Norcod As · OSL:NCOD
Norcod As — Investor Presentation (February 2024)
50 slides from Norcod As's investor presentation, Feb 28, 2024
Slide 1: Norcod Company presentation
Norcod Company presentation February 2024
Slide 2: Disclaimer
Disclaimer THIS DOCUMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, HONG KONG OR SOUTH AFRICA OR TO ANY RESIDENT THEREOF OR ANY OTHER JURISDICTION WHERE SUCH DISTRIBUTION IS
Slide 3: Key investment highlights
Key investment highlights 1 Market leader: A pioneer and market leader within cod farming having harvested over 70% of the volume in 2023 and having over 50% over the biomass at sea Proven production: ~3 full production cycles completed and latest with 93% of fish 2 classified as superior quality an
Slide 4: Agenda
Agenda 1. Introduction to Norcod 2. Operations 3. Market 4. Financials 5. Appendix 6. Risk factors 4
Slide 5: Norcod – a pioneer in the modern cod farming industry
Norcod – a pioneer in the modern cod farming industry Introduction to Norcod Harvest volume ‘000 tonnes WFE 26 Norcod is an innovative producer of premium Atlantic Cod and positioned as Trondheim-based company listed on Euronext the leader of cod farming Growth in 2020 Volume from current sites Avai
Slide 6: Cemented position as the leading player in a fast-growing industry
Cemented position as the leading player in a fast-growing industry 52% of total biomass at sea 71% of total harvest volume ~29% Harvest ~48% Biomass volumes at sea 52% 2023 2023 71% Norcod Others Source: Company estimates, Norsk Råfisklag 6
Slide 7: Significant biological and operational improvements
Significant biological and operational improvements Weight increase in juveniles FCR development1 % of fish classified as superior 52% 1.05 93% ’22-’23 increase in weight of juveniles FCR in 2023 % of fish classified as superior ‘23 Weight increase from 82g to FCR down from 1.16 in 2022 8pp increase
Slide 8: A green vision for a blue future
A green vision for a blue future Production methods with major Healthy, high-quality cod - Certified ESG friendly production environmental gains a source to sustainable protein Highly scalable - can supply the growing Sustainably sourced and certified feed population with food Certified responsible
Slide 9: Agenda
Agenda 1. Introduction to Norcod 2. Operations 3. Market 4. Financials 5. Appendix 6. Risk factors 9
Slide 10: This is Norcod
This is Norcod Headquarters and feeding centre Trondheim Frosvika Harvest facility Labukta Kråkøy Slakteri Bjørnvika Sites Jamnungen (3,600 tonnes MAB) Skogsøya (1,560 tonnes MAB) Kråkøy Norcod Skogsøya og Pålskjera Pålskjera (1,560 tonnes MAB) Trondheim (HQ) Jamnungen Bjørnvika (3,600 tonnes MAB) L
Slide 11: From broodstock to final product in only 26 months
From broodstock to final product in only 26 months 1 2 3 4 5 6 6 8 Broodstock Roe Larvae/Fry Juvenile Sea phase Harvest Logistics Plate 1 14 3 5 18 1 1 3 day days months months months day day days The cod is held at Eggs at 1.4mm. The Live feed of larvae Fry is moved to The cod is transferred Profes
Slide 12: Norcod is a part of every step of the value chain
Norcod is a part of every step of the value chain Broodstock Roe/larvae Fry Juvenile Sea phase Harvest Logistics Product Cod biology has developed vastly through 20 years of dedicated R&D. The Better growth Better farming Professionalised Infrastructure Sustainable, current 8th generation of broodst
Slide 13: Fry (Broodstock, Roe & Larvae)
Fry (Broodstock, Roe & Larvae) • The fry is the first step of the value chain and has been one of the bottlenecks to succeed in cod farming. Cod biology has developed vastly through 20 years of dedicated R&D and the current 8th generation of broodstock is a highly stable product with increased yield
Slide 14: Juvenile
Juvenile Juvenile 2022 vs 2023 • The Juvenile Phase, which is the second stage in the value chain, involves Weight grams transferring the newly hatched fish to a land-based facility, where they will 140 spend approximately five months growing until they are large enough to be moved to the sea phase.
Slide 15: Sea Phase
Sea Phase The sea phase is the largest phase of the cod's life and is Norcod's core operation. Norcod is seeking to increase the permitted production capacity at its locations, allowing for more tons per location. This has the potential to reduce overhead costs per kilogram significantly. Other cost
Slide 16: Harvest
Harvest Until June 2023, Norcod used external partners for this process, but the company acquired the harvest facility, Kråkøy, at that time. Previously, the company faced issues with a lack of waiting pens, leading to high wellboat costs, which have now been avoided. Additionally, the harvest facil
Slide 17: Jamnungen 22-24 cycle result
Jamnungen 22-24 cycle result Jamnungen Generation 20 vs. Generation 22 Fish harvested: 1,241,513 fish Average harvesting weight (W/R): 3,186gr Weight, grams Total volume: 3,955,637 kg 3.500 Excepted cost price pr. kg: NOK 44.92/kg Biological feed conversion rate: 0.959 Economical feed conversion rat
Slide 18: Maturation risk mitigation
Maturation risk mitigation Change in light regime Norcod is constantly striving to enhance its production protocols, drawing from both research and hands-on experience. One of the pivotal factors contributing to our success is the management of maturation through light control. In the course of 2023
Slide 19: Agenda
Agenda 1. Introduction to Norcod 2. Operations 3. Market 4. Financials 5. Appendix 6. Risk factors 19
Slide 20: Providing stable deliveries of fresh cod
Providing stable deliveries of fresh cod Avoiding seasonal dependency Utilizing the whole cod Delivery in 48-72 hours Delivery within 48 hours Gradually implementing VAP sales A guaranteed supply of top-quality North to increase margins Delivery within 72 hours Atlantic Cod all year-round Norcod hea
Slide 21: Solid production planned year-round delivery
Solid production planned year-round delivery 1400 1200 1000 Harvest per month (tons WFE) 800 600 400 200 0 2024: ~10,2 2025: ~12.0 2026: ~9.6 2027: ~9.7 2028: ~10.0 Harvest per year (‘000 tons WFE) Norcod’s business model provides industrial scale cod farming in Norway Harvested volumes are distribu
Slide 22: Introduction to the cod market
Introduction to the cod market Despite significant quota cuts the 6,000mt of Norcod produced in 2023 only constituted a mere 1% of the total Northern Atlantic cod quota, while wild- catch production constitute the remaining 99%. It is key to differentiate Norcod’s farmed cod from wild-caught cod wit
Slide 23: Norcod market update
Norcod market update Europe: Spain continues to be the main market for he Norcod products. The Spanish retailers have shown consistent demand and continue to promote and sell the products of Norcod. The French market, which is the largest fresh cod market in the world has also started to market the
Slide 24: Sales and market outlook
Sales and market outlook The key to Norcod's future success lies in its sales prices. The company has now reached a point where it can supply cod year-round, clearly differentiating it from wild-caught cod, which is only available seasonally. At the same time, macroeconomic trends indicate a declini
Slide 25: Recent price development and opportunities ahead
Recent price development and opportunities ahead Price trend and opportunities NOK/kg HOG • HOG price during H1-23 impacted by accelerated harvesting 110 • Price rebound with market repositioning H2-23 • Favourable market penetrations Q4-23 100 • China contract of 800 tons HOG 10% of total 2024 volu
Slide 26: Attractive market dynamics characterised by supply-demand imbalances
Attractive market dynamics characterised by supply-demand imbalances Reduction in wild fish quotas for Arctic fisheries Increasing prices on farm raised cod ktonnes NOK/kg HOG 890 70 710 690 710 675 65 565 60 453 55 365 350 350 50 45 40 35 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Jan Feb Ma
Slide 27: Agenda
Agenda 1. Introduction to Norcod 2. Operations 3. Market 4. Financials 5. Appendix 6. Risk factors 27
Slide 28: Increasing harvest volumes, biomass and revenues
Increasing harvest volumes, biomass and revenues Harvest volume (tons WFE) Biomass at sea (tons) Revenues (NOKm) 3.362 7.817 125 6.777 6.395 68 1.611 3.784 3.851 51 1.038 39 40 847 144 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 28
Slide 29: Cost saving initiatives – key to our strategy
Cost saving initiatives – key to our Current EBIT at Jamnungen (’22-’24 cycle) NOK/kg WFE strategy 61 8 45 9 The bridge – from 2023 cost levels to our 2026 ambition • Economies of scale from increasing MTB - From 3 650 MAB to 5 100 MAB per site - Land and sea phase WFE cost reduced from NOK 44.7 to
Slide 30: Production cost on Jamnungen '24-'26 cycle to approach NOK 37/kg WFE
Production cost on Jamnungen ’24-’26 cycle to approach NOK 37/kg WFE Development in direct production cost per kg WFE Production costs (NOK/kg WFE) 179.31 Fry and juvenile cod Feed Operating expenses 131.31 Equipment and maintenance Leasing, depriciations and amortisation Salary and on-site personne
Slide 31: Norcod 2026 EBIT at various cod prices
Norcod 2026 EBIT at various cod prices EBIT 2026 based on different cod prices and target cost/kg HOG Comments Norcod targets an EBIT cost per kg WFE of NOK 47 Price Profit (equivalent to NOK 59 per kg HOG) and harvest volume of 10,000 WFE (8,000 HOG) NOK/kg HOG EBIT/kg HOG (NOK) Total EBIT (NOKm)
Slide 32: An attractive entry point
An attractive entry point Mkt cap at a significant discount to invested equity1 EV with significant discount to invested capital -45% 879 +35% 1.004 741 484 Invested equity Current mkt cap Enterprise value2 Invested capital Replacement cost Source: 1) Market cap as of 14 February 2024, 2) NIBD inclu
Slide 33: Agenda
Agenda 1. Introduction to Norcod 2. Operations 3. Market 4. Financials 5. Appendix 6. Risk factors 33
Slide 34: Key historical and targeted upcoming milestones
Key historical and targeted upcoming milestones Trial sales of farmed Norcod AS First batch received Pilot batch moved Start of next growth Completion of first Multiple Year-round Production target of cod with key incorporated by from Nofima to sea phase at phase for Frosvika full production cycle p
Slide 35: Norcod is reshaping the cod farming market
Norcod is reshaping the cod farming market Quantum leaps since last cod farming boom… …particularly in the most critical input factor, Biology Biology Market prices Capex Marketing / sales Cannibalism Escapes Diseases Growth Weak market with Large capital Untargeted & ad-hoc The cod would eat Th
Slide 36: Excellent Seabed Conditions
Excellent Seabed Conditions In accordance with the national surveillance program, Norcod undergoes assessments regarding the seabed conditions of our production sites. We are pleased to report that all of Norcod's sites are currently in excellent Frosvika condition, a testament to our conscientious
Slide 37: Carbon Footprint
Carbon Footprint Environmentally Friendly Protein Production Farm raised cod is competitive with farmed salmon in terms of climate footprint, despite currently significantly lower production volume and lower MAB utilization. Farmed Cod 4 10 73 6 7 Farmed Salmon 3 11 77 4 5 0 10 20 30 40 50 60 70 80
Slide 38: Overview of shareholders
Overview of shareholders Top 10 shareholders as of February 14 2024 Ranking Investor Type Shares Ownership (%) 1 ARTHA NORCOD VI A/S Company 5,505,501 18.71% 2 ARTHA-NORCOD III A/S Company 3,872,500 13.16% 3 SIRENA GROUP AS Company 3,356,041 11.41% 4 ARTHA NORCOD A/S Company 3,287,712 11.17% 5 THE B
Slide 39: Group legal structure
Group legal structure Norcod AS 100.00% 100.00% 100.00% 4.72% Norcod Equipment AS Kråkøy Norcod Eiendom AS Kråkøy Slakteri AS Arctic Cod AS 39
Slide 40: Management team
Management team Christian Riber Kia Zadegan Hilde R. Storhaug Tsjipke Deuzeman Arne Kristian Hoset Chief Executive Officer Chief Operating Officer Chief Sustainability Officer Chief Production Officer Chief Financial Officer 12 years experience as 5 years experience as 2 years as aquaculture 17 year
Slide 41: Board of Directors
Board of Directors Renate Larsen Jan S. Sølbæk Trine Danielsen Boe Spurré Peter Buhl Chair of the Board Member of the Board Member of the Board Member of the Board Member of the Board Extensive leadership experience Adm. Director in Artha CCO at Blue Planet Academy Group CEO at Sirena A/S 35 years a
Slide 42: Agenda
Agenda 1. Introduction to Norcod 2. Operations 3. Market 4. Financials 5. Appendix 6. Risk factors 42
Slide 43: Risk factors
Risk factors Investing in the Company involves inherent risks. Prospective investors should carefully consider, among other things, the risk factors set out in this section before making an investment decision in respect of the Shares. The risks described below are not the only ones facing the Compa
Slide 44: Risk factors - Risks related to the Company and the industry (1/4)
Risk factors - Risks related to the Company and the industry in which it operates (1/4) No assurance can be given that the Company will achieve its objectives The Company is in an ongoing developing process. The Company has limited operating history and implementing its strategy will require the Com
Slide 45: Risk factors - Risks related to the Company and the industry (2/4)
Risk factors - Risks related to the Company and the industry in which it operates (2/4) Risks related to existing and increasing competition in the cod market The market for cod in general is international and highly competitive, and the Company faces strong competition from both wild caught cod and
Slide 46: Risk factors - Risks related to the Company and the industry (3/4)
Risk factors - Risks related to the Company and the industry in which it operates (3/4) Risks related to feed costs and supply Feed costs account for a significant portion of the Company's total production costs, and an increase in feed prices could thus have a major impact on the Company's future p
Slide 47: Risk factors - Risks related to the Company and the industry (4/4)
Risk factors - Risks related to the Company and the industry in which it operates (4/4) Risk of fish cannibalism The 8th generation of farmed cod is expected to have better feed and feed distribution which may lead to fewer incidents of cannibalism compared to previous generations of farmed cod. How
Slide 48: Risk factors - Risks related to the Company's financing and financial situation
Risk factors - Risks related to the Company's financing and financial situation Risks associated with changes to accounting rules or regulations Changes to existing accounting rules or regulations may impact the Company's future profit and loss or cause the perception that the Company is more highly
Slide 49: Risk factors - Risks related to the Shares
Risk factors - Risks related to the Shares Risk related to volatility of the share price The market price of the Shares may be highly volatile and investors in the Shares could suffer losses. The trading price of the Shares could fluctuate significantly in response to a number of factors beyond the
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