Salmon Evolution Asa · OSL:SALME
Salmon Evolution Asa — Q1 2022 Earnings Presentation
32 slides from Salmon Evolution Asa's earnings presentation, May 24, 2022
Slide 1: Q1 2022 Presentation
Q1 2022 PRESENTATION 24 May 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 Q1 2022 Presentation
Slide 4: Q1 2022 Highlights
Q1 2022 HIGHLIGHTS Q1 2022 • First fish tanks and related technical installations at Indre Harøy completed and put into operation • First smolt batch released at Indre Harøy late March as per original timeline – next smolt release planned in Q2 2022 • Batch 1 performing in line with expectations – s
Slide 5: Agenda
Agenda • Highlights • Extending the ocean potential™ • Operations • Financials • Summary and outlook • Appendices 5 Q1 2022 Presentation
Slide 6: Salmon Evolution at a Glance
SALMON EVOLUTION AT A GLANCE Company overview Salmon farming facilities 49% ownership of JV in South Korea ▪ Established in 2017 ▪ Based in Hustadvika, strategically located on the west coast of Norway Indre Harøy Yangyang ▪ Listed on main list at Oslo Stock Exchange in 2021 ▪ Successfully raised NO
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: Agenda
Agenda • Highlights • Extending the ocean potential™ • Operations – Norway • Financials • Summary and outlook • Appendices 10 Q1 2022 Presentation
Slide 11: First smolt released in March 2022 as planned – strong operating performance
FIRST SMOLT RELEASED IN MARCH 2022 AS PLANNED – STRONG OPERATING PERFORMANCE • First ~100,000 smolt with avg. weight of ~300 gram released in March • Stable conditions and water quality with minimal mortality and gradual ramp up of feeding along with tuning of systems and equipment • Average weight
Slide 12: Q1 2022 Presentation
12 Q1 2022 Presentation
Slide 13: Strong start to Indre Harøy farming operations
STRONG START TO INDRE HARØY FARMING OPERATIONS Group biomass development 31 March 2022 21 May 2022 Biomass Biomass Batch Units (#) Weight (g) Units (#) Weight (g) Comments (tonnes) (tonnes) Stable conditions, gradual ramp-up Batch I ~100,000 ~300 30 ~100,000 ~725 73 of feeding during period Total In
Slide 14: Solid initial feeding numbers verifying budget assumptions and indicating upside potential
SOLID INITIAL FEEDING NUMBERS VERIFYING BUDGET ASSUMPTIONS AND INDICATING UPSIDE POTENTIAL Daily feeding levels Daily feeding vs. target in production plan (%) 1,800 2.6% 200% 2.4% 1,600 180% 2.2% 1,400 160% 2.0% Daily feed volumes (kg) SFR (Specific feed rate) 1.8% 140% 1,200 1.6% Appetite (%) 120%
Slide 15: All twelve fish tanks assembled – buildings and structural facilities mostly completed
• All twelve fish tanks assembled – buildings and structural facilities mostly completed – focus on piping and equipment installation going forward • Joint feed storage and distribution system in process of being finalized • Remaining parts of the facility will be put into operations consecutively t
Slide 16: Signed Heads of Terms with Artec Aqua for Indre Harøy phase 2 construction
SIGNED HEADS OF TERMS WITH ARTEC AQUA FOR INDRE HARØY PHASE 2 CONSTRUCTION • Signed Heads of Terms with Artec Aqua for Indre Harøy phase 2 • Completed NOK 300 million private placement to partly fund Phase 2 Phase 2 • Phase 2 in principle identical to phase 1, bringing Indre Harøy production volume
Slide 17: Agenda
Agenda • Introduction • Extending the ocean potential™ • Operations – Korea • Financials • Summary and outlook • Appendices 17 Q1 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 2021 and Yangyang on-growing site 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: Agenda
Agenda • Highlights • Extending the ocean potential™ • Operations • Financials • Summary and outlook • Appendices 19 Q1 2022 Presentation
Slide 20: Commenced operations – all main input factors secured with tier 1 suppliers
COMMENCED OPERATIONS – ALL MAIN INPUT FACTORS SECURED WITH TIER 1 SUPPLIERS VALIDATING BUDGET ASSUMPTIONS Input factor Selected supplier Cost vs. budget In-house Smolt profitable operation Highly skilled workforce Higher feed raw material prices. Feed Low FCR gives Supporting relative advantage prod
Slide 21: Controlled production ramp up during 2022 – steady state smolt release volumes from Q4
CONTROLLED PRODUCTION RAMP UP DURING 2022 – STEADY STATE SMOLT RELEASE VOLUMES FROM Q4 Q1 2022 Q2 2022 Q3 2022 Q4 2022 100,000 smolt Batch #1 @ ~300g On-growing First harvest 150,000 smolt Batch #2 @ ~130g On-growing 100,000 smolt On-growing Batch #3 In-house sourcing @ ~130g of smolt from Kraft Bat
Slide 22: Group Profit & Loss
GROUP PROFIT & LOSS Summary of result (figures in NOK 1000) Note Q1 2022 Q1 2021 2021 Revenue from contracts with customers 6 826 0 12 047 • NOK 6.8m in revenues in Q1 2022 relating to Other income -8 0 209 external smolt sales – last deliveries under Total operating income 6 818 0 12 257 existing c
Slide 23: Capex Indre Harøy
CAPEX INDRE HARØY Accumulated Indre Harøy phase 1 CAPEX • Q1 2022 Indre Harøy Phase 1 capex (NOK million) • Capex of NOK 244 million 1,228 Capitalized internal G&A 64 • NOK 13.5 million capitalized internal G&A 1164 Investments (Indre Harøya) 969 • High Q1 capex reflecting good progress and Land tim
Slide 24: Gradual reduction in phase 1 capex going forward
GRADUAL REDUCTION IN PHASE 1 CAPEX GOING FORWARD Capex plan for Indre Harøy Phase 11 (NOK million) • Total capex for completion of phase 1 in line with budget 125 • Buildings and structural facilities mostly completed – focus going forward on piping and installation of equipment 70 • Ongoing inflati
Slide 25: Fully funded for committed projects
FULLY FUNDED FOR COMMITTED PROJECTS Total funding Total uses 300 236 173 25 326 1056 622 430 Cash Q1 22 Undrawn Apr 22 equity Available Remaining K Smart Kraft Laks sellers WC / Other / committed issue liquidity capex IH phase credit Expansion* debt facilities 1 25 Q1 2022 Presentation *Expansion in
Slide 26: Agenda
Agenda • Highlights • Extending the ocean potential™ • Operations • Financials • Summary and outlook • Appendices 26 Q1 2022 Presentation
Slide 27: Roadmap to 70,000 tonnes HOG
ROADMAP TO 70,000 TONNES HOG 2020 2022 2024 2028 2030 NORWAY 31.5kt Indre Harøy based on current licenses Phase 1 Phase 2 Phase 3 Norway expansion 7.9kt 7.9kt 15.7kt 20kt 50kt ASIA South Korea South Korea phase 1 phase 2 + 8.4kt 8.4kt 20kt+ TOTAL 70kt+ Further expansion opportunities in other overse
Slide 28: Summary & Outlook
SUMMARY & OUTLOOK • First smolt released in March 2022 as planned • Strong initial farming operations at Indre Harøy with fish already ~725 grams per 21 May, confirming production plan assumptions • Increased activity for Korean project • First harvest in Q4 2022 well aligned with strong salmon mark
Slide 29: Q&A
Q&A www.salmonevolution.no 29 Q1 2022 Presentation
Slide 30: Agenda
Agenda • Introduction and highlights • Extending the ocean potential™ • Operations • Financials • Summary and outlook • Appendices 30 Q1 2022 Presentation
Slide 31: Strong management team with extensive experience leading a growing organization
Strong management team with extensive experience leading a growing organization and corporation Management team Organizational structure Corporate structure Håkon André Berg Employees Chief Executive Officer Current YE2022 ▪ >15 years experience within strategy, business development and finance from
Slide 32: Highly competent board of directors backed by strong owners
Highly competent board of directors backed by strong owners Board of directors Ownership as per 11 May 2022 Tore A. Tønseth Anne Breiby Ownership Board Shareholders Comments Chairman of the board Board member share representative ▪ Investment Director at Ronja ▪ Extensive experience from Owned by fo