross profit Gross profit in Q amounted to EUR 11.6 million, which was EUR 10.4 million lower in comparison to the same period last year. The negative profitability in the processing segment had a large negative influence on the group s gross margin. The negative processing gross margin could not be offset fully by the increased profitability of farming. Farming volume of the Morpol Group in Q constituted only 29% of the total group sales volume in the quarter. Gross profit in the processing segment was negative EUR 0.3 milion, whereas the Q gross margin amounted to EUR 16.4 milion (EUR 16.7 milion change year on year). In Q processing revenues were higher by EUR 28.3 million in comparison to Q Higher volumes sold in the reporting period increasing by 2,952 tons (20.7%) contributed to EUR 18.7 million increase in sales turnover for the period. The higher average sales price of finished goods resulted in EUR 9.5 milion increased sales revenues. The volume sold in salmon farming segment was lower by 768 tons compared to the same period last year. This resulted in a decline of the sales revenues in farming of EUR 3.7 milion. This effect has been fully offset by the significantly higher sales prices which contributed to EUR 9.3 milion increase in sales revenues compared to the respective period in the prior year. Increased salmon prices year on year - amounting to EUR 1.85/kg for the quarter s average reduced the profit on sales by EUR 29.7 million due to the higher cost of sales. It was partially neutralised by the higher turnover of the volumes in the quarter giving supplemental gross margin in the amount of EUR 3.4 milion and higher sales prices to customers contributing positively to the gross margin in the amount of EUR 9.6 milion. In Q gross profit in the salmon farming segment amounted to EUR 12.1 million (EUR 5.8 million in Q2 2012). The increase of gross profit by EUR 6.3 mil- Morpol ASA Quarterly Report 3

4 lion is mainly due to higher sales prices resulting in the increase of the profit before tax by EUR 9.2 million. Operating EBIT Operating EBIT for the quarter amounted to EUR (2.0) million, which was EUR 8.2 million lower versus the same period last year and EUR 3.2 million higher versus Q Salmon farming operating EBIT for the quarter amounted to EUR 10.0 million and was EUR 7.4 higher than in the same period last year. The improvement is due to the higher sales margin influenced by the factors described above. The increased costs of sales and operating costs in the total amount of EUR 0.24/kg results from the higher mortality, lower biomass growth and additional treatment costs due to diseases in UK farming. The main reason for the lower result in Q in comparison to Q was lower operating EBIT in processing segment. Financing Net financial items in Q were negative with EUR 4.6 million compared to positive EUR 1.2 million in the same period last year. The lower result in financial items in Q in comparison to Q in total amount of EUR 5.9 million derives from negative difference on currency exchange transactions by EUR 5.4 million year on year. Net result The group had a net loss from continuing operations of EUR 4.6 million in Q versus net profit of EUR 9.9 million in Q Processing segment generated an operating EBIT of EUR (12.1) million in Q (EUR 5.7 million same period last year). The main reasons of lower operating EBIT in processing segment (except for reasons described in gross profit section) are: the higher transportation and warehousing costs due to the increased volumes sold, however in general the operating cost has decreased year on year by EUR 0.06/kg. Exchange rates impacts against last year Morpol s majority of the sales is proceeded in EUR and GBP. Most of the purchases and costs are denominated in EUR, GBP, PLN and NOK. The company manages the currency risk exposure by hedging cash flows mainly against weakening of EUR. Net exchange rate loss recognized in Q amounted to EUR 1.5 million, mainly due to exchange rate loss recognized in the companies that keep the accounting books in NOK and PLN, however have large settlements in other currencies. Morpol ASA Quarterly Report 4

5 OPERATIONAL REVIEW Processing Severe margin pressure Operating revenue in processing was EUR million compared to EUR 90.4 million prior year. Higher unit sales prices to customers impacted revenue. In addition, volume excluding contract processing was up strongly in comparison to Q Operating EBIT for processing in Q was EUR (12.1) million vs. EUR 5.7 million in the previous year. Raw material purchase unit price was significantly higher in comparison to prior year. Volumes Sales volumes for Q were as follows: Sales Tonnes Q Q % Var H H % Var Sales without contract processing % % Contract processing % % TOTAL SALES % % The change in volumes excluding contract processing over the last years is illustrated as follows: The operating EBIT margin in Q decreased to (10.2%) compared to 6.3% prior year. Market prices for salmon increased in Q with an average NOS price from Norway at approximately NOK 41.5/kg (54% increase in comparison to Q2 2012), up by approximately NOK 6.1/kg from Q Strong sales volume increase contines Sales volume excluding Contract Processing increased in Q by 21% overall compared to the same quarter in There was a strong, double digit sales volume growth in all product categories. There was an increase in prices to customers for Morpol s products compared to the same period last year. Morpol ASA Quarterly Report 5

6 Salmon farming Strong performance continues Operating revenue in salmon farming in Q was EUR 42.7 million (EUR 37.1 million in same period last year). Volumes sold were lower by 10% in comparison to the same period last year. Of the total revenue, EUR 12.6 million was transferred internally for further processing and sales. A summary of the farming results by country is shown below: UK UK Norway Norway Total Total Q H Q H Q H Volumes (gw e'000) Operating EBIT (EUR' EBIT per kg (EUR) The volume quarter per quarter for 2013 is shown below: Sales volumes (gwt) Q Q Q Q Yr 2012 Actual Actual Actual Actual Actual Scotland Norway Total sales volumes Q Q Q Q Yr 2013 Sales volumes (gwt) Actual Actual Estimate Estimate Estimate Scotland Norway Total sales volumes Salmon farming operating EBIT in Q was EUR 10.0 million (EUR 2.6 million same period last year), resulting in an operating EBIT margin of 23.5% (Q2 2012: 7.1%). The farming operation in the UK Meridian Salmon Group generated an operating EBIT of EUR 9.9 million. Sales volumes in the quarter were 6,662 metric tonnes gutted fish equivalent returning an EBIT/kg of EUR 1.4/kg. The Norwegian farming operation Jøkelfjord Laks generated an operating EBIT of EUR 0.6 million, returning an EBIT/kg of EUR 1.6. Please note that Jøkelfjord only harvested in the first half of April, hence the EBIT/kg reflects the low volume sold early in the quarter. Morpol ASA Quarterly Report 6

7 FINANCIAL SITUATION The group s net interest bearing debt (NIBD) was EUR million at the end of Q (EUR 13.1 million increase compared to 2012 year end). The equity ratio was 38.4% at quarter end compared to 42.5% at the quarter end prior year. Total assets amounted to EUR million compared to EUR million at the 2012 year end. The decrease is mainly due to decrease of trade and other receivables (by EUR 20.2 million) and cash and cash equivalents (by EUR 23.1 million). EUR thousand Borrowings long term ( ) ( ) ( ) Borrowings current ( ) ( ) ( ) Cash and cash equivalents Net interest bearing debt ( ) ( ) ( ) CASH FLOW The consolidated cash flow for Q was an ouflow of EUR 15.1 million comprising of cash inflow from operating activities EUR 2.3 miliion and outflows from financing activities of EUR 7.9 milion and investing activities EUR 9.5 milion. During the quarter, the Morpol Group invested EUR 9.6 million in property, plant and equipment and intangible assets. Total cash flow from financing activities was an outflow of EUR 7.9 million comprising of net decrease of interest bearing debt (EUR 5.2 million) and interest paid (EUR 2.7 million). Morpol ASA Quarterly Report 7

8 MARKET OVERVIEW In general, demand for Morpol s products continued to grow during Q2 2013, however there are signs that demand grow is slowing or even declining in certain markets and in certain product categories. Continued relatively low prices at retail in most markets helped demand for smoked salmon and speciality products. Germany Total retail sales of smoked salmon grew by approximately 16% by volume in YTD May 2013 as consumer prices fell by 2% versus the previous year. However, consumer prices in Germany increased Q versus Q On the 13 th May 2013 consumer price for a 200g pack moved up to EUR 2.99/pack from EUR 2.59/pack. Demand growth slowed in June as a result. France Q saw a reported decrease of smoked salmon sales in France. Volume decline year on year was (3.2%) and is accelerating, April (1.5%), May (3.3%), June (5.3%). Prices in Q declined by (0.2%) year on year. Morpol ASA Quarterly Report 8

9 SUBSEQUENT EVENTS Please refer to note 14 of the report. SHARE INFORMATION Total number of shares outstanding at quarter end was million shares and the total number of shareholders were 229. Morpol s share price ended at NOK on 28 June OUTLOOK Processing Q produced a significantly reduced EBIT margin versus Q2 of Raw material prices Q were at significantly higher levels than Q but end sales prices have not followed. The contined relatively low consumer sales prices stimulated demand. Raw material price touched record highs in July (NOK 45/kg) and are now falling, the question is if this trend will continue during Q3. End product prices have increased, but further significant price increases are unlikely in the short term. Margin during Q will improve versus Q Morpol expect demand to remain buoyant for our main products until consumer prices are adjusted to fully reflect the underlying raw material price. Consumer prices for smoked salmon have increased during Q in all markets. We expect this to have a negative impact on volume growth during the remainder of the year. Farming The biological performance in Norway continues to be very good and we expect this positive development to continue. Jøkelfjord will start harvest again in mid August In the UK the underlying performance was good in 2Q 2013, although volumes harvested were lower than initially planned (harvests were postponed to try to compensate for slow growth). We expect salmon prices to remain strong in Morpol ASA Quarterly Report 9

10 FINANCIAL STATEMENTS Interim consolidated income statement 3 months ended 6 months ended EUR thousand Continuing operations: Revenue: Sale of finished goods Sale of services Sale of merchandise and materials Cost of sales ( ) ( ) ( ) ( ) Finished goods sold ( ) ( ) ( ) ( ) Services ( ) ( ) ( ) ( ) Merchandise and materials sold ( ) ( ) ( ) ( ) Gross profit Operating expenses ( ) ( ) ( ) ( ) Transaction costs 0.0 (102.8) (16.0) (102.8) Operating EBIT ( ) ( ) Unrealised fair value adjustments (545.1) Impairment losses (23.5) 0.0 (23.5) 0.0 Trading derivatives EBIT (392.5) ( ) Financial items, net ( ) ( ) ( ) Profit/(loss) before tax ( ) ( ) Income tax expense Net profit/(loss) continuing operations ( ) ( ) Net income/(loss) discontinued operations Net profit/(loss) ( ) ( ) Net profit/(loss) for the period attributable to: Owners of the parent ( ) ( ) Non controlling interests (118.4) Earnings per share (EUR) Basic and diluted EPS continuing operations (0.03) Basic and diluted EPS discontinued operations Basic and diluted EPS total operations (0.03) The costs are presented "by function" and include depreciation and amortisation with the following amounts: Depreciation and amortization ( ) ( ) ( ) ( ) Operating EBITDA The group s key earnings measure is Operating EBIT as this reflects earnings on sales during the period. Morpol ASA Quarterly Report 10

11 Interim consolidated statement of comprehensive income 3 months ended 6 months ended EUR thousand Net profit/(loss) ( ) ( ) Items never reclassified subsequently to profit and loss Items that may be reclassified subsequently to profit and loss Exchange rate differences on translation ( ) (220.0) ( ) Total comprehensive income ( ) ( ) Total comprehensive income attributable to: Owners of the parent ( ) ( ) Non controlling interests (153.5) (77.5) Morpol ASA Quarterly Report 11

12 Interim consolidated statement of financial position EUR thousand ASSETS Deferred tax asset Intangible assets Property, plant & equipment Other non current assets Total non current assets Inventories Biological inventory Trade and other receivables Other current assets Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Total equity attributable to owners of the parent Non controlling interests Total equity Deferred tax liabilities Other long term liabilities Long term interest bearing debt Non current liabilities Trade and other payables Current tax liabilities Borrowings and other interest bearing short term debt Other short term liabilities Total current liabilities Total liabilities Total equity and liabilities Morpol ASA Quarterly Report 12

13 Interim consolidasted statement of changes in equity EUR thousand Share capital Share premium Other paidin capital Retained earnings Currency translation reserve Total equity attributable to owners of the parent Noncontrolling interests Total equity Balance ( ) ( ) Share swap Share capital issues Change in non controlling interests (107.2) (107.2) Transactions with owners (107.2) (107.2) Profit for the period ( ) 0.0 ( ) ( ) Other comprehensive income ( ) ( ) (187.6) ( ) Balance ( ) ( ) Balance ( ) ( ) Share swap Share capital issues Change in non controlling interests (339.2) (339.2) Transactions with owners (339.2) (339.2) Profit for the period Other comprehensive income Balance ( ) ( ) Morpol ASA Quarterly Report 13

14 Interim consolidated statement of cash flows 3 months ended 6 months ended EUR thousand Operating activities Profit before tax ( ) ( ) Adjustments: Depreciation and impairment of property, plant and equipment Amortisation and impairment of intangible assets Fair value adjustments on financial assets and liabilities (99.7) (13.4) (119.5) ( ) Impairment of financial assets (Gain)/loss on disposal of non financial assets (66.6) (6.7) (37.1) 9.9 (Gain)/loss on disposal of non derivative financial assets Foreign exchange impact (222.7) (568.9) Interest expenses Interest and dividend income 4.3 (125.4) 4.3 (294.2) Other 0.0 (23.1) 0.0 (1.2) Total adjustments Change in inventories Change in trade and other receivables ( ) Change in trade and other payables ( ) ( ) ( ) Change in provisions, accruals and prepaid expenses ( ) 61.4 ( ) ( ) Net changes in working capital Settlement of derivative financial instruments Interest paid (operating activities only) (0.7) (1.2) (2.6) (1.3) Income taxes paid ( ) ( ) ( ) ( ) Cash flow from operating activities Investing activities Purchase of intangible assets (7.8) (5.5) (46.1) ( ) Purchase of property, plant and equipment ( ) ( ) ( ) ( ) Acquisition of subsidiaries, net of cash (107.2) 0.0 (107.2) 0.0 Acquisition of other financial assets (15.2) 0.0 Repayment of loans 0.0 (6.7) Proceeds from disposals of property, plant and equipment Proceeds from disposals of subsidiaries, net of cash Proceeds from disposals of other financial assets Proceeds from government grants Interest received Dividends received Cash flow from investing activities ( ) ( ) ( ) ( ) Financing activities Net change in interest bearing debt ( ) ( ) ( ) Interest paid ( ) ( ) ( ) ( ) Proceeds from issue of share capital Dividends paid 0.0 (281.2) 0.0 (339.2) Cash flow from financing activities ( ) ( ) ( ) ( ) Net change in cash and cash equivalents ( ) ( ) Cash and cash equivalent, beginning of period Exchange differences on cash and cash equivalents ( ) (359.7) ( ) Cash and cash equivalent, end of period Morpol ASA Quarterly Report 14

15 Selected notes disclosure 1. General information Morpol ASA ( the company ) and its subsidiaries (together, the group or Morpol ) are the world leading processor of salmon and market leader with smoked and marinated salmon. Starting from 2010 Morpol also has salmon farming activities. The group has processing plants in Poland and UK. New plants in UK, Germany and France are under construction. The group sells mainly in countries within Europe, Japan and the USA. The farming activities are located in the UK and in Norway. Morpol ASA is a company incorporated on 23 April 2010 and domiciled in Norway whose shares are publicly traded on the Oslo Stock Exchange (OSE). The address of its registered office is Tjuvholmen Allè 3, 0252 Oslo. On 13 June 2012 the branch office of Morpol ASA was registered in Poland. The address of the branch office of Morpol ASA is Chrzanowskiego 8, Gdynia. The condensed consolidated interim financial information was authorised for issue in accordance with a resolution of the board of directors on 20 of August The condensed consolidated interim financial information is unaudited. 2. Basis of preparation The interim accounts are presented in accordance with IAS 34 Interim Financial Reporting. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ending 31 December 2012, which have been prepared in accordance with IFRSs. The consolidated financial statements for the year ending 31 December 2012 are available upon request from the company s registered office at Tjuvholmen Allé 3, Oslo or at The financial statements are presented in EUR, rounded to the nearest thousand, unless otherwise stated. As a result of rounding differences, numbers or percentages may not add up to the total. Foreign currency rates versus EUR (at end of the quarter) Currency PLN GBP NOK Foreign currency rates versus EUR (average currency rates in the quarter) Currency Q Q Q Q Q Q Q Q Q PLN GBP NOK Morpol ASA Quarterly Report 15

16 2.1. Going-concern basis The group meets its day-to-day working capital requirements through its bank facilities. The current economic conditions continue to create uncertainty particularly over (a) the level of demand for the group s products; and (b) the availability of bank finance for the foreseeable future. The group s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the group should be able to operate within the level of its current facilities. After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group therefore continues to adopt the going concern basis in preparing its consolidated interim financial statements. 3. Accounting principles The accounting policies applied in the interim financial statements are in all material respect consistent with those applied in the consolidated financial statements for the year ending 31 December There are no new IFRS or IFRICs that are effective for the first time for this interim period that would be expected to have a meterial impact on the results. Exceptional items are disclosed and described separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the group. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss. 4. Estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ending 31 December Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised. 5. Financial risk management The group s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The group s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group s financial performance. Risk management is carried out by finance teams of the subsidiaries in close cooperation with the management boards of the subsidiaries and under supervision of the group management of Morpol ASA. Morpol ASA Quarterly Report 16

17 The most important parts of the risk management process are the collateral of short-term and middle term cash flows, stabilisation of financial results fluctuation and achieving the required return rate from long-term investment with optimum sources for the financial of the investments. The group uses derivative financial instruments to decrease certain risk exposures. The interim condensed financial statements do not include all financial risk management information and disclosure required in the annual financial statements; they should be read in conjunction with the group s annual financial statements as at 31 December There have been no changes in the risk management policies since year end Liquidity risk The group is exposed to liquidity risk, which is the ability to pay the financial liabilities on time. The group s objective is to maintain a balance between continuity of funding and flexibility mainly through use of bank loans. The group manages the liquidity risk by monitoring the terms of payment and need for cash to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times. Compared to 2011 year end, there was a material change in the contractual undiscounted cash outflows for financial liabilities. On 20 th of December 2012 the Company received the amendment letter to credit facility as a result of the change of control over the Company. The letter waived the minimum geraring ratio from the level of 3.0 up to the level of 4.0 in 2013 as well as changed the final maturity date of the agreement to 30 September On the 2 nd of May the syndicate banks has granted the Company an extension of the credit facility. The new final maturity date of the credit line is On 19 th of August 2013 the Company has amended the credit agreement between Morpol ASA and syndicate banks. The new conditions set the required maximum gearing ratio at the end of Q and at the end of Q on the level of 7.5 and 6.75 respectively. In the opinion of the management the Company has sufficient access to funding sources. 6. Seasonality of operations The main business activities of the group are fish processing, sales and salmon farming. The group generates higher revenues and profits in second half of the year. The main factor influencing the seasonal patterns throughout the year is the weighting of processing sales volumes according to market demands. The main period of sales of smoked salmon is the period leading up to and at the Christmas holiday season in December and also the Easter period, which falls in a week period in either the month of March or April. Additionally, the salmon production cycle normally follows a pattern and biological cycle where more fish are harvested in the second half of a calendar year than the first half. In the financial year ended 31 December 2012, 23% of sales volumes excluding contract processing was accumulated in the first quarter of the year, 21% accumulated in the second quarter of the year, 22% accumulated in the third quarter of the year, with 34% accumulating in the fourth quarter. For more information please refer to the review of operations in processing and farming segments. 7. Operating segment information Morpol has three segments: fish farming salmon, fish farming other species and fish processing. Fish processing includes processing and preserving of fish and other fishery products and distribution and sale of those. The main product is smoked salmon, but other products are increasingly important to the group s profitability. Fish farming salmon involves the breeding and on-growing of fish, as well as slaughtering, processing, sale and distribution of salmon. Fish farming other species includes the activity of the companies in Vietnam and Belize. Morpol ASA Quarterly Report 17

18 Sales between segments are carried out at arms length. The revenue from external parties reported to the Board is measured in a manner similar to transaction with third parties. The following table presents revenue and profit information regarding the groups operating segments for 3 months ended 30 June 2013 and 30 June 2012 respectively: Fish farming Fish Farming Processing Group activities Eliminations Consolidated Other species Salmon EUR thousand Q Q Q Q Q Q Q Q Q Q Q Q Continuing operations: External sales Internal sales ( ) ( ) Operating revenue ( ) ( ) Cost of sales ( ) ( ) (479.3) ( ) ( ) ( ) ( ) ( ) Gross profit (loss) (335.3) (212.9) (148.0) (0.1) (84.0) Operating expenses ( ) ( ) (30.8) (280.2) ( ) ( ) ( ) ( ) 0.0 (0.1) ( ) ( ) Management fee (767.3) 0.0 (0.9) 0.0 (955.5) Transaction costs (102.8) (102.8) Operating EBIT ( ) (244.6) (531.0) ( ) (0.1) (84.1) ( ) Unrealised FV adj Impairment losses (23.5) (23.5) 0.0 Trading derivatives EBIT ( ) (244.6) (531.0) ( ) (0.1) (84.1) (392.5) Profit/(loss) before tax ( ) (333.0) (535.2) (700.7) (84.0) ( ) Income tax expense ( ) ( ) (644.2) (22.7) Net profit/(loss) cont.op. ( ) (323.4) (535.2) (651.9) (106.7) ( ) Net profit/(loss) disc.op Net profit/(loss) ( ) (323.4) (535.2) (651.9) (106.7) ( ) Depreciation/amortis. ( ) ( ) (194.7) (106.1) ( ) ( ) (32.7) (3.4) ( ) ( ) Operating EBITDA ( ) (49.9) (424.9) ( ) (0.1) (84.1) Morpol ASA Quarterly Report 18

19 The following table presents revenue and profit information regarding the groups operating segments for 6 months ended 30 June 2013 and 30 June 2012 respectively: Fish farming Fish Farming Processing Group activities Eliminations Consolidated Other species Salmon EUR thousand Continuing operations: External sales Internal sales ( ) ( ) Operating revenue ( ) ( ) Cost of sales ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) Gross profit (loss) (289.1) (84.0) Operating expenses ( ) ( ) (367.5) (646.1) ( ) ( ) ( ) ( ) ( ) ( ) Management fee ( ) 0.0 (6.0) 0.0 ( ) Transaction costs (102.8) (16.0) (16.0) (102.8) Operating EBIT ( ) (120.5) ( ) ( ) 0.0 (84.0) ( ) Unrealised FV adj (545.1) (545.1) Impairment losses (23.5) (23.5) 0.0 Trading derivatives EBIT ( ) (120.5) ( ) ( ) 0.0 (84.0) ( ) Profit/(loss) before tax ( ) (211.6) ( ) ( ) ( ) 0.0 (84.0) ( ) Income tax expense ( ) (0.3) (0.1) ( ) ( ) (22.7) Net profit/(loss) cont.op. ( ) (211.9) ( ) ( ) ( ) (106.7) ( ) Net profit/(loss) disc.op Net profit/(loss) ( ) (211.9) ( ) ( ) ( ) (106.7) ( ) Depreciation/amortis. ( ) ( ) (391.6) (414.4) ( ) ( ) (59.6) (6.8) ( ) ( ) Operating EBITDA ( ) (623.6) ( ) 0.0 (84.0) Total assets ( ) ( ) Morpol ASA Quarterly Report 19

20 8. Special events in the quarter Items relating to operation items that are material either because of their size or their nature or that are nonrecurring are presented within their relevant consolidated income statement category, but highlighted separately below to provide a better picture of the group s underlying performance: Amendment of the credit agreement dated 21 December 2010 between the Company and DnB Nor Bank ASA On the 2 nd of May the syndicate banks has granted the Company an extension of the credit facility. The new final maturity date of the credit line is For further information, please see note Biological inventory 3 months ended 6 months ended EUR thousand Carrying amount at the beginning of the period Acquired entities during the period Change in fair value (545.1) Currency differences ( ) ( ) Write down on biological assets (86.9) Net harvested ( ) ( ) Carrying amount at the end of the period months ended 6 months ended Tonnes (round weight) Acquired entities/assets during the period Growth during the period Slaughtered or sold biomass ( ) ( ) ( ) ( ) ( ) Carrying amount at the end of the period Biological assets comprise juveniles, smolt and fish in the sea. 10. Share capital Authorised shares Number of shares issued at date of incorporation Capital decrease ( ) Contribution in kind, shares Morpol SA Share issue Share issue Share issue Total number of outstanding shares In 2013 and 2012 there were no changes in value of ordinary shares and share premium. Morpol ASA Quarterly Report 20

21 11. Earnings per share The basic earnings per share is calculated according to the net profit attributable to the shareholder of the parent company divided by the average weighted number of ordinary shares in the relevant period. Morpol currently has no share-based compensation that results in a dilutive effect on earnings per share. 3 months ended 6 months ended Total operations Profit attributable to equity holders of the company (EUR million) ( ) ( ) Weighted average number of shares (basic and diluted) Basic and diluted EPS (EUR) (0.03) 0.06 (0.08) 0.11 Continuing operations Profit attributable to equity holders of the company (EUR million) ( ) ( ) Weighted average number of shares (basic and diluted) Basic and diluted EPS (EUR) (0.03) 0.06 (0.08) 0.11 Discontinued operations Profit attributable to equity holders of the company (EUR million) Weighted average number of shares (basic and diluted) Basic and diluted EPS (EUR) Morpol ASA Quarterly Report 21

22 12. Largest shareholders as at 30 June 2013 Shareholder Country Number of shares held Ownership MARINE HARVEST ASA Norway % SKAGEN VEKST Norway % VPF NORDEA KAPITAL Norway % KVERVA AS Norway % VPF NORDEA AVKASTNING Norway % VPF NORDEA NORGE VERDI Norway % VERDIPAPIRFONDET NORDEA NORGE PLUS Norway % VPF NORDEA VEKST Norway % VERDIPAPIRFONDET OMEGA INVESTMENT Norway % DNB NOR MARKETS, AKSJEHAND/ANALYSE Norway % SKAGEN VEKST III Norway % J.P. MORGAN CHASE BANK N.A. LONDON United Kingdom % J.P. MORGAN LUXEMBOURG S.A. United Kingdom % VPF NORDEA SMB Norway % PROFOND AS Norway % GMO RESOURCES FUND United States % SCHJØTT Norway % NAVIGARE SKIPS A/S Norway % NIKI AS Norway % HELGE SCHJØTT HOLDING AS Norway % Total 20 largest shareholders % Total other shareholders % Total number of shares % 13. Transactions with related parties The list of related parties indentified as at 30 June 2013: Morpol S.A. Laurin Seafood Sp. z o.o. Morpol VAP Sp. z o.o. Waynor Trading AS Laschinger Seafood GmbH Morpol France SAS Morpol France Production SAS Morpol Italia S.R.L. Morpol America Inc. Morpol UK Co. Ltd. Morpol Japan CO. Ltd. Morpol ASA Quarterly Report 22

23 Morpol Transport Sp. z o.o. Brookside Products Ltd. Amanda Foods (Vietnam) Ltd. Northern Isles Salmon Ltd. North Isles Seafarms Ltd. Mainland Salmon Ltd. Orkney Salmon Company Ltd. Lakeland Smolt Ltd. Marine Farms Holdings Pte Ltd. Marine Farms Vietnam Ltd. Marine Farms Belize Ltd. Marine Farm Technology Ltd. Hoganess Salmon Ltd. Wester Sound Salmon Ltd. Lakeland Marine Farm Ltd. Seagro Ltd. Cod and Shellfish (Scotland) Ltd. Marine Farms Ltd. Ocean Shells Ltd. Lakeland Unst Ltd. Heogland Salmon Company Ltd. Lakeland Unst Freshwater Ltd. Sound of Jura Salmon Ltd. Sea Products of Scotland Ltd. Lakeland Cairndow Ltd. Marine Products (Scotland) Ltd. Migdale Smolt Ltd. Migdale Transport Ltd. Jøkelfjord Laks AS Jøkelsmolt AS Jøkelfjord Edelfisk AS Meridian Salmon Group Ltd. Meridian Salmon Ltd. Meridian Salmon Processing Ltd. Meridian Salmon Farms Ltd. MKS Sp. z o.o. MKD Sp. z o.o. MKM Sp. z o.o. Friendmall Limited Vitamar AS X-lence Group AS Cypriot Holding Company Jopaco Ltd. Key management personnel of Morpol ASA: - Bjørn Myrseth - Marianne Elisabeth Johnsen - Kaj Kohave - Teresa Sienkiewicz - Piotr Kapinos - John-Paul McGinley - Pål Angell-Hansen Morpol ASA Quarterly Report 23

24 Details of significant transactions and outstanding balances with related parties are disclosed below: Transaction value Outstanding amount 3 month ended 6 month ended EUR thousand Office rent (2.5) (2.1) (5.4) (5.6) Sales Purchase At the reporting date neither board members nor key management personnel hold shares in Morpol ASA. 14. Significant events and transactions after the reporting period Breach of the Bond Agreement By purchase of the majority stake of the shares in Morpol by Marine Harverst Group the Change of Control Clause of the Bond Agreement has been breached. In that case - according to the Bond Agreement the Bond Holders had a right to pre-payment (a Put Option) at the 100% of the bond value plus interests. The Option was to be exercised before 29 th of June In this period bonds, representating the total value of NOK 2.5 million has been presented for repurchasing by Morpol. The transaction was finalised after the end of the reporting period. Amendment of the credit agreement dated 21 December 2010 between the Company and DnB Nor Bank ASA On 19 th of August 2013 the Company has amended the credit agreement between Morpol ASA and Syndicate Banks. The new conditions set the required maximum gearing ratio at the end of Q and at the end of Q on the level of 7.5 and 6.75 respectively. Morpol ASA Quarterly Report 24