November 21, 2017 Good Northern Pelagic Catches North: - - PowerPoint PPT Presentation

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November 21, 2017 Good Northern Pelagic Catches North: - - PowerPoint PPT Presentation

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November 21, 2017 Good Northern Pelagic Catches North: Normalization of temperatures at sea; abundant biomass near Iquique; low costs. Thousands of tons 140- 145 52 49 34 18 34 11 7 5 1 2016 2017 2016 2017 2016 2017 2016 2017

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November 21, 2017

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1 49 18 34 11 7 5 52 2016 2017 2016 2017 2016 2017 2016 2017 E Q1 Q2 Q3 Q4

Good Northern Pelagic Catches

55 77 40 21 4 52 2012 2013 2014 2015 2016 2017 E X% 100% 100% 100% 73% 25% 100% E

34 140- 145 2016 2017 E Year North: Normalization of temperatures at sea; abundant biomass near Iquique; low costs.

Northern catches include own and third parties

Thousands of tons Industrial anchovy catches (after H2 ban)

Catches at the end of the year with respect to the annual quota Affected by El Niño 2015-2016

Company’s estimations are based on current information, which could change due to deviations

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14 31 7 9 2 2 11 3 8 2 8 4 1 4 3 23 12 22 28 3 17 2 2016 2017 2016 2017 2016 2017 2016 2017 E Q1 Q2 Q3 Q4

South-Central Pelagic Catches

  • J. Mackerel: Normal fishing conditions vs very favorable conditions in 2016.

Sardine: Normalization in 8th region. Third parties catches doubled as of September.

Company’s estimations are based on current information, which could change due to deviations

35 45 21 10 50 57 2016 2017 E Year

106 110-115

Jack Mackerel Sardine (own) Sardine (third parties) Thousands of tons

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Fishmeal Price

1,780 1,490 1,600 1,404

1,850 2,013 2,247 1,844 1,613 1,760 1,570 1,592 1,676 1,551 1,471 1,384 1,425 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

As of September, prices down due to higher quotas and catches in Peru. US$ / ton (Camanchaca)

Peru’s Fishing Quota (North-Centre Region): Prime Fishmeal Price (Chile) IFFO week 45 2017

May to Jul: 2.8 M Ton (85% catched) Nov to Jan: No quota May to Jul: 2.6 M Ton (98% catched) Nov to Jan: 1.1 M Ton (99% catched) May to Jul: 1.8 M Ton (51% catched) Nov to Jan: 2.0 M Ton (98% catched) Nov to Jan: 1.5 M Ton (starting: Nov 23)

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As of September 2017:

  • At constant volume, increased fuel costs of US $ 1.3 million vs 2016.
  • Fuel cost is approx. 15% of the total cost of fishmeal production (anchovy and industrial sardine).

Camanchaca Diesel Price (US$/lt)

0.84 0.84 0.82 0.70 0.54 0.54 0.49 0.43 0.30 0.37 0.39 0.41 0.44 0.42 0.41 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

Diesel Oil Price (US$ / lt)

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September 30, 2017 December 31, 2016 September 30, 2016 December 31, 2015 VOLUME Months of Production ThUS$ VOLUME ThUS$ VOLUME ThUS$ VOLUME ThUS$ SALMON Atlantic Salmon (Tons) 3,560 2.1 32,229 2,595 23,763 3,676 32,471 7,458 42,198 Salmon Total 32,229 23,763 32,471 42,198 FISHING Fishmeal (Tons) 2,703 0.6 2,960 1,235 2,098 3,908 5,014 5,793 6,937 Fish oil (Tons) 407 0.3 463 38 353 291 511 846 1,896 Frozen Jack Mackerel (Tons) 5,390 6.5 2,064 31 16 1,045 535 1,185 694 Canned Fish (thousands of boxes) 569 6.8 7,028 449 5,719 736 9,368 43 664 Langostino Lobster (Tons) 153 3.1 2,133 92 1,180 229 2,742 225 2,824 Fishing Total 14,648 9,366 18,170 13,015 OTHER SEAFOOD Mussels (Tons) 3,401 4.1 8,470 3,094 5,275 2,317 4,578 2,280 5,304 Abalone (Tons) 56 3.4 1,370 79 1,788 80 1,644 86 1,969 Scallops (Tons) 5 51 12 177 19 157 Other Seaafood Total (Tons) 9,840 7,114 6,399 7,430 COMPANY TOTAL 56,717 40,243 57,040 62,643

As of September, decrease of fishmeal inventories (US$ 1,095 / ton). Increase in mussels (US$ 2.5 / kg) compared to September 2016

Stocks

(valued at cost)

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9.1 4.8 6.7 5.3 9.0 7.8 7.9 16.0 4.2 7.1 5.8 7.5 6.2 6.5 6.8 E Q1 Q2 Q3 Q4 33 34 5.6 6.5 E Year

Atlantic Salmon Price

Normalization in prices due to higher Chilean harvests in H2 with an estimated increase of ~4% in world supply in 2017. Lower harvests in Q1-17 due to Bloom 2016 and lower smolt stocking in 2015.

Δ+69% Δ+29%

2016 2017

Company’s estimations are based on current information, which could change due to deviations

Δ+16% Δ+5%

Harvest (Thousands of Tons WFE) Price (US$ / Kg WFE)

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8 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 jan-04 jul-04 jan-05 jul-05 jan-06 jul-06 jan-07 jul-07 jan-08 jul-08 jan-09 jul-09 jan-10 jul-10 jan-11 jul-11 jan-12 jul-12 jan-13 jul-13 jan-14 jul-14 jan-15 jul-15 jan-16 jul-16 jan-17 jul-17

Atlantic Salmon Price: Long-term trend

nov-17

Δ supply (Source: ABG Sundal Collier): 5% 4% 2% 10% 7% -2% -1% 12% 22% 2% 9% 4% -7% 4% E

Urner Barry Equivalent Trim C 2-3 (US$/Lb)

ISA Virus Overshooting recovery post ISA Algae bloom Large devaluation in major markets and non-tariff restrictions

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Chilean Salmon Price Expectation until Sep-18

Urner Barry Trim C 2-3, market spot

4.00 4.50 5.00 5.50 6.00 6.50 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18

USD/Lb

Fishpool Index Forwards Based Model Adjusted By:

  • Seasonal Historical Demand in the USA
  • US vs European salmon offer growth differences
  • Estimates subject to supply and demand fluctuations

Source: Kontali, Fishpool, own analysis

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Camanchaca vs Market (Salmonex, January 2015 = Base 100)

Lag in months with strong spot price increases (Mar - Jun 2016 and Jan - Feb 2017) As of September 2017: Camanchaca’s return exceeds Salmonex (+23 cent) and Ubarry (+33 cent) indices

Atlantic Salmon: Return of the raw material (relative performance)

20 40 60 80 100 120 140 160 180 200 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Urner Barry Salmonex Camanchaca Sep-17

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11 100 100 104 101 100 106 80

2012 2013 2014 2015 2016 2017

Salar Stocking in Chilean Industry

Salar Stocking January to September (mill. of smolts), 10th, 11th and 12th región

+4% +5%

Source: Undersecretariat for Fisheries and Aquaculture

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12 Source: Undersecretariat for Fisheries and Aquaculture 0.0 5.0 10.0 15.0 20.0 25.0

Previous Cycle (same neighborhoods) Current Cycle (considers new regulation) 143 156

Total

Salar Stocking and Stocking Plans: 10th and 11th regions

Salar Stocking previous cycle vs post new regulation cycle (mill. of smolt)

+9%

Considers neighborhoods opened between Sep-16 and Sep-17

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History and Projection of Harvests and smolt stocking in Camanchaca

Harvests (Thousands of Tons WFE)

Includes one third of the trout harvests originated by the joint venture business started in 2016

Salar smolt stocking (mill. smolt) 8.9 8.0 8.4 9.8 11.9 11.3 2014 2015 2016 2017 E 2018 E 2019 E

41 43 36 39 51 56 58 64 58 64 2014 2015 2016 2017 E 2018 E 2019 E 2020 E 2021 E 2022 E 2023 E

Atlantic salmon from current active sites Atlantic salmon from previously leased sites Trout

Estimate in November 2017 subject to variations due to future strategic decisions of the Company, changes in regulation, state of sanitary conditions or any other event not contemplated with the information available to date

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Economic Feed Conversion Ratio

8.7% 64.3% 5.5% 5.4% 19.2% 5.4% 14.2% 9.0% 4.2% 12.9% 5.5% 9.5% 10.9% 36.8% 7.0% E E Q1 Q2 Q3 Q4 Year 1.35 2.87 1.25 1.30 1.58 1.21 1.36 1.33 1.38 1.35 1.20 1.23 1.35 1.66 1.26 E E Q1 Q2 Q3 Q4 Year

Mortality

2016 2017

Salar Health Conditions in Camanchaca

(closed cycle)

2015

Q1-16 affected by harmful algae bloom (HAB) event. Favorable sanitary conditions starting in Q2-16

Company’s estimations are based on current information, which could change due to deviations

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Atlantic Salmon Costs

3.01

Q4-15 and H1-16 affected by SRS and low oxygen conditions in the 10th region. Q2-17 affected by harvests coming from third-party-hatchery smolts. Q3-17: downward costs.

3.31 2.95 2.92 3.02 3.08 3.66 3.75 3.09 2.79 2.79 3.34 3.13 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Feed OPEX Smolt Labor Medicine Others

Atlantic Salmon - Liveweight ex-cage cost (US$ / kg)

Company’s estimations are based on current information, which could change due to deviations

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16 50 60 70 80 90 100 110 120 130 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17

Raw Material Cost and RMP (Raw Material Return) Base 100 = RMP January 2014

RM cost before processing RMP

Back to positive margins in Q2-16 increased in H2-16 Q2-17 affected by harvests coming from third-party-hatchery smolts

Development of Atlantic Salmon Margins

Leptepu Cahuelmó Lamalec Licha Puelche Contao

Mañihueico

Islotes Edwards Izaza F.Largo Puerto Arg. Cabudahue Pilpilehue Ahoní Leptepu Cahuelmó Porc. Loncoch. Marilmó Forsyth Johnson 2 Licha Islotes |--Edwards--| Puelche |--Izaza--| Dec-17 |P. Arg.| |F.Larg.| |Porc.| |Ahoní| |Pilpileh.- |Maril.|

10th region sites 11th region sites

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  • 0.10

0.72 0.63 0.64 1.67 1.30

0.50

  • 0.24

1.29 0.91

  • 1.0
  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 3.0

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

Atlantic Salmon Business EBIT without trout joint venture

Development of Atlantic Salmon Margins

EBIT (US$/Kg WFE) before Fair Value in the Salmon business

Atlantic Salmon Business includes other Revenues and Costs due to services and sales to third parties, and intercompany salmon sales to our offices abroad.

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  • 7.2

23.8

  • 0.7

15.8

  • 3.3

26.2

  • 1.6

21.2 Fishing Salmon Other Seafood TOTAL 3.6 12.4 0.5 16.5 6.6 36.5

  • 1.0

42.2 Fishing Salmon Other Seafood TOTAL

2016 2017

Results January – September

(US$ million) Profit/Loss EBITDA (before Fair Value)

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60.0 66.1 58.7 45.1 47.1 21.6 10.1 8.7 14.5 32.8 55.4 64.0 58.5 485 496 489 453 462 439 446 470 483 488 487 479 454 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 EBITDA Revenues

10.0% 3.0% 12.4% 13.3% 12.0% 10.2% 4.9% 2.3% 1.8% 12.9% 13.4% 6.7% 11.4%

Last 4 mobile quarters development

X% EBITDA/Revenues

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22.6 33.1 29.0 18.8 27.3 15.7 18.9 15.6 6.7

  • 6.9
  • 9.7
  • 5.7
  • 4.0

163 184 179 161 169 146 147 141 126 107 105 121 123 38.2 31.5 27.5 25.6 20.1 6.7

  • 7.5
  • 5.8

8.2 38.8 63.6 68.7 63.0 233 247 242 223 202 288 279 275 260 263 263 269 299 328 353 352 330 302

  • 0.8

1.6 2.2 0.8

  • 0.3
  • 0.8
  • 1.3
  • 1.0
  • 0.5

0.9 1.5 1.0

  • 0.5

33 33 35 32 30 31 31 30 29 28 29 29 28 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

Last 4 mobile quarters development

FISHING SALMON OTHER SEAFOOD

EBITDA Total Revenues Own Revenues

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Salmones Camanchaca: IPO Process

  • Corporate Reorganization of Salmones Camanchaca: Extraordinary shareholders meeting on

September 14, 2017

  • Capital increase amount: US$ 38,579,359
  • Issuance of 340,266 shares subscribed and paid by the Parent Company with:
  • Capitalization of contributions:

US$ 19,500,024

  • Fiordo Blanco shares transfer:

US$ 18,712,484

  • Surproceso shares transfer:

US$ 366,851

  • Registration Process with Chilean and Norwegian Authorities (starting 3rd week of September)
  • Designation of new Directors at Salmones Camanchaca
  • Tore Valderhaug - former CEO and former CFO of Cermaq
  • Felipe Sandoval – Chairman of Salmon Chile
  • Estimated Placement Date: First Quarter 2018
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22 8.1 8.1 9.1 139.1 6,3* 6,3* 6,3* 6,3* 6.7 16.7 6.7 16.7 6.7 86.7 May 2018 Nov 2018 May 2019 Nov 2019 May 2020 Nov 2020 May 2021 Nov 2021 May 2022 Nov 2022

Debt Refinancing 2013 Debt Refinancing 2017

Debt Refinancing 2017: US$ 165 million

Debt repayment schedule (US$ mill.) Prepaid repayments in case IPO takes place

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Debt Refinancing 2017: US$ 165 million

  • Tranche A: TERM LOAN
  • Amount: US$ 25 million to the parent Company (term of 2 years)
  • Amortizations: Semiannual (4 in total)
  • Prepayment if IPO takes place
  • Tranche B: REVOLVING LINE
  • Amount: US$ 40 million to the parent Company (term of 5 years with 2.5 of grace period)
  • Amortizations: Semiannual (6 in total starting in month 30)
  • Availability fee: 0.35% on applicable margin
  • Tranche C: REVOLVING LINE
  • Amount: US$ 100 million to Salmones Camanchaca(term of 5 years with 3 of grace period)
  • Amortizations: 2 of 10% (end of year 3 and 4)
  • Payment in year 5 of the remaining 80%
  • Availability fee: 0.35% on applicable margin
  • Financial Covenants:
  • Net Debt / LTM EBITDA < 4.0x and Net Equity/ Assets > 40%
  • Interest Rate: according to Net Debt / EBITDA ratio
  • In case of IPO:

Libor + 2.25% to 3.25%

  • Without IPO:

Libor + 2.5% to 3.5%

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