cermaq capital markets day

Cermaq

Capital Markets Day 2012

Bodø, 19. September 2012

2

Agenda

Opening remarks Introduction to Cermaq and strategic priorities Mainstream - Long term cost optimization EWOS - Focus on excellence

Mainstream - Chilean farming update

Closing remarks & preparing for site visits

3

Cermaq introduction

Two business units; EWOS and Mainstream

EWOS: The leading producer of salmonid feed – market share of 37%

Sales 2011: 1,081,000 tonns

Mainstream: The third largest global salmon

farming company - market share of app. 7%

Sales 2011: 108,500 tons (gwe)

Total EBIT pre gain 2011 of NOK 1,369 mill

4,000 employees

Operations: Norway, Chile, Canada, Scotland,

Vietnam

4

Present in all major salmonid regions

Sales volume per region (2011)

Chile

45%

Norw ay

35%

20%

Canada

8%

Norw ay

Scotland

Chile 31%

7%

Canada

3%

Vietnam

51%

Pangasius feed

in Vietnam

5

Sustainable aquaculture our mission

• Our mission is Sustainable

Aquaculture

• Our vision is to to be a global leader in

sustainable aquaculture with main

focus on farming of salmon and trout

and the production of feed for these

fish species

Sustainable aquaculture defined as

• Operating the business in such a way that it does not reduce the potential for future aquaculture

activity and the production of fish feed with basis in the same natural resources

• Operating in the society in such a way that the business maintains the future support of our

stakeholders, including our employees, the local community, politicians and authorities, consumers and

customers.

• Creating value to the shareholders in such a way that the business can attract capital and secure growth

and profitability

6

A leading global supplier of

feed to salmonids

A significant player within global farming of salmonid

species

Among the best players in

R&D on fish feed and salmon farming

Maintain strong operational

focus as a basis for success and future growth

Our platform for value creation

6

Two separate business units

EWOS – Feed

Mainstream - Farming

A decentralized operating

structure

Centralized strategy, finance, IT and corporate functions

Profitable growth within

salmon farming and feed operations

Delivering solid operational

and financial results

Sound financing and ability to

reap benefits of growth opportunities

… while maintaining a strong

dedication to sustainable aquaculture

BUSINESS STRUCTURE LONG-TERM OBJECTIVE PLATFORM

OBJECTIVES CREATING SHAREHOLDER

VALUE CERMAQ

7

Strong financial development and position

7

KEY FINANCIALS SHAREPRICE DEVELOPMENT

KEY RATIOS NIBD/EBITDA

1210

998

2009

CAGR +11%

2011

15%

2010

18%

10%

2008

4%

2007

13%

22.1%

2010

59.8%

21.7%

2009

52.7%

8.0%

2008

42.0%

0.8%

2007

57.3%

14.2%

59.5%

2011

EBITDA%

Operating revenues (NOK bn)

Equity ratio

ROCE

2007 2008

2.1x

0.7x

2011 2010

1.2x

2009

9.4x

0.6x

NOK 4.63 NOK 5.40 NOK 1.50 NOK 0 NOK 2.25

Dividend per share

8 8

No position

PELAGIC FISHING FLEET

TERRESTRIAL FARMING

FISH MEAL AND OIL FACTORIES

RAW MATERIAL PROCESSING

FEED

FARMING

PRIMARY PROCES-

SING VAP

SMOLT

SALES

No position

Sourcing partners

BROODSTOCK

Partnerships in

selected areas

Limited

position

Value Chain Positioning

9

EWOS – a leading global feed supplier

7 factories world wide

20 feed production lines

Norway, UK, Chile, Canada and Vietnam

Global market share of 37% on salmonid feed

More than 1,000 employees

> 1 mill tonnes sold in 2011

Significant activities in R&D through EWOS Innovation

EBIT/tonnes (NOK)

0

100

200

300

400

500

600

2011 2010 2009 2008 2007

ROCE (PERCENT)

0

5

10

15

20

25

30

2011 2010 2009 2008 2007

10

Mainstream well positioned in key salmonid areas

Mainstream Canada • Atlantic Salmon

• Fresh & sea water facilities

• 2 processing plants

• 27 farming licenses

• 230 employees

Mainstream Norway • Atlantic Salmon

• Fresh & sea water facilities



• 540 employees

Mainstream Chile • Atlantic Salmon, Trout, Coho

• Fresh and sea water facilities


• Freezing capacity


• 2,200 employees

ROCE (PERCENT)

-10

-5

0

5

10

15

EBIT/kg (NOK)

2011 2010 2009 2008 2007

Total

Scotland

Norway

Canada

Chile 19212122

2012e 2011 2010 2009

Sales volumes, 1000 tonnes (gwe)

4049

3749

2012e 2011 2010 2009

52

383731

2012e 2011 2010 2009

-20

-10

0

10

20

30

40

2011 2010 2009 2008 2007

Total

Canada

Norway

Chile

11

..the combination creates value for Cermaq Group

ORGANIZATIONAL

DEVELOPMENT

JOINT PROJECTS

FINANCIAL SYNERGIES

Larger variances in

competencies improves solutions

Exchange of personnel

KNOWLEDGE

Feed the single largest cost

component in farming

Combined knowledge

improves performance

Less volatile feed business

improves financial stability and structure

Currency hedging synergies

12

Strategic Priorities

13

HARVEST OF ATLANTIC SALMON

Source: Kontali Analyse

Lower supply growth and strong demand support positive sentiment

155

150155

110

120107

128

137145

2011

1,620

1,006

221

Norway

Chile

UK

Canada

Other

2013

1,975

1,146

422

2012

1,914

1,129

378

CHANGES IN RETAIL SALE IN KEY MARKETS (%)

Source: Norw egian Seafood Council/Cermaq

3

8

2

-3

1

-1

7811

2 2

16

107

3

2011 2010 2009 2008 2007

Change in value Change in volume Change in price

64

1

-1

6

-5

910

63 1

1412

58

2009 2010 2011 2008 2007

-2

14

00

-9-6

-11

61

20

-8

26

0

10

2011 2010 2009 2008 2007

GERMANY – SMOKED

FRANCE – SMOKED

FRANCE – FRESH FILLETS

14

Organic growth in Mainstream require new licenses from 2014

Estimated harvest volumes based on full utilization, gwe kt

VOLUME IN CURRENT OPERATIONS

27 32 35 35

2017

21 21

48

6865 65

CAGR +1%

Norway - NL

Norway - FM

Canada

Chile

2015

145

24

2014

145

24

2013

141

24

2012

119

24

Note: In Canada, 2013 estimated volume is after IHN culling

15

Limited aquisition opportunities

Limited # of transactions during the low cycle

Recent transactions suggests significant synergies or long term high EBIT expectations

Note: Selected transaction multiples (harvest next FY)

Source: ABGSC

7071

50

60

49

60

52

17

81

75

38

79

35

16

50

26

21

33

Aurora

Lerøy

2004

Fjord

Pan Fish

2006

Follalaks

Cermaq

2004

Senja S.

Salmar

2005

Polarlaks

Cermaq

2006

MS, W/R

Morpol

2010

Bakkafrost

Salmar

2010

S. Andes

Cermaq

2004

Heritage

Cermaq

2004

MHG

Pan Fish

2006

Arctic

Cermaq

2006

Lakeland

Morpol

2010

Jøkelf jord

Morpol

2011

Midnor

Lerøy

2003

Aqua F.

Pan Fish

2005

Hydrotech

Lerøy

2006

Rauma

Salmar

2010

Sjøtroll

Lerøy

2010

Enterprise Value NOK/kg

16

MAINSTREAM

Long term cost optimization by focus on preventive

fish health and best in class operations – Support industry regulations in Chile to secure long term

sustainable operations

Profitable growth in Mainstream Norway – Develop existing licenses and actively pursue new licenses

– Focus on Nordland and Finnmark

Profitable growth Mainstream Chile – Increase capacity to enable growth and operational flexibility

– Acquisitions in selected areas

Maintain current activity in Mainstream Canada – Focus on good biological and operational results at current

levels

Key strategic objectives – Mainstream

http://misalonpr.com/image/estudios-sociales/banderas-del-mundo/no-lgflag.gif

http://en.wikipedia.org/wiki/File:Flag_of_Canada.svg

17

EWOS salmonid feed volumes

Thousand tonnes

EWOS with 8% annual volume growth in salmonids last 6 years

876

788

902847

777

35%

2009

33%

2008

7.9%

2007

32%

2006

33%

2012E

1,227

2011

1,081

37%

2010

35%

EWOS market share in salmonids

EWOS

Source: Cermaq 2011 annual report

• Approximately 95% organic growth

• Continued growth dependent also on increased salmon farming

• Limited growth in EWOS so far from new markets

18

Securing continued leadership position

• Secure and develop leading position in

salmonids

• Invest in new capacity if and when needed

PRIORITY ONE - SALMONIDS

• Investment in Vietnam to be developed to

secure profitable growth

• Assess feasibility and develop plans for

other markets next 12-18 months

PRIORITY 2 – NEW MARKETS

5.0%

2014E

1,420 1,353

2015E

1,288

2013E 2012E

1,227

EST. SALMONID FEED VOLUMES (1000 TONNES) FOCUS GOING FOWARD

19

Substantial farming consolidation in Norway the last 20 years

53

97

162

70

84

122

342

283

186

215

148

156

221

65

45

34846

453

(54%)

2002

>10 licenses

6-10 licenses

2-5 licenses

1 license

2011

976

688

(70%)

10

2008

897

636

(71%)

889

570

(64%)

1998

760

29

315

(41%)

1994

692

76

(11%)

2006

Source: Kontali

Number of commercial licenses per holder category

12%

31%

40%

2-5

licenses

16%

6-10

licenses

11-30

licenses

>30

licenses

1 license

1%

CONSOLIDATION IN NORWEGIAN FISH FARMING

Number of all licenses per holder category

IN 2011, 40% WITH MAJOR PLAYERS

20

Cermaqs Strategic Positioning

• Large farming consolidation last 15

years – opportunities in Norway &

Chile also forward

• Main focus on growth in feed and

farming – continue developing value

added product business in Chile

• R&D as an important part of value

creation

- New functional feeds to secure fish

health continuously under development

- Alternative sources to produce fish oil

explored

• Participation in industry development

Farming &

primary

processing

Value

added

products

Feed Feed

ingredients

# of players producing 80% of volume

Source: Kontali

0

10

20

30

40

50

60

70

1995 2000 2005 2010 2015

Norway

Chile

Scotland

Canada

Sales and

marketing

21

Key strategic objectives – Group

CERMAQ

Be a leading global aquaculture company within Salmonids with

presence in all major production regions

Continue developing a coordinated feed and farming group

Strong operational and financial performance on key value

drivers

Participate in the in the salmonid industry consolidation to the

extent this generates shareholder values

Secure a strong financial position with flexibility during cycles

and be able to reap opportunities

22

Agenda




23

Mainstream leadership philosophy

Competence and decision-making close to the fish

Lean business management at BU level

Autonomous OpCos

Committed and educated site management

Highest possible operating result through

Biological performance

Optimization

Benchmarking

Prudence

Efficient procurement

24

Cost leadership strategies – various approaches

SHORT TERM LONGER TERM LONG TERM

MAIN FOCUS

• Cost per kg fish

harvested

• Cost per kg fish

over time/across

cycles

• Sustainability, i.e.,

having lowest

possible risk

adjusted cost

IMPLICATIONS

• Low cost (as long as everything works…)

• Close to the limit of risks and regulations

• Low average cost over time

• Possibly higher cost short term

• Might give higher short term costs

• Should over time give lower costs and less volatility

WE STAY FAITHFUL TO OUR LONG-TERM STRATEGY

25

Mainstream cost optimization: Critical to focus on the right elements

FOCUSING ON THE RIGHT ELEMENTS KEY DRIVERS FOR OPTIMIZING COST

Preventive fish health

Smolt quality

Optimal feed and nutrition

HIGHEST EBIT

=

EBIT per kg

x

Volum

LOWEST POSSIBLE

COST PER KG

26

The main driver in cost optimization is biological performance

THE TWO MAJOR COST ELEMENTS EFFECTS ON PERFORMANCE

Increased mortality by 5%-points

increases costs by NOK 0.35-0.70 per

kg

Effects on total cost from a 10%

increase in cost

Increased feed conversion of 5%

increases cost by NOK ~0.50 per kg

5% lower MAB utilization reduce EBIT

by NOK ~1 per kg

Feed cost Smolt cost

4%

1%

27

Dedicated focus on fish health across organization

Mainstream Central fish health team

• Research on critical topics (e.g., ISA, SRS,

Parvicapsula)

• Developing policies and best practice

• Staying updated on external research

• Assisting the OpCos on case-by-case basis

Extensive fish health work in each OpCo

• Monitoring fish health status

• Preventive measures

• Responding to issues

• Operating procedures and policies

Functional team

• Global functional team

• Coordinate best practice and competence

Mainstream Central

fish health team

Extensive fish health

work in each OpCo

Functional team

28

Current fish health status

• IHN - depopulated two sites

• Low sea lice levels

• Winter Ulcers is reducing premium

percentage

• Algae and low Dissolved Oxygen

levels (DO)

MS Canada

• Overall status is good

• Mortality is low

• Low sea lice levels

• PD in Finnmark

MS Norway

• Increasing Caligus levels

• SRS creates problems

• Increased antibiotic use

MS Chile



29

Preventive measures per country

• IHN: Screening, reduced handling

and vaccination

• Winter Ulcers: Vaccination, vitamin

C trials and antibiotics trials

• Fungus: Improved handling and

water quality

• Algae and DO: Close monitoring and

preventive measures

• Stress reducing measures

• Education and competence building

• Working on smolt sourcing

• Harvesting trout before summer

• SRS vaccine trials

• Antiparasite treatments

• Extensive use of functional feed

MS Canada MS Norway

MS Chile



30

Industry cost leveling out and increasing since 2005

VOLUME, PRICE AND COST IN SALMON FARMING

Source: Kontali

31

”Sharpen Mainstream” – an improvement process in Mainstream

Sharpen

focus PROCESS

• Bottom-up process

• Generating support and enthusiasm

• Input to cost-reducing and performance-enhancing

measures from all levels in the OpCos

KEY TOPICS

• Competence

• Biological performance

• Competitive prices on supplies and services

• Re-thinking logistics and processes

EXECUTION

Sharpen

mindset

Sharpen

position

32

Focus on developing operational excellence in Finnmark

Learn to tackle the more challenging climatic

conditions

Develop organization to handle volume-

doubling

Benchmark and stabilize operational

performance

0

5

10

15

20

25

0

5

10

15

20

25

14

15

NORDLAND FINNMARK

EX-CAGE COST PER KG FOR ALL HARVESTED SITES 2004G UNTIL TODAY (NOK)

2010 2011 2012e 2013e

Smolt 5,5m 8,5m 7,4m 7,5m

Harvest 15kt 16kt 27kt 32kt

Growth 35 % 4 % 70 % 20 %

13

33

Agenda




34

Key topics

Salmonid fish feed is an enabler in feeding the world and

EWOS has an increasingly stronger position

Raw material sourcing is challenging, but EWOS has a

unique set-up in understanding and generating value from

raw material transformation

Large feed volumes with significant elements of seasonality is

logistically challenging – EWOS with new technology to

increase flexibility and capacity

35

Global aquaculture volumes will increase

SUSTAINABLE AND EFFICIENT

Low resource usage

Efficient energy retention

FEEDING A GROWING POPULATION

36

Salmon feed is a relatively small part, but a front-

runner in the global aqua feed market

GLOBAL AQUA FEED MARKET (MILLION TONNES)

86%Other

aqua feed

Salmon

feed 14%

100% = 23 MILLION TONNES

Front-running the industry

• More industrialized than any other aqua feed segment

• Consolidated from decades with fierce competition in innovation and operation efficiency

• High barriers to entry from significant investments, knowledge requirements and distribution capacity

Source: EWOS

37

EWOS has strengthened its position through profitable growth

876788

37%

2010

35%

2009 2012E

1,227

2011

1,081

CAGR: 15.9%

33%

EWOS market share*

EWOS volume (1000 tonnes)

EWOS SALMONID FEED VOLUMES FINANCIAL PERFORMANCE

* In salmonids

2009 2010 2011

23.2%

6.7%

19.1%

15.1%

6.9% 6.1%

ROCE

EBIT-margin*

* Before unrealised fair value adjustments

38

Current capacity and competitive edge support strong entry barriers

Current

capacity

1.5 million tonnes

EWOS “HARDWARE” –

CAPACITY IN PLACE

EWOS “SOFTWARE” –

BUILDING COMPETITIVE EDGE

Replacement

cost

NOK 4.5 billion

Significant installed capacity in good shape, with an

assumed replacement cost of NOK 3 per kg

Operational excellence

Logistical excellence

Economies of scale

Market orientation

Brand leverage

Building competitive edge through transformation of

commodity-like raw materials to customer oriented

advanced nutrition solutions

Nutritional excellence

39

Key topics









40

2011, USD million

Significant amounts of raw material pass through EWOS

EWOS RAW MATERIAL SOURCING VALUE

57 Micro

ingredients

Total 1,195

Other 54

Carbohydrates/

binders 52

Vegetable

proteins 229

Oils 394

Marine

proteins 34% 409

33%

19% Represents

more than one

million tonnes

of raw material

41

High volatility and increased raw material prices

RAW MATERIAL MARKET PRICES, 2002-2012 (NOK PER KG CIF)

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

10,00

11,00

12,00

13,00

jan

.02

jan

.03

jan

.04

jan

.05

jan

.06

jan

.07

jan

.08

jan

.09

jan

.10

jan

.11

jan

.12

Fish Meal

Soy Protein Concentrate

Soy (non GMO)

42

Category management

Focus on category management

Global knowledge of the raw material markets

To meet these challenges, EWOS has organized a global

and specialized sourcing function

EWOS APPROACH TO RAW MATERIAL

SOURCING SOURCING AND PURCHASING TEAM

Leading raw material skill set

High commercial and biological competence

and knowledge

Understanding the drivers in the market

R&D knowledge base – EWOS Innovation

Develops operational tools for better selection

of optimal raw materials

Ensuring best raw materials and suppliers

43

EWOS’ knowledge enables significant cost avoidance on

raw material sourcing – improves competitive position

4.3%

TOTAL COST AVOIDANCE

NORWAY 2011

USD 1.2 BILLION

GLOBAL RAW MATERIAL

SOURCING VALUE 2011

Note: Cost avoidance is defined as EWOS price vs. spot price in the Norwegian market

44

Large variations in raw material availability and quality

Proportional fish growth for various fish meals

FISH GROWTH WITH DIFFERENT FISH MEALS

45

Controlling and optimizing raw material sourcing is

handled through EWOS Innovation

You cannot

make high

quality feed

from low

quality raw materials!

46

PREDICTION CYCLE RAW MATERIALS

EWOS Innovation with competence to evaluate

prospective raw material batches

«Fm-tool»

predicts the

potential for

growth in

fish in any selected

fish meal

sample –

before we

sign the contract

47

Functional feed – only(?) way to influence fish in production

STOCKING

HARVEST

SEA PRODUCTION: 15-18 MONTHS

33.000 MEALS SERVED TO EACH FISH

EWOS obvious strategic platform is to develop products that can influence the fish positively

through oral delivery

1 BILLION SALMONIDS SWIMMING AROUND WITHOUT

“SUPERVISION OR INFLUENCE-POTENTIAL”

49

EWOS’ knowledge enables increasingly improved

product-mix towards higher margin products

683611 623 595

611

709749

753

550

589

58

2004

636

6%

41

2010

876

37%

326

2009

788

26%

492

582

2008

902

16%

149

847

12%

206

98

2007 2006

777

9%

68

2005

670

9%

2003

662

6%

39

2011

1,081

46%

2001

723

5%

40

2002

651

6%

39

Functional feed share% EWOS functional feed EWOS other feed

EWOS FUNCTIONAL FEED (1000 TONNES)

50

Key topics









51

Distribution – some challenges

Feed volume in peak month

– Average volume x 2

– For large companies x 4.5

– Up to 100 tonnes/day

Delivery 1-3 times a week

Storage capacity varies from 50 to 600 tonnes

52

Distribution – increased capacity

• Maximizing what we already have

- Cabin Factor

- PIT – Stop

• A new Lemon

- Flexible trade (Blue Line)

- Not specialized

- Lower cost

- Two In – Two Out

53

Agenda




54

Introduction to Mainstream Chile

Harvest 2012e: 54,000 tonnes (rwe)

2,200 employees

63 sea water licenses in regions Los Lagos,

Aysén and Magallanes ( X, XI and XII)

Strong value-add processing capacity

Focus on performance Focus on margin

55

Four cornerstones of the Chilean operations

3 regions 3 species

On-shore

smolt

Preventive

fish health

56

Stocking plan:

2.2 mill Atlantics smolt/year

Harvest volume:

- 3,000 t in 2013

- Avg. 10,000 t from 2014

Employment: ~120 people (direct/indirect)

Total investment

- USD 25 million

- Net investment reduced with 36% tax benefit

Current status:

Fry grows according to plans

Pto Montt

Aysén

Pta Arenas

53° 10′ 1″ S, 70° 56′ 1″ W

Pto. Natales

Access to unutilized organic growth opportunities at acceptable cost

Ensure risk diversification

- Work in an isolated area

- Better sanitary conditions

Región de Magallanes (XII): Update on operations

KEY HIGHLIGHTS AMBITIONS

3 regions

57

Region XII: Status and experience so far

• First stocking was 28. December 2011

• Two full sea sites currently stocked with Atlantics

• Lower than expected sea water temperatures

• Low mortality

• Good growth

3 regions

58

-1,50

-1,00

-0,50

0,00

0,50

1,00

1,50

2,00

2,50

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012YTD

USD

/ KG

RW

E

Gross margin per specie

Atlantic

Coho

Trout

Strategy on species

• Disease resistance different between the three species, specially ISAv & sealice

• Better usage of licenses considering the new regulations

• Ability to be present in different markets with different products (USA, Japan, Russia, Brazil)

3 species

59

Historical Coho and Trout price development (1980-2012) 3 species

60

Coho price and margin development 3 species

COHO PRICES AND GROSS MARGIN 2001-2012 YTD

61

Challenging market outlook for the 2012/13 season

High inventory of

frozen salmon

Typical annual Coho

consumption in

Japan: 90,000 tons

(HG)

Expected Chilean

Coho production in

2012/13: ~115,000

tons (HG)

Reduced catch of

Sockeye in Alaska,

97,000 tons vs.

113,000 tons in 2011

Reduced Sockeye

export to Japan

MONTHLY INVENTORY OF FROZEN SALMON IN JAPAN (TONNES) COMMENTS

3 species

120,000

110,000

100,000

90,000

80,000

2008 2007 2006 2005

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

2012 2011 2010 2009

62

All Atlantic and Trout smolt are now on-shore On-shore smolt

Mainstream Broodstock

100% in Fresh Water

Full individual screening

for all relevant diseases

Mainstream eggs are sent

to six different MS

incubation facilities

Mainstream Atlantic and

Trout incubation/smolt

facilities are land-based

and 100% isolated

The Mainstream on-shore

smolt cycle ensures high

quality smolt free of

diseases

1.6

3.0

Confluencia

3.0

3.5

2012 production

2.0

Trafun

1.5

4.0

Max production

Providencia

Cipreces

18.3

1.7

1.8

4.0

12.8

1.5

3.5

Collin

Rio Pescado

PRODUCTION AND CAPACITIES (MILLION SMOLTS) PRODUCTION CYCLE

63

Current sanitary status

More challenging sanitary situation YTD

2012 compared to 2010 and 2011

Increased mortality due to bacterial diseases (SRS), hence increased usage of antibiotics

Increased sea lice level and anti parasite

treatment

Reduced effectiveness of anti parasite

treatments

0

3

6

9

12

15

18

jul-

12

jan-

12

jul-

11

jan-

11

jul-

10

jan-

10

jul-

09

jan-

09

jul-

08

Trout

Atlantic

Coho

MORTALITY (PERCENT IN INDUSTRY) CHALLENGING SANITARY SITUATION

CALIGUS (PARASITE PER FISH IN INDUSTRY) USE OF ANTIBIOTICS (FULL-YR, GR/TONNES)


0

200

400

600

800

2008 2009 2010 2011 2012 YTD

Mainstream

Industry

64

Mainstream’s fish health plan going forward

Re-definition of capacities, species, time

of stocking of Neighborhoods / Areas /

Sites

To be based on analysis of historical data

Identify connections between diseases/

areas/sites neighbors and confirm those with statistical facts

Stop SRS - project

Caligus

Develop a system for closed treatment

(Best) alternation of available treatment

products

Use of functional feed

Test of vaccine

Test of skirts around cages

SRS & IPN

Use of oral vaccine across the sites

Continue use of functional feed against

SRS and implemented across the sites as

policy

Use of Boost post transfer to sea

LONG TERM SHORT TERM


65

Sanitary fallowing program, January 2012

- Extended to 2016

Health management and biosecurity regulation required to loading ports and unloading ports (Resolution

302), February 16th, 2012

- Establish b iosecurity measures. Obligatory from March, 2013

Certification and other health requirements for import of aquatic species (Decree 72), March 24th, 2012

- Risk analysis required before import eggs from other countries

- Chilean authority has to approve sanitary certification issued by origin country

Changes to the Fisheries Act (Decree 430), April 2nd , 2012

- Establish “macrozones”

- New concessions suspended in X and XI regions

- Establish new penalty and and license rental payments

Caligus (Resolution 1141), May 29th , 2012

- Obligatory closed system will not be before than May, 2013

- Sites with > 9 Average total adult parasites, it is declared, “High Infestation Site”: No more than 3 events in a six weeks period (non compliance => mandatory harvest)

Mortalities handling and sorting (Resolution 1468), July 28th, 2012

- Obligatory classification (twice a week)

- Daily removal of mortalities

- Necropsy (twice a week)

Update on regulatory framework in Chile Preventive fish health

Establishment of “macrozones”

New concessions suspended in X and XI regions

Sites with > 9 avg. total adult parasites is declared as “High

Infestation Sites”

No more than 3 events in a six weeks period

Non compliance => mandatory harvest

66

Summary of focus in the Chilean operations

3 REGIONS

3 SPECIES

ON-SHORE

FRESH

WATER

OPERATIONS

PREVENTIVE

FISH HEALTH

Controlled growth in Region XII

Diversifying biological and market risk by maintaining three

species

Broodstock, trout and Atlantic smolt production moved on shore

Structured approach to fish health with both short-term and

long-term strategies

67

Agenda




68

Closing remarks

A walk to the boat (follow the guides)

Boat trip to the facilities

Further info to be provided on the boat

Presentation of Mainstream Norway

Q&A from the presentations

Touring the facilities

And then safely to the airport

Cermaq

Capital Markets Day 2012 – Part II

Site visit Bodø, 19. September 2012

70

Agenda – Capital Markets Day 2012 – Part II

Presentation Mainstream Norway Site visit – Oksøy sea farm Site visit – Dyping Hatchery

71

Overview Mainstream Norway

• 44 licenses in operation

• Estimated 2012-harvest: 52kt

• Growth 32%

• Licenses fully utilized in Nordland and fully

utilized in Finnmark from August 2012

• Main markets are Russia and EU

2011

Harvest volume 38

Turnover 1.120

EBIT 217

Growth (%) 3 %

72

Nordland – complete aquaculture production

Nordnorsk Stamfisk AS

- JV with Aqua Gen, Nordlaks and Nova Sea

- Secure local production and supply of roe

Three hatcheries in Nordland, covering 50 %

of stocking requirements

New hatchery in Steigen under planning to

boost own smolt production by 8.4 mill

17 licenses in Northern Nordland

Two processing plants: Skutvik and Alsvåg

Broodstock/eggs Hatchery On growing Processing

73

Main advantages in Nordland – Geography

Deep fjords with unique sites

Limited number of neighbors

makes long term biosecurity and

sea lice strategy easier to

implement

Opportunity to develop new

production cluster in Ofoten

(Narvik) with Ballangen Sjøfarm

(2 licenses)

74

Practicing risk adjusted cost leadership in Nordland

Not the most aggressive when it

comes to short term cost leadership

Pay a risk premium in some cost elements

Avoid mixing well boats

Conservative when it comes to

equipment and size

- Larges cages limited to 120m in diameter

- Still use feed automats at some sites

- Feeding is done at the cage

- Largest site is 5,400 tonnes MAB

Some biological statistics

- Not used antibiotics since 1992

- Sea lice treatment cost was NOK 0.20

per kg (lwe) last generation

75

Main advantages in Nordland – People

Mainstreams leading principle:

Operational decisions to be decided

as close to the cage as possible

Good site managers is the key to

ensure operational success

83 % of employees have Craft

Certificate

Annual courses at the University of

Nordland for site managers to

improve competence and update

skills

Extensive internal and external

benchmarking

76

MAB UTILIZATION* FOR NORWEGIAN FARMERS, 2011

MSN Nordland – the best farming region in Norway?

MSN NORDLAND WITH THE BEST MAB-UTILIZATION IN 2011

MSN Nordland

MS Norway

Average sample

200 400 600 0 1,400 1,200 1,000 800

*Tonnes produced per normal license

Source: Kontali

77

MSN Nordland with low mortality

DEVELOPMENT IN MORTALITY (PERCENT)

Focus on preventive fish

health and reduced stress in

smolt production and during

stocking has given results

Decreased mortality in

Mainstream

Significant improvement of

production parameters

Reduction of fixed costs

15%

11G

14%

16%

5%

Est. 12G

4%

8%

10G

MSN NL

Industry average

Source: University of Nordland

78

Large potential for future growth in Nordland

Northern Nordland with significant

potential for future growth

Strong biological results

- No disease issues

- Low levels of sea lice

Available areas

- Opportunity to expand within existing sites

- New areas are available

Economy of scale for well boat and

processing will secure cost optimization

…but new licenses are needed

79



80

Oksøy Sea Site

• The first smolt was stocked in 1992

• 1,000 tons harvested in 1994

• Maximum allowed biomass 5,400 tons

• Total production approx. 6,000 tons lwe

• Stocking of 1.2 mill. smolt every second year

• One site manager and 5 staff

• The fallow period is 12 months at this site

81

FarmBase 500

• The FarmBase 500 is a feed barge

constructed and delivered by Marine

Construction

• Central feeding system which feeds 12 cages

at the same time

• 380 tons silo capacity

• When the site is at peak biomass, we feed 50

tons per day

• 4 Cabins with separate bathroom

• Sauna and fitness room

82

Testing of Polarcirkel EcoNet

• High durability and escape prevention

• This long-life net technology used to make

over 4,000 fish farming nets in Japan the

last 20 years

• Also eliminates the use of antifouling paints

and ongoing net changes

• Easily recyclable

• Technical data;

- PolarCirkel 400 mm -120m.

- EcoNet:

- Depth of cylinder 17.4 m

- Depth of bottom 9.6 m

- Circumference of net 118.8 m.

83

Dønnland – Well Boat

• Next generation wellboat which will be put in operation late September 2012

• 1,500 m³ capacity and state of the art technology

• First type of well boat that fulfills the requirements in the new regulation

currently on hearing and supposed to come into force in 2017

• Full recirculation of water

• Sea Lice filter both on intake and outlet of water

84



85

Mainstream Norway – Dyping Hatchery

• Annual production of 2.5 mill. smolt

split 50/50 between S1 and S0

• Dyping was amongst the first

hatcheries in Norway with an electric

generator installed to produce

electricity from the water intake

• The generator cover 80 % of the

needed electricity of the production

• Uses sea water during winter time to enhance growth

86

Grading and vaccination

• Grading of the fish is essential in

order to have fish with equal

performance and good growth

• We also vaccinate all the fish

manually before transfer to sea

• In one day 130,000 fish are

vaccinated

• Laboratory and quality control are

crucial to secure good performance and smolt quality

87

Growth hall

• In this hall we have 100 % control of

temperature to maximize the growth of

the fish

• Four tanks of 190 m3 volume and

maximum biomass of 30 tons of fish

• The water temperature never exceeds

14°C because too strong growth

increase the risk of deformities

• 4,500 l/min of warm water

88

Outdoor area

• The outdoor area consists of 10 tanks

which uses natural tempered water

• In the winter time sea water may be

used to boost growth on the smolt

before transfer to the sea sites

• The seawater is pumped up from 100

meter deep and the temperature is

approx. 7°C year around

• The seawater pump station has a capacity of 30,000 l/min

cermaq capital markets day

Documents

production of feed

mainstream ewos

salmonids mainstream

farming licenses20072008

production of fish feed

ebitkg nok

business units ewos

tonns mainstream