Austevoll Seafood ASA How to bake a Bigger cake? Is Norway the world leader of constraints to the fishing industry? As a globally integrated pelagic fishery and seafood specialist, Austevoll Seafood ASA (AUSS) operates through subsidiaries and associated companies, fishing vessels with licensed quotas in three of the world’s most important fishery countries - Norway, Chile and Peru. Committed to providing quality products to our customers, AUSS employs sophisticated fishing technology and responsible fishing strategies that harvest ocean resources without compromising the sustainability of such. Through our activities in fishing fleet, fishmeal and oil plants, canning plants, frozen fish plants, Omega-3 oil refining, salmon farming and sales, AUSS's integrated operation ensures a high level of freshness is maintained in our products - from fishing waters to finished products. Over the last decade, AUSS has acquired a significant number of companies of a complementary nature to its existing business areas. Our success lies in the integration of these businesses and creating synergies and value-added businesses through co- operations across all our business areas. Austevoll Seafood ASA FHL 2010 - 2 Operational Focus Market consolidation Sustainability • Positioning Value adding Supply control • Certification • Integration Market access • Participation • Productivity Environmental • Product policies development Environmental/ • Traceability Social commitment Combining de-centralised operation management system with centralised strategic values and goals. Austevoll Seafood ASA FHL 2010 - 3 Austevoll Seafood ASA Constrains and Operational Focus Austevoll Seafood ASA FHL 2010 - 4 Austevoll Seafood ASA Objective and Strategy Established in 1981 as a family owned fishing company. Fully integrated fishing company with licenses to participate in the world's largest pelagic fisheries. Among the world’s leading producer of; Canned fish products Fishmeal and Fishoil products Salmon High Concentrate Omega 3 Fish oil products Listed on the Oslo Stock Exchange (since Oct.2006) Austevoll Seafood ASA FHL 2010 - 5 Company Overview North Austevoll Seafood Peru Chile Atlantic (Group) Activities 7% of Anchovy quota 9.1% of pelagic fishing 600-700,000 tons of Harvesting 2 vessels* centre-north quota pelagic fish capacity - 37 vessels - 5 vessels (44 vessels) Salmon 105 salmon licenses 120.000~130.000 tons Operation 7 salmon licenses* of salmon 9 meal & oil plants 2 meal & oil plants 10 meal & oil plants 41 processing plants 1 storage/blending Primary 2 canning plants 2 canning plants Handling over 2 freezing plants 1 freezing plant 4 freezing plants 1.41 mill tons of Processing 8 salmon processing plants pelagic fish annually Secondary High Concentrate 2000mt of HCO3 Processing Omega-3 Fish Oil Plant Sales & Wholesale with global Own sales organisation Own sales organisation Own sales organisation Distribution distribution * Associated company Austevoll Seafood ASA www.auss.no NASF 2010 - 6 Value Chain Austevoll positioning Blue Agri-Feed whiting Fishmeal Anchoveta & Fish feed Salmon Fishoil Omega-3 Mackerel Sales & Consumer Horse mackerel Distribution Herring Freezing Canning Fresh Raw materials Processing Distribution Products Austevoll Seafood ASA FHL 2010 - 7 Access to Resources – CHILE • Legal fishing framework established by the “General fishing and aquaculture law” (Sep 1991). • To protect stocks, this law allows establishing global quotas by specie and geographical areas. • From 1992, the fishing of horse mackerel in the centre- south region of Chile started to develop. With a record of 4.4 million tons landed in 1995. • Up to 2001 – ”Olympic Race” system • January 2001, the Individual Quota(IQ) law was passed. The annual global quota was divided into individual quotas per shipowner, based in a combination between history and licence hold capacity for each vessel. • The only way to transfer a quota is by the sale of the vessel associated to it. Austevoll Seafood ASA FHL 2010 - 8 The Pelagic Fishing Industry in Chile • 12 Industrial companies all with own fleet and processing plants • Regulated through Individual Quota System: Total Allowable Catch (TAC) established annually for all species – TAC is established by authorities based on technical and scientific research. – INPESCA is the private internationally recognized research institute of which FoodCorp is shareholder, who acts as a counterpart to official IFOP. • Each company has an individual fixed quota • It is a closed system, the growth should be through acquisition of extra quota and/ or purchasing the “Artesanales” catch Individual quotas were confirmed in 2002 • Fishing within 200 miles from the coast is exclusive • Free Trade Agreements with main market nations. Austevoll Seafood ASA FHL 2010 - 9 Consumer demand for pelagic fish Use of Chilean Jack Mackerel • Norway: All landings of Atlantic mackerel and ca.90% herring goes to human consumption • Chile, horse mackerel: Strong shift towards human consumption due to high demand • Expect Peru to follow same trend Austevoll Seafood ASA FHL 2010 - 10 Operation in Chile Two Fishmeal & fishoil plants 2.000 tons of raw material capacity per day 5 vessels 9.1% of Chilean total Canning plant Canned tuna, mussels Horse Mackerel and seafood. quota (South) Over 2 million cases (48 million cans) Presence in all major yearly production supermarket chains and capacity wholesale distributors. Excellent brand awareness Freezing plant 6,100 tons of hold capacity Fish freezing plant, 550 ton/day capacity +30 coastal vessel contracts Austevoll Seafood ASA FHL 2010 - 11 Access to Resources – PERU • Legal fishing framework established by the General Fishing Law. • Key drivers of the regulation; to assure responsible exploitation of hydro-biological resources by the promotion of the sustainable growth as a source of food, employment and income. • The administration of the captures is the responsibility of the Ministry of Production. • To protect the fish stock; Source: SGS annual anchovy quotas (avg. of 6~7 mil tons) in two seasons: Mar~Jun and Oct~Dec regulates fishing season and bans during the year. There are certain areas reserved for artisanal fishing. • Free Trade Agreements with main market nations. Austevoll Seafood ASA FHL 2010 - 12 SATELLITE CONTROL OF THE PERUVIAN FLEET • All 1,200 vessels in the Peruvian fleet are satellite controlled by the Ministry of Production ESTACIÓN REGIONAL Austevoll Seafood ASA FHL 2010 - 13 SURVEILLANCE AND CONTROL BY SGS • Since January 2004, the private, international survey company SGS CABO BLANCO TALARA monitor fish unloading in every PAITA processing facility of the nation. PTA. AGUJA PIMENTEL ETEN • This system was promoted and CHICAMA designed and is now funded by the SALAVERRY industry with an annual budget of CHIMBOTE approximately $6.5 million. HUARMEY SUPE HUACHO CHANCAY CALLAO SGS Unloading Program PUCUSANA CERRO AZUL TAMBO DE MORA PISCO PTA. DOÑA MARIA PTA. CABALLAS SAN JUAN ATICO MOLLENDO ILO Austevoll Seafood ASA FHL 2010 - 14 RESPONSIBLE FISHING? IS PERU MANAGING THE BIOMASS IN A SUSTAINABLE MANNER? Sustainability Conference of the Peruvian Fishing Industry, Sept 2005, Lima-Peru “Peru manages the anchovy fishery in a sustainable manner and places adequate attention to important issues such as illegal fishing, quotas, environmental processes, and fishing/ unloading monitoring”. (Final conference document conclusion) Austevoll Seafood ASA FHL 2010 - 15 Operation in Peru Austral Group S.A.A. 9 fishmeal and fish-oil plants 2 cannery plants 2 frozen-fish plants 27 active vessels – 7% Quota Incl. 11 RSW-equipped vessels Austral is fully ISO14001 certified Austevoll Seafood ASA FHL 2010 - 16 EPAX Value Chain Capsulator Marketing Company Austevoll Seafood ASA FHL 2010 - 17 Norwegian Pelagic Industry Austevoll Seafood ASA FHL 2010 - 18 Access to Resources – Norway • All commercial fishing activities are govern by the Norwegian; Raw fish regulation (råfiskloven) - Sales Salt water regulation (Lov om saltvannfiske) - Operations Participator regulation (deltaker loven) – License / Quota • These regulations are primarily set up to regulate fishery in Norway. • Quotas are issued to fishing vessels. • All first hand sales and purchase have to go through the Norwegian Herring Association (Norges Sildesalglag). • The Norwegian quota is divided between the; • Coastal Fleet • Trawl Fleet • Purserseiner Fleet • Limitations on quota ownership up to 5% • The International Council for the Exploration of the Sea (ICES) is the main advisor with regards to the annual TAC quota setting. Austevoll Seafood ASA FHL 2010 - 19 Norwegian Pelagic quotas 2003-2010 • Stable fisheries over the last years • Increase Value Added Production. * Source: NSS * Austevoll Seafood ASA FHL 2010 - 20 Norwegian Pelagic Human Consumption Industry 2008 Source: Nordea Markerts • Pelagic purseiner fleet consolidated latest 25 years • Daily blast freezing capacity 15 760 mt over 45 plants Austevoll Seafood ASA FHL 2010 - 21 North Atlantic Fishmeal Producers (2009) • Norway – 8 facilities – 9 300 mt • Iceland – 13 facilities – 11 550 mt daily capacity • UK & Ireland – 4 facilities – 2 400 mt daily capacity • Denmark – 3 facilities – 7 100 mt daily capacity • Faroe Islands – 1 facility – 1 900 mt daily capacity Map from CIA World Factbook Austevoll Seafood ASA FHL 2010 - 22 Pelagic fish – a sustainable resource Stable volume development over the last 18 years Source: Kontali Analyse • Annual catches expected to remain at 35-37