Salmon Evolution Asa · OSL:SALME
Salmon Evolution Asa — Investor Presentation (April 2022)
52 slides from Salmon Evolution Asa's investor presentation, Apr 5, 2022
Slide 1: Investor Presentation
INVESTOR PRESENTATION 5 April 2022
Slide 2: Disclaimer (I/II)
DISCLAIMER (I/II) IMPORTANT INFORMATION. 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, ITS TERRITORIES OR POSSESSIONS, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR TO ANY RESIDENT THEREOF, O
Slide 3: Disclaimer (II/II)
DISCLAIMER (II/II) This Investor Presentation contains several forward-looking statements relating to the business, future financial performance and results of the Company and/or the industry in which it operates. In particular, this Investor Presentation contains forward-looking statements such as
Slide 4: Summary of Risk Factors (I/III)
SUMMARY OF RISK FACTORS (I/III) RISK FACTORS In the following is a summary of the key risks facing the Company. Please see pages 43 – 52 for more detailed descriptions of risk factors pertaining to the Group, the Shares and the Private Placement. Key risks relating to the Group and the industry in w
Slide 5: Summary of Risk Factors (II/III)
SUMMARY OF RISK FACTORS (II/III) • The Group has entered into a JV Agreement for its planned joint venture in South Korea. However, the project is still in an early phase and various factors may prevent the project to be realized as planned or at all. The capital expected to be required for the proj
Slide 6: Summary of Risk Factors (III/III)
SUMMARY OF RISK FACTORS (III/III) • The Group may, due to external factors or internal decisions, change its current strategy and pursue alternative strategies. The Group may also fail to execute its strategy due to e.g. changed market conditions, regulatory framework, available expertise and resour
Slide 7: Transaction Summary
TRANSACTION SUMMARY Company / Listing / Ticker • Salmon Evolution ASA (the “Company”) / Oslo Børs (main list on the Oslo Stock Exchange) / SALME. • Shares outstanding: 312,421,489 shares. Current share capital • Undiluted market capitalization: Approx. NOK 3.1 billion (based on current share price l
Slide 8: Agenda
Agenda • Kickstarting Phase 2 • Business update Norway • Business update Korea • Extending the ocean potentialtm • Financials • Appendices 8
Slide 9: Fully Funded for Committed Projects
FULLY FUNDED FOR COMMITTED PROJECTS Total funding Total uses 477 480 983 173 25 506 305 Cash YE21 Undrawn Available liquidity Remaining capex K Smart Kraft Laks sellers WC / Other / committed debt IH phase 1 credit Buffer facilities 9 Note: Phase 2 investments not part of the committed projects incl
Slide 10: Fundraise to Keep Momentum into Phase 2
FUNDRAISE TO KEEP MOMENTUM INTO PHASE 2 Sources and uses1 Currently targeted phase 2 funding plan Sources NOKm Uses NOKm 225-250 Private Placement 250-300 Phase 2 capex 225-250 600-700 Kraft Laks expansion 25-75 1,300-1,400 SUM 250-300 SUM 250-300 350-575 Phase 2 • 225-250 NOKm of proceeds to partly
Slide 11: 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 • Preparatory activities started for Indre Harøy phase 2 construction • Phase 2 in principle identical to phase 1, brining Indre Harøy production volume Phase 2 to 15,800 tons HOG • Target construction start Q4 2022 on back o
Slide 12: Estimated Phase 2 Timeline – Improved Phase 1 Copy
ESTIMATED PHASE 2 TIMELINE – IMPROVED PHASE 1 COPY 2022 2023 2024 Partial handover Completion facility of full facility Phase 1 Construction 7,900 tons (HOG) Production First smolt First harvest Steady state harvest volumes release of 7,900 tons HOG p.a. Design and engineering, tendering Partial han
Slide 13: Smolt Capacity Secured Through Kraft Laks
SMOLT CAPACITY SECURED THROUGH KRAFT LAKS Background Kraft Laks AS – Key financials • Current production of around 1.8 million smolt p.a. NOKm 2020 2019 2018 but license to produce 5 million smolt p.a. subject to certain conditions Revenues 27.6 30.9 26.9 • If the capital raise from contemplated pri
Slide 14: Agenda
Agenda • Kickstarting Phase 2 • Business update Norway • Business update Korea • Extending the ocean potentialtm • Financials • Appendices 14
Slide 15: First Smolt Released in March 2022
FIRST SMOLT RELEASED IN MARCH 2022 • On 26 March 2022 Salmon Evolution successfully completed the first smolt release at Indre Harøy • About 100,000 smolt was released with an average weight of around 300 grams • The smolt was supplied by Kraft Laks, Salmon Evolution’s in-house smolt facility • Cont
Slide 16: Q4 2021 Highlights
Q4 2021 HIGHLIGHTS Q4 2021 • Excellent project execution – commissioning started in December – first smolt released in March 2022 as planned – capex in line with budget • Entered strategic feed partnership with Cargill, combined with USD 5 million private placement towards Cargill • Entered into gre
Slide 17: First smolt released into Indre Harøy facility on 26th of March 2022
• First smolt released into Indre Harøy facility on 26th of March 2022 • Successful transfer of fish from wellboat to fish tank with no negative indicators identified • Conditions in the farm have been stable • Temperature increased from ~9 C to 14 C over the last week – now at target temperature
Slide 18: 100,000 fish at average weight of around 300 grams released into the tanks
• 100,000 fish at average weight of around 300 grams released into the tanks • Smolt from in-house smolt facility 18
Slide 19: All twelve fish tanks assembled
• All twelve fish tanks assembled • Phase 1 at Indre Harøy will consist of 12 fish tanks each with a diameter of 28 meter and a height of 13 meter • Fully developed, Indre Harøy will consist of 48 fish tanks with a combined cubic capacity of 240,000m3 19
Slide 20: Teaming Up with Market Leader Cargill to Unlock Land-Based Growth Potential
TEAMING UP WITH MARKET LEADER CARGILL TO UNLOCK LAND-BASED GROWTH POTENTIAL Comments Salmon growth curve at different TGC levels 6,000 • Entered into strategic feed partnership with market leader Cargill 5,000 • Salmon Evolution to become Cargill’s global flagship customer within land-based full gro
Slide 21: Controlled Production Ramp Up During 2022
CONTROLLED PRODUCTION RAMP UP DURING 2022 – STEADY STATE SMOLT RELEASE VOLUMES EXPECTED FROM Q4 Q1 2022 Q2 2022 Q3 2022 Q4 2022 100,000 smolt Batch #1 @ ~300g On-growing First harvest 100,000 smolt Batch #2 @ ~130g On-growing 150,000 smolt On-growing Batch #3 In-house sourcing @ ~130g of smolt from
Slide 22: Ready for Operations – All Main Input Factors Secured
READY FOR 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 23: Agenda
Agenda • Kickstarting Phase 2 • Business update Norway • Business update Korea • Extending the ocean potentialtm • Financials • Appendices 23
Slide 24: First Mover Advantage in South Korea – A Fast Growing and High Paying Market
FIRST MOVER ADVANTAGE IN SOUTH KOREA – A FAST GROWING AND HIGH PAYING MARKET FOR SALMON WITH SOLID PRICE POTENTIAL Positioned to achieve a premium on South Korean prices Salmon demand in South Korea is growing rapidly Supply of farmed Atlantic salmon to South Korea (HOG) NOK / kg (HOG) Norway 86% In
Slide 25: K Smart – Key Figures
K SMART – KEY FIGURES Summary of estimated KPIs for the South Korean JV facility1) Item Phase 1 Phase 2 Total Dongwon to facilitate debt Capex NOK 1,400m NOK 1,300m NOK 2,700m financing of K Smart at 75% Total project cost NOK 1,600m NOK 1,500m NOK 3,100m loan to cost2) SE equity requirement NOK 200
Slide 26: K Smart Farming – Focus on Early Engineering and Permits
K SMART FARMING – FOCUS ON EARLY 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 • Identified on-growing site in Y
Slide 27: Agenda
Agenda • Kickstarting Phase 2 • Business update Norway • Business update Korea • Extending the ocean potentialtm • Financials • Appendices 27
Slide 28: Salmon Evolution – Extending the Ocean Potential
SALMON EVOLUTION – EXTENDING THE OCEAN POTENTIAL A Norwegian land-based salmon farming company with a goal to become a global supplier of high-quality and sustainable salmon First production facility under construction in Norway – Joint venture with Dongwon Industries for a 16,800 tonnes estimated a
Slide 29: Conservative Approach in a "Disruptive Industry"
CONSERVATIVE APPROACH IN A “DISRUPTIVE INDUSTRY” 1 Biology is the most important consideration → Shown through our choice of technology There is much to learn, even though we have decades of experience 2 → That’s why we start in Norway International expansion can be accelerated with strong local par
Slide 30: Optimized Biology with HFS Technology
OPTIMIZED BIOLOGY WITH HFS TECHNOLOGY HYBRID FLOWTHROUGH ADVANTAGES INCREASED COMPLEXITY ABOVE 65% RECIRCULATION • No biofilters – less complexity • Proven technology used in smolt production for • Each tank functions as one decades independent biozone • Fresh seawater as • Maintenance flexibility,
Slide 31: Highly Competent Management Team Backed by a Board of Directors
HIGHLY COMPETENT MANAGEMENT TEAM BACKED BY A BOARD OF DIRECTORS WITH STRONG INDUSTRIAL BACKGROUND Selected management team Board of Directors and investor overview Tore A. Tønseth Kiyun Yun Håkon André Berg Chairman Board member Chief Executive Officer ▪ CIO of Ronja Capital ▪ CFO in Dongwon Industr
Slide 32: Our Technology Extends the Ocean Potential
OUR TECHNOLOGY EXTENDS THE OCEAN POTENTIAL NEW AREAS POSSIBLE FOR LOW RISK PRODUCTION THROUGH USE OF HFS Too cold Too cold Conventional production area Conventional production area Possible with HFS Possible Possible with HFS with HFS Too warm Too warm Too warm Possible with HFS Possible with HFS Co
Slide 33: Agenda
Agenda • Kickstarting Phase 2 • Business update Norway • Business update Korea • Extending the ocean potentialtm • Financials • Appendices 33
Slide 34: Group Profit & Loss
GROUP PROFIT & LOSS Summary of result (figures in NOK 1000) Q4 2021 Q4 2020 2021 2020 • NOK 12.3m in revenues in 2021 following Total operating income 5 0 12 257 704 acquisition of Kraft Laks and sale of smolt Cost of goods sold 1 542 0 -908 0 to third party in Q3 – last delivery under Personnel exp
Slide 35: Capex Indre Harøy
CAPEX INDRE HARØY • Q4 2021 capex • Indre Harøy capex of NOK 215 million Accumulated CAPEX Q4 2021 (NOK million) • NOK 10 million capitalized internal G&A 970 • Accumulated capex of NOK 920 million from Capitalized internal G&A 920 project initiation in 2019 ex. capitalized internal Investments (Ind
Slide 36: Increased Visibility on Phase 1
INCREASED VISIBILITY ON PHASE 1 • Total capex for completion of phase 1 in line with Capex plan for Phase 11 budget (NOK million) • Selected strategic upgrades and adjustments 175 covered by already built-in project buffers: • NOK ~40m related to capacity increases enabling 131 efficiency gains for
Slide 37: Fully Funded for Committed Projects
FULLY FUNDED FOR COMMITTED PROJECTS Total funding Total uses 477 480 983 173 25 506 305 Cash YE21 Undrawn Available liquidity Remaining capex K Smart Kraft Laks sellers WC / Other / committed debt IH phase 1 credit Buffer facilities 37 Note: Phase 2 investments not part of the committed projects inc
Slide 38: Est. Roadmap to 70,000 Tonnes HOG
EST. 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 o
Slide 39: Summary & Outlook
SUMMARY & OUTLOOK • Excellent project execution – first smolt released in March 2022 as planned – capex in line with budget • Continued progress in Korea • First harvest end 2022 well aligned with strong salmon market outlook the next couple of years • Salmon Evolution’s HFS technology addressing in
Slide 40: Agenda
Agenda • Kickstarting Phase 2 • Business update Norway • Business update Korea • Extending the ocean potentialtm • Financials • Appendices 40
Slide 41: Share Option Overview
SHARE OPTION OVERVIEW Overview of outstanding options as of April 2022 Option owner Tranche 1 Tranche 2 Tranche 3 Total options Håkon André Berg 1,000,000 1,000,000 1,000,000 3,000,000 Trond Håkon Schaug-Pettersen 800,000 800,000 800,000 2,400,000 Ingjarl Skarvøy 250,000 250,000 250,000 750,000 Kami
Slide 42: Salmon Evolution Will Have a State-of-the-Art Land-Based Facility at Indre Harøy
SALMON EVOLUTION WILL HAVE A STATE-OF-THE-ART LAND- BASED FACILITY AT INDRE HARØY 42
Slide 43: Risk Factors (1/10)
RISK FACTORS (1/10) General: Investing in the Shares involves inherent risks. Investors should consider all of the information set forth in this Presentation, and in particular, the risk factors set out below. An investment in the Shares is suitable only for investors who understand the risks associ
Slide 44: Risk Factors (2/10)
RISK FACTORS (2/10) Risks relating to the early phase of land-based salmon farming: Full-scale land-based salmon farming is a new industry and, as a consequence, experience with land-based salmon farming has been developing rapidly due to practical implementation of research taking place in several
Slide 45: Risk Factors (3/10)
RISK FACTORS (3/10) The Group is subject to the risk of cost overruns due to the size and technical complexity if the project: While such smaller, comparable land-based production facilities have been built in the past, no similar facilities have been built of the size the Group plans to construct.
Slide 46: Risk Factors (4/10)
RISK FACTORS (4/10) Risk relating to restrictive covenants and debt financing agreements: The Group will from time to time adhere to certain financing agreements and arrangements with various lenders. Such agreements and arrangements contain many terms, conditions and covenants, such as such as equi
Slide 47: Risk Factors (5/10)
RISK FACTORS (5/10) Risk relating to developing necessary customer base and relationship with partners: Salmon Evolution’s commercialization strategy involves entering into customer, distribution, marketing, sales and other agreements with third parties. A commercial success of the Group will requir
Slide 48: Risk Factors (6/10)
RISK FACTORS (6/10) Risk relating to regulatory environment: The Group’s activities are subject to extensive international and national regulations, in particular relating to environmental protection, food safety, hygiene and animal welfare. The Group’s future sale of its products (if and when devel
Slide 49: Risk Factors (7/10)
RISK FACTORS (7/10) Risk relating to dependence on qualified and experienced personnel: The Group’s senior management and key employees are important to the development and prospects of the Group. Further, the Group’s performance is to a large extent dependent on highly qualified personnel and manag
Slide 50: Risk Factors (8/10)
RISK FACTORS (8/10) Risk relating to availability of capital: The Group’s business and future plans are capital intensive and, to the extent the Group does not generate sufficient cash from operations in the long term, the Company or its subsidiaries may need to raise additional funds through public
Slide 51: Risk Factors (9/10)
RISK FACTORS (9/10) Risk relating to cyber security The Company could be a target of cyber-attacks designed to penetrate its network security or the security of the Company’s digital infrastructure, misappropriate proprietary information, commit financial fraud and/or cause interruptions to the Comp
Slide 52: Risk Factors (10/10)
RISK FACTORS (10/10) Future issuances of shares or other securities in the Company may dilute the holdings of shareholders and could materially affect the price of the Shares: It is likely that the Company may decide to offer new shares or other securities in order to finance new capital-intensive i
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