Salmon Evolution Asa · OSL:SALME
Salmon Evolution Asa — Q2 2022 Earnings Presentation
34 slides from Salmon Evolution Asa's earnings presentation, Aug 18, 2022
Slide 1: Q2 2022 Presentation
Q2 2022 PRESENTATION 18 August 2022
Slide 2: Disclaimer
DISCLAIMER This presentation (the “Presentation”) has been prepared by Salmon Evolution ASA (the “Company” and together with is subsidiaries, the “Group”) except where context otherwise requires, solely for information purposes. This Presentation, and the information contained herein, does not const
Slide 3: Agenda
Agenda • Highlights • Extending the ocean potential™ • Operations • Financials • Summary and outlook • Appendices 3 Q2 2022 Presentation
Slide 4: Q2 2022 Highlights
Q2 2022 HIGHLIGHTS Q2 2022 • Strong batch 1 biological performance with growth well exceeding expectations. Average weight around 20% ahead of plan and already ~2.3 kg as per 15 August – on track for first commercial harvest in Q4 2022 • Carried out extensive quality testing confirming good filet qu
Slide 5: Agenda
Agenda • Highlights • Extending the ocean potential™ • Operations • Financials • Summary and outlook • Appendices 5 Q2 2022 Presentation
Slide 6: Salmon Evolution at a Glance
SALMON EVOLUTION AT A GLANCE Company overview Salmon farming facilities ▪ Established in 2017 Indre Harøy Yangyang ▪ Based in Hustadvika, strategically located on the west coast of Norway ▪ Listed on main list at Oslo Stock Exchange in 2021 ▪ Market capitalization of USD 300m+ 49% ownership ▪ Highly
Slide 7: Salmon Evolution is aiming to be the global leader in land-based salmon farming
SALMON EVOLUTION IS AIMING TO BE THE GLOBAL LEADER IN LAND-BASED SALMON FARMING Salmon Evolution in a nutshell 1 2 3 4 5 Born in Norway – Biology is our most International expansion First-mover aiming for Premium position the cradle of salmon important consideration with strong local partners techno
Slide 8: Biology is our number one priority
BIOLOGY IS OUR NUMBER ONE PRIORITY Key drivers of technology choice 1 2 3 We have found the sweet-spot: Capturing the benefits of both Minimizing risk: Hybrid flow-through system (HFS) land-based & sea-based farming Each tank is a separate biozone Long-term Illustrative cost curve by technology Sea-
Slide 9: International expansion enabled by our competence and track record
INTERNATIONAL EXPANSION ENABLED BY OUR COMPETENCE AND TRACK RECORD Scalable and capital light expansion models enabled by Global opportunities enabled by HFS technology technological & operational know-how Ocean temperatures and suitability for salmon farming 1 2 3 4 … Royalties & Selling project Sa
Slide 10: State of the art downstream capabilities forming a strong foundation for long term price premiums
State of the art downstream capabilities forming a strong foundation for long term price premiums World-class downstream capabilities from day 1… …while building a premium position Enabled by partnership with Vikenco 1 2 Sustainability Quality 1 ▪ Highly experienced and reputable State of the art se
Slide 11: Agenda
Agenda • Highlights • Extending the ocean potential™ • Operations – Norway • Financials • Summary and outlook • Appendices 11 Q2 2022 Presentation
Slide 12: Continued strong biological performance
CONTINUED STRONG BIOLOGICAL PERFORMANCE • Batch 1 has continued to perform well and is around 20% ahead of plan at current ~2.3 kg – on track for Q4 harvest • Batch 2 released in July – strong initial growth figures • Feeding and growth numbers continuing to exceed expectations, reflecting stable co
Slide 13: Strong start to Indre Harøy farming operations
STRONG START TO INDRE HARØY FARMING OPERATIONS Group biomass development 30 June 2022 15 August 2022 Biomass Biomass Batch Units (#) Weight (g) Units (#) Weight (g) Comments (tonnes) (tonnes) Stable conditions with growth well Batch #1 ~100,000 ~1,480 148 ~100,000 ~2,250 225 exceeding expectations S
Slide 14: Very good start for batch 1 and batch 2 continuing to perform well
VERY GOOD START FOR BATCH 2 AND BATCH 1 CONTINUING TO PERFORM WELL Comments Compounded daily growth rate (%) 2,5 • Batch 1: ➢ Now at ~2.3 kg compared to 1.5 kg per 2,25 30 June – about 20% ahead of plan to date 2 Compounded daily growth rate (%) ➢ Stable nominal growth levels but growth 1,75 rate wi
Slide 15: Phase 1 project update
PHASE 1 PROJECT UPDATE • All buildings and structural facilities completed • Remaining construction work mainly related to installation of equipment and piping as well as system integration • Two tanks currently in operation – next two tanks to be taken into operation in connection with splitting an
Slide 16: No changes in production plan
NO CHANGES IN PRODUCTION PLAN Q1 2022 Q2 2022 Q3 2022 Q4 2022 Batch #1 100,000 smolt On-growing First harvest Batch #2 In-house sourcing 230,000 smolt On-growing of smolt from Kraft Batch #3 Laks 200,000 smolt On-growing “Steady state” volume – new smolt Batch #4 release every second month in phase
Slide 17: Agenda
Agenda • Introduction • Extending the ocean potential™ • Operations – International • Financials • Summary and outlook • Appendices 17 Q2 2022 Presentation
Slide 18: K Smart Farming – focus on engineering and permits
K SMART FARMING – FOCUS ON ENGINEERING AND PERMITS • K Smart JV with Dongwon Industries formalized end of March Yangyang on-growing site 2021 and first tranche of equity investment completed in May 2021 • Ownership split 49/51% for SE and Dongwon, respectively • Dongwon to provide 75% debt financing
Slide 19: Launching North America expansion
LAUNCHING NORTH AMERICA EXPANSION Comments Tentative timeline • Actively evaluating selected identified 2022 2023 2024 2025 2026 2027 2028 potential production sites in North America, both on the west and east coast Site selection and initial due diligence • Current focus is centred on site selectio
Slide 20: Agenda
Agenda • Highlights • Extending the ocean potential™ • Operations • Financials • Summary and outlook • Appendices 20 Q2 2022 Presentation
Slide 21: Group Profit & Loss
GROUP PROFIT & LOSS Summary of result (figures in NOK 1000) Note Q2 2022 Q2 2021 YTD 2022 YTD 2021 2021 • NOK 12.7m in revenues in Q2 2022 relating to Revenue from contracts with customers 2 12,689 0 19,515 0 12,047 Other income -11 0 -19 0 209 external smolt sales – last deliveries under Total oper
Slide 22: Q2 2022 Cash Flow
Q2 2022 CASH FLOW 93 525 NOKm 430 287 -9 -20 -190 -10 -3 -3 -10 -40 Cash per Q1 Operational Changes in Phase 1 Capitalized Phase 2 IFRS effects Other Change Equity issue Debt change Cash per Q2 22 CF WC capex G&A payables 22 CF operations CF investments CF financing 22 Q2 2022 Presentation
Slide 23: Indre Harøy Phase 1 Capex
INDRE HARØY PHASE 1 CAPEX Comments Accumulated Indre Harøy phase 1 CAPEX (NOKm) 1 427 • Accumulated capex of NOK 1,354 million from Capitalized internal G&A Investments (Indre Harøya) 1 228 74 project initiation in 2019 ex. capitalized internal Land 969 G&A 745 1,354 1 303 506 • Full Phase 1 capex e
Slide 24: High volatility in raw material prices but markets seem to have normalized somewhat lately
HIGH VOLATILITY IN RAW MATERIAL PRICES BUT MARKETS SEEM TO HAVE NORMALIZED SOMEWHAT LATELY Comments Copper (USD/MT) Aluminium (USD/MT) Iron ore (USD/MT) • Unprecedented rally in raw 11 000 4 500 250 material prices post Covid- 225 19, but downward trend 10 000 4 000 recent months 200 • Significant l
Slide 25: Continuing Indre Harøy Phase 2 preparations
CONTINUING INDRE HARØY PHASE 2 PREPARATIONS • Commenced initial design and engineering activities with focus on implementing learning effects from phase 1 and identifying cost Phase 2 savings • Currently seeing inflation pressure on the raw material intensive part of the project • High uncertainty i
Slide 26: Favorable capex and competitive opex
FAVORABLE CAPEX AND COMPETITIVE OPEX Salmon Evolution cost position compared to traditional farming CAPEX OPEX All figures in Freight NOK/kg Traditional farming Salmon Evolution Traditional farming Salmon Evolution 2022-figures ≈240 Equipment 25 Currently 40-50 ≈190 Depreciation ≈175 Other (incl. se
Slide 27: Fully funded for committed projects
FULLY FUNDED FOR COMMITTED PROJECTS Total funding Total uses 146 237 173 25 762 525 418 Cash Q2 22 Undrawn Available liquidity Remaining capex K Smart Kraft Laks sellers WC / Other / committed debt IH phase 1 credit Expansion* facilities 27 Q2 2022 Presentation *Expansion includes part financing of
Slide 28: Agenda
Agenda • Highlights • Extending the ocean potential™ • Operations • Financials • Summary and outlook • Appendices 28 Q2 2022 Presentation
Slide 29: Roadmap to 100,000 tonnes HOG
ROADMAP TO 100,000 TONNES HOG 2020 2022 2024 2026 2028 2030 2032 NORWAY 31.5kt Indre Harøy based on current licenses Phase 1 Phase 2 Phase 3 7.9kt 7.9kt 15.7kt ++ 31.5kt+ ASIA South Korea South Korea phase 1 phase 2 ++ 8.4kt 8.4kt 16.8kt+ North America North America 31.5kt+ ++ 31.5kt+ TOTAL 100kt 29
Slide 30: Summary & Outlook
SUMMARY & OUTLOOK • Continued strong biological performance with growth well exceeding expectations • Batch 1 about 20% ahead of plan and currently at ~2.3 kg • Limited test slaughter completed at Vikenco and on track for first commercial harvest in Q4 2022 • Batch 2 already performing very well – e
Slide 31: Q&A
Q&A www.salmonevolution.no 31 Q2 2022 Presentation
Slide 32: Agenda
Agenda • Introduction and highlights • Extending the ocean potential™ • Operations • Financials • Summary and outlook • Appendices 32 Q2 2022 Presentation
Slide 33: Strong management team with extensive experience leading a growing organization and corporation
Strong management team with extensive experience leading a growing organization and corporation Management team Organizational structure Corporate structure Håkon André Berg Chief Executive Officer ▪ >15 years experience within strategy, About 50 FTEs across the Group business development and financ
Slide 34: Highly competent board of directors backed by strong owners
Highly competent board of directors backed by strong owners Board of directors Ownership as per 10 August 2022 Tore A. Tønseth Eunhong Min Ownership Board Shareholders Comments Chairman of the board Board member share representative ▪ Investment Director at Ronja ▪ Chief Operating Officer of Owned b