Bakkafrost strongest result ever

The Bakkafrost Group delivered a total operating EBIT
of DKK 169.3 million in Q2 2013. The combined farming
and VAP segment made an operational EBIT of DKK 157.8
million in Q2 2013. The salmon spot prices stayed on
a high level during the quarter, compared to previous
quarters. Because of the high salmon prices, the VAP
segment had an operating loss of DKK -41.8 million,
as the contracts prices still do not reflect the
current market situation. The EBITDA for the feed
segment was DKK 30.9 million in Q2 2013.

Commenting on the results, CEO Regin Jacobsen said:

"We are very satisfied with the record high result
for Q2 2013. The strong salmon prices during the
quarter and a good biology are the main reasons for
the strong result. The Farming operation delivers a
continuing strong performance, while the VAP
production is suffering during the period with high
spot prices, as we could expect. In Q3 and especially
in Q4 we expect higher margins from the VAP products.
The Fish meal, oil and feed segment had a strong
performance".

The Group made a profit for the quarter of DKK 184.2
million (DKK 90.9 million). For H1 2013 the profit
was DKK 251.7 million (DKK 107.3 million).

The total volumes harvested in Q2 2013 were 10,540
tonnes gutted weight (10,219 tgw). The total
harvested volumes in H1 2013 were 18,836 tonnes
gutted weight (21,567 tgw). The reason for the
decrease in the harvested volumes year on year is
that the harvested profile is more backend loaded in
2013, compared to 2012.

Bakkafrost transferred 1.8 million smolts in Q2 2013
(2.3 million), which is in line with the company's
plans. Year to date 3.9 million have been transferred
(4.8 million). The smolt release is less in 2013
compared to 2012, due to available sites for smolt
release.

In July 2013, Bakkafrost announced a five-year plan
for optimising its value chain, resulting in savings,
increased production and reduced biological risk. The
yearly investments amount to DKK 170 million per
year, in addition to investment in a new well boat
operated by Bakkafrost, estimated to DKK 230 million.
The purpose of the investment plan is to continue to
have one of the most costs efficient value chains in
the farming industry, increase efficiency and reduce
the biological risk, to meet the futures consumers'
trends and be more end-customer orientated.

All business activities will be retained, but the key
changes to the value chain are the centralisation of
the production units - Packaging, Harvest and VAP on
Glyvrar in the Faroes. The investments for the
centralisation amounts to DKK 300-350 million and
will result in savings of DKK 50-70 million per year,
when the plan is fully implemented in 2017.

Today, Bakkafrost operates two plants for production
of styropor boxes (Packaging), three harvesting sites
(Harvest), two well boats for transportation of live
fish and two VAP factories (VAP).

In addition to the centralisation, Bakkafrost will
build a new 3,000 m3 well boat owned and operated by
Bakkafrost.

Another part of the plan is related to organic
growth. The plan is to increase the smolt production
in terms of number and size of the smolts. This will
result in shorter production time at sea and reduce
the biological risk. By doing this, Bakkafrost is
able to increase the production within the existing
licenses. In the Farming division, the plan is to
increase the capacity and fish welfare by being able
to farm salmon in more weather exposed areas with
better water conditions. Finally, Bakkafrost plans to
increase the salmon feed production.

No redundancies are expected due to increased
production and natural leavers.

The combined farming and VAP segment made an
operational EBIT of DKK 157.8 million (DKK 78.3
million) in Q2 2013. For H1 2013 the combined farming
and VAP segment made an operational EBIT of DKK 259.0
million (DKK 138.6 million). This corresponds to an
Operational EBIT/kg for the combined farming and VAP
segment of DKK 14.97 (NOK 15.29) in Q2 2013, compared
to DKK 7.66 (NOK 7.78) in Q2 2012. For H1 2013
Operational EBIT/kg was DKK 13.75 (NOK 13.81),
compared to DKK 6.43 (NOK 6.53).

The farming segment made an operational EBIT of DKK
199.5 million (DKK 67.7 million). The improved result
is due to increased sales prices in the quarter,
compared to Q2 2012. For H1 2013 the operational EBIT
was DKK 324.1 million (DKK 116.5 million).

As expected, the VAP segment had a loss on its
operations in Q2 due to high salmon spot prices. The
VAP segment made an operational EBIT of DKK -41.8
million (DKK 10.6 million) for Q2 2013. For H1 2013
the accumulated losses amount to DKK -65.0 million
(DKK 22.1 million). There is normally a time lag
between the changes in the spot prices and the
changes in the contract prices. Therefore, typically
the VAP segment has losses the first quarters in a
longer period with increasing salmon prices.

The third segment - fishmeal, oil and feed - made an
operational EBITDA of DKK 30.9 million (DKK 13.7
million) in Q2 2013 and for H1 2013 the operational
EBITDA amounted to DKK 55.7 million (DKK 24.8
million). The increase in the EBITDA is primarily due
to higher production of fishmeal and fish oil.
In Q2 2013, Havsbrún sourced 42 thousand tonnes of
raw material (6 thousand tonnes), and for H1 2013 the
raw material intake was 74 thousand tonnes (30
thousand tonnes).

The Bakkafrost Group had a net interest bearing debt
at the end of Q2 2013 amounting to DKK 785.8 million
(DKK 806.9 million at year-end 2012) and had undrawn
credit facilities of approx DKK 617.2 million, of
which DKK 15.0 million are restricted.

Bakkafrost's equity ratio is 49%, which is the same
as at the end of 2012.

Bakkafrost paid out DKK 97.7 million in dividend in
Q2 2013.

On 14 February 2013, Bakkafrost issued unsecured
bonds at a total nominal value of NOK 500,000,000;
the disbursement date was 14 February 2013. The bonds
were listed on the market on 3 May 2013. The interest
rate is NIBOR 3 Months plus a margin of 4.15 %. The
bonds are measured at fair value at initial
recognition. The bonds mature five years from the
issue date at their nominal value.

In Q2 all full-time employees from 2012, still
employed in Bakkafrost, have received bonus shares in
Q2 with a total value of 2% of paid out salary in
2012. In total Bakkafrost has allocated 45,957 shares
to its employees at a fair value on DKK 3,206
million. The grant date was on 22 May 2013 and the
share price was DKK 69.65 (NOK 69.75) per share.

Farming:
The operating revenue for Bakkafrost's farming
segment was DKK 520.4 million in Q2 2013 (DKK 296.8
million) and DKK 945.4 million for H1 2013 (DKK 609.3
million).

Operational EBIT, which is EBIT before fair value
adjustments on biological assets, amounted to DKK
199.5 million in Q2 2013 (DKK 67.7 million), and for
H1 2013 it was DKK 324.1 million (DKK 116.5 million).

Operational EBIT/kg for the farming segment was DKK
18.93 (NOK 19.34) in Q2 2013, compared to DKK 6.63
(NOK 6.73) in Q2 2012. The salmon prices in Q2 2013
have been stronger than in Q2 2012 and thus higher
margins. Operational EBIT/kg for H1 2013 was DKK
17.20 (NOK 17.27), compared to DKK 5.40 (NOK 5.49)
for H1 2012.

Value Added Products (VAP):
The operating revenue for the value added segment
amounted to DKK 168.1 million in Q2 2013 (DKK 129.6
million). For H1 2013 the revenue was DKK 315.9
million (DKK 251.1 million). The increase in the
revenue from Q2 2012 to Q2 2013 is 30%, while the
volumes that went for VAP products only increased by
23%.

Operational EBIT amounted to DKK -41.8 million in Q2
2013 (DKK 10.6 million), corresponding to an
operational EBIT of DKK -8.61 (NOK 8.80) per kg
gutted weight in Q2 2013 (DKK 2.67 (NOK 2.72) per kg
gutted weight). The decrease in the operational EBIT
margins is due to higher salmon spot prices. The VAP
segment acquires its raw material (fresh salmon) at
spot prices each week. For H1 2013 Operational EBIT
amounted to DKK -65.0 million (DKK 22.1 million),
corresponding to an operational EBIT of DKK -7.14
(NOK -7.17) per kg gutted weight in H1 2013 (DKK 2.78
(NOK 2.83) per kg gutted weight).

Fishmeal, Fish Oil and Fish Feed:
The operating revenue for the fishmeal, fish oil and
fish feed segment amounted to DKK 250.8 million (DKK
191.0 million) in Q2 2013, of which DKK 152.8 million
represents sales to Bakkafrost's farming segment
corresponding to 60.1% (59.7%).
For H1 2013 the revenue was DKK 408.2 million (DKK
341.2 million), of which DKK 269.2 million represents
sales to Bakkafrost's farming segment corresponding
to 65.9% (63.9%).

Operational EBITDA was DKK 30.9 million (DKK 13.7
million) in Q2 2013, and the operational EBITDA
margin was 12.3% (7.19%). For H1 2013 the EBITDA was
DKK 55.7 million (DKK 24.8 million), and the margin
was 13.6% (7.27%).

Sales of feed amounted to 18,196 tonnes (20,762
tonnes) in Q2 2013, of which the farming segment
internally used 14,412 tonnes (12,376 tonnes). In H1
2013, the feed sale was 33,102 tonnes (36,061
tonnes). The internal sale was 25,403 tonnes (24,203
tonnes).

The Group's total assets as of end Q2 2013 amounted
to DKK 2,796.1 million, compared to DKK 2,570.9
million at the end of 2012.

The Group's intangible assets amounted to DKK 293.7
million at the end of Q2 2013 (DKK 293.7 million) and
comprise primarily the fair value of acquired farming
licences. No licences in the North region are
recorded with a value in the Bakkafrost accounts.

Property, plant and equipment amounted to DKK 832.8
million at the end of Q2 2013, compared to DKK 812.8
million at the end of 2012. In Q2 2013 Bakkafrost
made investments in PP&E amounting to DKK 40.0
million and in H1 for DKK 62.3 million.

Non-current financial assets amounted to DKK 109.5
million at the end of Q2 2013, compared to DKK 91.2
million at the end of 2012. The increase in the
financial assets relates mainly to the positive
result in Faroe Farming, Hanstholm Fiskemels-fabrik
and a financial investment.

The Group's carrying amount (fair value) of
biological assets amounted to DKK 815.5 million at
the end of Q2 2013, compared to DKK 747.0 million at
the end of 2012. Included in the carrying amount of
the biological assets is a fair value adjustment
amounting to DKK 215.0 million, compared to DKK 181.1
million at the end of 2012.

The Group's total inventories amounted to DKK 348.5
million as of end Q2 2013, compared to DKK 242.9
million at year-end 2012. The inventory primarily
represents Havsbrún's inventory of fishmeal, fish oil
and fish feed, in addition to feed at the feed
stations, packing materials and other raw materials.
Due to higher raw material intake at Havsbrún in
2013, than in 2012, the increase in the inventories
of around DKK 100 million relates to Havsbrún's
inventory.

The Group's total receivables amounted to DKK 306.7
million as of end Q2 2013, compared to DKK 358.4
million at the end of 2012. The decrease is primarily
due to reduction in receivables from an associated
company. On the other hand, accounts receivables have
increased slightly, due to higher salmon prices.

The Group's equity as at 30th June 2013 is DKK
1,382.7 million, compared to DKK 1,262.9 million at
the end of 2012. The change in equity in H1 2013
primarily consists of the profit for the period, a
negative fair value adjustment to a currency-
/interest rate swap related to the bond financing and
payment of dividend to the shareholders. Bakkafrost
paid out DKK 97.7 million in dividend in Q2 2013.

The Group's total non-current liabilities amounted to
DKK 1,081.4 million at the end of Q2 2013, com-pared
to DKK 990.4 million at the end of 2012. Deferred and
other taxes amounted to DKK 308.5 million, compared
to DKK 258.4 million at the end of 2012. Long-term
debt was DKK 772.8 million at the end of Q2 2013,
compared to DKK 731.9 mill-ion at the end of 2012.

Bakkafrost's interests bearing debt consists of two
bank loans and a bond loan. The bank loans are one
instalment loan of DKK 350 million, payable with DKK
25 million each quarter, and one loan payable in 2016
with the full amount of DKK 553 million. The bond
loan of NOK 500 million, was issued at 14 February
2013 and is payable in full after five years at 14
February 2018. The interest rates of the bonds are
NIBOR 3m + 4.15%. Following the issuance of the
bonds, Bakkafrost has entered into a
currency/interest rate swap, hedging the exchange
rate and switched the interest rate from NIBOR 3m to
CIBOR 3m. Bakkafrost has entered the swap due to its
exposure to DKK, as a large part of the income and
costs are in DKK and EUR.

At the end of Q2 2013, the Group's total current
liabilities are DKK 332.0 million, compared to DKK
317.6 million at the end of 2012. Short-term interest
bearing debt amounts to DKK 100.0 million and relates
to a short-term part of long-term debt as described
above. Accounts payable amount to DKK 232.0 million,
compared to DKK 217.6 million at the beginning of the
year.

Bakkafrost's equity ratio is 49%, compared to 49% at
the end of 2012.

Cash flow
The cash flow from operations in Q2 2013 was DKK
173.1 million (DKK 154.6 million). The Cash flow from
operations was aggravated by primarily in-creased
inventory amounting to DKK 40.0 million. For H1 2013
the cash flow from operations was DKK 199.8 million
(DKK 235.0 million).

The cash flow from investment activities in Q2 2013
amounted to DKK -40.7 million (DKK -19.8 million).
The amount relates primarily to invest-ments in fixed
assets. For H1 2013 the cash flow from investments
amounts to DKK -69.3 million (DKK -36.8 million).

Cash flow from financing activities totalled DKK -
169.3 million in Q2 2013 (DKK -125.1 million). The
short-term debt was increased by DKK 50.3 million,
and changes in financing of associated companies
contributed negatively with DKK -5.6 million. In Q2
2013 Bakkafrost paid out dividend to its shareholders
amounting to DKK 97.6 million. For H1 2013 cash flow
from financing amounted to DKK -68.5 million (DKK -
166.3 million).

Net change in cash flow in Q2 2013 amounted to DKK -
36.9 million (DKK 14.3 million) and for H1 2013 DKK
62.0 million (DKK 31.9 million).

At the end of Q2 2013 Bakkafrost had unused credit
facilities of approximately DKK 617.2 million of
which DKK 15.0 million is restricted.

Outlook

MARKET
The outlook for the salmon market is good. The global
supply of salmon in 2013 is expected to increases by
2-3%, compared to 2012. The increase is mainly in
Chile, while the supply in Europe is expected to be
lower than in 2012. Historically the demand for
salmon has increased 6-7% per year, theoretically
resulting in higher salmon prices in 2013, compared
to 2012, due to the low supply growth. The average
NOS price in Q2 2013 was NOK 41.50 pr. kg, compared
to NOK 26.90 pr. kg in Q2 2012. Due to seasonally
higher harvest in Q3 and Q4, salmon prices are
expected to decrease during the second half of 2013.

FARMING
Bakkafrost expects to harvest around 45,000 tonnes
gutted weight in 2013, which is on the same level as
in 2012. This means that Bakkafrost will harvest
approx 26,000 tonnes gutted weight in H2 2013.

Faroe Farming, which Bakkafrost holds 49% in, expects
to harvest 4,500 tonnes in 2013 resulting in harvest
of 1,300 tonnes in H2 2013.

The number of smolts released is one key element of
predicting the future production for the Group.
Bakkafrost's forecast for the smolt release in 2013
is unchanged at 10 million smolts, which is slightly
less than in 2012, due to available sites for smolt
release in 2013.

The estimates for harvesting volumes and smolt
releases, is as always dependent on the biological
situation in the Faroe Islands. The overall bio-
logical situation in the Faroe Islands is good. The
number of sea lice is lower than in previous years
after a coordinated treatment in the whole Faroese
farming area in the spring. The number has been
significantly lower during the summer, compared to
previous years.

Value added products (VAP)
Bakkafrost expects to sell around 60-70% of the
harvested volume of salmon on the spot market in
2013. The market place is one of Bakkafrost's most
significant risk areas. To reduce the exposure to the
market risk, Bakkafrost has a geographical approach
and a market price approach. To diver-sify the
geographical market risk, Bakkafrost sells its
products to some of the largest salmon markets in the
world, Europe, US, Russia and the Far East.
Bakkafrost´s strategy of selling 40% to 50% of the
harvested volume on contracts reduces the
fluctuations in the selling prices. The sales of
value added products are based on fixed contracts
normally lasting between 6 to 12 months, while the
whole gutted salmon is sold in the spot market.

The market for contracted VAP products follows a more
stable pattern with trends instead of short-term
fluctuations. Bakkafrost has committed contracts
representing in excess of 90% of the VAP capacity for
the rest of 2013, representing approximately 31% of
the expected harvest for the rest of 2013. As the
salmon prices have increased significantly in a short
time period, the earnings in the VAP segment are
negative in H1 2013 and most likely will be negative
in the short term, compared to sales in the spot
market. The time lag between the fluctuations in the
spot market and the fixed contracts for VAP products
are causing these patterns.

Fish oil, -meal and feed
The major market for Havsbrún´s fish feed is the
local Faroese market. It is expected that the total
consumption for fish feed in the Faroe Islands will
be approximately 90,000 tons in 2013. Depending on
the purchase from external costumers in the Faroe
Islands and abroad, the sale of fish feed will be in
the range of 80-90,000.

Havsbrún intends to increase the production of own
fishmeal and fish oil in 2013, compared to 2012. With
increasing quotas for Blue whiting in the North
Atlantic and test fishing for local Norway pout, the
access to raw material should improve. However,
depending on supply, demand and the price level, the
sourcing of raw material for the production of fish
oil and -meal is very uncertain. An alternative to
Havsbrún's production of fish oil and -meal is
purchasing from other producers, which has been
common in recent years.

Investments
In July 2013, Bakkafrost announced its investment
plan for the period 2013-2017. The yearly invest-
ments amount to DKK 170 million per year, in addition
to investments in a new well boat, operated by
Bakkafrost. The investments in the well boat are
estimated to be around DKK 230 million. Thus, the
total investments will exceed DKK 1 billion.

All business activities in the value chain will be
retained, but the key changes, are the centralisation
of the production units - Packaging, Harvest and VAP
on Glyvrar in the Faroes. The investments for the
centralisation amounts to DKK 300-350 million and
will result in savings of DKK 50-70 million per year,
when the plan is fully implemented in 2017. Today,
Bakkafrost operates two plants for production of
styropore boxes (Packaging), three harvesting sites
(Harvest), two well boats for transportation of live
fish and two VAP factories (VAP).

The purpose with the optimisation is to continue to
have one of the most costs efficient value chains in
the farming industry, increase efficiency and re-duce
the biological risk and to meet the future consumers'
trends and be more end-customer orientated.

The investments will be financed with cash flow from
the operations, by the company's existing financing
facilities, and partly with additional financing, if
this is beneficial. Bakkafrost's dividend policy will
be unchanged.

To reduce Bakkafrost's financial risk, the invest-
ments are not interdependent and will be made
independent of each other. The investment in the well
boat and the new harvesting plant is to some extent
dependent on each other, as a new well boat cannot be
fully used without one large harvesting plant. The
commitment for the other investments will be made
project by project during the coming years.

Financial
Improved market balances in the world market for
salmon products and costs effective production will
likely improve the financial flexibility going
forward. A high equity ratio together with the
Group's bank financing and the issuance of bonds,
makes Bakkafrost's financial situation strong, which
enables Bakkafrost to carry out its investment plans
to further focus on strengthening the Group, M&A's,
organic growth opportunities and fulfil its dividend
policy in the future.

Contacts:
Regin Jacobsen, CEO of P/F Bakkafrost: +298 23 50 01
(mobile)
Teitur Samuelsen, CFO of P/F Bakkafrost: +298 23 51
11 (mobile)

This information is subject of the disclosure
requirements acc. to §5-12 vphl (Norwegian Securities
Trading Act)

About Bakkafrost:
Bakkafrost is the largest salmon farmer in the Faroe
Islands. The Group is fully integrated from feed
production to smolt, farming, VAP and sales. The
Group has production of fish meal, fish oil and
salmon feed in Fuglafjørður. The Group operates
licenses on 14 farming fjords. The Group has primary
processing in Klaksvík, Kollafjørð and Strendur and
secondary processing (VAP) in Glyvrar and
Fuglafjørður. The headquarters are located in
Glyvrar, and the company has a total of 590 employees.


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