Pelagia Holding AS Bond Investor Presentation November 2020
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Pelagia Holding AS Bond Investor Presentation November 2020
Disclaimer (I/II)
THIS DOCUMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES
OF AMERICA, ITS TERRITORIES OR POSSESSIONS, AUSTRALIA, CANADA, JAPAN, HONG KONG OR SOUTH AFRICA OR TO ANY RESIDENT THEREOF, OR ANY
JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL. THIS DOCUMENT IS NOT AN OFFER OR AN INVITATION TO BUY OR SELL SECURITIES.
This presentation (the "Presentation") has been prepared by Pelagia Holding AS (the "Issuer") solely for information purposes for use in presentations to potential investors in connection
with the contemplated offering of senior unsecured bonds (the "Bonds") by the Issuer. The joint managers for the contemplated offering of the Bonds are DNB Markets, a part of DNB Bank
ASA and Pareto Securities AS (jointly the "Managers"). This Presentation and its contents are strictly confidential and shall not (in whole or in part) be reproduced, distributed or passed on,
directly or indirectly, to any other person (excluding investment professional's advisers) without the prior written consent of the Managers or the Issuer.
Only the Issuer and the Managers are entitled to provide information in respect of matters described in this Presentation. Information obtained from other sources is not relevant to the
content of this Presentation and should not be relied upon.
This Presentation is for information purposes only and does not in itself constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein.
This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Issuer and its subsidiaries (the "Group") and/or the industry
in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes",
"expects", "predicts", "intends", "projects", "plans", "estimates", "anticipates", "targets" and similar expressions. The forward-looking statements contained in this Presentation, including
assumptions, opinions and views of the Group or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause
actual events to differ materially from any anticipated development. Neither the Issuer, nor any of its parent or subsidiary undertakings or affiliates or any such person's directors, officers,
employees, advisors or representatives (collectively, the "Representatives") provides any assurance that the assumptions underlying such forward-looking statements are free from errors,
nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Issuer
and its Representatives assume no obligation, except as required by law, to update any forwards-looking statements or to confirm these forward-looking statements to the Group's actual
results. The Presentation must be read in conjunction with other offering material, including the term sheet and application Form.
This Presentation has only been made and shall only be made available to a limited number of prospective investors (the "Recipients"). The Recipients are reminded that the Presentation
contains confidential and sensitive information. By accepting this Presentation, each Recipient agrees to cause their respective Representatives to equally observe the commitments
described in this notice and to use the Presentation only to evaluate an investment in the Bonds and not disclose any such information to any other party.
An investment in the Bonds involves a high level of risk, and several factors could cause the actual results or performance of the Issuer to be different from what may be expressed or
implied by statements contained in this Presentation. Each Recipient acknowledges that it will be solely responsible for its own assessment of the market and the market position of the
Issuer, and that it will conduct its own analysis and be solely responsible for forming its own view of the potential future performance of the Issuer and the Group's business. The content of
this Presentation shall not be construed as financial, legal, business, investment, tax or other professional advice. Each Recipient should consult with its own professional advisers for any
such advice. Each Recipient must carefully read and consider the risk factors described in slides 54 to 61 of this Presentation.
2
Disclaimer (II/II)
No external due diligence investigations (neither legal, commercial nor technical) have been carried out by the Managers or by any other parties in connection with the Bonds. The
Recipients acknowledge and accept the risks associated with the fact that only limited investigations have been carried out. The information contained in this Presentation has been
obtained from the Issuer or its Representatives. While the information herein is believed to be correct, in all material respects, the Issuer and the Managers, including their respective
Representatives (the "Covered Persons"), make no representation or warranty, expressed or implied, as to the fairness, accuracy or completeness of the information contained in this
Presentation, or regarding any other additional information which has or will be made available to the Recipients in connection with any investment in the Bonds. Accordingly, no Covered
Person accepts any liability whatsoever for any loss of any nature arising from use of this Presentation or its contents or the additional information referred to above or otherwise arising in
connection therewith, except as may follow from mandatory law.
The Presentation reflects the conditions and views as of the date set out on the front page of this Presentation. The information contained herein is subject to change, completion, or
amendment without notice. In furnishing this Presentation, no Covered Person undertakes any obligation to provide the Recipient with access to any additional information.
THIS PRESENTATION HAS NOT BEEN REVIEWED BY OR REGISTERED WITH ANY PUBLIC AUTHORITY OR STOCK EXCHANGE, IS NOT A KEY INFORMATION DOCUMENT
("KID") UNDER THE REGULATION 2016/653/EU (THE "PRIIPS REGULATION") AND DOES NOT CONSTITUTE A PROSPECTUS UNDER THE EU PROSPECTUS DIRECTIVE
(DIRECTIVE 2017/1129/EU), AS AMENDED. NEITHER THE ISSUER, NOR ANY MANAGER, HAS AUTHORIZED ANY OFFER TO THE PUBLIC OF SECURITIES, OR HAS
UNDERTAKEN OR PLANS TO UNDERTAKE, ANY ACTION TO MAKE AN OFFER OF SECURITIES TO THE PUBLIC REQUIRING THE PUBLICATION OF AN OFFERING
PROSPECTUS, IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE EU PROSPECTUS DIRECTIVE (DIRECTIVE 2017/1129/EU), AS
AMENDED. NO OFFER OF ANY SECURITIES IS DIRECTED TO PERSONS IN ANY JURISDICTION WHERE SUCH AN OFFER WOULD BE IN VIOLATION OF APPLICABLE LAWS OR
WHOSE ACCEPTANCE OF SUCH AN OFFER WOULD REQUIRE THAT (I) FURTHER DOCUMENTS ARE ISSUED IN ORDER FOR THE OFFER TO COMPLY WITH LOCAL LAW OR
(II) REGISTRATION OR OTHER MEASURES ARE TAKEN PURSUANT TO LOCAL LAW.
Please also note that the Issuer following the bond issue may publish a listing prospectus. Such prospectus will include additional information which is not included in this Presentation.
This Presentation and the information contained herein do not constitute an offer of securities for sale in the United States and are not for publication or distribution to U.S. persons (within
the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the "US Securities Act")). The securities proposed to be offered in the Issuer have not been and will not
be registered under the US Securities Act and may not be offered or sold in the United States or to U.S. persons except pursuant to an exemption from the registration requirements of the
US Securities Act.
This Presentation is subject to and governed by Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo
District Court as excusive legal venue.
By receiving this Presentation, each Recipient agrees to be bound by the terms and conditions set forth above and represents that it is a qualified institutional or other professional investor
who is sufficiently experienced to understand the aspects and risks related to an investment in the Bonds, and who will obtain additional expert advice where and when needed.
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Summary of risk factors (I/II)
The following sets out a summary of key risks facing the Group. Before making an investment decision with respect to an investment in the Bonds, investors should carefully consider the
risk factors set forth below and as further described on page 54-61 herein, and all other information set out in the transaction documents, including this Presentation.
RISKS RELATED TO THE INDUSTRY IN WHICH THE GROUP OPERATES
• The Group operates in a globalized industry where a significant share of its products are exported internationally. As a consequence, the prices for the Group's products are affected
by global supply and demand for seafood.
• Wild caught fish is a natural resource which naturally fluctuates over time. The total allowable catches of wild caught fish will be limited by the quotas allotted by the Norwegian, United
Kingdom and Irish governments, and the occurrence of the different fish stocks will additionally fluctuate geographically. Fluctuations of the fish stock can thereby create
unpredictability in production levels and/or prices for the purchase of raw materials.
• The Group operates in a global and highly competitive industry, which exposes the Group and its operations to competition from domestic and foreign seafood producers.
• The industry in which the Group operates in is highly politically influenced. The industry has an environmental footprint which is often debated politically. In this regard, the Norwegian,
United Kingdom and Irish authorities can impose restriction that limit access to raw material. Furthermore, the access to current and/or new export markets may be limited by the
authorities.
• The Covid-19 situation may adversely affect the Group's risk profile, including, but not limited to, logistical and transportation challenges, availability of foreign workers (crew and
seasonal employees), currency fluctuations and an increase in insurance costs and credit risk.
RISKS SPECIFIC TO THE GROUP AND THE GROUP'S BUSINESS ACTIVITIES
• The Group is dependent on supply of raw material in order to deliver products to its customers, and no guarantees can be made that the Group will secure sufficient volumes going
forward. Furthermore, any increase in prices for raw materials could adversely affect the Group's business.
• Both access to raw material and customers' demand for products are seasonal. As a consequence, there can for certain products sold by the Group be a gap between access to raw
material and when the products are sold and paid for, resulting in the need of substantial working capital year round.
• The Group is dependent on retaining and attracting qualified people for its operations, and failure of such could harm its business going forward.
• Use of technology is becoming increasingly important for the Group to minimize costs and stay competitive, and there can be no guarantees that the Group will be positioned to utilize
new technology.
• A significant amount of the Group's annual operating expenses are denominated in NOK, while a significant amount of the Group's total revenue are denominated in other currencies.
As a consequence, fluctuations in exchange rates could have an adverse effects on the prices for the Group's products, and result in lower profitability for the Group.
4
Summary of risk factors (II/II)
RISKS RELATED TO LAWS AND REGULATION
• A significant amount of the Group's products are exported, making the Group reliant on continued export to current or new export markets. Additional restrictions in the Group's main
export markets, or increased toll or other taxes, could affect the Group's ability to supply such markets with its products on favorable terms, if at all.
• Operations in politically unstable regions and legal systems all over the world may cause business interruptions, reputational damage and compliance risks. The political
circumstances or inadequacies of the legal systems and law enforcement mechanisms in certain countries in which the Group operates may have a material negative impact on the
Group's reputation, revenue, cash flows and financial condition.
• A failure by the Group to meet customer requirements may lower the demand for its products, and exposes the Group to the risk of product liability claims from its customers as well
as end-consumers. Should any contamination or other food safety issues related to the Group's products occur, this could have both financial and reputational consequences.
• There is a risk that certain events may occur for which only partial or no indemnity is payable under the Group's insurances.
RISKS RELATED TO THE BONDS
• The Issuer is a holding company and is dependent upon cash flow from its subsidiaries to meet its obligations, in general and under the Bonds. Even though the Issuer may have
sufficient resources on a consolidated basis to meet its obligations under its debt agreements, it may not be able to meet such obligations if the Issuer's subsidiaries are unable to
transfer cash to the Issuer.
• The Bonds will not be secured by any of the Issuer's assets. Your right to receive payments under the Bonds will be effectively subordinated to claims of the Issuer's existing and
future secured creditors.
• None of the Issuer's subsidiaries will guarantee or have any obligations to pay amounts due under the Bonds or to make funds available for that purpose. Generally, claims of
creditors of a subsidiary will have priority with respect to the assets and earnings of the subsidiary over the claims of creditors of its parent entity, including by holders of the Bonds.
The Issuer's creditors (including the holders of the Bonds) will have no right to proceed against the assets of such subsidiary.
• The market price of the Bonds could be subject to significant fluctuations in response to actual or anticipated variations in the Group's operating results and those of its competitors,
adverse business developments, changes to the regulatory environment in which the Group operates, changes in financial estimates by securities analysts and the actual or expected
sale of a large number of Bonds, as well as other factors.
5
Issuer characteristics
Issuer characteristics Confirmatory / verification work conducted
▪ Pelagia is a producer of pelagic fish products for human consumption, and a ▪ The Issuer will sign a declaration of completeness and conclude a bring
supplier of ingredients in all kinds of fish- and animal feed; protein down due diligence call with the Managers, among others confirming to the
concentrate, fishmeal and fish oil Managers that the marketing material in all material respect is correct and
complete, and that all matters relevant for evaluating the Issuer and the
▪ The Issuer is owned 50% by Austevoll Seafood ASA (listed on OSE: ticker
Transaction is properly disclosed in the marketing material
“AUSS”) and 50% by Kvefi AS. Kvefi AS is owned 73.371% by Kverva
Industrier AS and 26.629% by Egersund Fiskeri Investering AS ▪ Apart from legal counsel assisting with the bond legal documents, the
Managers have not engaged any external advisors to carry out any formal
▪ Board member Gustav Witzøe is the only beneficial owner of the Issuer and has
an indirect ownership of 36.3% in the Issuer through Kverva Industrier AS due diligence investigations (neither legal, financial nor commercial)
▪ Egersund Fiskeri Investering AS is owned 100% by the Group’s CEO Egil Magne ▪ 2019 annual report is the latest audited financial report and the 3Q’20 is the
Haugstad latest unaudited interim income statement and balance sheet statement
▪ The Group’s shares and debt instruments are not publicly listed. The Bonds
will be listed on Oslo Stock Exchange in connection with the bond issue
▪ Issuer characteristics: Overview of advisors to the Manager and the Issuer
▪ Issuer name: Pelagia Holding AS
▪ Country of registry: Norway
▪ The law firm Wikborg Rein Advokatfirma AS has assisted the Managers
with respect to Norwegian law in relation to the Transaction and will also act
▪ Country of operations: The Group has facilities in Norway, UK, Denmark, Ukraine
on behalf of the Trustee with respect to finalizing the Bond Terms and
and Ireland and have global sales
relevant documents
▪ Headquarter: Bergen, Norway
▪ Date of incorporation: 31st May 2013 ▪ The Issuer is being advised by the law firm Advokatfirmaet Thommessen
▪ Auditor: Pricewaterhousecoopers AS
AS
6
Table of contents
1. Transaction summary
2. Introduction to Pelagia
3. Business overview
4. Markets
5. Financials
6. Risk factors
7. Appendix
7
1. Transaction summary
8
Summary of the bond terms
Issuer: Pelagia Holding AS
Initial issue Size: NOK [750-1,000] million
Borrowing limit: NOK 1,500 million
Use of Proceeds: The net proceeds from the bonds shall be used for general corporate purposes
Tenor: 5 years
Status of the Bond: Senior unsecured
Issue Price: 100% (par value)
Coupon: 3mN + [•]bps, p.a., quarterly interest payments. NIBOR floor at 0%
Amortization: The bonds shall be repaid in full at final maturity date at par value
Call Options: Make-whole for the tenor of the bonds
General undertakings with respect to inter alia mergers, de-mergers, disposal of assets/business, insurances, arms’ length transactions,
Issuer’s Undertakings:
subsidiaries’ distributions etc., and certain regulations with respect to financial indebtedness, financial support and negative pledge
▪ Minimum book equity ratio of 30% for the Group
Financial Covenants:
▪ Interest coverage ratio for the Group > 4.0x
Change of Control: Bondholders’ put option at 101% if Austevoll Seafood and Kverva ceases to own and control minimum 2/3 of the shares in the Issuer
Shareholder Equity De-Listing Event: Bondholders’ put option at 101% if Austevoll Seafood ceases to be listed on an exchange
Listing: Oslo Børs within six months after the issue date
Reporting: Quarterly (unaudited) within two months and annually (audited) within four months
Trustee: Nordic Trustee AS
Governing Law: Norwegian law
Joint Lead Managers: DNB Markets and Pareto Securities
9
Transaction structure
Comments Simplified ownership structure
▪ Pelagia is contemplating a NOK [750-1,000]m unsecured
bond issue Kverva Industrier Egersund Fiskeri
AS Investering AS
▪ Use of proceeds is general corporate purposes which 73.371% 26.629%
may include among others funding of growth capex,
acquisitions, repay bank debt and diversify its funding
sources Austevoll Seafood
Kvefi AS
▪ Pelagia enjoys significant support from its current lenders ASA
and has in November 2020 agreed terms for a 50% 50%
refinancing of its existing bank debt
▪ Covenant package in the bond terms aligned with bank
facilities Pelagia Holding AS
Issuer
▪ All material debt located in Pelagia Holding AS
▪ Historically strong financial and operational support from
its owners Austevoll Seafood ASA and Kvefi AS
Sources and uses
Sources NOKm Uses NOKm
Unsecured bond issue [750-1,000] General corporate purposes [750-1,000]
1 Subsidiaries in the group. 100% owned unless otherwise specified 10Key credit highlights
Global market leader within production of pelagic fish products
Attractively positioned in the value chain with a diversified customer base and product offering
Fish as a sustainable and healthy source of protein is a megatrend
Clear ESG-profile with focus on 100% utilization of the fish
Conservative financial profile with stable financial performance and solid operational cash flow
Experienced management and backed by supportive owners with leading industry expertise
112. Introduction to Pelagia
12Today’s presenters
Egil Magne Haugstad CEO Rolf Andersen CFO
▪ CEO of Egersund Fisk and later Pelagia since 2001 ▪ CFO of Egersund Fisk and later Pelagia since 2012
▪ Previous experience from management positions in ▪ Previous experience from various positions within
Felleskjøpet and Gartnerhallen accounting and finance, including CFO of Akva Group
and Director in PWC
▪ MSc in Agriculture and Life Science from NMBU and MSc
in Business from BI ▪ MSc and state authorised auditor from Norwegian School
of Economics
▪ Owns 13.3% of Pelagia through Kvefi AS1
1 Kvefi AS owns 50% of Pelagia. Kvefi AS is owned by Kverva Industrier AS (73.37%), a subsidiary of Kverva, and Egersund Fiskeri Investering AS (26.63%), which is 100% owned by CEO Egil Magne Haugstad 13Pelagia is a leading global producer of pelagic fish products
Overview Strategically located facilities across three segments
▪ Pelagia is a leading producer of pelagic fish products for human consumption and a
supplier of fishmeal, fish oil and protein concentrate for animal feed
▪ The Food division exports most of its products, while Feed products are mainly sold 57% ▪ Fresh
in the domestic market to fish- and animal feed production ▪ Frozen
▪ Through Epax and the Health division, Pelagia offers concentrated marine-based Food ▪ Marinated
omega-3 fatty acids for dietary supplement and pharmaceutical preparations
▪ Pelagia’s owners are Austevoll Seafood and Kvefi, each holding 50% - Kvefi is in
turn owned by Kverva Industrier (73.4%) and CEO Egil Magne Haugstad (26.6%)
37% ▪ Marine protein
▪ Marine oil
Strong top-line growth and diversified revenue streams Feed ▪ Non-marine
ingredients
Revenue and EBITDA (NOKm) 2019 revenue per geography
8 119 2%
6 986 8%
5 701 6 122 6 369 7% 33% 6%
22% ▪ Omega 3
concentrates
605 663 652 871 649 29% Health
1,200
2016 2017 2018 2019 LTM Norway EU Africa FTEs
Revenue EBITDA
3Q’20 East Europe Asia Other x% % of LTM 3Q’20 revenue
14Pelagia purchases fish and trimmings to create fish-
based products for human and animal consumption
Purchase of whole pelagic fish and trimmings Sale and distribution of fish,
Processing of fish and trimmings at
from fishing vessels, collection of trimmings fishmeal and fish oils through three
25 processing facilities located in
from salmon farms in Norway and the UK, divisions to B2B customers
Norway, UK, Ireland and Denmark
and purchase of oil from South America world wide
Pelagic fish:
▪ Live in the pelagic zone of the ocean, neither
close to the bottom nor near the shore
▪ Typically swim in schools weighing hundreds of
tonnes
▪ Key species include Herring, Mackerel, Capelin
and Blue Whiting
15The Pelagia group was established to consolidate the Pelagic
fish producer industry
▪ Acquired Domstein ▪ Health segment ▪ Acquired 50% of Commitment to drive the
Norway Eiendom1 and established through Norsildmel and 67% marine industry forward
A leading producer Scombrus the acquisition of of Distral
Pelagic
of pelagic fish ▪ Bodø property sold Epax ▪ Seal Sands UK sale
AS Grow market share through
▪ Increased ownership ▪ HC Pelagia Health efficient and high-quality
in Rossyew to 100% factory in Måløy for sourcing
processing of cut-offs
for human
consumption Optimize allocation of raw
material and by-products
Implement operational
Welcon A leading producer of protein improvement to ensure best
concentrate, fish meal and oil
2015 2016 2017 2018 2019 2020
Invest AS in class production
2014 Maximize value from raw
material aligned with market
▪ Selje, Egersund and ▪ Kalvåg facility ▪ Epax capacity
demand
Måløy expansion, expanded to herring increase (2019-2021)
increasing capacity marinated products ▪ Træna expansion
within mackerel ▪ Bodø facility upgrade (freezing and Increase share of value-
filleting, marinating, storage) $ added products
freezing and storage
Egersund A leading producer
▪ Killybegs upgrade
Fisk AS of pelagic fish
▪ Increased Shetland Improve global sales reach
ownership to 75%
1 Acquisition carried out in two steps, partly in 2015 and 2016 16Pelagia is backed by supportive and committed owners with
leading industry expertise
50% 37%
ownership ownership3
▪ Austevoll Seafood is a globally integrated ▪ Kverva is a Nordic investment company
seafood company within pelagic, whitefish and specialising in aquaculture and marine
salmon, with activities in Norway, Chile, Peru and resources, Gustav Witzøe indirectly owns ~93%
the North Atlantic of Kverva AS
▪ Investments include ownership and operation of ▪ Acts as an active long-term industrial owners,
fishing vessels, fishmeal factories, canning offering companies knowledge and experience
plants, freezing plants, salmon farming, trade, combined with capital and a dynamic approach
processing, and sale and distribution of fish ▪ Kvefi AS, owned by Kverva Industrier (73.4%)
▪ Listed on Oslo Stock Exchange with a market and Egil Haugstad (26.6%), holds a 50% stake in
cap of NOK ~16.9bn Pelagia3
Revenue (NOKbn) Market Cap. (NOKbn) Revenue (NOKbn)2
22,8 23,3 22,6 30 18,8
15,5 18,0 NOK 25.6bn
25 2019 total assets2
20
2018 2019 LTM Q3 ’20 2017 2018 2019
15
EBITDA (NOKbn)1 EBITDA (NOKbn)2
10
5,2 4,3 3,8 5 3,7 4,2 3,8 NOK 13.5bn
0
2019 book equity2
2018 2019 LTM Q3 ’20 Jan 16 Jan 18 Jan 20 2017 2018 2019
1 Before fair value adjustments related to biological assets 17
2 Kvarv AS financials. Kvarv AS owns 93% of Kverva AS which again owns Kverva Industrier AS 100%
3 Kvefi AS owns 50% of Pelagia. Kvefi AS is owned by Kverva Industrier AS (73.37%), a subsidiary of Kverva, and Egersund Fiskeri Investering AS (26.63%), which is 100% owned by CEO Egil Magne HaugstadAttractively positioned in the value chain
Wild catch/ fish Sales and Secondary
Processing End-customer
production distribution processing
1 2 3 4 5
Pelagia buys pelagic fish The fish is processed by Finished goods are Further value-adding The final product reaches
from fisheries Pelagia with by-products stored and sold world- processing by the end-customer
being used to produce wide through external customers, depending on through retailers
fish meal and oil distribution, varying with product
product and end-market
18Pelagia contributes to a low carbon footprint and limited waste
generation through 100% utilization of raw material
A low carbon footprint and limited waste generation Commentary
CO2 emission of seafood at landing relative to European beef (relative greenhouse ▪ Catch, production and transportation of pelagic fish is environmentally
gas emissions at landing/slaughter per editable yield) friendly relative to many other food sources with a low carbon footprint and
efficient utilization of raw materials
Norwegian seafood products
100% ▪ Fish products have low greenhouse gas emissions relative to other animal
proteins, with products from pelagic fisheries having an especially attractive
Farmed Norwegian
salmon has an carbon footprint relative to other fish species
emission intensity that Herring and Mackerel ▪ Efficient raw material utilization as by-products from production of fish for
is 18% of that of beef have attractive CO2 human consumption is used to produce fish oil and meal – Pelagia utilizes
footprints representing
100% of the fish, including cut-offs and dead fish form the aquaculture
2% of that of beef and
~90% lower than salmon industry for production of fish oil and fish meal in the Feed segment
24%
18% 14% ▪ Strategically located processing facilities for food and feed, ensuring high
7% 6% 4% 2% 2%
efficiency and limited transport related emissions
▪ Pelagia’s production system is subject to various sustainable and
European Shrimp Salmon King Haddock Saithe Cod Herring Mackerel
beef crab
environmentally responsible manufacturing standards through several
certifications - Mackerel, North Sea herring, Norwegian spring spawning
+ herring and saithe are MSC certified
Utilization of by-products for fish meal and oil coupled with Selected certifications
optimal employment of production facilities ensures
100% utilization of the fish
Source: SINTEF – Greenhouse gas emissions of Norwegian seafood products in 2017 (dated 2020) 19Contributing to the UN sustainable development goals is a
natural part of Pelagia’s business
SOURCING FROM PROVIDING HEALTH CONTRIBUTING TO LOW ENSURING SUSTAINABLE
SUSTAINABLE FISHERIES PROMOTING PRODUCTS EMISSIONS AND WASTE FOOD PRODUCTION
▪ Wild catch and renewable resources ▪ Pelagia offers products with high ▪ A significant part of electrical energy is ▪ Pelagia alone processes enough
are the basis of Pelagia’s business, nutritional value contributing to already from renewable sources and seafood to feed every person on earth
the sustainable governance and improved mental and physical health – Pelagia is working on replacing fossil one healthy meal of fish a year
development of pelagic resources are products include food and ingredients energy with renewable energy sources
▪ Main products come from renewable
strictly followed by national regulations to dietary supplements and
▪ Focus on effective logistics through the pelagic resources or byproducts from
and control agencies pharmaceutical intermediates
value chain – limited need for seafood products
▪ Pelagia sources from sustainable and ▪ Proven health benefits including transportation as Food and Feed
facilities are strategically located in ▪ Pelagia mainly sources fish from wild,
well managed fisheries, all products improved inflammatory response,
proximity to one another and suppliers renewable pelagic stocks which does
undergo strict quality control ensuring cardiovascular, cognitive, eye, joint,
not require input factors such as soy
traceability from catch throughout the pre-and postnatal health
▪ Pelagia offers a sustainable product that could have been used directly for
value chain
▪ Pelagia is also committed to the health with a low carbon footprint and limited human consumption
▪ Norwegian stock management is and safety of employees and waste generation
▪ Contributes to reduced food waste
considered one of the best systems encourages staff to participate in
through 100% utilization of the fish and
worldwide physical activity through Pelagia Active
a longer shelf-life following processing
203. Business overview
21Pelagia operates across three divisions
Segment Food Feed Health
Share of LTM
57% 37% 6%
group revenue1
Processing of pelagic fish for human
Production of fishmeal, fish oil and Production of high-concentrate omega-3
consumption, mainly mackerel, herring and
Description concentrate of fish protein, mainly to the ingredients for the nutrition and
capelin caught in the Norwegian Sea and
Norwegian aquaculture industry pharmaceutical industries
the North Sea
14 500 10 209 1 74
Facilities Employees Facilities Employees Facility Employees
Production footprint
6,800 MT/day 116,000 MT 7,500 MT/day 135,000 MT 3-4,000 MT/year 3 types of
Production Frozen storage Production Meal & oil storage Production oil
7,3% 16,6% 16,1% 30,3%
6,1% 5,8%
18,3%
7,9%
EBITDA margin 10,8%
2018 2019 LTM Q3’20 2018 2019 LTM Q3’20 2018 2019 LTM Q3’20
Selected customers
1 LTM as of 3Q’20, excluding “other” 22Pelagia’s key end products are frozen whole fish, fishmeal
and fish oil and omega 3 oil
Food Feed Health
Fresh, frozen and marinated
pelagic fish products Fish meal and fish oil to the Omega 3-rich oils for the
animal food and fish feed pharmaceutical and nutrition
Typically frozen fish in 20kg industries industries
boxes
23Food 57%
Pelagia Food produces pelagic fish products for human
consumption globally
Pelagia Food Value chain
▪ Food is Pelagia’s largest division, representing 57% of LTM revenues Northeast Atlantic Landing and processing
pelagic fisheries at Pelagia facility
▪ Pelagia Food acquires pelagic fish from the Northeast Atlantic pelagic
fisheries, refines it and sells products for human consumption globally 100% fish
~22% utilization
▪ The segment operates 14 modern production and storage facilities located Feed
strategically close to key fishing grounds along the Norwegian Coast and on Sourcing through
Shetland1 in addition to a refining and marinating facility in Skagen, auctions and ~78%
Denmark agreement with
fish vessels and
▪ Key species are mackerel, herring and capelin, and product range includes trawlers 6,800 MT/day production
a wide range of frozen (mainly sold in 20kg boxes) and marinated products
▪ 95% of the products are exported to the global market, with e.g. Asia and Key financials (NOKm)
Africa key markets for mackerel while Eastern Europe and the Middle East
are important for herring Revenue EBITDA EBITDA margin
+1.9%
4 622
3 679 3 667 3 818 3 756 3 970
290 269
224 229
151
120
Magnus Strand 500 14 6,800 MT/day Sales to 60+ 3.3% 6.1% 3.9% 6.1% 7.3% 5.8%
Food COO FTEs Facilities Production countries
2015 2016 2017 2018 2019 LTM Q3’20
1 77% ownership in one factory on Shetland 24Feed 37%
Pelagia Feed is an important supplier of essential ingredients
for fish- and animal feed production
Pelagia Feed Value chain
▪ Feed is Pelagia’s second largest segment, representing 37% of LTM group Landing and processing Sale to feed producers
at Pelagia facility mainly domestically
revenues
▪ Pelagia Feed operates 10 facilities for production of fishmeal and fish oil Reduced
~47% cost
Food
▪ Production facilities with cutting edge technology are located across
Norway, UK and Ireland to ensure fresh and quality assured raw materials Collection and
~53% purchase
▪ The segment utilizes trimmings from filleting units in the Food production agreements
segment as raw material for production of feed ingredients, and also
collects fresh and ensiled by-products from third partiers 7,500 MT/day production
▪ Significant storage capacity in Egersund, Norway approved as a border
station for importation of protein and oils from third countries Key financials (NOKm)
▪ Product offering includes 2 different oil types and 6 different meal types
Revenue EBITDA EBITDA margin
which are mainly sold domestically to producers of fish- and animal feed
+0.8% 3 021
2 413 2 492
2 210 2 300
2 092
597
8 381
461
382 401
238
Arnt-Ove Hoddevik 209 10 7,500 MT/day Different 24.8% 19.3% 20.9% 16.6% 16.1% 7.9%
Feed COO FTEs Facilities Production products
2015 2016 2017 2018 2019 LTM Q3’20
25Health 6%
Epax is a leading global brand of premium omega-3
ingredients to the nutrition and pharmaceutical industries
Pelagia Health (Epax) Value chain
▪ Epax is a leading global brand of premium omega-3 ingredients for dietary Refinement and Sale of premium
concentration of fish oil omega-3 ingredients
supplements and pharmaceutical intermediates to some of the most
renowned retail brands in the world Plan to increase
-
▪ Pelagia acquired Epax from FMC in 2017 with the aim of increasing the internal sourcing
Food
market value of Pelagia’s pelagic resources through a strong brand and new
production resources and benefit from vertical integration Fish oil from 1 Epax Ultra Concentrates
~100% third parties 2 Epax Core Concentrates
▪ Today Epax operates one state-of-the-art factory for refinement and
concentration of fish oil located in Ålesund, Norway 3 Epax Custommade
▪ Currently close to 100% of the oil is sourced externally, in particular oil from
omega 3-rich anchoveta purchased from third parties in South America, but
the ambition is to increase internal sourcing going forward Key financials (NOKm)
▪ The company has a sales and marketing department in Oslo, Norway and Revenue EBITDA EBITDA margin
sells products through distribution partners across Europe, Asia and the US 476
Pelagia acquired +38.5% 420
412
▪ USD 35m invested in production facility 2019-2021, set to double capacity Epax 1 Aug 2017 144
305 314
219 77
34
Bjørn Refsum 74 1 3-4,000 MT/day Global 10.8% 18.3% 30.3%
CEO FTEs Facility Production1 sales
2015 2016 2017 2018 2019 LTM Q3’20
1 Current capacity, expected to double after completion of ongoing expansion 26Diversified sourcing of pelagic fish from the North Atlantic
Ocean and omega 3-rich oil from South America
Sourcing overview The sourcing process
North Atlantic Ocean ▪ Blind auctions arranged by Norges Sildesalgslag, a sales
organization owned and operated by fishermen
Sourcing by specie Food
▪ Continuous purchasing, almost 3x per day on average
Others
Sand Eel ▪ Highest bidder receives the offered volume
Feed 47% 1.2bn Trimmings
Food ▪
mt 53% 10% Electronic auction where catches are registered electronically
Mackerel 28% and presented to potential buyers while the vessel is still at sea
12% 4%
▪ Buyers must be located within a “bidding area” to ensure
delivery of fresh fish without a decline in quality
22% 24%
Food
Blue Whiting Herring ▪ Separate agreements with trawlers and purse seines (vessels
using large nets)
Herring ▪ Auction-like process where the supplier compares offers from
South America various processors and delivers to the best buyer
Mackerel
Oil from
Capelin
anchoveta Feed
▪ Approximately 55% is purchase of fish through auction in
purchased for 8,000 Blue Whiting Norway and through agreements with trawlers elsewhere
concentration mt
into Epax Silversmelt ▪ Remaining ~45% is fresh and ensiled by-products from
products harvesting and processing which are collected and transported
Saithe
Health to Pelagia for services and handling
27Pelagia’s supply of raw material follows predictable seasonal
patterns for wild catch of pelagic fish
Norwegian catch seasonality measured by round weight (MT)1 Comments
Share of annual catch, average 2017-2019 Mackerel Blue whiting Herring2 ▪ The high season for pelagic fish catch is the second half of
70% Average ~115,000 Average the year, while high season for capelin catch is in the first half
60% Average ~200,000 MT mackerel in ~165,000 MT
peak month herring in peak ▪ Norwegian spring-spawning herring spawn between February
50% MT blue whiting in
peak month month and March, and is at its best and fattiest in the autumn, while
40% North Sea herring has its premium catch period in the summer
30% before spawning starts in August
20% ▪ The premium catch period for mackerel is between
10% September and November, when it returns from feeding areas
0% in the Norwegian Sea to spawning areas in the central North
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sea, and to some extent in January
▪ Blue whiting is caught mainly in March and April, accounting
Pelagia monthly processing volume 2019 (kMT) for 84% of total catch for the species on average from 2017-
2019
Food Feed3 Total Diversification across several species and three divisions
ensures relatively stable raw material supply throughout the year ▪ Pelagia’s broad access to raw materials from various sources
and species ensures high capacity utilization and profitability
140 throughout the year
110
94 99 95 ▪ Pelagia has best access to raw materials from pelagic fish in
68 65 72 69 the autumn-/winter months, which is reflected in higher
53 56 59 57
41 earnings in these months, in particular Q4
25 31 27
18 9
3 1 2 2 7
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1 Source: Directorate of Fisheries
2 Herring
28
includes both Norwegian spring spawning herring and other herring species
3 Includes raw material from associated companies (Hordafor)Pelagia is by far the largest processor of North Atlantic
pelagic fish with ~1.2-1.3 million MT per year…
The North Atlantic pelagic fish market Pelagia raw material processing (kMT)
Estimated market share – North Atlantic Ocean pelagic fish quota2
Important areas for pelagic fish supply globally Barents Sea
36.2% 36.4% 32.8% 32.4% 32.5%
Strategically located processing facilities
1,301 1,390 1,337
1,169 1,203
Norwegian
Sea
2015 2016 2017 2018 2019
The total tonnage processed by Pelagia is Average market share of ~34% last 5 years,
North Sea comparable to the entire Norwegian salmon ~2x the size of the second largest buyer of
North Atlantic farming industry (2019) pelagic fish in the North Atlantic Ocean
Ocean Pelagic fish quotas in the
North Atlantic Ocean
~2x
Other 1 333
1 203 34,1%
18%
29%
6% 2019
~3.7mt
18%
16%
14%
Norwegian Second largest player
salmon farming1
1 Source:Kontali. Note that voume presented is whole fish equivalent Norwegian salmon farming and raw materials processed for Pelagia 29
2Company estimate of Pelagia’s market share based on total quotas for Mackerel, NVG Herring, North Sea Herring and Blue Whiting in the North Atlantic Ocean including Norway, UK, Iceland, Faroe Islands, Greenland, Russian
Federation and rest of EU…and has a dominant position in a concentrated market
protected by strong entry barriers…
Competitive environment – raw material for food and feed divisions
Segment Food Feed Key success factors for Pelagia
43% 46%
41%
60%
46% 50% ✓
▪ Unmatched production footprint across
Norway, UK and Ireland, providing the best
Pelagia market overview of the market
share last 3
years - Norway1 ✓
▪ The only player in Norway with both food
and feed production, enabling synergies
2017 2018 2019 2017 2018 2019
between divisions
Others
Others
16%
✓
▪ Being the largest player with the biggest
21% production facilities yields significant
41% economies of scale vs smaller players
11%
Market shares 8% ~650kt 50%
2019 – Norway1
8%
~754kt
11%
✓
▪ Having the highest volume capacity gives
flexibility and pricing power towards
9% 12% suppliers
14%
✓
▪ Entry barriers through high capital
intensity, required scale to make money
▪ Concentrated market, with top 7-8 players ▪ Norwegian market dominated by few players and long customer relationships
absorbing ~90% of the pelagic volume in Norway with top 4 having 85-90% market share1
Comments
▪ No other players with both food and feed ▪ Some competition from competitors in Iceland, ✓
▪ More efficient use of raw material
production Denmark and Faroe Islands
1 Based on Norges Sildesagslag auction numbers 30…resulting in stable performance over time
Key success factors Quarterly revenue development (NOKbn)
8.1
✓
▪ Stable access to raw material Food Feed
6.1 6.1
Health Total LTM
6.1 6.2 6.3 6.2 6.4 6.5 6.6 6.8 6.9 7.4 8.0
5.9 5.8 5.8 5.9 6.0 6.0
✓
▪ Efficient value chain and operational
2.4 2.4
excellence through >100 years 2.1 2.1 2.2 2.1 2.0
experience 1.4 1.5 1.6 1.4 1.6
1.3 1.3 1.3 1.3 1.4 1.2 1.4 1.3 1.2 1.4
1.1
✓
▪ Three divisions ensuring maximum
utilization of raw material
Q1’15
Q2’15
Q3’15
Q4’15
Q1’16
Q2’16
Q3’16
Q4’16
Q1’17
Q2’17
Q3’17
Q4’17
Q1’18
Q2’18
Q3’18
Q4’18
Q1’19
Q2’19
Q3’19
Q4’19
Q1’20
Q2’20
Q3’20
✓
▪ Dominant market position with average
market share of ~34% on North
Atlantic fisheries last 5 years Quarterly EBITDA margin
12% 13%
✓
▪ Diversified and global market exposure LTM 12% 12% 11% 11% 11% 11%
11% 10% 10% 11% 12% 11% 10% 10% 11% 10%
9% 8%
✓
▪ Three segments with different
12%
15% 13% 12%
14% 14%
12%
fluctuations and risks gives stability 10% 11% 10% 11% 10% 11% 10% 11% 11% 10%
8% 9% 9%
7%
and predictability 4% 4%
Q1’15
Q2’15
Q3’15
Q4’15
Q1’16
Q2’16
Q3’16
Q4’16
Q1’17
Q2’17
Q3’17
Q4’17
Q1’18
Q2’18
Q3’18
Q4’18
Q1’19
Q2’19
Q3’19
Q4’19
Q1’20
Q2’20
Q3’20
Note: Revenue and EBITDA excluding NOK 105m gain on sale of assets in Q2 2019 31Stable margins that are resilient to price fluctuations
Pelagia has stable margins and is not affected by increasing prices Comments
▪ Margins are not correlated to prices for
NOK/kg EBITDA margin Norwegian Spring Sprawn Herring Mackerel EBITDA %
mackerel, herring or other Pelagic species
18 18%
▪ Since Pelagia purchases 40-50% of all
pelagic fish sold in the Norwegian auction, it
is the most important player in setting the
15 15% market price towards customers which
increases ability to pass on increased fish
12,5% prices to customers
12 11,8% 12%
10.6% 10,8% ▪ Further stability in margins as a result of the
10,2%
diversification effect from being involved in
9 9% different business segments and products
8,0%
6 6%
3 3%
0 0%
2015 2016 2017 2018 2019 LTM Q3 2020
Source: Norges Sildesalgslag 32Well-invested production platform of 25 facilities with long
operating history and limited capex needs going forward
Production footprint Overview of production facilities
Food Feed Health Capacity
▪ Pelagia has a well-established production footprint with 25 production Owned / Production Storage
# Division Country Location Established
facilities spread across the Norwegian Coast, Denmark, UK and NOK 2,176m leased (MT/day) (MT)
Ireland 1 Honningsvåg 2008 Owned 450 9,000
Book value 2 Tromsø - Leased 420 3,000
▪ Most facilities are owned, while four non-core facilities are leased with 3 Lødingen 1993 Leased 650 10,000
contract expiry in 2022 and 2024 4 Bodø 1917 Owned 800 1,4591
5 Træna 1952 Owned 450 5,000
▪ Several of the facilities have been modernised substantially over the ~80% 6 Ålesund 1920 Owned - -
7 Liavåg 1979 Owned 650 12,500
last years, including key Food facilities in Egersund and Måløy and Owned 8 Selje 1979 Owned 500 7,500
significant investment within Feed in 2019 9 Måløy 1993 Owned 600 28,000
10 Måløy 1938 Owned 1,500 25,1001
▪ Majority of facilities have storage capacity, and total capacity can 11 Kalvåg 1979 Owned 250 3,400
absorb ~14 days production NOK 150m 12 Austevoll - Leased 370 9,000
Maint. capex 13 Karmsund 1995 Owned 1,500 20,1001
▪ Depreciation of fixed non-current has been in the NOK ~175-215 14 Sirevåg 1985 Owned 300 4,000
million over the last three years (lifetime of 10-50 years for buildings, 15 Egersund 1993 Owned 700 5,000
5-20 years for machinery and equipment), maintenance capex 80 days 16 Egersund 1921 Owned 1,500 17,9601
17 Egersund 1919 Owned - 44,0001
somewhat lower at NOK ~150 million p.a. Average 18 Karmøy 1998 Leased 475 5,500
utilization Food2
▪ Replacement cost varies depending on complexity and age of the 19 Skagen 2011 Owned - -
20 Bressay early 1900’s Owned 360 -
facility, but is estimated to be in the NOK 300-500 million area per unit 21 Shetland 1989 Owned 1,000 11,000
for most of the facilities – significantly higher than current book values 185 days 22 Aberdeen 1977 Owned 750 7,4301
of NOK 2.1bn providing a solid asset backing Average
23 Greenock 2001 Owned 50 4181
24 Grimsby 1930s Owned 300 2,0701
utilization Feed2
▪ Average utilisation of 80 days for Food and 185 days for Feed in 2019 25 Killybegs 1957 Owned 800 5,6601
12,825 199,908
1 Including fish oil, fish meal, FPC, ensiled raw material, raw material and fuel
2 In
33
2019Sticky and long term relationships with a diversified and
global customer base
Revenue and customer statistics Comments
▪ Pelagia has a highly diversified and global customer base due to
6% 4% the global market dynamics and Pelagia’s diversification across
4% 3% 60+ the three divisions
4%
7%
2% Food Countries ▪ Norway and EU represented ~61% of 2019 revenue, followed by
globally Asia with ~22% - the global nature of the market gives flexibility to
8% 79% shift supply between geographies and customers when market
33% dynamics change with a growing middle class globally
22%
12% 550+ ▪ Top 10 customers accounted for 38% of 2019 revenue, and
3% largest customers include aquaculture feed producers in Norway
2019 revenue 3% Customers and leading B2C distributors of pelagic fish products
22% NOK ~6.9bn1 Feed globally
23% 38% ▪ Increased consolidation among customers in recent years is
positive for large suppliers like Pelagia
20+ years ▪ Customer relationships are sticky in nature as Pelagia offers just-
13% 8% in-time delivery of large volumes that would take time for
5% Customer customers to shift to other suppliers – many of the most important
29% 5% relationships
22% customer relationships have lasted for more than 20 years
Health
▪ Most credit sales are secured by credit insurance or other
48% instruments – no losses have been taken on customer receivables
38 % during Covid-19
Customer 1 Customer 4
Norway EU Africa of revenue from
Customer 2 Customer 5 top 10 customers
East Europe Asia Other
Customer 3 Other
1 Excluding NOK 105m gain on sale of assets 344. Markets
35Global megatrends driving demand for protein
Population growth… …and economic growth… ..drive demand for protein
Billion people 140 Million MT
Protein consumption / capita (kg)
United States
Upper or middle class +100%
120 Malaysia
Australia
Israel Norway
+29% New Zealand 404
100 Vietnam
Argentina
China Chile Canada
Brazil Japan
9,8 80 Russia
United Kingdom
Peru Mexico Switzerland
7,6 60
Philippines
South Africa
Colombia 202
Ukraine
Indonesia Saudi Arabia
Iran Thailand
Paraguay
40 Egypt
84% Turkey
20 Pakistan
50% Nigeria
India
Ethiopia
0
2017 2050E 0 50 100 2017 2050E
GDP per capita (USDk)
▪ Global population expected to increase with 2.2bn ▪ Strong correlation with GDP per capita and animal ▪ Demand for animal protein expected to increase
people in 2050 compared to 2017, which alone will protein consumptions with more than 200 million MT from 2017 to 2050,
drive demand for protein corresponding an increase of 100%
▪ Economic growth in developing countries expected
▪ Majority of population growth expected to come to increase per capita consumption and drive
from developing countries demand for animal protein globally
▪ High growth regions expected to have high
economic growth leading to increasing middle class
Source: United Nations, IMF, OECD – FAO Agricultural Outlook. 36Fish is a sustainable and healthy source of protein
Consumer preferences are changing Fish consumption growth
Fish consumption by country category
Million MT (kg p.a.) Kg / capita
24,4
+23mt
32% of consumers want to increase their fish consumption 300 9,3
12,6 30
250 Low-income & Least
food deficit developed
Developed
191 201 25
200 165 178
137 146
150 117 126 20
2 times / week Recommended fish consumption by 100
99
international Health Authorities 15
50
0 10
1990 1995 2000 2005 2010 2015 2019 2025E 2029E
36% of consumers want to reduce their meat consumption Consumption Consumption / capita
Fish has favourable health attributes
Aging & growing Health Food I Rich in healthy omega-3 acids
population focus safety
II Rich in nutrients such as vitamin D and selenium
Global megatrends III High protein content
Environmental Production
change consumer
focus efficiency
preferences IV Low in saturated fat content
Source: FAO, Seafood Report Kantar TNS / Kantar Worldpanel, MOWI Capital Markets Day 2019. 37Food
Pelagic fisheries – Global
Global pelagic fisheries vs. other fisheries1 Top global pelagic species
Million MT Share of total Million MT (2018)
90 60% 18.8
7,0
83
80
50% 3,2
70 1,8 1,6 1,6 1,5 1,3 1,0 1,0
44 Global pelagic fisheries
60 40%
represents ~47% of total fish capture
Peruvian Skipjack Atlantic Sardine Pacific Yellowfin Scads Atlantic Japanese Other
50 anchovy tuna herring chub tuna mackerel anchovy
mackerel
30%
40 49 Pelagic fisheries by Ocean
30 20% Million MT (2018)
23% 16% 14% 11% 10% 8% 6% 3% 3% 6%
20
10% 8,8 Norway is fishing in the
10 6,4 5,6 Atlantic, Northeast
4,1 4,0
3,0 2,3 2,3
0 0% 1,3 1,0
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
Pacific, Pacific, Pacific, Atlantic, Atlantic, Indian Indian Pacific, Atlantic, Other
Southeast Western Northwest Eastern Northeast Ocean, Ocean, Eastern Southeast
Pelagic marine fish Other fisheries Pelagic marine fish share Central Central Western Eastern Central
Source: FAO
1 Includes only fish (demersal, freshwater, diadromous, pelagic and marine) captured in marine and inland waters.
38Food
Stable pelagic volumes in the Atlantic Northeast
Atlantic Northeast pelagic fisheries by specie group Top Atlantic Northeast pelagic species
Million MT Thousand MT (2018)
5,0
1 678
4,5
991
4,0 501 479
129 71 59 45 24 51
3,5
Atlantic Atlantic European Capelin Atlantic Atlantic Sardine European Albacore Other
3,0 herring mackerel sprat horse chub anchovy
mackerel mackerel
2,5
2,0
Atlantic Northeast pelagic fisheries by country
Million MT (2018)
1,5
22% 11% 10% 8% 8% 5% 5% 4% 4% 23%
1,0
0,9 0,9
0,5
0,4 0,4
0,0 0,3 0,3
0,2 0,2 0,2 0,2
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Atlantic herring Atlantic mackerel European sprat Capelin Other Other
Soruce: FAO. 39Food
Increasing and stable prices for Pelagia’s main species
within the Food segment
Price development for selected pelagic species1
NOK / kg Mackerel (whole) Mackerel (fillet) Herring (whole) Herring (fillet) Herring (processed)
40
Price variations has limited impact
35 on Pelagia’s financials – proven to
deliver stable margins
30
25
20
15
10
5
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD
Source: Export prices from Norwegian Seafood Council. 40Feed
Feed demand fuelled by increasing aquaculture production
Aquaculture will outgrow wild catch1 Fed aquaculture production experience high growth…
Million MT Wild catch Aquaculture Million MT Fed aquaculture2 volumes outpace non-fed volumes
200 and represent ~70% of total aquaculture production
CAGR 5%
180
Wild catch volumes have 52 54 56
45 48 49
stagnated, Aquaculture 38 40 43
160 34 36
production to fill increasing
demand for fish
140
120 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
100 …leading to increasing demand for aquaculture feed
80 Aquaculture feed product ▪ Aquaculture feed production has experienced
increased demand on the back of higher fed
60 26%
aquaculture production
CAGR 0.4%
30%
▪ Aquaculture feed production amounted to 45
40 million MT in 2018
45mt
▪ 10% of the feed production in 2018 was used for
20
10%
farming of salmonids
13% 21%
0 ▪ Feed production set to grow as aquaculture
Carp Shrimp Tilapia
1990 1995 2000 2005 2010 2015 2020E 2029E production grows
Salmonids Other
Source: FAO, OECD – FAO Agricultural Outlook 2020 – 2029, MOWI Salmon Farming Industry Handbook 2020. 41
1 Includes only wild capture volumes for human consumption.
2 Fed aquaculture is production where feed as an input factor is required.Feed
Salmonids feed is currently the main market for Pelagia
Growing salmonid production… …yield increasing demand for feed Salmonid feed ingredients
Million MT (WFE) Million MT Norway 2019 5%
3,1 4,4 11%
2,8 2,9 4,0 4,1 24% fish meal
2,7 2,7 0,2 3,9
2,6 2,6 2,6 3,7
0,2 0,2 0,3 1,1 & fish oil
0,2 0,2 0,1 0,3
0,2 0,2 0,3 0,3 1,0 1,0
0,3 0,3 0,9
0,4 0,3 0,9 13%
1,4
1,2 1,2 1,3 51%
1,0
2,4 2,6
2,2 2,3 2,2 2,3
2,0 2,0
1,7 1,7 1,8 1,8 2,0
21%
2012 2013 2014 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Veg meal Veg oil Fish meal
Atlantic salmon Large trout Pacific salmon Norway Chile Other Fish oil Avian meal
▪ Moderate growth expectations for the conventional ▪ Most of the feed in farming of salmonids is produced ▪ Salmonids should provide proteins, energy and
Salmonid farming industry driven by natural close to where it is farmed essential nutrients to ensure muscle growth, energy
constraints and biological challenges metabolism and good health
▪ Norway used 45% of the global feed directed
▪ New technologies such as offshore, closed and land- towards the salmonid segment in 2019 and Chile ▪ Fish meal and fish oil are important ingredients to
based emerging used 31% ensure the abovementioned
▪ Robust demand growth and strong prices
Source: Kontali, MOWI Salmon Farming Industry Handbook 2020. 42Feed
Robust market outlook for fishmeal and fish oil
Comments Fishmeal production & price development Fish oil production & price development
▪ Fish meal and fish oil are Million MT USD / MT Million MT USD / MT
Fish meal production Fish oil production Fish oil prices
produced from raw materials 8 Fishmeal prices 2 000 1,4
increased 7.9x 2005-2020 YTD
2 500
Price (Hamburg) increased 3.5x 2005-2020 YTD Price (Hamburg)
with limited availability: pelagic 7 Current YTD price 1 800
Current YTD price
1,2
fish not suited for human 1 600 2 000
6
consumption and by-products 1 400 1,0
from processed pelagic fish 5 1 200 1 500
0,8
▪ Volumes have decreased 4 1 000
800 0,6 1 000
historically due to increased 3
focus on using more volumes 2
600 0,4
for human consumption and 400 500
1 0,2
lower catch volumes of small 200
pelagic species 0 0 0,0 0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
▪ Fish meal and fish oil are
essential feed ingredients for Production by geography1 Application2 Production by geography1 Application2
the growing aquaculture
6% 1% 5% 3% 7% 8%
industry
8% 8%
34%
▪ Market balance for fishmeal 40% 22% 23%
and fish oil has been and
expected to be tight, resulting 17%
21%
in increasing prices
70% 69%
27% 28%
Asia Latin America Asia Latin America
Aquaculture Pig feed Aquaculture
Europe Africa Europe North America Human consumption
North America Oceania Poultry feed Other Africa Oceania Other
Source: FAO, Kontali Analyse, Oil World, IFFO. 43
1 Based on 2019 figures.
2 Based on 2017 figures.You can also read
