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NORTH ATLANTIC SEAFOOD CONFERENCE Q4 update w/outlook on industry structure Lillestrøm, March 5th, 2008 Gunnar Domstein (CEO) Jan-Terje Teige (CFO)

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Presentation on theme: "NORTH ATLANTIC SEAFOOD CONFERENCE Q4 update w/outlook on industry structure Lillestrøm, March 5th, 2008 Gunnar Domstein (CEO) Jan-Terje Teige (CFO)"— Presentation transcript:

1 NORTH ATLANTIC SEAFOOD CONFERENCE Q4 update w/outlook on industry structure Lillestrøm, March 5th, 2008 Gunnar Domstein (CEO) Jan-Terje Teige (CFO)

2 Agenda Overview Operations Financials Outlook on industry structure SectionSubject I II III IV

3 Norway Pelagic at a glance Formed in the merger between Domstein Pelagic, Global Fish, Bergen Fiskeindustri, Koralfisk and Bernt Hansens Eftf at 1th of July, 2007 Processing and sales og pelagic fish (mainly herring and mackerel) for human consumption 10 processing plants from Karmøy in the south to Sommarøy in the north A strategic initiative to consolidate an industry charaterized by a fragmented structure and modest profitability

4 The value chain Catch of pelagic fish is mainly done by purse seiners. NVG herring is mainly caught in the Norwegian Sea and mackerel and North Sea herring mainly in the North Sea area Processing plants, scattered along the coast, bid for the catches through four daily mandatory auctions and receive fresh fish for sorting, filleting, freezing, packing, storage, sales and transportation Logistics - The cargo is deep- frozen, and transport is handled by ship and/or land based transport Customers are mainly large national import companies –Herring: Mainly Russia, Ukraine and EU –Mackerel: Mainly Japan and Russia

5 Sommarøy Bodø Ålesund Liavåg Selje Måløy Kalvåg Florø Bergen Karmøy Ideally located for landings that varies with seasons for pelagic fish combined with high peak season capacity… Total production capacity: 5.050 tons/day Est. production volume 2008: 400 000 tons Norway Pelagic locations

6 Overview Operations Financials Outlook on industry structure SectionSubject I II III IV

7 Raw materials Simultanious peak season for herring and mackerel in october and november Increased quotas for both species compared to last year Total production in 2007: 209 000 tons Fire in Bodø plant reduced production Failure of horse mackerel fisheries Estimated share of total landings: 33,5% Estimated share of total landings at normal capacity utilization: 37-40% Tons (rw)NPELTotal for consumption % share Mackerel49 000158 00031 % Horse mackerel2 0003 90052 % Herring157 000460 00034 % Total209 000622 00033,5 %

8 Production Total Q4 2007Q4 2007HerringMackerel Horse mackerel Produced round frozen108 40394 34166 18440 2251 994 Produced fillet/value added51 37647 70948 9562 4200 Total produced159 779142 050115 14042 6451 994 Total 2007Q3+Q4 2007HerringMackerel Horse mackerel Produced round frozen144 647103 66395 81746 8242 006 Produced fillet/value added64 17159 08961 0493 1220 Total produced208 818162 752156 86649 9462 006 Production 4th quarter (round weight in tons) Production 2007 (round weight in tons) Total production increased by 12 % compared to same period in 2006

9 Quota developments The NVG Herring is getting increasingly more important and accounted for almost 70 % of the total quota in 2007. From 2003 the NVG herring quota has increased 114 % while the total quota for the three main pelagic species has increased 30%.

10 Markets

11 Average price for NP in 2007 was approx 5,00 kr /kgAverage price for NP in 2007 was approx 10,30 kr/kg Footnote: 1. Prices of herring and mackerel are based on prices achieved by Domstein and Global in the period 2001-2006 (volume weighted) Norwegian Mackerel volumes and export pricesNorwegian Herring volumes and export prices Volumes and prices of Herring and Mackerel (1)

12 Gross margins (kr/kg) 4 th quarter2007 Herring1,331,34 Mackerel2,162,23 Horse mackerel2,392,38 TOTAL1,561,58

13 Overview Operations Financials Outlook on industry structure SectionSubject I II III IV

14 P&L 2007 MNOK Q4 2007 2007 Net operating revenues 996,81.118,3 EDITDA 78,383,9 EBIT 74,376,0 Operating margin 7,5%6,8% Net financial expences 8,39,7 Result before tax 66,066,3 Result after tax 47,347,8

15 BALANCE SHEET - ASSETS Mill. Kroner 31.12.200701.07.2007 Intangible fixed assets 346,6372,4 Tangible fixed assets 310,3278,9 Financial fixed assets 0,1 Total fixed assets 656,9651,3 Inventories 176,92,8 Receivables 424,9 Cash and equivalents 11,3203,8 Current assets 613,1206,3 Total assets 1 270,0857,9

16 BALANCE SHEET - LIABILITIES MNOK 31.12.200701.07.2007 Equity contributions 634,5632,3 Earned equity 47,3 Total equity 681,8632,3 Provisions 7,03,5 Interest bearing long term debt 346,8206,7 Interest bearing short term debt 109,811,5 Non interest bearing current liabilities 124,73,9 Current liabilities 588,2225,6 Total equity and liabilities 1 270,0857,9

17 KEY FINANCIAL % and kr 31.12.2007 Result margin4,27% Operating margin6,80% Result pr. share Nok 3,35 Equity Mnok 681,8 Equity share53,7% Working capital Mnok 378,5 Net interest bearing debt Mnok 445,5

18 Expectations for 2008 Capacity utilisation is very good at Q1, more volumes than recent years Norway Pelagic expects to produce 400.000 tons raw materials, equivalent of over 2 billon NOK turnover Norway Pelagic will increase fillet capacity Norway Pelagic will continue to establish best practice on production and logistics Low purchase prices on herring can still open favourable opportunities in new markets Market conditions in Japan for mackerel are generally good, partly because of lower domestic catch than expected Sommarøy and Bodø plant already approved by Russian Food Safety Authorities, and has the capacity to serve our largest Russian customers. Further plants have been inspected for approval. Norway Pelagic expected to be listed on OSE by Q2 2008

19 Overview Operations Financials Outlook on industry structure SectionSubject I II III IV

20 Structural development Lack of Industrial Structure In the Pelagic Consume Sector: –Fleet concentration –From 11 to 3 major Fishmeal producers last 10 years –Forceful concentration in the Salmon field –Still above 30 factories for Pelagic Consume Production in Norway… Norway Pelagic = response to this challenge Many factors drive the structural process: –Larger customers; expects large quantities and stability in quality and volume – security for supply becomes important issue –Food Safety Demands – Norwegian Authorities –Russian Authorities; still only 7 suppliers are accepted –Investment needs vs volumes in each factory

21 Case: The 3 days rule and its consequences

22 Our challenge is in the Market NP main operational challenge =improved performance in the Value Chain that we command –Production and efficiency –Market performance Increment of value creation in our products: –From Round frozen products to Fillets –High standards & documentation: Quality & food safety –Improved customer understanding and product/process development in accordance with market needs Particular focus on Herring – by far our most important product


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