Why we're bullish on Iceland's salmon sector Charles Høstlund, CEO 30.11.2016 1
Agenda NRS in brief Why we're bullish on Iceland's salmon sector 2
Attractive farming operation Founded in 1992 160 employees Listed on Oslo Stock Exchange March 2011 REGION NORTH NRS Finnmark (19) Nord Senja Laks (6) Nor Seafood (4) Farming 35 licenses Region North 29 licenses Region South 6 licenses Volume 2015: 27 900 tonnes < 80% in Region north Associated companies with 10 licenses and Arctic Fish (50 %) Trading Salmon fresh and frozen 95% export 50 countries Volume 2015: 70 000 tonnes REGION SOUTH NRS Feøy (6) Head office Norway Royal Salmon ASA Sales office Norway Royal Salmon ASA 3
Highlights in Q3 2016 All time high operational EBIT of MNOK 218 All time high operational EBIT per kg of NOK 30.35 Strong salmon market driven by good demand and low supply growth High salmon price in the quarter Steady production costs in Region North and substantially lower production costs in Region South Good financial flexibility Acquisition of 50 % of Arctic Fish on Iceland 4
Organic growth potential for Norway Royal Salmon 50,000 45,000 40,000 NRS-Farming 45,000 35,000 34,000 30,000 25,000 20,000 18,500 21,000 25,200 22,400 27,900 26,700 15,000 10,000 5,000 4,400 6,000 6,500 10,500 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E Capacity 5
Why we're bullish on Iceland's salmon sector 6
Iceland: The new frontier in salmon farming Significant growth potential in Iceland Current: Licences and applications equivalent to an annual production of 80.000 tonnes of Atlantic salmon Regulations can secure good sanitary situation Few salmon farmers. Sites have large distances from each other and/or in separate fjords Icelandic Atlantic salmon harvest 1 340 4 900 80.000 2011 2014 Current licences and applications Icelandic salmon farming locations Benefits from it`s geographical location Favourable natural and biological farming conditions in Iceland Reykjavik Reykja vik Salmon farming 7
Atlantic Salmon: World Production
Significant growth potential in Iceland Estimated harvest volume 2016 Faroe Islands: 80 000 tonnes Iceland: 8 000 tonnes
Significant growth potential in Iceland NRS assume a 80-100.000 tonnes potential Icelandic aquaculture association says total production could be between 50 and 90.000 tonnes annually 10
Regulations can secure good sanitary situation Generally - learn from mistakes done in other countries Few salmon farmers possible to build an industry with few companies All farms running a generation model all inn all out Sites have large distances from each other and/or in separate fjords 11 No delousing and no medication
Benefits from it`s geographical location Beginning of the year until March/April - low temperatures The goals is to put out larger smolts to avoid a second winter in sea cages Westfjords provide a benefit in terms of day degrees Records from Icelandic farmers show compensated growth in the summer time 12 * Reference: Marine Harvest Salmon Farming Industry Handbook, Salmon from the Faro Isalnds (salmon.fo) and Finmark/Westfjords temperatures
Joint Venture in Iceland NRS agreed to acquire 50 % of Arctic Fish, forming a joint venture with the existing owners Transaction structured as a directed private placement of new shares in Arctic Fish Why Arctic Fish? Fully integrated with attractive licenses in three fjords in the Westfjords State-of-the art hatchery plant with an annual capacity of 7 mill smolt when fully operated Goal is to gain a competitive advantage by raising lager smolts, i.e. smolt >500g Westfjords Hatchery Arctic Fish has currently licenses with a total allowed production of 9,000t farmed fish. NRS believes it can provide significant industry knowledge to Arctic Fish s business, given the locations similarity to Finnmark (part of NRS region North) 13
Thank you for your attention Norway Royal Salmon ASA NO 864 234 232 www.norwayroyalsalmon.com 14