#1ISI ICELAND SEAFOOD THE ICELAND SEAFOOD GROUP Q2 and 1H 2021 RESULTS Presentation to Investors and Analysts E ปี#2ISI ICELAND SEAFOOD Q2 2021 Results Presentation to Investors and Analysts We are Iceland Seafood#3ICELAND ISI SEAFOOD Q2 2021 Presentation to Investors and Analysts Iceland Seafood in numbers +370m € Annual revenues in 2020 Global value added Seafood producer and sales and marketing company 10 Businesses in 7 countries 曲 7 value added factories 3 5.1m Normalised PBT 2020 31.2% Equity ratio at year end 2020 3.000+ Customers across 45 countries 0.8m Meals sold every day during 2020 +670 employees 80.000 MT of products sold in 2020#4ICELAND ISI SEAFOOD Q2 2021 Presentation to Investors and Analysts IIII I ICELAND SEAFOOD Strong sales recovery in S-Europe with the important HORECA sector opening up Value Added S-Europe A good overall performance in a difficult market representing Iceland Seafood's category leading position • Strong demand in Spain and Italy from March onwards, with easing of Covid19 restrictions. The HORECA sector has been recovering but activity is still significantly below pre Covid19 levels, Sales to retail have increased, with new retail contracts kicking in during Q2. Retail sales team in Spain strengthened with new recruitment in the period, Due Diligence of Ahumados Dominguez (AD) in progress, closing expected within the month of September, The proposed acquisition in AD and extension of our current facility in Barcelona will generate significant profit growth opportunities, driven by cross sales synergies and improved efficiencies. . Good results from operation in Argentina • Results from Rawson season (Nov-Mar) and Squid sales were in line with expectations and improved significantly from last year, National water season (Jun-Aug) started in beginning of June. Total production in June and July of 761MT was in line with budget, Market conditions remain good, prices have been stable supported by good demand from key markets in Europe and US. At the same time sales to China have been low and logistics been challenging, Recent investment to increase production and coldstore capacity has paid off during a challenging season, marked by Covid19 and transportation disruptions. 4#5ISI Q2 2021 ICELAND SEAFOOD Presentation to Investors and Analysts Strong retail presence with well recognised premium consumer brand for smoked salmon Ahumados Dominguez - Reminder Rational for the proposed acquisition. Good consumer recognition with a premium brand. Active consumer campaigns and direct consumer contact, specialty stores located inside of premium retailer El Corte Inglés supermarkets, Will strengthen and broaden our proposition in retail. Opportunity to utilize the platform for selling high quality salted Cod products, Iceland Seafood will be entering into salmon, fast growing product category in Spain. Opportunity to expand current product offering with unused production capacity in the factory, Opportunity to expand sales and profits with the premium brand and quality product development capabilities. The company produces highly value-added products with high margins, Moderate revenue and profit growth in the past four years. Aiming for significant growth in the coming years, by leveraging the opportunities mentioned above. 21,3 20,6 Sales € m's 23,8 19,3 2018 2019 2020 2021B Gross margin % 47,3% 47,3% 44,8% 44,3% 2018 2019 2020 2021B 0,5 Normalised PBT € m's 1,3 1,2 0,9 2018 2019 2020 2021B LO#6ICELAND ISI SEAFOOD Q2 2021 Presentation to Investors and Analysts SNVION yours HIS spoofies kupphe SNVION SNVION uous Panous spoofies kuyang SNVION goofines kap SNVION pa Spany spoofing kup SNVION SNVION папрацай от ранения рип катарин we w p uous payours р spoofers kyph SNVION Over years spoofres kayak SNVTON Ongoing good performance in Ireland, UK still behind plan Value Added N-Europe Ongoing positive results from operation in Ireland . • Significant increase in sales compared to same period last year, partly driven by Brexit where the Irish operation was well prepared and in better position to service local retail customers than suppliers outside Ireland, Lockdown measures have also helped sales in the period, restrictions on indoor dining have increased retail demand, Sales under the leading Nolan brand have increased. Product offering being expanded with the addition of breaded and coated products produced by IS UK and Argentinean red shrimp from Achernar, Relatively stable pricing on Salmon in the period helped the results, whilst whitefish prices were high, Production of smoked salmon for the important Christmas season have started. Positive outlook for sales. CO 6 Future outlook for the UK business remains. strong despite difficulties this year . • • All UK operation moved into a single location at year end 2020. The merger process and integration has proven to be more complex and costly than anticipated, severally impacted by both Brexit and Covid19, It has taken longer time to reach necessary efficiency and utilisation levels in the factory. Actions have been taken to reduce costs and increase activity, Ongoing challenges in transportation and logistics, both in relation to China and local distribution within UK. This has both negatively impacted sales and increased costs in the period, Foodservice sales have improved from a low level following easing of lockdown restrictions in May and June. The sector has however not fully recovered, but starting of schools will have positive impact in Q3, New agreements with both existing and new customers secured, which will positively impact sales and margins in the coming months, but to larger extent from Q1 2022, With strong customer base and new state of the art factory the future outlook and potentials for the UK business remains strong. https://youtu.be/6-zreMeLYhg 02080#7ICELAND ISI SEAFOOD Q2 2021 Presentation to Investors and Analysts Movements of key external factors will bring both opportunities and challenges to the Group Demand in key markets has picked up Volatile operating environment • • • • • • Cod quota in Icelandic waters declining by 13% for the 2021/2022 fishing year. At the same time ICES* advise is to reduce catches in the Barents Sea by 20% for 2022, Disruption and price increases in various supply chains. are expected to continue for the coming months, especially in relation to transportation to and from Asia. Local production in Europe becoming more. competitive where automation and investments in production efficiencies will play a key role, Demand in key markets is picking up, with Covid19. restrictions being lifted in Europe and North America, All these factors have had and will have significant impact on the operating environment. Further price inflation is expected in the coming months, The overall impact on Iceland Seafood operations is uncertain, different factors will both bring new opportunities and challenges, The operation of Iceland Seafood is well balanced, the company is in good position with its strong sourcing base and value added operations close to key markets. * International Council for the Exploration of the Sea Operation in the USA simplified and risk reduced following an agreement with Villa Seafood • • Agreement reached with Villa Seafood. Sales and distribution of Icelandic landfrozen products under the Iceland Gold brand will go through Villa Seafood from October 1st 2021, The sales office of Iceland Seafood in the USA will close from that time. The MD of IS USA will become an employee of Villa Seafood from that time, Iceland Seafood will continue to sell fresh and seafrozen products from Iceland directly to its customers in the USA, This will simplify Iceland Seafood's operation in the USA and reduce risk. At the same time it will not have any significant impact on neither sales or profit generation of the Group, This is in line with the Group's strategy of focusing mainly on value added activities in Europe. 7 865 Atlantic cod supply 2009 - 2022 1117 1064 974 1362 1373 1329 1304.. 1303 1137. 1126 1251 1149 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022* *2022 is based on a forecast#8ICELAND ISI SEAFOOD Q2 2021 Presentation to Investors and Analysts Iceland Seafood is building a strong portfolio of consumer brands in Spain and Ireland AHUMADOS DOMINGUEZ LAS TA- PAS de IslandiaⓇArmengol SMOKED SALMON TOP LIDER CORNER – ESTA 1946 - CARR & SONS OF IRELAND Dunn's OF DUBLIN QUALITY SEAFOOD 1822 FOR CENTURY ICELANDIC SEAFOOD NOLANS Quality Seafoods Estd. 1912 These brands stand for a top-quality products, focused on cod, smoked salmon, and ready meals 8#9ICELAND ISI SEAFOOD Q2 and 1H 2021 RESULTS PRESENTATION TO INVESTORS AND ANALYSTS Financial performance#10ICELAND ISI SEAFOOD Q2 2021 Presentation to Investors and Analysts Unique combination of sourcing expertise and well positioned value added activities. Sales & Distribution Iceland Seafood International Group management Value Added N-Europe Turnover 2020 Value Added S-Europe VA S-Europe 36% 34% VA N-Europe IS Iceland IS UK IS Ibérica 30% Sales & Distribution IS France Oceanpath / Dunns of Dublin Elba 0 IS Germany Carr & Sons 0 Achernar Employees 34 (5%) 354 (52.3%) Executive management & Group reporting: 286 (42.2%) 3 (0.5%) 10 Profit before tax 2020 24% VA S-Europe VA N-Europe 49% 27% Sales & Distribution#11ICELAND ISI SEAFOOD Q2 2021 Presentation to Investors and Analysts VA N-Europe Excellent results driven by increased > VA S-Europe demand following easing of Covid 19 restrictions in S-Europe € m's Q2 21 Q2 20 1H 21 1H 20 Sales 40.7 21.5 77.8 62.7 • Net margin 4.0 1.8 9.9 6.8 Normalised EBITDA 1.3 (0.4) 4.7 2.0 Normalised PBT* 1.4 (1.1) 4.5 0.9 * Normalised PBT represents Profits before tax before allowing for significant items. ** Ecomsa classified as discontinued operation, therefore not included in numbers Sales picked up in S-Europe from March, after slow start of the year due to negative impact of lockdown. restrictions, ) Sales & Distribution Sales in Q2 €19.2m up on Q2 Normalised PBT of €4.5m, 2020 up €3.6m from 1H 2020 €3.1m growth in net margin, continuing strong margins from Cod products, Improved efficiency in production of Arg. Shrimp with increased coldstore capacity have positively impacted margins in the period. Good market conditions and higher volumes have also helped the results, • Significant revenue and profit improvement of Achernar, compared to same period last year, driven by both increased production and improved market conditions, Focus on sales growth into Spanish retail, where the proposed acquisition of Ahumados Dominguez will be of a further support, Outlook for 2H of the year is positive, continuing strong sales in July and August. Overhead cost in line with expectations, annual cost reduction after the 2019 merger in excess of €1.0m, Vaccination is progressing well in S- Europe. Spain with c.a. 71,1% of the population fully vaccinated, Italy 66,7% and Portugal 74,6% on August 16th. 11#128,0 7,5 7,0 6,5 ISI ICELAND SEAFOOD Q2 2021 Presentation to Investors and Analysts Results impacted by more costly > VA S-Europe > VA N-Europe integration process in UK, affected by ) Sales & Distribution supply chain disruptions € m's Q2 21 Q2 20 1H 21 1H 20 Sales 31.6 26.7 63.4 54.4 Net margin 2.1 3.1 5.2 6.1 Normalised EBITDA 0.3 1.6 1.5 3.1 Normalised PBT* (0.6) 1.0 (0.4) 1.9 *Normalised PBT represents Profits before tax before allowing for significant items. SALMON PRICES (€/KG) 2019 2020 2021 4,60 4,40 4,20 4,00 3,80 H&G COD FROZEN PRICES (US$/KG) ■2019 2020 2021 6,0 5,5 5,0 4,5 3,40 4,0 Jan Feb March April May June July Agu Sept Okt Nov Dec Jan Feb March April May June July Agu Sept Okt Nov Dec Source: SeaData Center 3,60 Source: Norges Sjomatrad 17% sales growth compared to 1H 2020 . • Strong demand from Irish retail, sales of Oceanpath grew by 13% from 1H 2020 on top of €5.4m sales of Carr&Sons. Restrictions on restaurant activity positively impacted sales in the period, The Irish operation was well prepared for Brexit. The companies are in better position to service local customers than suppliers in UK, Launching of new products for UK retail positively impacted sales, but supply chain disruptions both in relation to transport from China and local distribution in UK have caused significant challenges and increased costs, Foodservice sale in UK improved in Q2, with easing of Covid19 restrictions but have still not fully recovered. Negative PBT of €0.4m in 1H 2021 • • • Improved profitability in Ireland, driven by strong demand and relatively stable raw material price, especially during Q1, Costs related to the UK merger and lower sales than expected negatively impacting results, UK operation further impacted by ongoing challenges due to Covid19 and disruption in the supply chain, both in relation to transportation from China and local distribution, Actions taken to reduce overhead costs and improve factory efficiency. At the same time new sales agreements have been closed. with both new and existing customers. Vaccination is progressing well in the market area with c.a. 76,7% of the population in UK and 80,7% in Ireland fully vaccinated on August 16th 12#13ISI ICELAND SEAFOOD Q2 2021 Presentation to Investors and Analysts Good sales of all product categories out of Iceland € m's Q2 21 Q2 20 1H 21 1H 20 Sales 37.4 29.0 76.8 69.0 Net margin 1.7 1.3 3.5 3.0 Normalised EBITDA 0.6 0.3 1.2 0.6 Normalised PBT* 0.5 0.1 1.1 0.5 *Normalised PBT represents Profits before tax before allowing for significant items. FRESH FILLETS (€/KG) Saithe Haddock Cod FROZEN AT SEA FILLETS (€/KG) Saithe Haddock Cod 7,2 16 14 12,5 9 12,4 12 8 7,4 6,5 10,2 12,2 11,3 7,7 11,1 11,3 12,8 6,5 12 7 6,3 6,1 9,9 10,5 10,6 6,2 7,2 5,5 10 12,1 6 11,7 10,9 10,5 10 10,3 11 6 6,3 8 25 10,1 8,9 5 9,3 5,5 6 47 5,2 4,7 5,3 5,1 4,2 4 5,9 5,5 4,9 2 2 Aug Sept Oct Nov Dec Jan Feb March April June May July Aug Sept Oct Nov Dec Jan Feb March 55 5,5 7,3 55 7,2 6,4 6,3 6,8 6,5 6,1 5,3 5,3 4 5,7 2,9 2,8 2,8 2,7 2,9 3 3,1 2,9 3,1 2,7 3 2,7 3,0 5,2 April May June July 32 Strong sales growth in Q2 compared to 2020 . Sales in Q2 up 29% on last year and 1H sales 11% higher than 1H 2020. Sales helped by easing of restrictions in key markets in the period, Good sales in all product categories out of Iceland, such as fresh fish markets in Continental Europe and the UK seafrozen market have remained strong, Supply chain disruptions, especially related to transportation to and from Asia, has positively impacted sales of Icelandic products in the period to Europe and the US, Successful cooperation between the Icelandic entity and Oceanpath, where fresh fish from Iceland is becoming more competitive compared to UK origin post Brexit, >VA S-Europe > VA N-Europe > Sales & Distribution Improved profitability on prior year • • • • Net margin up €0.5m on last year, driven by higher sales, Continuing actions to reduce costs, divisional overhead costs €0.1m. down on 1H 2020, Good results from fresh fish operation in Germany and France. Results in France further supported by good sales of Argentinean shrimp in Q2, Results in USA impacted by sales of redundant inventories. Operation in the USA being simplified and risk reduced, with signing of an agreement with Villa Seafood, Vaccination is progressing well in the market area France, with c.a. 65,8% of the population fully vaccinated, Germany 65,6,% and the USA lacking behind with 51,5% on August 16th. Source: SeaData Center Source: Norges Sjomatrad 13#14ISI ICELAND SEAFOOD Q2 2021 Presentation to Investors and Analysts Results driven by continuing strong performance of Ireland, recovery of S- Europe division and negative results of UK € m's Q2 21 Q2 20 1H 21 1H 20 Sales 103.9 75.0 208.3 180.5 Net margin 7.8 6.2 18.7 15.9 Normalised EBITDA 2.2 1.5 7.3 5.7 Normalised PBT* 1.0 (0.3) 4.8 2.6 Net Profit 0.7 (0.5) 3.4 1.3 *Normalised PBT represents Profits before tax before allowing for significant items and discontinued operations. Group sales 15% up on 1H 2020 • • • • • Strong sales recovery in S-Europe from March onwards, after slow start of the year. Improved sales into HORECA from March and focus on retail sales starting to bear fruits, Significant growth in profitability of Argentina, helped by increased production capabilities and cold store investment, Strong demand from Irish retail, partly driven by local restrictions on restaurant activities, Complex and costly integration affected by supply chain disruption, continue to cause challenges for UK operations, leading to negative results in the period, Increased demand for products out of Iceland, positively impacted by easing of lockdown restrictions in key markets and difficult access to products out of Asia, Continuing focus on balance between retail and foodservice sales. Iceland Seafood Group Significant improvement in profitability, Normalised PBT up €2.2m on 1H 2020 Net margin €2.8m up on 1H 2020, driven by strong margins in S- Europe division, Overhead costs €1.2m higher than 1H 2020, mainly due to costs. associated with the UK merger and the addition of Carr&Sons, Total FX benefit of €0.6m in the 1H 2021, including €0.4m benefit from capital injection to Achernar, to finance recent investments, Normalised PBT in 1H 2021 of €4.8m is up €2.2m on last year. Q2 2021 results of €1.0m up €1.3m on last year. Q1 and Q4 are seasonally the strongest quarters for the group, with demand for certain products picking up pre easter and Christmas, After considering cost of significant items and income tax, net profit in 1H 2021 of €3.4m was up €2.1m on same period last year. 14#15ISI ICELAND SEAFOOD Q2 2021 Presentation to Investors and Analysts Private placement of ISK3.4bn, 4 year unsecured bond completed in Q2 further improves funding flexibility and headroom € m's € m's Fixed assets Leased assets Intangible assets 30.6.2021 31.12.2020 Variance 30.6.2021 31.12.2020 Variance 26.6 24.6 2.0 Total Equity 78.9 75.3 3.6 1.7 1.7 Thereof minority interest 0.1 0.1 52.6 52.7 (0.1) Long term borrowings 38.2 22.8 15.4 Deferred tax/other 3.3 3.1 0.2 Lease liabilities 1.3 1.4 (0.1) Non Current Assets 84.2 82.1 2.1 Obligations/Deferred tax 2.6 2.5 0.2 Inventory 83.1 80.9 2.2 Non Current Liabilities 42.2 26.7 15.5 Trade and other receivables 60.6 48.8 11.8 Short term borrowings 73.4 89.0 (15.5) Other assets 8.0 6.4 1.6 Trade and other payables 46.5 39.3 7.2 Bank deposits 13.3 23.3 (10.0) Other current liabilities 8.1 11.2 (3.1) Current Assets 165.0 159.3 5.6 Current liabilities 128.1 139.5 (11.4) 249.2 241.5 7.7 Total Equity and Liabilities 249.2 241.5 7.7 Total Assets Inventories €2.2m higher than at year beginning due to seasonality but have decreased by 6.8m during Q2. Inventories have come down both in UK and Spain in the quarter, but are still higher than normal, Net debt at end of June €98.3m, €9.8m higher than year beginning driven by higher receivables due to improved sales, Cash position is normalizing with deposits in Spain being utilized in the Trade receivables €11.8m higher than at operation, beginning of the year, reflecting increased sales. Collections remains good, around 90% of Group receivables insured at end of June, deposits) is around €62m at end of June, Private placement of ISK3.4bn (€23.1m) 4 Group funding headroom (including bank years unsecured bond completed in June. The issuance marks a milestone for the Icelandic Capital Market. The bond is listed on Nasdaq Iceland, Two offerings of 6 months bills for ISK1.5bn each completed in the 1H 2021. Total fixed amount of bills at end of June. amounts to €19.4m, Total equity of €78.9m at end of June, has increased by €3.6m from year beginning, resulting in equity ratio of 31.7%. 15#16ISI ICELAND SEAFOOD Q2 and 1H 2021 RESULTS PRESENTATION TO INVESTORS AND ANALYSTS Outlook#17ICELAND ISI SEAFOOD Q2 2021 Presentation to Investors and Analysts 1H results in line with plan . • • Higher end of the outlook range reduced by €1m due to adverse impact of Covid19 and longer, more costly integration process in UK Strong performance of VA S-Europe, with easing of Covid19 restrictions and positive market conditions for Argentinian Shrimp, Good results from operation in Ireland, supported by the acquisition of Carr&Sons late 2020, Costs of merging and stabilizing operations in UK still impacting results in Q1. Actions have been taken to reduce costs, at the same time new agreements have been secured with both current and new customers, which will positively impact results in 2H 2021, Covid19 restrictions have been eased in key markets which has helped sales to foodservice and HORECA customers. The sector has however not fully recovered, activity is well below pre covid levels, Based on the assumption that Covid19 restrictions will not be tightened again in key markets, the Outlook range for 2021 Normalised PBT is narrowed to €12.0 - 16.0m, i.e. higher end of the range is reduced by €1m, The level of uncertainty remains high, both in relation to Covid19 development and other key external factors. Disruptions on supply chains will continue to impact transportation and logistic costs, Based on Outlook, the Group will reach a run rate of annual Normalised PBT in excess of €20m post the pandemic. In addition to the Covid19 uncertainty, Group results are influenced by various other external factors such as: • Fishing and quota changes as well as price development and ability to pass on price changes in key markets, Changes in underlying global economic conditions, currency rates, import duty rates, competition and consumer behaviours, Political uncertainty, for example in Argentina, USA and UK related tariffs, 2,9 1,7 1,3 1,0 Full year 16,0 Normalised PBT* (m's) 3,5 3,3 7,4 11,3 12,0 5,1 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 With recent investments and projects that will increase efficiency and drive profit growth, the Group is in strong position to reach it's target of Normalised PBT in excess of €20m post the pandemic. 17#18ICELAND ISI SEAFOOD Q2 2021 Presentation to Investors and Analysts Forward Looking Statements Disclaimer This presentation is furnished and intended for European market participants and should be viewed in that manner. Any potential forward looking statements contained in this presentation are reflective of managements current views on future events and performance, whilst the views are based on positions that management believes are reasonable there is no assurances that these events and views will be achieved. Forward looking views naturally involve uncertainties and risk and consequently actual results may differ to the statements or views expressed. 18#19ISI ICELAND SEAFOOD WE ARE ICELAND SEAFOOD www.icelandseafood.com 1897