Marel hf. - Decisions of general meeting

Highlights of Marel’s Annual General Meeting 2017

Marel’s Annual General Meeting (AGM) was held at the company’s headquarters in
Gardabaer, Iceland, on March 2, 2017. All proposals presented by the Board were
approved by the meeting. 

Chairman’s address

Asthildur Margret Otharsdottir, Chairman of Marel’s Board of Directors
addressed the meeting. “2016 was yet another good year for Marel. It was a year
of strategic growth and a further strengthening of our foundations. Amidst
significant shifts in the world’s geopolitical landscape – resulting in both
political and economic uncertainty – the strategic drivers in our industry
remained intact. The immense social challenge of how to feed the world’s
population in the future continues to present Marel with opportunities for
sustainable value creation by advancing the way food is processed,” she said. 

The chairman presented the proposal to pay out dividend, corresponding to 20%
of net profits for the operational year 2016. “The Board of Directors is
pleased to propose to the Annual General Meeting today that a dividend of 15.3
million is paid to shareholders, corresponding to 20% of net profits. This is
fully in line with our dividend policy” she said. In addition, the Board of
Directors has authorized management to purchase own shares in 2017 for up to a
value of 15 million to be used as payment for potential future acquisitions,
she said. 

Asthildur also talked about the challenges that face Marel, consumers and
companies worldwide today. “During the year, significant progress was made in
developing and executing a formal approach to Marel’s corporate social
responsibility. Guiding principles for the approach to people, the planet and
profit were introduced throughout the organization and Marel became a signatory
to the UN’s Global Compact” she said. 

CEO’s address

“2016 was a great year for Marel and we are at the center point of prevailing
trends which are driving global economic development. Our vision and strategy
are clear and we are in the position to advance food processing at a global
level” said Arni Oddur Thordarson, CEO of Marel, in his address to the
company’s AGM. 

Arni Oddur Thordarson talked about Marel’s growth story, a story filled with
strategic acquisitions and strong organic growth. He took the audience back to
the year 2005, when Marel’s revenue was 129 million and EBIT 10 million and
when Marel’s main focus was on the fish industry. That same year a growth
strategy of becoming a global leader and a full line provider to the poultry,
meat and fish industries was introduced. Arni then went through the several
strategic acquisitions that later took place, the latest one being MPS Meat
processing systems in January 2016. “Marel acquired MPS without issuing new
shares and managed to stay within targeted capital structure of between x2-3
net debt/EBITDA. Net leverage was at x2.9 net debt/EBITDA after the acquisition
and solid operational performance and strong cash flow has now driven it down
to x2.25”. Since 2006, Marel’s revenue has grown around 20% per year on
average, one-third through organic growth and two-thirds through acquisitions.
This has brought Marel to its current situation; global leader in providing
advanced equipment and services for the poultry, meat and fish industries with
pro forma revenue close to 1 billion and 143 million in EBIT. 

Arni Oddur then covered the business and financial highlights of the year 2016.

“Pro forma revenue was 983 million, compared to 819 million in the previous
year for Marel stand alone. We have gradually increased the operational
performance in recent years and delivered a solid operational performance with
14.6% EBIT in 2016. Earnings per share increased by 34% between years due to an
improved operational performance and a better utilization of the balance sheet”
he added. 

Throughout the year, the modernization and maintenance business remained strong
while we saw some softness in the greenfield and expansion projects at the
beginning of the year. However, in Q4 we saw the order intake at an all-time
high with landmark projects secured for the poultry, meat and fish industries
around the globe, resulting in a strong order book entering 2017. These
greenfield projects will now go into engineering phase and will start to
deliver revenue in Q2 2017 and onwards. Our product portfolio is strong and we
introduced several revolutionary products to the market in 2016,” he added.
Significant investments were also made in advancing Marel’s business, upgrading
manufacturing equipment as well as improving facilities and IT platforms. 

Arni talked about Marel’s business model that consists of three main revenue
streams;Greenfields, modernization and standard equipment and service and spare
parts. Recurring revenue from service and spare parts are now 36% of total
revenue, compared with 7% in 2005. “Our greenfield projects are Marel’s future
revenue as they continue to deliver recurring service revenue and modernization
revenue going forward”. 

Finally Arni Oddur introduced Marel’s outlook and strategy. Marel is targeting
12% average annual revenue growth in the next 10 years. Marel’s management
expects 4-6% average market growth in the long term and the target continues to
be set at growing faster than the market organically driven by innovation and
market penetration. Strong financials and an experienced and united team make
Marel well equipped to take on further growth through strategic acquisitions.
By maintaining solid operational performance and strong cash flow a 5-7% annual
revenue growth by acquisition can be pursued. Organic and acquisition growth
will not be linear but based on opportunities, economic fluctuations and
general economic conditions. “We are firmly committed to delivering increased
value to the society, customers and shareholders by enhancing safe and
sustainable food processing.  We will continue to drive the growth forward with
passion and discipline,” he added. 

Confirmation of annual accounts

The company’s Consolidated Financial Statements and the Report of the Board of
Directors and CEO were approved by the meeting. All proposals presented were
approved by the meeting. 

Board of Directors

All seven directors on the Board of Marel were re-elected unanimously. The
board consists of: Astvaldur Johannsson, Olafur Gudmundsson, Arnar Thor Masson,
Ann Elizabeth Savage, Asthildur Margret Otharsdottir, Helgi Magnusson and
Margret Jonsdottir. 

The new Board of Directors has convened and assigned roles and
responsibilities. Asthildur Margret Otharsdottir continues as Chairman of the
Board and Arnar Thor Masson, as the Vice-Chairman of the Board. 

More information is available on Marel.com.

More information about the Annual General meeting is available on Marel.com as
well as the information page for the AGM at http://www.marel.com/agm.

Attachments:

CEO_adress_AGM_2017.pdf