Pan Fish acquires Aqua Farms, establishing unique fish farming cluster

| Source: Mowi ASA Mowi ASA

  •         Aqua Farms has a production cost (EBIT) below NOK 18.00 per kilo for gutted salmon. With its dedication to cost and quality, AquaFarms fits perfectly into Pan Fish's "lowest cost to market" strategy.
  •         Aqua Farms has a strong position as a supplier towards large retail clients in the EU, and thereby complements the position of Pan Fish as a supplier towards the professional industrial segment.
  •         Aqua Farms is characterised by its solid grip on all the elements in the production process and the beneficial locations of is production facilities.
  •         Per the expiration of August, Aqua Farms made an operating result of NOK 28.6 million, for 4,800 tonnes gutted salmon, corresponding to NOK 5.95 per kilo gutter weight. Planned harvesting for wholly-owned licenses is 4,000 tonnes gutted weight in the last four months of the year.
  •         The price paid by Pan Fish corresponds to NOK 285 million for 100 % of the equity.
  •         Interest-bearing debts at the time of acquisition are estimated at NOK 200 million. This yields an enterprise value (EV) of NOK 485 million.
  •         The enterprise value for the fish farming division, adjusted for the value (see below) of minority shares, is NOK 451 million. Converted into 100 % ownership, Aqua Farms owns the equivalent of 14.5 licenses.
  •         The estimated equity at the time of acquisition is NOK 140 million.
  •         In addition, the Aqua Farms group owns 27.4 % of one of Norway's leading quality exporters of salmon products, Aalesundfisk, and 33.3 % of France's third largest smokehouses, Kritsen. Both Kritsen and Aalesundfisk have a strong position towards the retail market in the EU. The two minority positions have been estimated at their book value, NOK 34 million, in the accounts for Aqua Farms per 31.12.2004. The final allocation of the acquisition price will be made in connection with the annual accounts for 2005.
  •         The acquisition date is November 1, which is also the date of the consolidation into the Pan Fish accounts.
  •         In the event that Pan Fish should own more than 90 % of the shares, Aqua Farms will not be in tax payable position for several years.
  •         The transaction will be financed by equity directly through an increase of capital and/or in combination with subordinated loans.
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    Additional information about Aqua Farms
     
    The acquisition of Aqua Farms enables Pan Fish Norway to establish one of the world's most favourable fish farming clusters, covering the dense coastline from the northern part of the county of Hordaland and including the counties of Sogn og Fjordane and Møre og Romsdal. The efficient operation of Aqua Farms is ensured through 60 licenses, high-quality smolt production, ideal locations, solid qualifications and the world's most modern salmon harvesting facilities. All within a 24-hour road transport from the market.
     
    Pan Fish's fundamental strategy during the past few years with a strong focus on cost-efficient production and distribution of the supply of salmon, is gradually showing good results, and the acquisition of Aqua Farms is a continuation of this strategy.
     
    Aqua Farms produces its own smolt. The capacity of approximately 4 million smolt is based on high-quality water sources, and with a moderate investment, the production can easily be increased to 7.5 million smolt, should the market be ready for it.
     
    The harvesting of the Aqua Farms group for 2005 is planned at approximately 10,800 tonnes gutted weight, of which about 2,000 tonnes will come from the three 50 % owned licenses. For 2006, the planned harvesting figures are 13,500 tonnes gutted weight, of which partly-owned licences will contribute 2,200 tonnes.
     
    - The acquisition of Aqua Farms has given us access to a company that is based on the same policies as Pan Fish when it comes to strategy and way of organising. Geographically, Aqua Farms is located in the same area as us, and this opens up for advantages in terms of synergies. But it is equally important that Pan Fish is acquiring a well-run company with a solid expertise when it comes to producing cost efficient quality salmon, says CEO of Pan Fish, Atle Eide.
     
    In addition to the main fish farming activity, Aqua Farms holds the following ownership positions:
     
  •         Kritsen SAS
    • o       33.3 % ownership of the VAP business Kritsen SAS. In 2004, Kritsen had a production of approximately 4,400 tonnes of VAP. The company is the third largest player in the French market for smoked salmon and the second largest in the market for high-quality seafood tureens. The gross operating revenues for 2004 was NOK 375 million with an operating result of NOK 6.3 million. For the current year to date, the results for Kritsen are characterised by high prices for raw material, but the company aims strongly at achieving a result close to zero.
     
  •         Aalesundfisk AS
    • o       27.4 % ownership share in the seafood company Aalesundfisk AS, that also owns 100 % of the smokehouse company A-Fisk Skagen. The latter is located in Denmark, and the company has been significantly restructured in 2005, a process that includes outsourcing most of the production of 1,500 tonnes finished goods to partners in Poland.
    o       Aalesundfisk is one of Norway's most professional exporters/seafood producers, and has spent years working on a strategy that is directed towards the retail segment and long-term contracts towards demanding clients. In 2004, Aalesundfisk had gross operating revenues at NOK 670 million and negative operating results at NOK -2.3 million.
    o       Aalesundfisk also owns 33.3 % of Kritsen SAS.
    o       For 2005, the company expects gross operating revenues of over NOK 750 million and positive operating results.
    o       Aalesundfisk represents an important resource for Pan Fish in terms of ensuring that increased volumes through the acquisition of Aqua Farms and any future acquisitions can be efficiently marketed towards new market segments.
     
    - Pan Fish will undoubtedly become beneficial owners of Aqua Farms. The companies share the same views when it comes to building a competitive power in this new and demanding industry. Ever since the beginning of the 1990s, Aqua Farms has been dedicated to maintaining a strong focus on low cost and quality, says Sigbjørn Haugen, CEO of Aqua Farms. And he continues:          - Sustainable operations, based on healthy competition have been the cornerstones of both our company and Pan Fish. Uniting a substantial production in the same area, with the addition of our own smolt production and very favourable facilities, forms the basis for creating one of the world's most efficient fish farming businesses.
     
     
    For further information, please contact: CEO Atle Eide, +47 911 52 977

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