Bull signals. Reasons for strong salmon prices. Vidar Strat, 22 November 2017

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1 Bull signals Reasons for strong salmon prices Vidar Strat, 22 November 17 This document is for the use of the recipient only and should not be copied or distributed to any other person or entity. Please refer to important disclosures at the end of this presentation.

2 2 The backdrop Where do we come from?

3 We were used to a cyclical salmon price Salmon price, Norway (NOK/gwe) NOK/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e Salmon price, Norway (EUR/gwe) EUR/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e 3

4 Then followed three years with more stability Salmon price, Norway (NOK/gwe) NOK/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e Salmon price, Norway (EUR/gwe) EUR/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e 4

5 Then something unexpected happened Salmon price, Norway (NOK/gwe) NOK/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e Salmon price, Norway (EUR/gwe) EUR/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e 5

6 Then something unexpected happened Salmon price, Norway (NOK/gwe) NOK/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e Salmon price, Norway (EUR/gwe) EUR/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e 6

7 Then something unexpected happened Salmon price, Norway (NOK/gwe) Salmon price, Norway (EUR/gwe) NOK/kg EUR/kg ?? '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e 7

8 Then something unexpected happened Salmon price, Norway (NOK/gwe) Salmon price, Norway (EUR/gwe) NOK/kg EUR/kg ?? '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e With «The salmon price», we mean NASDAQ salmon price (all sizes) minus NOK 0.75/kg = Old FHL price 8

9 Another year has gone What did we believe one year ago?

10 What did we believe one year ago? Salmon price, Norway (NOK/gwe) NOK/kg NOK/kg Q Q2 Q Q4 17e avg. 17e 21.7 Forward ABGSCe Actual '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e 10

11 What did we believe one year ago? Salmon price, Norway (NOK/gwe) NOK/kg NOK/kg Q Q2 Q Q4 17e avg. 17e 21.7 Forward ABGSCe Actual '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e 11

12 What did we believe one year ago? Salmon price, Norway (NOK/gwe) NOK/kg NOK/kg Q Q2 Q Q4 17e avg. 17e 21.7 Forward ABGSCe Actual '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e We believed the salmon price in 17 would be NOK 58/kg The salmon price will probably be higher in the first half of 17 than in the second half of 17 The market (Fish Pool forward curve) will probably be disappointed 12

13 What did we believe one year ago? Salmon price, Norway (NOK/gwe) NOK/kg NOK/kg Q Q2 Q Q4 17e avg. 17e 21.7 Forward ABGSCe Actual '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e We believed the salmon price in 17 would be NOK 58/kg The salmon price will probably be higher in the first half of 17 than in the second half of 17 The market (Fish Pool forward curve) will probably be disappointed 13

14 % 35% 30% 25% % 15% 10% 5% 0% -5% -10% What did we believe one year ago? Salmon price, Norway (NOK/gwe) NOK/kg % 11% 3% 10-3% -4% 0 Q1 Q2 Q3 Q4 17e avg. 17e Forward ABGSCe Actual Actual vs. ABGSCe ( ) We believed the salmon price in 17 would be NOK 58/kg Missed by 3% (forward price missed by 12%) The salmon price will probably be higher in the first half of 17 than in the second half of 17 The market (Fish Pool forward curve) will probably be disappointed 14

15 % 35% 30% 25% % 15% 10% 5% 0% -5% -10% What did we believe one year ago? Salmon price, Norway (NOK/gwe) NOK/kg % 11% 3% 10-3% -4% 0 Q1 Q2 Q3 Q4 17e avg. 17e Forward ABGSCe Actual Actual vs. ABGSCe ( ) We believed the salmon price in 17 would be NOK 58/kg Missed by 3% (forward price missed by 12%) The salmon price will probably be higher in the first half of 17 than in the second half of 17 True, but the forward curve expected the same The market (Fish Pool forward curve) will probably be disappointed 15

16 % 35% 30% 25% % 15% 10% 5% 0% -5% -10% What did we believe one year ago? Salmon price, Norway (NOK/gwe) NOK/kg % 11% 3% 10-3% -4% 0 Q1 Q2 Q3 Q4 17e avg. 17e Forward ABGSCe Actual Actual vs. ABGSCe ( ) We believed the salmon price in 17 would be NOK 58/kg Missed by 3% (forward price missed by 12%) The salmon price will probably be higher in the first half of 17 than in the second half of 17 True, but the forward curve expected the same The market (Fish Pool forward curve) will probably be disappointed 16

17 % 35% 30% 25% % 15% 10% 5% 0% -5% -10% What did we believe one year ago? Salmon price, Norway (NOK/gwe) NOK/kg % -3% WARNING Past performance is no guarantee of future results 11% 3% -4% Q1 Q2 Q3 Q4 17e avg. 17e Forward ABGSCe Actual Actual vs. ABGSCe ( ) We believed the salmon price in 17 would be NOK 58/kg Missed by 3% (forward price missed by 12%) The salmon price will probably be higher in the first half of 17 than in the second half of 17 True, but the forward curve expected the same The market (Fish Pool forward curve) will probably be disappointed 17

18 Salmon supply growth Where everybody seems to agree

19 Both main salmon farming regions are in recovery mode Global supply of Atlantic salmon (18e) 7% 24% 6% 4% 6% 53% Norway Chile UK Canada Faroes Others = growth potential in Source: ABG Sundal Collier, Kontali

20 W'1 W'3 W'5 W'7 W'9 W'11 W'13 W'15 W'17 W'19 W'21 W'23 W'25 W'27 W'29 W'31 W'33 W'35 W'37 W'39 W'41 W'43 W'45 W'47 W'49 W'51 Norway: The trend in harvest sizes is improving Kg GW Average harvest size, spot (gwe*) YTD: 4.16 kg YTD 16: 4.10 kg High/low '06-'16 Avg. '06-' kg WFE Average harvest size, total volume (wfe*) YTD: YTD 16: 4.84 kg 4.71 kg Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec High/low '06-'16 Average '06-' Source: Sjømat Norge, NASDAQ, Directorate of Fisheries. * gwe = gutted weight equivalent, wfe = whole fish equivalent

21 Harvest size in Norway hit 10 year low due to sea lice Harvest volume vs # individuals Norway Harvest size Norway KPIs and annual summary e 18e 19e Average harvest weight (WFE kg) Number of smolts expected to be harvested (m) Actual number of harvested fish (m) Mortality and losses/wastage/other 19% 14% 16% 16% 13% 16% % % 18% Smolt yield, fish harvested (WFE kg) Harvest (WFE ktonnes) % 18% -3% 5% 3% -5% 2% 7% 4% 21 Source: ABG Sundal Collier, Directorate of Fisheries

22 e 18e Chilean production recovers after the algal bloom Chile Annual smolt release (salmon) Estimated supply growth Chile Mill. individuals % 16% 100 9% 9% % 32-76% 122% 71 65% 117 Y-o-y ch. 150% % 25% 50% -4% 2% -7% 0% 5% 6% 0% -50% -100% ktonnes wfe Normalised Low smolt smolt release, release due average yield Algal bloom to financial distress ktonnes wfe Annual smolt release Y-o-y change, smolt release e 17e 18e 19e e Region X Region XI Region XII 0 KPIs and annual summary e 18e 19e Average harvest weight (WFE kg) Number of smolts expected to be harvested (m) Actual number of harvested fish (m) Mortality and losses/wastage/other 12% 15% 22% 21% 8% 26% 15% 14% 14% Smolt yield, fish harvested (WFE kg) Harvest (WFE ktonnes) % 29% 25% 3% -16% 9% 6% 6% 22 Source: ABG Sundal Collier, Company data, Urner Barry, NASDAQ, Sjømat Norge, FactSet, AquaBench

23 e 18e 19e Hence, we see global supply growth at 6% in 18 7% 6% Estimated supply growth Gobally Growth y-o-y ktonnes 25% 22% 2,700 % % 19% 2,0 18% 15% 15% 11% 11% 13% 2,100 15% 12% 1,800 9% 7% 8% 10% 9% 10% 7% 6% 1,500 5% 5% 4%2% 2% 1,0-2% 6% -1% 4% 4% 900 0% 0-5% % -7% 0 Global supply, ktonnes Global supply growth 23 Source: ABG Sundal Collier, Company data, Urner Barry, NASDAQ, Sjømat Norge, FactSet, AquaBench

24 e 18e 19e Hence, we see global supply growth at 6% in 18 7% 6% Estimated supply growth Gobally Growth y-o-y ktonnes 25% 22% 2,700 % % 19% 2,0 18% 15% 15% 11% 11% 13% 2,100 15% 12% 1,800 9% 7% 8% 10% 9% 10% 7% 6% 1,500 5% 5% 4%2% 2% 1,0-2% 6% -1% 4% 4% 900 0% 0-5% % -7% 0 Global supply, ktonnes Global supply growth Consensus seems to be in the same area (Kontali says 7% global supply in 18) 24 Source: ABG Sundal Collier, Company data, Urner Barry, NASDAQ, Sjømat Norge, FactSet, AquaBench

25 The salmon price reaction Is the market perception too negative?

26 6% global supply growth = 2% price increase NOK 61/kg Nominal supply/salmon price regression (EUR) +2? Nominal price change (EUR) 50% 16e 13? % 30% % 10% 0% -10% 15 -% -30% e? 14 R 2 = % -10% -5% 0% 5% 10% 15% % 25% Global supply change (Atl. salmon)? 26

27 6% global supply growth = 2% price increase NOK 61/kg Nominal supply/salmon price regression (EUR) +2? Nominal price change (EUR) 50% 16e % 13 30% % 10% 0% 14-10% 15 -% -30% R 2 = % -10% -5% 0% 5% 10% 15% % 25% Global supply change (Atl. salmon)? Is it really that simple? 18e?? 27

28 6% global supply growth = 2% price increase NOK 61/kg 28 Nominal price change (EUR) 50% 16e % Nominal supply/salmon price regression (EUR) 13 30% % 10% 0% 14-10% 15 -%? R 2 = % -% -10% -5% 0% 5% 10% 15% % 25% Global supply change (Atl. salmon)?

29 6% global supply growth = 2% price increase NOK 61/kg 29 Nominal price change (EUR) 50% 16 % Nominal supply/salmon price regression (EUR) 13? 30% % 10% 17e 0% 14-10% 15 -% % R 2 = % -10% -5% 0% 5% 10% 15% % 25% Global supply change (Atl. salmon)?

30 6% global supply growth = 2% price increase NOK 61/kg How reliable is this regression really? 30 Nominal price change (EUR) 50% 16 % Nominal supply/salmon price regression (EUR) 13 30% % 10% 17e 0% 14-10% 15 -% %? R 2 = % -10% -5% 0% 5% 10% 15% % 25% Global supply change (Atl. salmon)?

31 6% global supply growth = 2% price increase NOK 61/kg How reliable is this regression really? 31 Nominal price change (EUR) 50% 16 % Nominal supply/salmon price regression (EUR) 13 30% % 10% 17e 0% 14-10% 15 -% %? R 2 = % -10% -5% 0% 5% 10% 15% % 25% Global supply change (Atl. salmon)?

32 Relative pricing has mattered in 12/13 Subtitle Salmon vs other protein (index since 00) Salmon vs other proteins (index since 1990) Index value Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Salmon index Beef Poultry Pork Jan-15 Jan-16 Ratio 1.4x 1.3x 1.2x 1.1x 1.0x 0.9x 0.8x 0.7x 0.6x 0.5x 0.4x x 1.2x High/low band Salmon price/meat price ratio e Salmon vs. avg. meats 1.0x 0.8x 0.6x 0.4x Jan-90 Jan-93 Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 Jan-17 32

33 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 Change in salmon price (EUR) The deviations vs the regression line are not random Nominal supply/price regression model (year) Nominal supply/price regression model (month) Nominal price change (EUR) 50% 16 % 13 R 2 = % % 10% 17e 0% 14-10% % -30% -% -10% -5% 0% 5% 10% 15% % 25% Global supply change (Atl. salmon) Deviations versus the regression line (monthly) Change in salmon price (EUR) 80% % % % 0% -% -% y = x R² = % -% -10% 0% 10% % 30% Global change in supply ABGSC demand indicator (deviation vs. model) 80% % % % 0% September 08: 13% supply growth Expected price change: -10% Actual price change: +10% Deviation = +pp % -% y = x R² = % -% -10% 0% 10% % 30% Global change in supply - 33 Source: ABG Sundal Collier, NASDAQ, Kontali, Bloomberg, FAO

34 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 Can we explain these deviations? ABGSC demand indicator Demand indicator (lhs) 34 Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

35 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 The price relative to other proteins 12 months ago is important ABGSC demand indicator vs price of salmon relative to other proteins (meats) Demand indicator (lhs) Salmon vs other meats (12 months lag, rhs) 35 Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

36 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 The future did not look bright ABGSC demand indicator vs price of salmon relative to other proteins (meats) Demand indicator (lhs) Salmon vs other meats (12 months lag, rhs) 36 Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

37 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 And the salmon price came in lower than expected ABGSC demand indicator vs price of salmon relative to other proteins (meats) Demand indicator (lhs) Salmon vs other meats (12 months lag, rhs) 37 Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

38 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 Change in salmon price (EUR) After some recovery, November looks like a disappointment Change in global supply vs change in salmon price (Oct/Nov are estimates) 80% % % % 0% -% -% Jan-17 Apr-17 Feb-17 Mar-17 Jun-17 Sep-17 Aug-17 May-17 y = x R² = Jul-17 Oct-17e -% Nov-17e -% -10% 0% 10% % 30% Global change in supply Historical over/underperformance vs regression (global volumes) 80 Oct-17e 0 - Sep-17 - Nov-17e - 38 Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

39 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 What are future probable scenarios? ABGSC demand indicator vs price of salmon relative to other proteins (meats) Demand indicator (lhs) Salmon vs other meats (12 months lag, rhs) 39 Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

40 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 What are future probable scenarios? ABGSC demand indicator vs price of salmon relative to other proteins (meats) e implied Scenario salmon price High 64.2 OK 57.9 Low 51.7 Very low 45.4 Demand indicator (lhs) Salmon vs other meats (12 months lag, rhs) Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

41 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 We believe the salmon price will be above NOK 55 in 18 ABGSC demand indicator vs price of salmon relative to other proteins (meats) e implied Scenario salmon price High 64.2 OK 57.9 Low 51.7 Very low 45.4 Demand indicator (lhs) Salmon vs other meats (12 months lag, rhs) 41 Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

42 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 Gradual recovery in the indicator means decent price for 18 ABGSC demand indicator vs price of salmon relative to other proteins (meats) Demand indicator (lhs) Salmon vs other meats (12 months lag, rhs) 42 Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

43 Jan-05 Aug-05 Mar-06 Oct-06 May-07 Dec-07 Jul-08 Feb-09 Sep-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Mar-13 Oct-13 May-14 Dec-14 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 Gradual recovery in the indicator means decent price for 18 ABGSC demand indicator vs price of salmon relative to other proteins (meats) NOK 59.5/kg Demand indicator (lhs) Salmon vs other meats (12 months lag, rhs) 43 Source: ABG Sundal Collier, FAO, NASDAQ, Bloomberg, Kontali

44 What do we believe in now? Salmon price, Norway (NOK/gwe) NOK/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e Salmon price, Norway (EUR/gwe) EUR/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e With «The salmon price», we mean NASDAQ salmon price (all sizes) minus NOK 0.75/kg = Old FHL price 44

45 What do we believe in now? Salmon price, Norway (NOK/gwe) NOK/kg Fish Pool NOK 56.25/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e Salmon price, Norway (EUR/gwe) EUR/kg '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e With «The salmon price», we mean NASDAQ salmon price (all sizes) minus NOK 0.75/kg = Old FHL price We assume EURNOK 9.45 in 18 (spot is currently 9.65) 45

46 Concluding remarks 46

47 Concluding remarks We believe the salmon price in 18 will be NOK 59.5/kg, down 1% from 17e at NOK 59.8/kg 47

48 Concluding remarks We believe the salmon price in 18 will be NOK 59.5/kg, down 1% from 17e at NOK 59.8/kg The market probably has a better estimate about what is coming this time Fish Pool forward curve is currently at NOK 56.3/kg for 18 (we are 5.7% above) 48

49 Concluding remarks We believe the salmon price in 18 will be NOK 59.5/kg, down 1% from 17e at NOK 59.8/kg The market probably has a better estimate about what is coming this time Fish Pool forward curve is currently at NOK 56.3/kg for 18 (we are 5.7% above) Risks to our conclusion 49

50 Concluding remarks We believe the salmon price in 18 will be NOK 59.5/kg, down 1% from 17e at NOK 59.8/kg The market probably has a better estimate about what is coming this time Fish Pool forward curve is currently at NOK 56.3/kg for 18 (we are 5.7% above) Risks to our conclusion Biological challenges/surprises 50

51 Concluding remarks We believe the salmon price in 18 will be NOK 59.5/kg, down 1% from 17e at NOK 59.8/kg The market probably has a better estimate about what is coming this time Fish Pool forward curve is currently at NOK 56.3/kg for 18 (we are 5.7% above) Risks to our conclusion Biological challenges/surprises Inventory release/build-up in Chile 51

52 Concluding remarks We believe the salmon price in 18 will be NOK 59.5/kg, down 1% from 17e at NOK 59.8/kg The market probably has a better estimate about what is coming this time Fish Pool forward curve is currently at NOK 56.3/kg for 18 (we are 5.7% above) Risks to our conclusion Biological challenges/surprises Inventory release/build-up in Chile Currency EURNOK 52

53 Concluding remarks We believe the salmon price in 18 will be NOK 59.5/kg, down 1% from 17e at NOK 59.8/kg The market probably has a better estimate about what is coming this time Fish Pool forward curve is currently at NOK 56.3/kg for 18 (we are 5.7% above) Risks to our conclusion Biological challenges/surprises Inventory release/build-up in Chile Currency EURNOK China 53

54 54 Thank you for your attention!

55 Disclaimer Analyst Certification I/We, Vidar Strat, the author(s) of this report, certify that not withstanding the existence of any such potential conflicts of interests referred to below, the views expressed in this report accurately reflect my/our personal view about the companies and securities covered in this report. I/We further certify that I/We have not been, nor am/are or will be, receiving direct or indirect compensation related to the specific recommendations or views contained in this report. Stock ratings distribution Analyst stock ratings definitions BUY = We expect this stock s total return to exceed the market s expected total return by 5% or more over the next six months. HOLD = We expect this stock s total return to be in line with the market s expected total return within a range of 4% over the next six months. SELL = We expect this stock s total return to underperform the market s expected total return by 5% or more over the next six months. Analyst valuation methods When setting the individual ratings, ABG Sundal Collier assumes that a normal total absolute return (including dividends) for the market is 8% per annum, or 4% on a 6-month basis. Therefore, when we rate a stock a buy, we expect an absolute return of 9% or better over six months. We have more rigorous guidelines for trading buys and trading sells on small cap stocks, defined as having a market capitalisation below USD 1.5 billion. For trading buys on small cap stocks, we must identify a potential absolute return of 15% or more over the next six weeks. This more rigorous guideline reflects the fact that the low trading volume for small cap stocks inhibits the ability to trade them within a narrow price band. ABG Sundal Collier analysts publish price targets for the stocks they cover. These price targets rely on various valuation methods. One of the most frequently used methods is the valuation of a company by calculation of that company s discounted cash flow (DCF). Another valuation method is the analysis of a company s return on capital employed relative to its cost of capital. Finally, the analysts may analyse various valuation multiples (e.g. the P/E multiples and the EV/EBITDA multiples) relative to global industry peers. In special cases, particularly for property companies and investment companies, the ratio of price to net asset value is considered. Price targets are changed when earnings and cash flow forecasts are changed. They may also be changed when the underlying value of a company s assets changes (in the cases of investment companies, property companies or insurance companies) or when factors impacting the required rate of return change. 55

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57 Norway ABG Sundal Collier ASA Pb Vika Munkedamsveien 45E 7th floor NO-0115 Oslo Sweden ABG Sundal Collier AB Box 7269 Regeringsgatan 65 5th floor SE Stockholm United Kingdom ABG Sundal Collier Ltd. St Martins Court 5th floor 10 Paternoster Row London EC4M 7EJ Denmark ABG Sundal Collier ASA Copenhagen Branch Forbindelsesvej 12, St. DK-2100 Copenhagen Ø Tel Fax Tel Fax Tel Fax Tel Fax Germany ABG Sundal Collier ASA Frankfurt Branch Schillerstrasse 2 5. Obergeschoss DE-313 Frankfurt /Main USA ABG Sundal Collier Inc. 850 Third Avenue Suite 9-C New York NY Singapore ABG Sundal Collier Pte Ltd 10 Collyer Quay Ocean Financial Center #-07, Singapore Tel Fax Tel Fax Tel This material has been prepared by ABG Sundal Collier ASA, or an affiliate thereof ("ABGSC"). This material is for distribution only under such circumstances as may be permitted by applicable law. It has no regard to the specific investment objectives, financial situation or particular needs of any recipient. It is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the materials. It should not be regarded by recipients as a substitute for the exercise of their own judgement. Any opinions expressed in this material are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of ABGSC as a result of using different assumptions and criteria. ABGSC is under no obligation to update or keep current the information contained herein. ABGSC, its directors, officers and employees' or clients may have or have had interests or long or short positions in the securities or other financial instruments referred to herein and may at any time make purchases and/or sales in them as principal or agent. ABGSC may act or have acted as market-maker in the securities or other financial instruments discussed in this material. Furthermore, ABGSC may have or have had a relationship with or may provide or has provided investment banking, capital markets and/or other financial services to the relevant companies. Neither ABGSC nor any of its affiliates, nor any of ABGSC' or any of its affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this material. 16 ABG Sundal Collier ASA. All rights reserved. ABG Sundal Collier ASA specifically prohibits the redistribution of this material and accepts no liability whatsoever for the actions of third parties in this respect.