Markedsrapport – Desember 2007 - NRP AS

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Markedsrapport – Desember 2007 Side 78 Ness, Risan & Partners AS NRP Seafood DIS Company facts Key Data Investment Policy Guidelines* Prime investment objective Incorporation date 24.05.2007 Minimum number 8 The Company shall invest in companies Committed Capital NOK 250 mill Normal ownership 5%-30% within the fish farming and fishing Life time 7 years Total cost / Committed capital 30 % industry with a potential for increase in Return target 20% - 30% p.a. Unlisted companies mainly value, with main focus on Norwegian Instruments Shares in limited *Limits apply after end of investment companies liabilitiy companies period in relation to Portfolio as primary instrument Companies Nominal Return and Currency hedging Net asset value NOK mill Nominal return NOK mill Capital account Portfolio Value 107,9 Paid-up capital 150,0 Paid-up capital 150 Bank deposits 37,5 Accumulated distributions 0,0 Repaid capital 0 Receivables 0,2 Net Asset Value 149,3 Undrawn capital 100 Capitalised costs 4,5 Total Commitment 250 Payment commitments Currency Hedging -0,8 Net Asset Value 149,3 Nominal return since incorp. -0,7 undrawn capital per 1% per 1% share (NOK) 1 493 125 per 1% NOK -6 875 1 000 000 All return measures are before tax and profit sharing Return % 1) Nominal return of paid-up capital 2) IRR p.a. 3) IRR per quarter and accumulated for the period 4) IRR p.a. since incorporation since incorporation 1 kv 2 kv 3 kv 4 kv Per year per year -0,5 % -1,5 % 2007 -0,4 % -0,2 % -0,5 % -1,5 % Comments to the reporting format and incorporation of the Company Also for this report, Portfolio Company valuation is based on cost price. Accruing the start-up cost over the Company life time, the sum of administration and start-up costs is -2,5% p.a. In Q3 2007, interest received on bank deposits was NOK0,6mill. It is the opinion of the board that it is too early to make any significant changes to the Portfolio value. One could argue for some smaller upward and downward revision per Portfolio Company, but the total portfolio valued would be approximately unchanged Q/Q. The operating performance of the cod farming companies have fared more or less in line with the industry during the quarter. Valuation of new issues and listed companies in cod farming is at least at pre-summer levels. Salmon prices have pressured valuation of listed salmon farmers at the stock exchange. However, we believe the underlying operation of the salmon related portfolio companies does not warrant any major changes in valuation at portfolio level. All return measures are before tax and profit sharing NRP Seafood DIS (NOK millioner) 1) Accumulated return since incorporation in relation to paid-up capital disregarding timing of payments 2) Internal Rate of Return (IRR) since incorporation as a yearly rate based on capital paid-up, distributions and latest reported NAV. 3) IRR per quarter (or relevant part of quarter) based on capital paid-up, distributions and reported NAV at period end. Reported NAV for one period is used as input for the next period. 4) IRR as a yearly rate based on capital paid-up, distributions and reported NAV at period end. Reported NAV for one period is used as input for the next period. 1)-4) alle measures before tax and effect of the capital distribution agreement 270 240 210 180 150 120 90 60 30 0 1 kv 05 2 kv 05 3 kv 05 4 kv 05 1 kv 06 2 kv 06 3 kv 06 4 kv 06 1 kv 07 2 kv 07 3 kv 07
Side 79 Markedsrapport – Desember 2007 NRP Seafood DIS Shares bought during the quarter* Shares sold during the quarter Date Project Name Share Transaction Date Project Name Share Price per 1% Transaction type price NOK mill Type Krill Seaproducts AS 250 4,5 2. nd Lofitorsk* 2,0 1,6 Issue / 2. nd Nordic Seafarms ASA 8,2 0,5 2. nd Norsk Marin Fisk AS 30,6 1,1 2. nd Norway Royal Salmon 7,4 9,0 2. nd *Jasto AS is legal owner of 644500 of the shares. OxSeaVision 1763 5,0 Issue Transfer awaiting shareholder approval Overview of Portfolio Companies Company Related party Portfolio Portfolio Ownership Cost per Value Segment board rep. Company Value (mill) Weight* of company share (mill) Branco AS 19,6 7,8 % 14,0 % 22,0 127 Cod Farming Yes Norsk Marin Fisk AS 13,2 5,3 % 9,7 % 28,4 154 Cod Farming Yes Norway Pelagic 15,0 6,0 % 2,1 % 50,0 720 Processing and Sales No Norway Royal Salmon 14,3 5,7 % 7,5 % 7,3 197 Salmon / Sales/Marketing No Rauma Gruppen AS 34,1 13,6 % 12,4 % 75,2 274 Salmon Farming Yes Lofitorsk AS ** 1,6 0,7 % 1,9 % 2,0 84 Cod Farming No Krill Seaproducts AS 4,5 1,8 % 1,9 % 250,0 238 Krill catch and process No Nordic Seafarms ASA 0,5 0,2 % 0,4 % 8,2 130 White Halibut farming No OxSeaVision 5,0 2,0 % 16,7 % 1 763 30 Oxygen equipment Yes SUM Comments 107,9 * as % of Total committed capital Salmon : Salmon prices have hovered around NOK 25 per kg during the quarter, about the same level as the previous quarter. Global supply growth in Q3 was up 14,5% Y/Y with Norwegian volumes increasing 26,8%. The sharp production increase owes to a large extent to favourable water temperatures and relatively low level of deceases. Prices have been declining in the latter part of the quarter and are presently at or below the EU minimum prices. With regards to Rauma Gruppen, management focus is on integration activities following the acquisition of three companies earlier this year. One of the acquired units have been plagued by deceases and measures are under implementation. Rauma Gruppen will deliver a 2007 result which is lower than we anticipated entering the company. However, longer term projections are intact with significant restructuring and integration potential. Norway Royal Salmon AS (NRS) delivered record results for the first half of 2007. The sales operation is positively influenced by the high production volumes. While the associated salmon producers are adversely affected by the negative price development, the group of companies still delivered a result on par with last year. We continue to believe the NRS group offers an highly interesting upside on the back of identified efficiency measures and acquisition strategy. Cod : Cod prices have stayed firm in the NOK 36- 38 per kg (hog) range. Our impression is that most cod farmers are still challenged by the modest average size of fish harvested in combination with high mortality rates. A hatchery break down at one of the major suppliers of fingerlings early this year has pushed up fingerling and juvenile prices. Consequently, companies operating up-stream in the value chain generally enjoy healthy profitability, while ongrowers are complaining about the shortage and high cost of juveniles.. Branco AS is no industry exception. High costs of juveniles and mortality rates weighs on cash flows. However, growth rates have picked up since the summer and the company is now harvesting fish at around 3,5 kg. Moreover, management sticks to its target of releasing up to 1,7 million juveniles in 2007, despite a modest release of only 0,35 million in H1. The 2007 harvest target is downgraded from 900 tons to 750 tones. Existing licenses allows for a yearly production volume of 10.000 tones while already installed capacity can handle 5.000 tones. Norsk Marin Fisk (NMF) delivered a highly promising batch of 1,5 million fingerlings in the first half of 2007. The fingerling and juvenile operation will deliver acceptable profit level in 2007. The fish farming operation is under the influence of the same factors as mentioned above. Yearly harvest target is 600 tons and 420.000 juveniles are scheduled for release to sea. The company plans for an incremental expansion of the fish farming operation. Lofitorsk has achieved very promising results in the fingerling and juvenile operation in 2007. 1,15 million juveniles are more than twice the 2006 level. Other : Krill Seaproducs has obtained a license for the catch krill in the Antarctic. A vessel has been purchased and is currently being converted at a shipyard in the Baltics, she will then be brought to Norway for outfitting with proprietary catch and production equipment. Main investor is companies controlled by Mr. Arne Blystad. Oxyvision is in an early development phase, marketing and selling a proprietary system for injecting oxygen to the water. Target customers include salmon farmers in Chile and Canada, together with shrimp producers in the far east. Recently established, the first significant data point for Norway Pelagic will be Q4 2007 financial and processing results. The main season starts in September/October. Ness, Risan & Partners AS
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