Arctic Fish Holding As · OSL:AFISH
Arctic Fish Holding As — IPO Roadshow (February 2021)
68 slides from Arctic Fish Holding As's IPO roadshow presentation, Feb 11, 2021
Slide 1: Arctic Fish Investor presentation
Arctic Fish Investor presentation 11 February 2021 Strictly private & confidential
Slide 2: Important information (I/III)
Important information (I/III) By receiving this company presentation (the "Presentation") or attending any meeting or oral presentation held in relation thereto, you (the "Recipient") agree to be bound by the following terms, conditions and limitations. The information in this Presentation has been
Slide 3: Important information (II/III)
Important information (II/III) The risk factors discussed herein should be read as a high-level summary only and not so as to contain an exhaustive review of all risks faced by the Company. An investment in the Company's shares is only suitable if you have sufficient knowledge, sophistication and ex
Slide 4: Important information (III/III)
Important information (III/III) In addition, in the United Kingdom, this Presentation is being distributed only to, and is directed only at (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (ii) hi
Slide 5: Summary of risk factors (I/III)
Summary of risk factors (I/III) RISK RELATING TO THE GROUP'S BUSINESS AND THE INDUSTRY IN WHICH IT OPERATES • A short-term or long-term decline in the price for the Group's products could have a material adverse effect on its revenue, and thereby affect its overall operational result, financial posi
Slide 6: Summary of risk factors (II/III)
Summary of risk factors (II/III) RISK RELATING TO THE GROUP'S BUSINESS AND THE INDUSTRY IN WHICH IT OPERATES (cont.) • The Group's activities are dependent upon licenses and permits from the Icelandic regulators, which may be revoked or not renewed, or pending licence applications may not be granted
Slide 7: Summary of risk factors (III/III)
Summary of risk factors (III/III) FINANCIAL RISKS • Factors affecting the exchange rate between NOK and EUR may have adverse effects on the obtainable price for the Group's products, and ultimately result in lower profitability for the Group. • The Group may experience non-payment, loss on receivabl
Slide 8: Agenda
Agenda 1 Introduction 2 Investment highlights 3 Financials 4 Appendix
Slide 9: Transaction background & summary
Transaction background & summary Transaction summary Corporate structure • Arctic Fish Holding AS (the "Company“, together with its consolidated subsidiaries, the "Group" or “Arctic Issuer Fish"). Novo Norway Royal Bremesco ehf.1 Salmon ASA1 Holding Ltd.1 Pre-money • Pre-Money Equity Value: NOK 1,60
Slide 10: Presenting team
Presenting team Stein Ove Tveiten – Chief Executive Officer Neil Shiran Thorisson – Chief Financial Officer Ola Loe - Board Member • CEO in Arctic Fish since 2017 • CFO in Arctic Fish since 2015 • Board member in Arctic Fish since 2016 • Stein Ove has extensive experience within • Background in mana
Slide 11: Arctic Fish at a glance
Arctic Fish at a glance Introduction to Arctic Fish Harvest volume forecast • Arctic Fish is one of the leading salmon farmers on In thousand tonnes, HOG Iceland, situated in the West Fjords with favourable First year of salmon 24.0 conditions for fish farming – the Company was harvest 15.0 founded
Slide 12: The proceeds from the private placement will mainly be used to fund growth investments
The proceeds from the private placement will mainly be used to fund growth investments Sources and uses of proceeds Planned capital expenditure going forward NOKm Seawater Freshwater Processing, plant & other Miscellaneous Contemplated private placement 350 EURm Total sources 350 38 NOKm The remaini
Slide 13: Arctic Fish has a strategic and modern smolt facility, being the only RAS facility in Iceland
Arctic Fish has a strategic and modern smolt facility, being the only RAS facility in Iceland with large-scale production capacity State-of-the-art smolt RAS facility Smolt capacity of 3.5 million smolt • 100% self-sufficient smolt capacity • Proven production capacity of ~500t of smolt (3.5m smolt
Slide 14: Agenda
Agenda 1 Introduction 2 Investment highlights 3 Financials 4 Appendix
Slide 15: Key investment highlights
Key investment highlights 1 2 3 Well-invested platform with Attractive license portfolio Operating in Iceland – the strategic smolt facility catering with considerable growth fastest growing salmon farming for harvest growth in the years potential within existing and country in the world to come pen
Slide 16: Key investment highlights
Key investment highlights 1 2 3 Well-invested platform with Attractive license portfolio Operating in Iceland – the strategic smolt facility catering with considerable growth fastest growing salmon farming for harvest growth in the years potential within existing and country in the world to come pen
Slide 17: Iceland is positioned as the fastest growing farming country in the world
1 Iceland is positioned as the fastest growing farming country in the world – 2015-2020E CAGR of +50% Icelandic salmon farming production Fastest growing salmon region In thousand tonnes, wfe1 53% 5-year CAGR Iceland 31 Canada Norway 141 4 1,349 1% 4% 1% 2% 2% 135 1,234 2015 2020E 2015 2020E 2015 20
Slide 18: Key investment highlights
Key investment highlights 1 2 3 Well-invested platform with Attractive license portfolio Operating in Iceland – the strategic smolt facility catering with considerable growth fastest growing salmon farming for harvest growth in the years potential within existing and country in the world to come pen
Slide 19: Arctic Fish has an integrated value chain with excellent hatchery and sea site locations
2 Arctic Fish has an integrated value chain with excellent hatchery and sea site locations Freshwater (smolt) Seawater Processing Sales • RAS smolt facility in • Strategically placement in • Harvesting/processing of the • Arctic Fish has a partnership Nordurbotn (Tálknafjörður) different fjords to b
Slide 20: Arctic Fish has state-of-the-art smolt facility NorðurBotn
2 Arctic Fish has state-of-the-art smolt facility NorðurBotn which secures the Company with high-quality smolt Freshwater (smolt) Seawater Processing Sales Pictures of smolt facility Key facts Inside smolt facility • Proven production (delivered) of +500 tonnes of smolt and fry in 2020 ✓ Proven prod
Slide 21: Sizable area and favorable location close to the sea
2 Sizable area and favorable location close to the sea limiting need for transportation to seawater Freshwater (smolt) Seawater Processing Sales Area prepared and planned for 7,200 m3 Water treatment and tank capacity feed storage building Grow-out 1 of 2,800 m3 Grow-out 3 of 2,800 m3 tank tank capa
Slide 22: Proven low mortality rates and low FCR
2 …to be able to alternate the production to minimize biological risk with proven low mortality rates and low FCR Freshwater (smolt) Seawater Processing Sales Mortality Feed Conversion Ratio In % of total number Biological Feed Conversion Ratio (bFCR) 35.9 1.31 31.8 1.24 1.23 1.23 17.0 12.5 G2017 G2
Slide 23: Processing and sales are currently handled externally
2 Processing and sales are currently handled externally – increased focus on fresh- and seawater operations Freshwater (smolt) Seawater Processing Sales 1▪ The fish is transported from different locations with well boat when the fish has Illustrative grown to harvesting size 2▪ Primary processing do
Slide 24: Arctic Fish has a global footprint with sales in more than 15 countries in 2020
2 Arctic Fish has a global footprint with sales in more than 15 countries in 2020 Freshwater (smolt) Seawater Processing Sales • All of Arctic Fish’s sales are handled by Seaborn, a major distributor of Norwegian and Icelandic salmon • Current export routes are well-established with potential for ne
Slide 25: Key investment highlights
Key investment highlights 1 2 3 Well-invested platform with Attractive license portfolio Operating in Iceland – the strategic smolt facility catering with considerable growth fastest growing salmon farming for harvest growth in the years potential within existing and country in the world to come pen
Slide 26: Ample growth opportunities within existing license portfolio and pending applications
3 Arctic Fish has ample growth opportunities within its existing license portfolio, and is in advanced process for additional licenses Licenses and applications are well positioned for future growth with locations in different fjords In thousand tonnes (MAB) 31.9 6x Areas with granted licenses 7x Ar
Slide 27: Key investment highlights
Key investment highlights 1 2 3 Well-invested platform with Attractive license portfolio Operating in Iceland – the strategic smolt facility catering with considerable growth fastest growing salmon farming for harvest growth in the years potential within existing and country in the world to come pen
Slide 28: On track to a competitive medium-term target cost level
4 On track to a competitive medium-term target cost level Historical production cost development and medium-term target EUR / kg (HOG) Harvesting & packaging Wellboat COGS Higher costs mainly 5.2 due to start-up of a new site. Lower cost is expected going forward 5.0 4.9 4.8 4.8 1,0 4.5 4.5 4.6 1,1
Slide 29: Key investment highlights
Key investment highlights 1 2 3 Well-invested platform with Attractive license portfolio Operating in Iceland – the strategic smolt facility catering with considerable growth fastest growing salmon farming for harvest growth in the years potential within existing and country in the world to come pen
Slide 30: Robust sustainability profile
5 Robust sustainability profile ASC certified since 2016 Other sustainable measures First of its kind hi-tech Arctic Fish strives to use non-medical smolt facility with 100% methods to battle sea and fish lice green energy1 ✓ Area based management: Strategically placed sites with Organic alternating
Slide 31: Arctic Fish positioned to achieve a price premium in the future
5 Arctic Fish positioned to achieve a price premium in the future Arctic Fish achieves higher weights than industry average High product quality and superior share Arctic Fish average weight vs. Avg. NO (kg HOG) Arctic Fish achieved average Superior share • +10% average price • Arctic Fish is achiev
Slide 32: Product associated with high-quality, delicate coloring and happy customers
5 Product associated with high-quality, delicate coloring and happy customers Pictures of Arctic Fish Salmon Customer feedback Extremely happy with the shipment we received Salmon was delicious. Good color, no issue with gaping We are willing to pay a premium for this quality The volume potential is
Slide 33: Key investment highlights
Key investment highlights 1 2 3 Well-invested platform with Attractive license portfolio Operating in Iceland – the strategic smolt facility catering with considerable growth fastest growing salmon farming for harvest growth in the years potential within existing and country in the world to come pen
Slide 34: Strong management team and a competent BoD
6 Strong management team and a competent BoD with extensive relevant experience… Overview of the management team in Arctic Fish Board of Directors2 Svein Sivertsen Sigurdur Petursson Chairman Stein Ove Tveiten Neil Shiran Thorisson Business Development • Board member and advisor in a wide Chief Exec
Slide 35: Backed by strong industrial ownership
6 …backed by strong industrial ownership Industrial backing from majority owner Norway Royal Salmon • Norway Royal Salmon ASA (NRS) is a global salmon farmer and NRS established as a salmon NRS buys 50% of the leading salmon farmer in Northern Norway – a region that trading company Arctic Fish share
Slide 36: Agenda
Agenda 1 Introduction 2 Investment highlights 3 Financials 4 Appendix
Slide 37: Quarterly volumes and financials
Quarterly volumes and financials Quarterly harvest volumes In thousand tonnes, HOG 2,8 3,0 1,6 0,9 0,9 0,9 0,8 No harvest and sales Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Quarterly revenues • Other revenue is mainly EURm Salmon sales Other revenue related to external sale of 12,2 12,5 fry a
Slide 38: Targeting ~24kt harvest volume in 2025
Targeting ~24kt harvest volume in 2025 Smolt release forecast Harvest volumes forecast Million smolts In thousand tonnes, HOG +72% +2.1m +210% +16.3kt 5,0 5,0 24,0 4,3 3,5 15,0 2,9 2,8 2,7 12,1 12,5 12,0 1,8 7,4 0,7 3,3 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2019 2020 2021E 2022E 2023E 20
Slide 39: Key investment highlights
Key investment highlights 1 2 3 Well-invested platform with Attractive license portfolio Operating in Iceland – the strategic smolt facility catering with considerable growth fastest growing salmon farming for harvest growth in the years potential within existing and country in the world to come pen
Slide 40: Agenda
Agenda 1 Introduction 2 Investment highlights 3 Financials 4 Appendix
Slide 41: Arctic Fish started in 2011 and has gradually positioned itself as a pioneer
Arctic Fish started in 2011 and has gradually positioned itself as a pioneer in salmon farming Arctic Fish was founded by Novo, established by Sigurdur Petursson with his January – first salmon business partner Gudmundur Started building a new farmed by the Company Stefansson, in 2011 hatchery was h
Slide 42: Arctic Fish has a well-invested platform with scalable growth
Arctic Fish has a well-invested platform, with operational history, industrial backing by the NRS system and scalable growth 4 Scalable growth Considerable growth opportunities within current licenses and applications – 100% self-sufficient smolt 3 State-of-the-art capacity and increased smolt facil
Slide 43: Growing population and increasing middle class driving demand for sustainable seafood
Growing population and an increasing middle class is driving demand for sustainable seafood proteins Demand underpinned by megatrends Potential for additional salmon demand 2019 Atlantic salmon consumption per capita (kg) Global population growth driving Norway 7.8 increased food demand Finland 5.5
Slide 44: Integrated value chain and own smolt in a recirculating aquaculture system
Arctic Fish has an integrated value chain and grows its own smolt in a hi-tech recirculating aquaculture system Freshwater (smolt) Seawater Processing Sales Average weight and total number of smolt produced (forecast) Key facts Million smolt External sale1 Internal sale1 Grams Average smolt size (in
Slide 45: Seawater sites strategically located in all West Fjords fjords
Seawater sites strategically located in all West Fjords fjords… Freshwater (smolt) Seawater Processing Sales Sites located in all the fjords on the West Coast… …with considerable harvest growth expected 7x6x AreasLicenses with granted licenses 7x Areas with applied licenses 1x Hatchery (smolt) 11.8k
Slide 46: Iceland has farming conditions similar to Northern Norway
Iceland has farming conditions similar to Northern Norway Freshwater (smolt) Seawater Processing Sales Avg. seawater temperatures1 Day degrees °C in water Annual day degrees (‘000s) West Fjords Norway - North Norway - West Eastern Fjords 1,9 16 14 Northern Fjords 2,2 12 Southern coastline 3,1 10 Wes
Slide 47: Considerable growth expected in the coming years
Considerable growth for Arctic Fish is expected in the coming years – smolt capacity is available to cater for the planned growth Arctic Fish expects to increase its harvest volume by ~2.3x from 2019 to 2020 • In 2020 the Company released ~2.9m smolt with more than 8.9m smolt released since 2017 Inc
Slide 48: Iceland has the potential to become the next big region within salmon farming
Iceland has the potential to become the next big region within salmon farming – with a total biomass allowed at 106,500 tonnes Favorable regulatory framework Total harvest quantity of Atlantic salmon in 2019 • The MRI recently carried out an updated risk In thousand tonnes (MAB) 1,333.4 assessment f
Slide 49: Smolt expansion plan to increase tank volume by 2.25x
With the smolt expansion plan, Arctic Fish may be able to increase the tank volume by 2.25x and smolt capacity to 5m smolt Commentary Expected tank volume increase from 6,000 m3 to 13,500m3 • Two-step plan to increase tank volume with 7,500m3 and increase smolt capacity to 5 million smolt Tank volum
Slide 50: Salmon farming is an ESG leader within food production
Salmon farming is an ESG leader within food production Salmon compared to other protein sources1 Salmon farmers top the FAIRR Index FAIRR Index score 80 The only three companies categorized as “low risk” include two salmon farming companies Protein retention 28 % 37 % 21 % 13 % Salmon farmers Other
Slide 51: Transport cost expected to come down following volume bump
Transport cost expected to come down following volume bump • Salmon production on Iceland has increased from ~14k tonnes • The availability of air and sea in 2018 to ~25k tonnes in 2019 • Traditionally, transportation has cargo is expected to increase as been challenging as a • This is expected to i
Slide 52: Iceland offers favourable conditions for salmon farming
Iceland offers favourable conditions for salmon farming Less prone to infectious diseases and low farming density Viral diseases Bacterial diseases Parasites Norway PD1 ISA2 CMS3 BKD4 SRS5 Sea lice Iceland ✓ ✓ Health risks ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 2019 production per km coastline (thousand tonnes HOG) Ch
Slide 53: 2020 performance shows improved operations
2020 performance shows improved operations Volume Revenue EBIT In thousand tonnes, HOG EURm EURm 35,9 (0.74) 0.06 EBIT/kg (1.33) (0.41) 124% 7,4 163% 0,5 16,6 3,3 3,0 275% 150% 12,5 (1,1) (1,2) 5,0 0,8 (2,4) 2019 2020 Q4'19 Q4'20 2019 2020 Q4'19 Q4'20 2019 2020 Q4'19 Q4'20 • Arctic Fish continues th
Slide 54: Consolidated income statement
Consolidated income statement Consolidated income statement overview EURm 2020 2019 • Increased revenue from 2019 to 2020 with increased volumes and better price achievements Operating revenue 35.92 16.62 • Price achievement improved compared to market prices • Increased volumes of biomass in sea fo
Slide 55: Balance sheet
Balance sheet Balance sheet overview EURm End 2020 End 2019 • Biggest single property within the group is the freshwater ASSETS Property, plant and equipment 53.56 48.45 production facility, that represents a value of EUR 28m of the Goodwill 0.12 0.18 property, plant and equipment. Other significant
Slide 56: Corporate structure
Corporate structure Novo ehf.1 Norway Royal Salmon ASA1 Bremesco Holding Ltd. 1 2.5% 50% 47.5% Arctic Fish Holding AS 100% Arctic Fish ehf. 99.99%2 100% 99.99%2 0.01%2 0.01%2 Arctic Sea Farm hf. Arctic Oddi ehf. Arctic Smolt hf. 56 Source: Company 1 Respective ownership share as of pre-IPO 2 Arctic
Slide 57: Risk factors (I/XI)
Risk factors (I/XI) An investment in the Shares involves inherent risks. Before making an investment decision with respect to the Shares, investors should carefully consider the risk factors set forth below and all information contained in this Information Document, including the Financial Informati
Slide 58: Risk factors (II/XI)
Risk factors (II/XI) 1.1.3 Risks relating to operating in a global and highly competitive market The Group's business is reliant on continued global demand for farmed Atlantic salmon. In order to continue to achieve good results, it is dependent on breeding, processing, marketing and selling salmon
Slide 59: Risk factors (III/XI)
Risk factors (III/XI) 1.1.7 Risks relating to political influence The aquaculture industry is highly politically influenced. Fish farm operators carrying out the conventional type of aquaculture, including the Group, are highly dependent on access to suitable fish farming sites along the coast-line,
Slide 60: Risk factors (IV/XI)
Risk factors (IV/XI) 1.1.9 Risks relating to food safety and health concerns (cont.) The Group mainly uses lumpfish in order to combat sea lice. Recently, there has been an increased focus on fish welfare relating to mass mortality of lumpfish used for the purpose of combating sea lice. An extensive
Slide 61: Risk factors (V/XI)
Risk factors (V/XI) 1.1.13 Risks relating to the Group's current fish farming licences and pending applications The Group's activities are dependent upon licenses and permits from the Icelandic regulators, which may be revoked or not renewed, including if the Group breaches the applicable laws and r
Slide 62: Risk factors (VI/XI)
Risk factors (VI/XI) 1.1.15 Risks relating to third party suppliers (cont.) Due to the long production cycle for farmed fish, there may be a significant time lag between changes in feed prices and corresponding changes in the prices of farmed fish and finished products to customers. As the main feed
Slide 63: Risk factors (VII/XI)
Risk factors (VII/XI) 1.2.2 Risks relating to industry regulation (cont.) Relevant authorities may also further regulate the operations of the Group, with enhanced harvesting or processing standards, or more stringent environmental or animal welfare requirements. Investments necessary to meet new re
Slide 64: Risk factors (VIII/XI)
Risk factors (VIII/XI) 1.2.5 Risks relating to exposure to laws and regulations in several jurisdictions The industry of fish farming is heavily regulated by numerous national, international and supra-national regulations which directly affects the Group's operations and consequently its profitabili
Slide 65: Risk factors (IX/XI)
Risk factors (IX/XI) 1.3.2 Risks relating to accounts receivable Consequently, the Group is reliant on the credit worthiness of its customers. Customers of the Group are sometimes unable to pay for the goods when on arrival, which may result in non-payment and loss on receivables, and the Group may
Slide 66: Risk factors (X/XI)
Risk factors (X/XI) 1.4 Risks related to the Shares and the Admission to Trading 1.4.1 An active trading market on Euronext Growth Oslo may not develop and the Shares may be difficult to sell in the secondary market The Shares have not been traded on any stock exchange, other regulated marketplaces
Slide 67: Risk factors (XI/XI)
Risk factors (XI/XI) 1.4.4 The price of the Shares may fluctuate significantly and may result in investors losing a significant part of their investment (cont.) Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than tempora
Slide 68: Arctic Fish
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