Atlantic Sapphire

Annual Report (ESEF) • May 24, 2024

Atlantic Sapphire ASA ANNUAL REPORT 2023 01 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND THE PLANET 2023 IN REVIEW 02 04 03 39. Developing a Sustainable Option 41. Consumer and Product Responsibility 53. Economic Responsibility 61. Environmental Responsibility 83. Social Responsability 99. About this report 100. GRI Content index 22. Our ESG Framework 30. Our Commitment to Responsible Governance 34. Why Sustainability Matters to Atlantic Sapphire 04. Message from the CEO 06. About Atlantic Sapphire 18. The Global Challenges Facing Seafood Production 168. Atlantic Sapphire ASA Financial Statements 1 8 7. Statement of Responsibility 189. Auditor’s Report 106. Board of Directors’ Report 1 1 7. Board of Directors 118. Corporate Governance 122. Atlantic Sapphire Consolidated Financial Statements 2 TABLE OF CONTENTS GROUP RESULTS ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 01 04. Message from the CEO 06. About Atlantic Sapphire 18. The Global Challenges Facing Seafood Production 3 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 2023 IN REVIEW 4 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 MESSAGE FROM THE CEO critical issues such as water pollution, disease transmission, and the escape of farmed fish, thereby safeguarding the delicate balance of our oceans. Key to the success of this vision is our embrace of cutting- edge technologies. Recirculating aquaculture systems (RAS), coupled with advanced monitoring and automation, enable us to create an optimal environment for salmon growth. The integration of data analytics, artificial intelligence, and renewable energy sources not only enhances efficiency but also positions us as pioneers in sustainable aquaculture practices. Our commitment to animal welfare is integral to this vision. The controlled environment we provide ensures that our salmon are raised in conditions that closely mirror their natural habitat. This ethical approach not only reflects our corporate values but also guarantees the production of high-quality, healthy fish. From an economic perspective, land-based salmon farming offers a promising opportunity. By establishing these farms closer to consumer markets, we reduce transportation costs, minimize our carbon footprint, and enhance the freshness and traceability of our products. This localized approach not only benefits the economies of the regions in which we operate but also strengthens our market positioning. The vision behind our land-based salmon farming initiatives is a testament to our commitment to sustainability, innovation, and responsibility. As we continue to navigate the evolving landscape of our industry, we remain steadfast in our dedication to delivering long-term value to our shareholders, customers, and the planet. We look forward to increasing our production in 2024 to reach full Phase 1 production. JOHAN E. ANDREASSEN DEAR STAKEHOLDERS, 2023 was a year that came with new challenges, but it was also pivotal year in our mission to produce healthy proteins in America. The first part of the year was focused on the biofilter reset project that was an enormous undertaking upgrading one of the most essential components of the Bluehouse while farming fish at the same time. Following the critical work of the biofilters the company faced new challenges during the summer months due to insufficient reliability of the water chillers resulting in higher temperatures in our fish tanks. The company completed the installation of new chillers in Q4. Since the new chiller bank was installed, we have achieved to stabilize our water temperatures to the target temperatures and have seen a drastic decrease in mortality and increase in production. In a world where sustainable practices and responsible resource management are at the forefront of corporate strategies, our commitment to environmental stewardship has driven us to explore innovative solutions within the aquaculture industry. Land- based salmon farming represents a paradigm shift, aligning with our core values and pushing the boundaries of responsible business practices. This vision is deeply rooted in environmental sustainability. By transitioning from conventional open-net pen systems to controlled, land-based facilities, we are taking significant strides towards mitigating the environmental impact associated with traditional aquaculture. This shift addresses 5 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 MESSAGE FROM THE CEO 2010 VIKEBUKT, NORWAY MIAMI, FLORIDA, US ASA 158 AASZF 342.3M FOUNDED: LEGAL HEADQUARTERS: BUSINESS HEADQUARTERS: OSLO STOCK EXCHANGE TICKER: EMPLOYEES US OTCQX TICKER:  GRI 2-1 GRI 2-2 Atlantic Sapphire ASA (“ASA”), a public limited liability company incorporated in Vikebukt, Norway and domiciled in Vestnes, Norway, is the parent company of the Atlantic Sapphire group of companies (collectively, “Atlantic Sapphire” or the “Group”), which includes: ATLANTIC SAPPHIRE DENMARK A/S (“ASDK”, registered in Hvide Sande, Denmark) ATLANTIC SAPPHIRE USA LLC (“ASUS”, registered in Miami, Florida, US) AS PURCHASING, LLC (“ASP”, registered in Miami, Florida, US) S.F. DEVELOPMENT, L.L.C. (“ASSF”, registered in Miami, Florida, US) ATLANTIC SAPPHIRE IP, LLC (“ASIP”, registered in Miami, Florida, US) This report is published as a single document and part of our annual integrated financial and ESG report, written by our internal ESG committee led by CFO Karl Øystein Øyehaug. (GRI 2-3) Additionally, we publish quarterly financial reports. (GRI- 2-4) 6 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 COMPANY FACTS Miami Bluehouse Business Headquarters Incorporated 99% UNITED STATES 1% CANADA Revenue by Market 7 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE BY LOCATION 2010 2015 2016 2011 2013 ATLANTIC SAPPHIRE IS FOUNDED by Norwegian salmon entrepreneurs Johan Andreassen and Bjorn-Vegard Løvik with the vision of creating a world-class Bluehouse in the United States, the world’s largest market for Atlantic salmon FOUNDING PARTNER THUE HOLM, a Danish recirculation aquaculture expert, joins the company CONSTRUCTION BEGINS on the commercial pilot Denmark Bluehouse, which would become the world’s largest land- based salmon operation upon completion AFTER AN ASSESSMENT including over 12 states, Miami, Florida is selected as the location for US operations THE FIRST WATER USE and well drilling permits are secu- red for the Miami Bluehouse THE FIRST OVA of Atlantic salmon are stocked in the Denmark Bluehouse THE FIRST BATCH of Denmark Bluehouse salmon are harvested ATLANTIC SAPPHIRE SALMON SELLS in the US market 8 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 SELECTED HISTORICAL HIGHLIGHTS 2019 DNB DEBT FINANCING COMPLETED, with a guarantee from EKF, Denmark’s export credit agency, in alignment with IFC performance standards and guidelines. First ‘green rated’ seafood debt for DNB, the world’s largest seafood lender. NOK 783M equity raise completed. The Company increases its projected capacity target from 90,000 metric tons in 2026 to 220,000 metric tons by 2031. THE FIRST GENERATION of Atlantic salmon born in Florida successfully grows through the freshwater stage and onto the saltwater post-smolt systems ATLANTIC SAPPHIRE is named ‘Star of Innovation’ at the 2019 European Small and Mid-Cap Awards ATLANTIC SAPPHIRE JOINS the UN Global Compact, committing to respecting and promoting the ten principles on human rights, labor rights, environmental standards, and anti-corruption 2018 CONSTRUCTION OF GROW-OUT SYSTEMS expansion begins in Denmark, increasing capacity from 700 metric tons to 2,900 metric tons annually of round living weight (RLW) production NOK 600M equity raise completed and Atlantic Sapphire listed on the Merkur Market in Oslo, Norway THE FIRST ATLANTIC SALMON OVA are stocked in the Miami Bluehouse A ‘KEY TO MIAMI-DADE COUNTY’ is received from Miami- Dade County Mayor Carlos A. Gimenez in recognition of bringing responsible economic development and positive impact to the community FIRST UNITED STATES PATENT granted for systems and methods of intensive recirculating aquaculture 2020 ATLANTIC SAPPHIRE IS LISTED in Oslo Stock Exchange (“OSE”) THE FIRST COMMERCIAL US HARVEST of Atlantic Salmon raised in RAS in Florida occurs ATLANTIC SAPPHIRE INITIATES SALES of Bluehouse Salmon from Florida in several retail chains and food service outlets 2017 NOK 595M equity raise completed US CONSTRUCTION MANAGEMENT AGREEMENT is signed WELL DRILLING AND US PHASE 1 Miami Bluehouse construction commences 9 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 SELECTED HISTORICAL HIGHLIGHTS 2022 BLUEHOUSE SALMON IS CERTIFIED Friend of the Sea ATLANTIC SAPPHIRE INTRODUCES new smoked salmon products HOT SMOKED BUEHOUSE SALMON wins Parent Tested Parent Approved seal of certification FILLETING LINE is installed for in-house capabilities NEW CHILLER BANK is installed START OF stable production conditions 2023 ATLANTIC SAPPHIRE and Skretting enter agreement to secure local feed supply ATLANTIC SAPPHIRE INTRODUCES algal oil from Veramaris,replacing fish oil by 25% THE GROUP’S BRAND, Bluehouse Salmon, gains the “Heart Check” certification from the American Heart Association ATLANTIC SAPPHIRE IS LISTED in the US OTCQX market ATLANTIC SAPPHIRE DENMARK A/S receives the ASC Standard certification 2021 10 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 SELECTED HISTORICAL HIGHLIGHTS FOUNDED IN 2010, Atlantic Sapphire owns and operates a land-based Atlantic salmon farm in Miami, Florida, US. A Bluehouse® facility (the “Bluehouse”) is proprietary production technology developed in collaboration with a wide range of supply chain partners to optimize growing conditions for Atlantic salmon. Each Bluehouse contains the facilities needed for a salmon’s full value chain, from egg to fresh fillets packed for retail and food service. Consolidated operations enable Atlantic Sapphire to control the entire production cycle without having to transport salmon to and from sea-based net pens. The Group’s strategy is to produce in the end-market, near customers, thereby reducing the environmental impacts and costs associated with airfreight transportation. The Miami Bluehouse has a designed production capacity of approximately 9,500 metric tons head-on gutted (“HOG”). The Group has a target to expand production at the Miami Bluehouse up to 220,000 metric tons of annual capacity. The global volume of farmed Atlantic salmon reached 2.9 million metric tons in 2023, according to Kontali. By the end of 2023, Atlantic Sapphire employed 160 full time employees, and expects to continue increasing its workforce as the Group scales up in the US. (GRI 2-7). The financial statements of this report is audited by PwC. (GRI 2-5) Atlantic Sapphire aims to transform salmon farming by managing an integrated value chain of salmon production and bringing full traceability from egg to final product. Activities include farming, harvesting, processing, marketing, and sales. Through the specialized, efficient design of the Recirculating Aquaculture System (“RAS”), Atlantic Sapphire can control the key drivers of the production cycle consistently every day of the year. (GRI 2-6) In the US, end-market production collapses the costs inherent in the international conventional sea- based salmon farming value chain. Bluehouse farming has fewer negative impacts on the coastal environment, and for the Miami Bluehouse, there are no coastal impacts. The innovation of the Bluehouse allows Atlantic Sapphire to contribute to meeting the growing demand for sustainable, healthy, and fresh proteins. Atlantic Sapphire continuously invests in research and development to ensure that the Group remains at the forefront of transforming market salmon production. 11 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 OUR STORY 12 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 INTEGRATED VALUE CHAIN Johan Emil Andreassen CO-FOUNDER AND CEO OF ATLANTIC SAPPHIRE JOHAN E. ANDREASSEN is a Co-Founder of Atlantic Sapphire, served as Chairman of the Board of Directors from 2010 to 2023, and serves as the Chief Executive Officer of Atlantic Sapphire ASA. Mr. Andreassen has served as the Group’s Chief Executive Officer from 2010 to 2012, and from 2017 to 2020. Prior to founding the Atlantic Sapphire, Mr. Andreassen founded and led Villa Organic, a 30,000 metric tons capacity conventional salmon farming company, which was subsequently sold to Lerøy and SalMar in 2010. In October 2023, Mr. Andreassen announced his desire to step down as CEO of the Group, and consequently the Board of Directors initiated a search for his replacement [that was still ongoing at the time of publication of this report]. Karl Øystein Øyehaug CHIEF FINANCIAL OFFICER KARL ØYSTEIN ØYEHAUG is the Group’s Chief Financial Officer. Mr. Øyehaug was hired as the Group’s Finance Director in 2018 and served as the Group’s Managing Director from the time of conversion to public limited liability company in May 2020 until 2023. Prior to joining the Group, Mr. Øyehaug served as an Equity Analyst at Carnegie Investment Bank in Oslo, Norway covering the seafood sector. Mr. Øyehaug holds a degree in Economics and Business Administration from the Norwegian School of Economics (“NHH”) and Columbia University in New York. Damien Claire CHIEF SALES AND MARKETING OFFICER DAMIEN CLAIRE is the Group’s Chief Sales and Marketing Officer. Prior to joining Atlantic Sapphire, Mr. Claire was the President of Platina Seafood, Inc. Mr. Claire’s experience includes positions in several industries around the world. From 2009 to 2014, he served as Sales/Analyst for South Pacific Specialties in Miami. From 2004 to 2008 he also acted as Vice President of Business Development for Global Outsourcing in Chile. Damien earned a Bachelor’s Degree in Computer Science and Business Administration from Lander University in South Carolina. Mario Palma CHIEF OPERATING OFFICER MARIO PALMA was appointed the Chief Operating Officer of the Group in October 2023. Mr. Palma has been involved with the Group’s US operations since such operations commenced, and prior to being appointed Chief Operating Officer he held the position as Director of Aquaculture Engineering within the Group. Mr. Palma also has more than 8 years of experience from other companies within aquaculture, including 5 years in various positions at Mowi. Mr. Palma holds an engineering degree from the Universidad Católica del Norte in Chile. 13 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 EXECUTIVE MANAGEMENT Svein Taklo CHIEF DEVELOPMENT AND INFRASTRUCTURE OFFICER SVEIN TAKLO is the Group’s Chief Development and Infrastructure Officer since joining the Group on 1 October 2019. Before joining Atlantic Sapphire, Mr. Taklo held several positions within the cruise line industry, including most recently as Vice President Marine & Technical with ROW Management (The World, Residences at Sea) and previously as Chief Operational Officer and Senior Vice President of Maritime Operations for Hurtigruten from May 2014. Mr. Taklo holds a Bachelor’s in Safety and Maintenance from Høgskolesenteret i Vestfold in Norway and completed the Executive Education Program by Wharton School of Business of the University of Pennsylvania. Valerie Leath DIRECTOR OF HUMAN RESOURCES VALERIE LEATH joined Atlantic Sapphire in 2021 as a Director of Compensation and Benefits, and currently serves as Director of Human Resources. Leath has broad experience within the fields of HR with a strong focus on compensation, compliance and strategic management. She is a professional member of the Society for Human Resource Management and currently holds the Senior Professional in Human Resources designation through HRCI. Leath’s prior work experience includes her role as HR/Benefits Manager at Weller Management and HR Consultant with Corporate Business Solutions. Leath has a strong academic background, and holds a Bachelor’s degree in Public Relations from the University of Florida, a Master’s degree in International Business from the University of Florida and a Master’s degree in Business Administration from the EM Lyon Business School. 14 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 EXECUTIVE MANAGEMENT GRI 2-9 Atlantic Sapphire creates long-term value by ensuring good and healthy business practices, reliable reporting, regulatory compliance, and a culture that emphasizes ESG principles and standards. Atlantic Sapphire is publicly traded and listed on the main exchange of the Oslo stock exchange. The Oslo Stock Exchange is governed by the Norwegian Securities Trading Act and its associated regulations. The regulations provide a framework for the governance of the stock exchange. Key regulations governing the Oslo Stock Exchange: 1. 3. 5. 2. 4. LISTING RULES: The Oslo Stock Exchange has specific listing rules that companies must adhere to, to be listed on the exchange. These rules cover topics such as financial reporting, corporate governance, and disclosure requirements. MARKET ABUSE REGULATIONS: The market abuse regulations in Norway are designed to prevent insider trading and other forms of market abuse. These regulations are enforced by the Financial Supervisory Authority of Norway. These regulations aim to promote transparency and fairness in the Norwegian financial markets, and to protect investors and maintain confidence in the integrity of the stock exchange. DISCLOSURE REQUIREMENTS: Listed companies on the Oslo Stock Exchange are required to disclose certain information to the market, such as financial reports, major events or changes in ownership, and material changes in business operations. CORPORATE GOVERNANCE GUIDELINES: The Oslo Stock Exchange has issued guidelines for corporate governance that listed companies are encouraged to follow. These guidelines cover topics such as board structure, remuneration, and shareholder rights. TRADING RULES: The trading rules for the Oslo Stock Exchange govern the conduct of trading on the exchange. The rules include provisions for order types, price limits, and trading hours. 15 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 CORPORATE GOVERNANCE Our board members ensure Atlantic Sapphire operates with integrity and accountability: Kenneth Jarl Andersen CHAIRMAN KENNETH JARL ANDERSEN has served as a Director since August 2022. Andersen is the CEO of Strawberry Equities AS, which recently made a significant investment in the Company in the private placement announced on 28 June 2022. Andersen has extensive experience from the Strawberry Group, where he has been employed since 2007. In addition, Andersen has experience from Terra Fondsforvaltning and Arthur Andersen Consulting. Mr. Andersen is a Norwegian citizen, currently residing in Oslo, Norway. Eirik Welde DEPUTY CHAIR EIRIK WELDE is a Norwegian national who holds a veterinarian degree from the Norwegian School of Veterinary Science (2001) and has over 20 years of experience from the Norwegian aquaculture industry. He has worked with fish health, production management and design of live fish support systems, including hatcheries and post-smolt facilities. He has experience as project manager and project executive within several aquaculture species and RAS technology. From 2012, he was the general manager of Nordlaks Smolt AS, and since 2019 he has been CEO of the Nordlaks Group. André Skarbø DIRECTOR ANDRÉ SKARBØ has served as a Director since 2015. Mr. Skarbø is owner and managing director of Platina Seafood AS, a Norwegian fish distribution company headquartered in Stranda, Norway and also with offices in Miami, Florida, USA. Mr. Skarbø has been involved in the salmon processing and sales industry for 35 years. Mr. Skarbø is a Norwegian citizen, currently residing in Stranda, Norway. 16 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 CORPORATE GOVERNANCE Our board members ensure Atlantic Sapphire operates with integrity and accountability: Marta Rojo Alonso DIRECTOR MARTA ROJO ALONSO is a Spanish national with over 25 years of international experience in Europe, Asia and Latin America. She has worked with various large companies within the aquaculture industry, such as Mowi, Skretting and as CFO of Salmones Camanchaca in Chile (listed on the Oslo Stock Exchange). She is the current CEO of Sterner Group, a Norwegian water treatment technology provider working with RAS. She has a Master’s degree in Economics and Management from the University of Madrid, as well as an Executive MBA from Nyenrode Business University in the Netherlands. Ellen Marie Sætre DIRECTOR ELLEN MARIE SÆTRE is an educated veterinary from the Norwegian School of Veterinary Science (2006). She has been working as a consultant in private fish health companies on questions regarding fish health, welfare, hygiene and biosecurity since 2006. Now she is leader of the fish health department in Møre og Rømsdal for Åkerblå AS. Ms. Sætre is a Norwegian citizen, currently residing in Vikebukt, Norway. 17 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 CORPORATE GOVERNANCE The past years navigating the pandemic have shown that the seafood supply chain is far from immune to shocks. When the COVID-19 pandemic (the “Pandemic”) hit, it exacerbated some of the critical conditions facing our food systems at both global and local levels. However, it accelerated Atlantic Sapphire’s focus to build greater resilience into its food systems. 18 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 THE GLOBAL CHALLENGES FACING SEAFOOD PRODUCTION The notion of food systems has resurfaced as an important approach to the challenge of creating policy that successfully inte- grates nutritional and sustainability goals. Food systems need to be reshaped to feed our planet sustainably with healthy proteins. Atlantic Sapphire views its business as being part of the solution, not only by participa- ting in a leadership role in navigating the world onto a low-carbon path for a healthier environment, but also driving resilience for a more sustainable future. THERE IS AN UNPRECEDENTED PRESSURE on natural resources, which creates challenges to provide enough food to sustain a growing global population. The UN Sustainable Development Goals (“SDGs”) have framed the global environmental, social, and economic challenges and have urged businesses to step up with solutions that tackle the problems – fast and at scale. Salmon farming emerged four decades ago in Norway, and later in other areas with similar oceanographic conditions, as a consistent and reliable source of healthy seafood. Salmon farming soon became one of the main sources of income and employment in many small communities, contributing to the economic development of remote parts of these countries. According to the Food and Agriculture Organization of the United Nations (“FAO”), the growth of human consumption of fish in the last 60 years globally has increased at a rate significantly higher than the growth in world population. From 1990 to 2018 alone, the world has seen a 122% rise in total fish destined for human consumption (“food fish consumption”). The same period also saw the average annual growth rate of total food fish consumption outpace that of all other animal proteins such as meat, eggs, milk, etc. In 2017, fish provided approximately 3.3 billion people with almost 20% of their average per capita intake of animal protein, accounting for about 17% of total animal protein and 7% of all proteins consumed globally. The FAO estimates that per capita fish consumption in 2018 was 20.5 kg, expecting it to rise to 21.3 kg in 2027. Meanwhile, aquaculture production is projected to grow at a compound annual growth rate (“CAGR”) of approximately 2.6%, reaching 109 million metric tons in 2030, an increase of 32% (26 million metric tons) over 2018. In comparison, the growth rate of wild-caught fish is expected to remain flat in this period. This will grow aquaculture’s share of total fish supply from approximately 46% in 2016 to approximately 53% in 2026. According to Kontali, fish from aquaculture will grow faster than any other main source of animal protein, with a 2014-2024E supply CAGR of 2.8%. Salmon farming is expected to play an important role in this development. In 2023, the production of Atlantic salmon was under 2.9 million metric tons. The growth in 2023 was flat or even slightly negative and expected growth for 2024 is around 1%. Over the past decades, aquaculture has greatly contributed to the protection of depleting wild stocks and is expected to continue to be a significant contributor in feeding the world’s increasing population. However, there is much more to be done to protect the world’s ecosystems and, in particular, its oceans. Atlantic Sapphire has become increasingly aware of the issues, and understands the need to adapt to global changes and embrace new technologies as they become available to mitigate the negative impacts that current practices may have on the environment and society as a whole. As a member of the UN Global Compact, Atlantic Sapphire aims to contribute to the development of international policies that will establish the key role that sustainable aquaculture will play in future food systems to fulfill the expanding dietary needs of the world’s population. Atlantic Sapphire will also support the work of relevant subgroups, such as the UN Blue Food Working Group, in the coming years to ensure measurable progress. 19 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 THE GLOBAL CHALLENGES FACING SEAFOOD PRODUCTION Aquaculture 1950 1970 1990 2010 0 20 40 60 80 100 120 2017 2019 2021 2023 2025 WILD-CAUGHT AQUACULTURE 20 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 MILLION METRIC TONS GLOBAL PRODUCTION 02 22. Our ESG Framework 30. Our Commitment to Responsible Governance 34. Why Sustainability Matters to Atlantic Sapphire 21 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND THE PLANET Atlantic Sapphire is a company where talented individuals are empowered to do their best work by applying the Group’s core values: Passion PURPOSE. DEDICATION. COURAGE. Performance INITIATIVE. COLLABORATION. RESULTS. Innovation CONTINUOUS IMPROVEMENT. SOLUTIONS. LEARNING. Integrity ACCOUNTABILITY. OPEN COMMUNICATION. CARE. Balance HEALTHY FISH. STAKEHOLDER WELLNESS. SUSTAINABLE PLANET. Atlantic Sapphire exists for one clear purpose: to lead the global transformation of aquaculture through innovative fish farming methods that deliver a delicious, nutritious, and sustainable product to the end-consumer. The Group’s approach to doing business is sustained by an ongoing consideration of ESG factors with the goal of bringing results across four key areas: product, economic, environmental, and social responsibility. Vision Pioneering Bluehouse Farming Locally Transforming Protein Production Globally Transformative Purpose For the Health of People and Planet Healthy Environment Performance Integrity Balance Innovation Passion Development & Infrastructure People & Culture Finance & Legal Operations Technology Sales & Marketing Sustainable Supply Chain Engaged Employees Financial Performance Healthy Fish ORGANIZATIONAL STRUCTURE PRIORITIES VISION & TRANSFORMATIVE PURPOSE CORE VALUES 22 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ESG FRAMEWORK GRI 3-3 In 2019, the Group undertook its first assessment to determine its key stakeholders and their ESG priorities, disclosure topics, and risk factors, which has since been revisited annually. This year’s updated Materiality Matrix has also been reviewed and approved by the Board of Directors. Careful consideration for guidance was included from theGlobal Reporting Initiative (“GRI”) Standards, the Sustainability Accounting Standards Board (“SASB”), the UN Global Compact, and the UN Sustainable Development Goals (“SDGs”). ATLANTIC SAPPHIRE VIEWS all potential material ESG topics, including both risks and opportunities, according to its time horizon (short-, medium-, and long-term). The Group also evaluates boundaries, considering where each of the impacts occur and the Group’s direct or indirect involvement with those impacts. Atlantic Sapphire then assesses the Group’s stakeholders along its value chain, focusing on four key stakeholders and their expectations of Atlantic Sapphire: customers, employees, suppliers, and shareholders. Atlantic Sapphire has analyzed the Group’s significant impacts and stakeholder expectations across over 30 relevant and key topics. Through an iterative aspect process, it prioritized the 16 topics considered most material across four topic categories: Product Responsibility, Economic Responsibility, Environmental Responsibility, and Social Responsibility. The resulting list of topics and the materiality matrix are shown below, and its mapping has been validated by the executive team and the Board of Directors prior to publishing this report. Although the Group has not undertaken a formal validation of the overall matrix with external stakeholders after its creation, it has collected direct and indirect feedback on the priorities through an ongoing dialogue with investors and other external stakeholders. In 2022, the Group continued its validation on the materiality assessment with selected external stakeholders, ensuring that it continually monitors its understanding of the dynamic and evolving landscape of risks and opportunities in sustainable aquaculture. Updates to the 2023 Materiality Matrix In the 2023 Materiality Matrix, “Water & Effluents” / “Climate Adaption” has switched spots because Atlantic Sapphire now has a relatively greater impact on water and effluents, and plans to improve on this reporting. Meanwhile, Technology & Innovation has been removed from the Materiality Matrix, because the Group now wants to focus its efforts on delivering, rather than innovation. 23 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES PRIORITIZING MATERIAL RISKS ECONOMIC RESPONSIBILITY ENVIRONMENTAL RESPONSIBILITY SOCIAL RESPONSIBILITY PRODUCT RESPONSIBILITY Indirect Economic Impact Climate Adaptation Resilience and Transition Local Communities Energy Consumption and Intensity & GHG Emissions Anti-corruption & Anti-competitive Behavior Training and Education Assessment of Suppliers’ Environmental and Social Standards Economic Performance Customer Health and Safety & Marketing labeling Occupational Health and Safety Animal Health and Welfare Water and Effluents Biodiversity Diversity, Equal Opportunity and Non-Discrimination Waste Management Environmental Compliance Significance of Atlantic Sapphire’s impacts on the economy, environment, and society Impact on external stakeholders’ assessment and decisions 24 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE’S MATERIALITY MATRIX PRODUCT RESPONSIBILITY CONSUMER SAFETY FISH HEALTH • Food safety and certification compliance • No antibiotics or pesticides • Integrated production and processing quality control • No exposure to microplastic waste • Fish husbandry best practices • Prevent exposure to parasites • Prevent exposure to toxic algae or diseases TRACEABILITY LOGISTICS BENEFITS • Secure and integrated production cycle • Key suppliers, including genetics and feed • Elimination of airfreight intermediaries • Longer fresh product shelf-life • Single location transportation origin • Full byproduct utilization opportunities ENVIRONMENTAL RESPONSIBILITY GHG EMISSIONS AND CLIMATE CHANGE WATER AND LOCAL EFFLUENTS • In-market production, eliminating airfreight transportation • Minimal transportation for farming and processing • Improved feed efficiency • Advanced water treatment • Minimal impact on coastal waters • Responsible sludge management ENERGY CONSUMPTION AND INTENSITY BIODIVERSITY • Increase renewable energy supply • Efficient energy investments • Minimal impact on local flora and fauna • Prevent escapees and predator issues • Avoid microplastic contamination SUPPLIER ENVIRONMENTAL ASSESSMENT WASTE • New suppliers to be screened • Actions taken against any negative impacts • Minimize generation and impact • Management ECONOMIC RESPONSIBILITY ECONOMIC PERFORMANCE ANTI-COMPETITIVE BEHAVIOR • Financial results and shareholder return • Financial integrity and responsibility • Code of Conduct adherence • Transparent reporting INDIRECT ECONOMIC IMPACT TECHNOLOGY AND INNOVATION • Investment and job creation impact • Contribution to GDP growth • Intellectual Property Rights • Research & Development SOCIAL RESPONSIBILITY OCCUPATIONAL HEALTH AND SAFETY COMMUNITY IMPACT • Safe and hazard-free working environment • Provision and use of health & safety equipment • Local supplier engagement • Charity, civic and research organizations engagement TRAINING AND EDUCATION DIVERSITY AND INCLUSION • Atlantic Sapphire Academy • Collaboration with educational institutions • Learning and networking events • Equal opportunities for employees and suppliers • Gender diversity • Integration initiatives SUPPLIER SOCIAL ASSESSMENT • New suppliers to be screened • Actions taken any negative impacts 25 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES MATERIAL ESG RISKS The material topics listed below reflect both potential risks and opportunities that will impact the decisions Atlantic Sapphire makes from a business perspective. THE GROUP will increasingly capture data on the material ESG topics and risks for management attention and reporting. Data collection will increase to support additional comprehensive and accurate disclosure as Atlantic Sapphire approaches steady-state operations in the US. Profitability 1. ECONOMIC VIABILITY: Without profitability, Atlantic Sapphire cannot sustain its operations. 2. SCALABILITY: Profitable operations allow for scalability, as The Group is working towards the construction of Phase 2. 3. MARKET DEMAND: Profitability helps ensure that sustainably farmed salmon remains competitive in the market, meeting both ethical and economic demands. 4. INVESTMENT AND INNOVATION: Profitability attracts investment and drives innovation in Bluehouse-Tech. Customer health and safety 1. FOOD SAFETY: Land-based farming allows for greater control over production conditions, reducing the risk of contamination from pollutants, pathogens, or other hazards that might affect fish health and, subsequently, human health. 2. PUBLIC HEALTH: Land-based farming practices that prioritize health and safety mitigate the risk of transmitting diseases from farmed fish to humans. This is particularly important in preventing the spread of zoonotic diseases that can potentially be transmitted from animals to humans. 3. REGULATORY COMPLIANCE: Adhering to food safety regulations and standards is essential for compliance and maintaining consumer confidence. Failure to meet these requirements can lead to regulatory penalties, recalls, and damage to the reputation of the farm. 4. CONSUMER CONFIDENCE: Concerns about food safety, especially regarding seafood products, can influence consumer purchasing decisions. Demonstrating a commitment to health and safety in land- based salmon farming operations can reassure consumers and strengthen brand loyalty. Occupational health 1. RISK REDUCTION: Land-based salmon farming involves various tasks and operations that can pose risks to workers, such as handling equipment, working in wet environments, and exposure to chemicals or biohazards. Implementing proper safety protocols, training, and equipment reduces the likelihood of accidents and injuries. 2. LEGAL COMPLIANCE: Failure to meet occupational and safety regulations and requirements can result in legal penalties, fines, lawsuits, and damage to the reputation of the farm. Prioritizing worker safety helps ensure compliance with relevant laws and regulations. 3. PRODUCTIVITY AND EFFICIENCY: Safe working conditions enable employees to perform their tasks more effectively and efficiently. By minimizing the risk of accidents and injuries, Atlantic Sapphire can maintain productivity levels, avoid disruptions in operations, and reduce downtime associated with worker absenteeism or injury recovery. 4. RISK MANAGEMENT: Identifying and mitigating workplace hazards not only protects employees but also minimizes the potential for financial losses, damage to equipment, and disruptions in production. 5. SUSTAINABILITY: Ensuring the well-being of employees is aligned with broader sustainability goals, as it contributes to social responsibility and the long-term viability of farming operations. 26 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES MATERIAL ESG RISKS GRI 2-29 Atlantic Sapphire’s business depends on its social license to operate, the trust and goodwill of its stakeholders, and on its reputation for keeping its promises. ANY CIRCUMSTANCES that publicly damage this may lead to a broader adverse effect than solely the monetary liability arising directly from a damaging event by way of loss of business, trust and goodwill, clients and consumers, employees, partners, and neighbors. The Group strives to build long-term relationships with all stakeholders, and the Group’s management team engages in open and transparent dialogue with those interested in its business from a social, environmental, and economic perspective. The Group proactively listens to its stakeholders, provides them with information about Atlantic Sapphire’s projects and operations, and addresses their needs on an ongoing basis. Such dialogue strives to raise awareness on both the value of what Atlantic Sapphire does and the challenges they face. In the past year, the Group held valuable dialogue with stakeholders around various topics that consisted of product attributes, environmental and animal welfare aspects related to Bluehouse salmon farming, technology and R&D invested in the recirculating aquaculture systems (“RAS”), the viability of the business model, and the socio-economic impacts of its operations in the US. Further, the Group employs different platforms to engage with its stakeholders to provide a relevant setting and frequency of communications while simultaneously maintaining a healthy level of involvement and interest with, and ultimately for, the stakeholders. Animal welfare 1. ECONOMIC PERFORMANCE: To achieve economic performance, animal welfare is a top priority. The welfare of the salmon is at the center of the company mission and vision. Ensuring the welfare of the fish contributes to the long-term viability and resilience of the operation. 2. PRODUCT QUALITY: Stress-free fish have better meat quality, which translates to a superior product for consumers. 3. REDUCED MORTALITY: Poor animal welfare can lead to increased stress and mortality. 4. SUSTAINABILITY AND EFFICIENCY: Healthy, well-cared-for fish are more efficient in converting feed into edible protein. This efficiency contributes to the overall sustainability of the operation by reducing resource inputs and waste outputs. 5. PUBLIC PERCEPTION AND REPUTATION: Consumer awareness and concern for animal welfare is growing. Prioritizing animal welfare is prioritizing consumer trust. Water effluent management 1. ENVIRONMENTAL PROTECTION: Atlantic Sapphire uses an injection well, which allows for the controlled disposal of treated wastewater deep underground, minimizing the risk of surface water contamination, algal blooms, and other ecological disturbances associated with traditional discharge methods. 2. REGULATORY COMPLIANCE: Compliance with regulations governing the discharge of effluent is essential to avoid legal penalties, fines, and other enforcement actions. 3. WATER QUALITY MAINTENANCE: Salmon require clean water with specific temperature, oxygen levels, and pH for optimal growth and health. Managing effluent ensures that water quality parameters remain within acceptable limits, reducing stress on the fish and minimizing the risk of mortality. 4. RESOURCE CONSERVATION: Effective effluent management strategies such as recycling and reuse systems within the Bluehouse help conserve Florida’s aquifer by reducing the amount of freshwater needed for salmon production. 5. SUSTAINABLE PRACTICES: Atlantic Sapphire’s mission includes the promotion of sustainable aquaculture practices. Proper effluent management ensures the long-term viability of land-based salmon production. 27 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES MATERIAL ESG RISKS STAKEHOLDER ENGAGEMENT Employees FULL-TIME EMPLOYEES | SUBCONTRACTORS | CANDIDATES • Ongoing and regular communication on openings and feedback on status of applications • Ongoing and consistent open engagement regarding professional goals and opportunities, needs, work performance, updates on procedures, Group and department performance, and major events • Frequent company-wide online and (when possible) face to face communications such as townhalls, on relevant and exceptional information through different platforms • Annual employee satisfaction and engagement surveys Shareholders & Lenders INVESTORS | BANKS • Regular communication, updates in Group presentations, meetings to discuss both financial and ESG performance, ESG risks and opportunities (especially with institutional investors with a strong ESG mandate), investor roadshows, and site visits • Availability for two-way face-to-face communication, email correspondence, and response to enquiries • Multiple access platforms including Oslo Stock Exchange (“OSE”) official channels, website, and investor relations email address Customers BUYERS | RETAILERS | FOOD SERVICE | CONSUMERS • Frequent communication through onsite visits, email, and phone to set common goals, respond to questions around product safety and attributes, and to provide updates on commercial plans • Direct communication with customers through social media and other marketing and PR channels to answer questions about product safety, traceability, and salmon attributes Communities LOCAL COMMUNITIES | EDUCATION CENTERS ASSOCIATIONS | MEDIA • Open dialogue responding to questions, concerns and requirements via onsite visits, and participation in community activities (including those focused on the improvement of social and economic indicators), and scheduled meetings • Engagement with organizations, such as the South Dade Chamber of Commerce and Miami Dade Beacon Council, with respect to advancing economic development in the community • Support to educational efforts and institutions with conservation goals, such as the Frost Museum of Science in Florida, Before It’s Too Late, and Miami Waterkeeper • Provision of relevant information and updates about the progress of our operation through email, social media, press, and announcements • Product donations to support local communities such as the Homestead Soup Kitchen and Camillus House 28 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES HOW ATLANTIC SAPPHIRE ENGAGES WITH STAKEHOLDERS Business Partners SUPPLIERS | CONTRACTORS • Face-to-face daily communication regarding progress on both sides • Monthly meetings with a set agenda regarding project timelines, requirements, budgets and technical developments, or other needs • Support local businesses whenever possible Industry INDUSTRY PEERS | NON-GOVERNMENTAL  • Updates through Group presentations at conferences and summits gathering businesses within the seafood industry and beyond • Notifications through OSE, market days, on-site visits strictly centered on pre-competitive dialogue • Communications through specialized media • Press releases, Group updates, and social media posts Authorities LOCAL | REGIONAL | NATIONAL • Continuous engagement informing of progress, practices, and permissions via formal communication • Onsite visits • Regular updates via face-to-face communication 29 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES HOW ATLANTIC SAPPHIRE ENGAGES WITH STAKEHOLDERS Atlantic Sapphire is committed to high standards in corporate governance and complies with all the corporate governance requirements that are part of the listing requirements of the Norwegian stock exchange, Oslo Børs. 30 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES COMMITMENT TO RESPONSIBLE GOVERNANCE GRI 2-10-2-15 The framework for respon-sible governance includes an Environmental and Social Management System (“ESMS”), which comprises a set of policies, procedures, and requirements for internal capacity to identify and manage ESG impacts. Atlantic Sapphire has set out a range of governance policies, including: Code of Conduct, Investor Relations Policy, Nomination Committee Charter, and a Human Rights Policy. These are published online. THE BOARD OF DIRECTORS is ultimately responsible for the Group’s sustainability performance. There is no separate board-level committee, as the entire Board is engaged in setting the Atlantic Sapphire’s strategic direction for sustainability and ESG as well as monitoring performance. Daily responsibilities are integrated throughout the Group’s executive management. Atlantic Sapphire promotes a culture where everyone is responsible for driving value with a focus on engaged people, healthy fish, healthy environment, sustainable supply chain, and financial performance. Measurement, monitoring, and auditing of the environmental and social management system (“ESMS”) and coordination is conducted by the managers accountable for the related elements of the Environmental and Social Action Plan (“ESAP”). Atlantic Sapphire’s Board of Directors is independent from the Group’ executive management. Johan Andreassen, the CEO of Atlantic Sapphire, was the only Group employee represented on the Board as a non-independent member until he stepped down as Chairman in May 2023. As per Norwegian law, the Board shall always have at least 40% of both genders represented. In 2023, the Board comprised two female members out of five members in total. The Group has independent committees in place for audit and remuneration, in addition to a Nomination Committee that is acting independently of the Board of Directors. We comply with all applicable requirements under the Norwegian Public Limited Liability Companies Act, including facilitating shareholder participation through invitation to our general meetings. The agenda, materials, and meeting minutes for the General Meetings of the Group are published online in both English and Norwegian. In the 2023 AGM, 46.4% of the outstanding shares in the Group were represented. Of all the issues presented to the AGM, 99.9 of present shareholders voted on each of the 16 voting items. (GRI 2-16-2-18) Public Policy GRI 415 IN 2023, Atlantic Sapphire worked with Seagrant and their internship program in order to improve government reach and relations. Seagrant together with the University of Florida helped recruit an intern for Atlantic Sapphire to work on government relations and policy. Some of the work that was done thanks to this collaboration include: Outreach to government and government buying programs, working on an organic certification for seafood and more broadly to promote aquaculture to the local and federal government. The latest deliverable of the internship program was the redaction of a comment letter to the 2024 US Farm Bill addressed to the senate agriculture committee. The letter was completed in 2023 and cosigned by dozens of other American aquaculture farmers. It has not yet been submitted as the Farm Bill was pushed to September 2024. Remuneration policy GRI 2-19-2-21 ATLANTIC SAPPHIRE has a remuneration policy for the Board of Directors and the executive management team. This remuneration policy provides a framework for remuneration, as well as specific guidelines for incentive pay. The Policy is subject to approval by the general meeting of the Company, and subsequently (i) either in respect of any material changes, or (ii) at least every four years. This update Remuneration policy was approved by the annual general meeting of the Company in 2023. The Compensation Committee prepared the Remuneration Policy, and is also responsible for preparing later amendments and updates. CEO-to-Employee Pay Ratio TOTAL CEO COMPENSATION – 500,000 Median Employee Compensation –68,800 , Mean Employee Compensation – 87,580 , The ratio between the total annual compensation of the Chief Executive Officer and the mean or median employee compensation: 5.70, 7.27. 2-25 Processes to remediate negative impacts 2-30 Collective bargaining agreements Atlantic Sapphire employees have the right to organize and form a union, but employees have not initiated any efforts to unionize. 31 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES GOVERNANCE FRAMEWORK ATLANTIC SAPPHIRE’S ESMS was built following an external review of the Group’s Environmental and Social Management Plan (“ESMP”) for compliance with the IFC Performance Standards (“PS”) (2012), IFC EHS Guidelines for Aquaculture (2007), and EHS General Guidelines (2007). The ESMS comprises a set of policies across a range of ESG topics – from environment, health & safety, security and emergency preparedness to employment conditions, rights and obligations, grievance management, whistleblower policy, community engagement, and communication. (GRI 2-26) ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEM ENVIRONMENT HEALTH & SAFETY HUMAN RESOURCES SECURITY EMERGENCY PREPAREDNESS COMMUNITY EXTERNAL COMMUNICATION Internal Compliance Monitoring Data Collection & Reporting External Due Dilligence Certifications Grievance Mechanism Communication and dialogue with internal and external stakeholders To encourage feedback from employees and community members, the Group expanded its grievance mechanism to include confidential boxes and electronic submissions for suggestions and acknowledgements. In 2023 a total of five grievances, suggestions, or acknowledgments were received through these boxes and other communication channels. Three of them were addressed; one not solved or communicated back to employees; one issue solved but not communicated to the employees. 32 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ESMS FRAMEWORK GRI 2-25 Atlantic Sapphire’s overarching Environmental, Health, Safety, and Security (“EHSS”) Policy expresses their commitment to responsible governance and includes: IDENTIFYING, evaluating, and managing risks associated with occupational health & safety, community health & safety, food safety, environmental compliance, and quality of products. CONTINUING to improve our processes and development of technologies to increase the performance and sustainability of operations. COMMUNICATING to management and all concerned parties any unlawful or unsafe conditions, security lapses, and maintaining openness, transparency, and continuing dialogue with our employees, contractors, communities, regulatory authorities, suppliers, customers, and other stakeholders. ENSURING compliance with all applicable EHSS laws and regulations, EHSS management standards, and other EHSS standards to which Atlantic Sapphire subscribes. PROMOTING this culture through our suppliers, vendors, and contractors. DESIGNING and reliably operating our aquaculture facilities with emphasis on effective process safety programs to maintain a safe work environment, prevent accidents, and improve efficiency in the consumption of energy, water and other resources, and material inputs. CONDUCTING employee training and implementing a top- down culture of safety awareness. 1. 5. 6. 7. 2. 3. 4. 33 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES EHSS POLICY 34 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET Atlantic Sapphire was founded upon an aspiration to find solutions to existing global environmental, social, and economic challenges. Through the Group’s core business, values, and behaviors, it recognizes that environmental, social, and governance (“ESG”) factors have a material impact on the long- term financial performance and value creation for stakeholders. Through its daily actions, Atlantic Sapphire seeks to leverage the potential of its alignment with ESG principles to minimize risk while maximizing stakeholder value. WHY SUSTAINABILITY MATTERS TO ATLANTIC SAPPHIRE THROUGH THEIR DAILY ACTIONS, Atlantic Sapphire seeks to leverage the potential of its alignment with ESG principles to minimize risk while maximizing stakeholder value. ESG factors are incorporated into Atlantic Sapphire’s corporate culture and serve as guiding principles towards the Group’s conduct, decisions, and actions. The Atlantic Sapphire team is measured on and rewarded for its contributions to achieving their corporate values and four key priorities of responsibility: Product, Economic, Environmental, and Social Responsibility. Atlantic Sapphire strongly supports the UN Sustainable Development Goals (“SDGs”). The Group sees these goals as a blueprint for business leadership generally as well as for the industry because food production lies, as described by the World Economic Forum, at the intersection of so many major global challenges, including natural resource management, climate change, public health, food security, and trade regimes. Atlantic Sapphire believes that it has a duty to find a balance between producing enough healthy proteins to feed the world and protecting the planet’s limited resources. (GRI 2-22) Atlantic Sapphire fully supports the UN Global Compact principles and SDGs as they relate to its business strategy, day-to-day operations, organizational culture, and influence. Atlantic Sapphire identified the eight SDGs highlighted below as targets based on the Group’s highest priorities and the areas in which it is best placed to drive positive change. (GRI 2-23) 35 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES WHY SUSTAINABILITY MATTERS TO ATLANTIC SAPPHIRE “Ensuring healthy lives and promoting the well-being for all at all ages is essential to sustainable development” SDG 3 ATLANTIC SAPPHIRE PRODUCES Atlantic salmon, which is high in long-chain Omega-3s fatty acids that help maintain a healthy heart and is a rich source of vitamins and minerals. According to health authorities, a healthy, balanced diet should include at least two portions of fish a week, including one of oily fish such as salmon. “Sustainable economic growth will require societies to create the conditions that allow people to have quality jobs” SDG 8 BY SPEARHEADING THE DEVELOPMENT of a new cross- discipline industry, Atlantic Sapphire has secured the creation of quality jobs that will set the basis for a robust talent pool in the emerging land-based aquaculture sector. In addition to the positive impact generated through employment and the economic multiplier effect, the growth of Atlantic Sapphire and the land-based salmon farming sector generates a significant need for skills. This leads to collaboration between the public and private sectors to develop programs oriented to form students for the jobs of the future, engaging people of different ages and backgrounds. “Sustainable consumption and production is about promoting resource and energy efficiency, sustainable infrastructure, and providing access to basic services, green and decent jobs and a better quality of life for all” SDG 12 ATLANTIC SAPPHIRE PRODUCES high quality Atlantic salmon free of antibiotics, parasites, and other medicines and which swim in water free of micro-plastics or mercury thanks to its closed-containment salmon farming technology. The Group’s Bluehouse technology enables them to responsibly use natural resources, such as water, and produce a sustainable protein for consumers. “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation” SDG 9 INNOVATION IS AT THE HEART of Atlantic Sapphire’s transformative purpose. By pioneering Bluehouse salmon farming, the Group is contributing to the progress and development of the land-based salmon industry at large as they open the door for larger projects and collaborate with contractors, equipment manufacturers, and suppliers to develop new solutions. The Group invests in research and development (“R&D”), participates in conferences to contribute to the global understanding of the main challenges and opportunities of this emerging industry, and continues to expand the pool of talent by recruiting people from different disciplines who can help bring land- based salmon farming forward. Product Responsibility Economic Responsibility 36 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES OUR SDG PRIORITY TARGETS “Take urgent action to combat climate change and its impacts” SDG 13 SALMON FARMING has the lowest carbon footprint in animal protein production. Atlantic Sapphire’s objective is to further contribute to the reduction of the environmental impact of salmon farming by eliminating airfreight-related carbon emissions and exploring and implementing carbon removal technologies when possible. “The food and agriculture sector offers key solutions for development and is central for hunger and poverty eradication” SDG 2 AS THE WORLD’S POPULATION continues to grow, future generations will need higher availability of protein. Atlantic Sapphire is contributing to bridge the increasing gap between a stagnant growth in global supply of salmon and a rising demand by optimizing the use of natural resources and eliminating barriers such as geographical production limitations. “Conserve and sustainably use the oceans, seas and marine resources for sustainable development” SDG 14 ATLANTIC SAPPHIRE has minimal impact on the oceans, marine wildlife, and marine ecosystems. By producing salmon out of the sea, wild populations of salmon and other wildlife are protected from additional escapees, parasite, and disease pressure. In addition, the use of the Boulder Zone to discharge treated water in Miami eliminates risks of eutrophication and changes on the seabed caused by wastewater. Atlantic Sapphire’s recycling technology reuses more than 99% of the water used which reduces the fresh and saltwater demand on the Group’s operation. Atlantic Sapphire actively engages in reducing its reliance on marine ingredients for the feed of its salmon and ensures that these ingredients are responsibly sourced. “Gender equality is not only a fundamental human right, but a necessary foundation for a peaceful, prosperous and sustainable world” SDG 5 EQUALITY AND DIVERSITY are paramount to the creation of a balanced work culture and the base of a company for the future. Atlantic Sapphire strives to offer equal opportunities and pay to male and female employees and to create inclusive employment opportunities through training programs in different areas. Environmental Responsibility Social Responsibility 37 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES OUR SDG PRIORITY TARGETS 03 39. Developing a Sustainable Option 83. Social Responsability 61. Environmental Responsibility 41. Consumer and Product Responsibility 9 9. About this report 53. Economic Responsibility GRI Content index 10 0. 38 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES TODAY, the global food system generates up to one quarter of the world’s greenhouse gases. When human eating habits over-index beef, lamb, pork, and poultry, too many forests are cleared for farmland, too much methane is released into the atmosphere, and too many fossil fuels are burned to produce fertilizers, run farm equipment, and ship food around the globe. Meanwhile, seafood protein consumption is rising. Most wild fish populations are overfished and can’t absorb new demand. The United Nations Food and Agriculture Organization reports that 90 percent of assessed wild fish populations cannot handle the pressure of additional fishing. Ocean-based fish farming offers some answers but faces many challenges and can still pressure the world’s oceans. The conventional aquaculture industry today generates a global supply of healthy Atlantic salmon of an estimated 2.7 million metric tons , almost all produced in ocean-based net pens or cages, primarily off the coasts of Norway and Chile due to suitable conditions. However, these industrial ocean- based fish farming areas are remote from the largest end- markets, and require significant airfreight transportation, and logistics costs, leading to high carbon emissions and a reduced shelf life of the final product. When 80% of seafood consumed in the US 1 — the world’s largest salmon market — is imported, the carbon footprint remains a heavy tread. In addition, the industry faces numerous other challenges such as ocean-based farmed fish in net pens, host diseases and parasites, including sea lice, requiring continuous use of pesticides and other prevention methods. Farmed salmon also escape into the surrounding waters, spreading non- native fish varieties that may intervene with the local ocean ecosystem and wild salmon. Fish waste dissipates untreated into the coastal areas causing nutrient pollution and harmful algal blooms. Atlantic Sapphire’s Bluehouse technology eliminates conventional industry environmental and health risks. The Problem 1. NOAA Fisheries www.fisheries.noaa.gov/national/aquaculture/us-aquaculture M E D E C I N E S & P E S T I C I D E S M I C R O P L A S T I C S P R E D A T O R S E S C A P E S I M P A C T O N W I L D S A L M O N U N T R E A T E D F I S H W A S T E D I S E A S E S & P A R A S I T E S Conventional ocean net pen farming experiences a series of concerns 39 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES DEVELOPING A SUSTAINABLE OPTION ATLANTIC SAPPHIRE RAISES salmon on land in the U.S. far from wild waters. The Group has developed its vision of a Bluehouse – essentially a greenhouse where fish can be raised in optimal conditions for animal health and welfare with a goal of feeding the world with locally raised seafood that is truly sustainable. By keeping the whole farming process on land within biosecure Bluehouses, the Group eliminates the threats to wild fish stock as well as protecting its own fish from sea lice, parasites, and other diseases being transferred, avoids untreated fish waste being emitted into coastal areas, and ensures that no microplastics and other contaminants are ingested by the fish raised in the Bluehouse. The Solution We love our oceans, which is why we let them be. The Group’s water source is naturally purified through limestone rock in an ancient artesian aquifer. The water is more than 20,000 years old and has never been exposed to man-made contamination such as microplastics or mercury. More than 99% of the water used is recycled. Of all the water used, under only 5% is freshwater and over 95% is saline water which is not otherwise suitable for irrigation or human consumption. Atlantic Sapphire raises their salmon locally in the U.S. which means there is no airfreight needed. Consumers can receive salmon faster, fresher, and at a fraction of the carbon footprint of imported ocean-farmed salmon. Salmon raised in a Bluehouse is better for fish, for people, and for the planet. 40 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES DEVELOPING A SUSTAINABLE OPTION Salmon has become a sought-after product as consumers increasingly demand more healthy, delicious, and sustainable protein options. ATLANTIC SAPPHIRE’S MAIN MARKETS are the US and Canada. Most of today’s seafood in North America is imported, and the US has a high obesity rate and a low per capita consumption of seafood. Salmon is an excellent choice as a nutritious part of a healthy diet for all ages. The health benefits of Atlantic salmon are widely documented and include richness in Omega-3s, proteins, and essential vitamins (A, D, and B-12). Thanks to its high level of Omega- 3s, Bluehouse Salmon has received the American Heart Association’s “Heart Check” certification and the Miami Bluehouse location in Florida paves a path to a locally produced and healthier diet for American consumers. Another meaningful product attribute to consumers across all segments is the fact that Bluehouse Salmon is raised completely in closed water containment which means less contaminants such as micro plastics and no need for the use antibiotics or pesticides at any point during its life. The Group’s reasoning towards an even cleaner and healthier product is simple: Bluehouse Salmon is not exposed to viruses, diseases, or parasites that exist in the wild because its water source comes straight from artesian aquifers which have not been exposed to any man-made contamination. Although the USDA has been planning to develop an organic certification standard for seafood, such a standard has yet to be formalized in the United States. Nonetheless, the Group believes that its fish is one of the cleanest seafood options available thanks to its onshore closed containment technology and it will be working with the authorities as an organic framework for seafood is being put in place in the years to come. Atlantic Sapphire partners with organizations such as Seafood Nutrition Partnership (SNP) to support and expand educational efforts around the many benefits of Bluehouse-raised salmon. While Atlantic Sapphire’s current business model and technology provide a great solution, The Group will endeavor to continuously seek ways to increase sustainability in the production of its salmon. Bluehouse Salmon not only offers the taste and health benefits valued by consumers, but is also raised in ideal conditions from a fish welfare and environmental perspective. CONSUMER AND PRODUCT RESPONSIBILITY 41 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS Bluehouse Value Chain ATLANTIC SAPPHIRE’S PRODUCTION CYCLE starts with the introduction of salmon ova into the hatchery. As eggs hatch and develop, the fish are moved between increasingly sized freshwater tank systems until they reach the smolt stage in the production cycle. Smolt typically grow until approximately 50 to 100 grams in freshwater before they are moved to saltwater tanks where the salmon are fed and raised to the target average harvest size of approximately 4 kilograms. Once harvested, the salmon are processed into consumer-ready products and Fish Welfare THE HEALTHIER THE FISH, the better the Group performs. Atlantic Sapphire’s Bluehouse technology brings unprecedented measurements and control of critical production factors. To ensure optimal fish welfare, Atlantic Sapphire constantly monitors all relevant water quality parameters. Over time, the Group has continued to increase data collection to support ongoing improvements in water quality, the general health of the fish and their growth performance. The most powerful “sensor” is the fish itself. A healthy fish that has good environmental conditions will have high appetite and grow fast. In that way, you can say that fish welfare and profitability of the company are aligned and “a happy fish is a happy farmer”. An onsite control room allows for close monitoring, quick detection of variations, and immediate adjustments to maintain optimal Bluehouse conditions. Furthermore, Atlantic Sapphire works with leading information and biotechnology companies to analyze fish welfare and corroborate internal measurements. 5,78% Q4 2023 MORTALITY RATE loaded onto trucks for transportation to retailers, restaurants, and other customers. The complete production cycle takes between 18 and 22 months. Atlantic Sapphire thrives to mimic what it believes is ideal conditions for salmon to thrive from hatch to harvest, and its Bluehouses are tailored to replicate this natural life cycle to the largest extent possible. Salmon is an anadromous fish that begins its natural life cycle in the wild in freshwater rivers and migrates out to sea after it smoltifies. The smoltified salmon then spends its life at sea to grow large and will then reproduce in the river it originated from. Complete salmon production under one roof shortens the value chain of salmon production significantly, eliminates risk of parasites, reduces risk of diseases, simplifies logistics, and increases traceability of the end-product. In 2023, Atlantic Sapphire experienced instabilities in the farming conditions due to the significant infrastructure improvements and, in the summer of 2023, the temperature- related issues. Therefore, the Company experienced significantly higher mortalities than expected under normal farming conditions. In 2023, Atlantic Sapphire’s mortality rate was 17.6%. For comparison, the conventional net-pen ocean aquiculture industry in Norway reported a mortality rate of 16.7% in 2023 (Source: The Norwegian Veterinary Institute). In steady state, the Group’s fish mortality rate is expected to be low single-digit. Since the conditions in the farm were stabilized in mid-October 2023, Atlantic Sapphire has seen low mortality rates. 42 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES CONSUMER AND PRODUCT RESPONSIBILITY 17,55% 2023 MORTALITY RATE Genetics ATLANTIC SAPPHIRE IMPORTS ova from leading industry suppliers in Iceland and Norway to its Miami facilities. All ova supplied to Atlantic Sapphire meet the criteria of “no genetic engineering involved” under the terms of the EU regulations. Furthermore, Atlantic Sapphire is committed to never using genetically modified ova in its production. Genetic development in salmon aquaculture consists of the improvement and strengthening of salmon breeds using selection and mating techniques to ensure a higher survival rate and resistance to the conditions to which salmon are exposed throughout the production cycle. Atlantic Sapphire’s salmon are raised in an environment which allows the genetic work to be focused on growth and traits more specific to Bluehouse conditions rather than attributes such as resistance to parasites, bacteria, pathogens, or other sea-specific conditions. Atlantic Sapphire is working with leading aquaculture genetics companies to advance performance in its Bluehouses and will work in the future to establish integrated onsite genetics operations. Bluehouse farming is designed to produce high-quality biomass in a high intensity environment. With high intensity comes added complexity, and successful operations require more from the equipment used and the operators of this equipment. Over the last few years, Atlantic Sapphire has made significant changes to minimize operational risks, in particular as it relates to extraordinary mortality events: Risk of hydrogen sulfide (H2S) intoxication • H2S is a gas that can be created in all water systems with organic material. It can affect fish growth and performance in low concentrations, whereas it can kill fish in minutes in high concentrations. In addition to being highly toxic in small volumes, the gas is very volatile which makes it unpredictable and hard to measure. The toxicity of H2S can be mitigated by adjusting certain water quality parameters and procedures that have successfully been implemented in the Bluehouses. Although Atlantic Sapphire continues to focus on H2S to ensure a low-risk environment, the Group is confident that the risk of large mortality events has been severely reduced, though not eliminated. As a result, the farms are designed with multiple independent systems. Organizational restructuring • Operational changes support better flow of communication and allow for tighter monitoring of all RAS system parameters. The ongrowing systems are treated as independent farms. • Each system has 24/7 staff coverage and Atlantic Sapphire operates with a minimum of nine staff in the Bluehouse at night and during weekends, significantly reducing the risk of incidents with impact on fish or property happening outside of normal business hours. 43 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES CONSUMER AND PRODUCT RESPONSIBILITY The Bluehouse Read more about The Bluehouse 44 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS CONSUMER AND PRODUCT RESPONSIBILITY Leading Technological Development ATLANTIC SAPPHIRE BLUEHOUSES deliver maximum biological control due to innovative technology that is revolutionizing the industry. The Group’s proprietary capabilities build on collaboration and integration with a diverse range of technology partner solutions. All relevant parameters are constantly monitored with an increasing number of sensors, automation, tools, and equipment that measure water quality indicators such as alkalinity, carbon dioxide, oxygen, and temperature. The systems also measure potential risks for the fish, such as elevated levels of toxic gases. Early detection and mitigation of toxic hydrogen sulfide formation is critical to minimize the risk of a mortality event and continues to be a key area of technical innovation towards risk reduction and exposure for the Group. Continuous improvements in technology also allow Atlantic Sapphire to grow fish faster with less feed and with reduced consumption of oxygen and energy to ensure optimum fish welfare. Atlantic Sapphire has patented technology pulling water from one layer of an aquifer, using the water to farm fish and discharging treated wastewater sustainably into a different layer of the aquifer: The brackish and salty groundwater is sourced from the Floridan Aquifer, a density stratified artesian aquifer, and is located at approximately 1,200 feet below the Miami Bluehouse. The salinity of groundwater in the aquifer increases with the increase in depth as saline water is denser than freshwater. Wells constructed in the Floridian Aquifer are completed in two different zones: the upper Floridan Aquifer and the middle Floridan Aquifer. These hydrogeologic units produce groundwater with salinities of 2.7 parts per thousand (“ppt”) and 35 ppt, respectively. Over 95% of the groundwater consumption for farm operations will consist of saltwater from the Floridan aquifer. The exchange of groundwater entering and exiting the Miami Bluehouse is about 10% per day. Inside the Bluehouse, the recirculation degree of filtered water in the tanks is above 99%. Less than 1% of the total water that is sent through the filtration system is discharged as non-toxic wastewater through the injection well and into the Boulder Zone of the lower Floridan Aquifer, located at a depth of nearly 3,000 feet underground. The Boulder Zone then acts as a storage zone and natural filter with a natural current that slowly filters the water over thousands of years, thus eliminating any wastewater impact on the ecosystem. The unique groundwater resources of South Florida are well suited for Bluehouse farming at scale. A stable supply of fresh, brackish, and saline groundwater, along with a proven and environmentally desirable method for wastewater disposal, are critical elements. In 2018, Atlantic Sapphire was granted a United States patent for its systems and methods of intensive recirculating aquaculture, incorporating the use of wells constructed for groundwater supply and wastewater disposal. Atlantic Sapphire is continuously working on advancing the aquaculture industry by being leaders in using new and advanced technologies in Bluehouse farming. Furthermore, the Group is taking advantage of the enormous amount of data of all water quality parameters, thanks to a new AI system that recognizes how changes in different water quality parameters impacts water quality and fish appetite. With each day, the AI system becomes better at optimizing water conditions for the fish, which increases biomass gain and economic performance, and results in an even more healthy and delicious product for the end-consumers. Lastly, the Group’s focus is on improved and gentle fish movement, energy consumption, and the design and concept for a more modular, highly scalable tank module as part of the Group’s Grand Master Plan to reach 220,000t HOG of annual harvest volumes a decade from now. Sustaining Trust in Our Product GRI 4-16 GROWING A BRAND on a promise of a healthier product and sustainability does not happen by accident. In bringing Atlantic Sapphire product to market, the Group has engaged with a range of carefully selected clients and business partners, built, fostered, and maintained trust through transparent communication, and only associated with organizations who share the Group’s commitment to sustainable aquaculture and product safety. Domestically raised salmon will contribute to food safety in the value chain, and further consumer trust. Ensuring product safety from ‘egg to plate’ is paramount. Atlantic Sapphire follow strict protocols for testing and lab analysis, which support the Group’s goals to ensure that Bluehouse Salmon remains the safest protein for consumers to enjoy. 45 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES CONSUMER AND PRODUCT RESPONSIBILITY BLUEHOUSE SALMON IS Friend of the Sea certified. Friend of the Sea is a project of the World Sustainability Organization (WSO), an international NGO whose mission is to promote environmental conservation. WSO activities fully align with Agenda 2030 and its 17 sustainable development goals (SDGs). Friend of the Sea strict certification criteria and yearly audit ensure companies are focused on minimizing any negative effect of aquaculture operations, hence gaining the trust of the consumer and industry alike. Friend of the Sea has become a leading certification standard for products and services which respect and protect the marine environment. THE AMERICAN HEART ASSOCIATION’S HEART CHECK certification is a program designed to help consumers make informed choices about the foods they purchase. It makes it easy to spot heart-healthy foods in the grocery store regardless of labeling. This program is the nation’s oldest, and it is science based, with a transparent and strict criterion for nutritional requirements. Atlantic Sapphire brand Bluehouse Salmon’s recognition with Heart Check speaks to the direct impact in reduced risk of coronary heart disease by increased amounts of beneficial Omega-3 fatty acids. According to a Healthy Living Rewards Concept Test Report (2016), 75% of consumers reported that they were familiar with the Heart- Check symbol, a program that guides shoppers to healthier choices, and that they are more likely to purchase foods that feature the Heart-Check mark, regardless of age or number of kids in their household. PARENT TESTED PARENT APPROVED (PTPA) is a free, parent based, community that offers families the opportunity to try and test products in exchange for their honest thoughts and opinions. This invaluable feedback is analyzed by PTPA, and in favorable cases, results in the granting of its Seal of Approval. Bluehouse Salmon has received the PTPA’s Seal of Approval after being declared a 2022 Winner. The trust generated by this type of certification has been quantified in increased loyalty (approximately at 73%) and increased product trial (approximately at 63%). Since inception, Atlantic Sapphire has reviewed a range of potentially relevant certifications and quality standards and continues to do so on a yearly basis, as part of a broad strategy of awareness and consumer education. Atlantic Sapphire engages with several organizations ranging from consumer focus on environmental issues to health-related topics. A few of the Group’s partners include Friend of the Sea, American Heart Association, Parent Tested Parent Approved, Monterey Bay Aquarium Seafood Watch, Oceanwise and FDACS’s Fresh from Florida. Product Certifications 46 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS CONSUMER AND PRODUCT RESPONSIBILITY ADDITIONALLY, Bluehouse Salmon is Ocean Wise recommended. Ocean Wise is a non-profit conservation organization that helps consumers identify sustainable seafood. It’s part of the Vancouver Aquarium’s ocean conservation program and was established in 1951. Ocean Wise offers a certification program for businesses that meet its criteria. This program is based on scientific research and third-part, peer reviewed studies, including those from the Marine Stewardship Council (MSC). Such third-party certifications affirm the quality and high standards of the Group’s Atlantic salmon. THE FLORIDA DEPARTMENT of Agriculture and Consumer Services (FDACS) conducts several programs encompassing local production, food safety and state forests among others. One of their emblematic initiatives is the Fresh from Florida program, which promotes Florida agricultural products through consumer marketing campaigns, partnerships with 100+ domestic and international retailers, and an established presence at prominent industry tradeshows. Bluehouse Salmon is proud to be one of the products featured by Fresh from Florida, and leverages its network of members as well as its newsletter, social media efforts and publications to reach millions of potential consumers who favor and trust locally grown or raised products. Note that the Group’s fresh product does not have labels as it is sold behind the glass counter without packaging, however, in accordance with GRI 417 Marketing and Labeling, the company produces sign toppers that showcase the product certifications (such as Heart-) and are displayed at point of sale when allowed, enhancing the communication of the product benefits and potentially building trust with the consumer base. ATLANTIC SALMON GROWN in indoor recirculating tanks worldwide, such as Bluehouses, are rated Green – Best Choice by Monterey Bay Aquarium Seafood Watch. The Monterey Bay Aquarium’s Seafood Watch program rates seafood based on scientific criteria of environmental sustainability and has been active for more than twenty five years. A green rating or Best Choice, indicates that a species is abundant and caught or raised in an environmentally friendly way. The public in general can use their recommendations and consumers guides to find seafood that is sustainably produced. 47 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS CONSUMER AND PRODUCT RESPONSIBILITY Food Safety TO DATE, Atlantic Sapphire products are carried by a broad range of retailers and food service operators in North America, from small to large scale. The growing demand for healthy and sustainably produced proteins means that retailers of every category are looking to promote safe, healthy, sustainable, and healthy food products. To address the importance of food safety the Group contracted a third- party consultant in 2022 who did an internal GMP audit in order to start the SQF compliance program. The company was SQF certified in 2023. (GRI 416-1). Traceability ATLANTIC SAPPHIRE’S full production cycle is carried out in its Bluehouse, ensuring traceability from egg to final product. The Group’s internal farming, processing, labelling and inventory systems allow full traceability of every box. This through process ensures that information is kept available at all times in the Groups’s Bluehouse operations, whereas typical traceability challenges in the conventional industry happen during harvest, at the dock, processing, and for imports. The very short value chain is also a beneficial factor as Atlantic Sapphire sells directly to our customers or with very few intermediaries, “from egg to plate”. The Group’s traceability practices facilitate: • Safety: Fraud, mislabeling and environmental damage are mitigated, and information is available if there is need for a recall • Legal compliance: General food law and fish marketing • Supply chain: Elimination of illegal and unregulated activities within the supply chain, such as corruption and overfishing • Customer confidence: Shoppers and food service operators have confidence that what they are buying is legal, safe, and fairly traded. There have been no incidents of non-compliance concerning the health and safety impacts of products or services for the company (GRI 416-2). Our integrated value chain 48 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES CONSUMER AND PRODUCT RESPONSIBILITY Marketing & Labeling GRI 417 ATLANTIC SAPPHIRE IS FULLY COMMITTED tto responsible marketing, and consumer trust in Atlantic Sapphire’s product is vital to the Group’s business and position as a leader in the marketplace. For that reason, the company is always mindful to ensure the accuracy of every product and sustainability- related claim it makes on labelling and in marketing materials and communications, to avoid any potential misleading instances. The Group’s current product portfolio includes fresh salmon, whole or fillets, smoke roasted salmon, smoked salmon flakes, and frozen and fresh steaks. As already mentioned, our fresh products do not have packaging and are sold at the seafood counter without product labelling in accordance with the industry practices. Atlantic Sapphire provides product sign toppers to its customer base that indicate the product certifications whenever allowed (GRI 417-1) and desired by the retailer. These certifications include American Heart Association’s Heart Check and Fresh from Florida logos, but also product attributes such as Antibiotic Free, USA Raised, Omega-3’s powered by micro-algae, and others. Customer Privacy GRI 418 ATLANTIC SAPPHIRE UNDERSTANDS that maintaining customers’ trust in its products requires that it protect privacy, and the Group is very sensitive to the needs of customers who use Atlantic Sapphire websites, social media and networking services and emails (collectively, the Group’s Sites). Customers are understood as individual consumers or users as well as organizations, such as a retailer. We may collect information about customers in a variety of ways: • Directly provided information to us • Customer chose to allow a social networking service to share information • Gathered information when a customer visits the Group’s Sites or clicks on online ads The Group employs reasonable security measures designed to protect the security of information submitted through the Sites. Some of these include matters such as the protection of data; the use of information or data for its original intended purpose only, unless specifically agreed otherwise; the obligation to observe confidentiality; and the protection of information or data from misuse or theft. At the same time, customers always have the right to review and update any information previously provided to the Sites. The Group’s Sites have clearly marked sections or contact information destined to provide a resource for customers to request further transparency about data processing practices, or access to, or deletion of, the personal information the company has collected. For the smoked salmon varieties and salmon steaks, our products are sold in individual and wholesale packages, for retail and for food service, respectively. Packaging complies with the USDA (U.S. Department of Agriculture) guidelines to Federal Food Labeling requirements for seafood and include Country of Origin declaration and Method of Production designation. Additionally, all FDA Food Product Labeling and Packaging requirements are satisfied including product name, trademark, complete list of ingredients, allergen information, net contents, name and address of manufacturer, distributor, lot identification, expiration date, and detailed nutritional label highlighting calories, fat breakdown, cholesterol, sodium, carbohydrates breakdown and proteins (GRI 417-1). There have been no incidents of non-compliance con- cerning product and service information and labeling (GRI 417-2), nor any incidents of non-compliance concerning marketing communications (GRI 417-3) There have been no complaints concerning breaches of customer privacy, and losses of customer data (GRI 418-1), derived from non-compliance with existing laws, regulations and/or voluntary standards regarding the protection of customer privacy, as covered in key instruments of the Organization for Economic Cooperation and Development. 49 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES CONSUMER AND PRODUCT RESPONSIBILITY Consumer Health & Safety Packaging CONTINUED 100% compliance with all food safety standards ACHIEVED OBTAIN SQF certification ACHIEVED MAINTAIN American Heart Association Certification (US) ACHIEVED INCREASE packaging for 60% of our fish in biodegradable or recycled/recyclable packaging for the transportation of harvested salmon to lower use of Styrofoam(US) ACHIEVED: actual rate of 80% for use of recycled/recyclable packaging Production Responsibility Fish Welfare ZERO WASTE of off-cuts and byproducts from filleting facility (US) ACHIEVED LOWER non-edible byproducts by increasing filleting yield of edible meat to minimum 65% for Trim D fillets (changed) MISSED: Results in 2023 were 58% BETTER survival rate than the average rate for the Norwegian net pen industry MISSED: Actual results at 18%, compared to an average Norwegian net pen rate of 17% 50 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS SELECTED TARGETS: PRODUCT & CONSUMER 2023 RESULTS Consumer Health & Safety Packaging CONTINUED 100% compliance with all food safety standard MAINTAIN SQF certification MAINTAIN American Heart Association Certification (US) MAINTAIN packaging for 80% of our fish in biodegradable or recycled/recyclable packaging for the transportation of harvested salmon to lower use of Styrofoam Production Responsibility Fish Welfare ZERO WASTE of off-cuts and by products from filleting facility (US) LOWER non-edible byproducts by increasing filleting yield of edible meat to minimum 65% for Trim D fillets (changed) BETTER survival rate than the average rate for the Norwegian net pen industry 51 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS SELECTED TARGETS: PRODUCT & CONSUMER TARGETS FOR 2024 Consumer Health & Safety Packaging CONTINUED 100% compliance with all food safety standards MAINTAIN SQF certification MAINTAIN American Heart Association Certification (US) ACHIEVE of 100% biodegradable or recycled/ recyclable packaging for the transportation of harvested salmon to eliminate use of Styrofoam Production Responsibility Fish Welfare PROCESS 100% of off-cuts from farming operations and processing (including guts, and sludge) into value-added product (biogas, protein powder, and fish oil), towards achievement of zero waste (US) MORE THAN 97% survival rate as a percentage of biomass gain ACHIEVE a third-party animal welfare certification 52 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS SELECTED TARGETS: PRODUCT & CONSUMER TARGETS FOR 2030 Atlantic Sapphire is fully committed to fostering economic value for all its stakeholders through facilitating job creation, fairly compensating employees, sourcing from local suppliers and distributors, and working closely in collaboration with local officials as well as financial institutions. The Group’s actions are in strict alignment with GRI Standards 203-1 and 203-2, reiterating commitment towards local economic development. ATLANTIC SAPPHIRE PRIORITIZES sourcing talent locally effectively contributing to the State of Florida. The Group also support hundreds of small local businesses across Florida. Additionally, it sponsored approximately 4% of its workforce through work permits in both 2022 and 2023. Its economic engagement involves responsibility, prompt and full payments to employees, suppliers, financial institutions, and other qualified expenses. Integrity is a foundational virtue of Atlantic Sapphire’s ethos. Its employees play a crucial role in increasing value for by working in the best interests of the Group. The protection of shareholder value is prioritized through ethical conduct and confidentiality regarding resources and proprietary information. A joint study by McKinsey and NielsenIQ shows a clear link between environmental, social, and governance (ESG) related claims and consumer spending. Products that claimed to be environmentally and socially responsible averaged 28 percent cumulative growth over the past five years, compared to 20 percent for products that made no such claims. 53 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ECONOMIC RESPONSABILITY Generating Economic Value THE GROUP’S primary investment strategy is focused on the Phase 1 operation of the Miami Bluehouse facility in Homestead, Florida, along with the Phase 2 expansion which began in Q2 2021. Atlantic Sapphire has invested a total capital expenditure (CAPEX) of approximately USD 351m related to these projects through the end of year 2023. The expansion project in Phase 2 is set to increase the annual harvest volume capacity to 25,000t HOG, with indirect economic benefits including contributing to hundreds of local businesses, infrastructure improvements including roads and power lines, as well as other indirect impacts. Furthermore, the construction has benefited local suppliers and business partners who the Group has engaged and supported throughout the construction period. The Group is committed to using local suppliers and business partners to support the local economy where possible. According to an independent assessment conducted by The Washington Economics Group, Inc., Atlantic Sapphire will have a significant and growing impact throughout the entire State of Florida in the years ahead. In Years 1-2 (2024- Economic Performance GRI 201 ATLANTIC SAPPHIRE was listed on the fully regulated main list of the Oslo Stock Exchange in May 2020 and was also quoted in the US on the OTCQX market under the ticker AASZF as of January of 2021. Indirect Economic Impacts GRI 203 203-1: INFRASTRUCTURE AND SERVICES Atlantic Sapphire has invested in significant infrastructure towards its Phase 1 and Phase 2 Bluehouse facilities located in Miami, Florida through commercial engagements. In 2023, approximately 94% of capital expenditures were from US vendors whereas approximately 6% were from foreign vendors. In 2022, approximately 85% of capital expenditures were from US vendors whereas approximately 15% were from foreign vendors. 2023 SELECTED FINANCIAL MEASURES USD Revenues 14.0m Total operating expenses (excluding USD 35.0m impairment) 105.2m Total salary and personnel costs 16.6m Total assets 342.3m 2025), Atlantic Sapphire will support an average of 3,620 jobs and create $423 million in Total Economic Impact each year throughout Florida. In Years 3-5 (2026-2028), Atlantic Sapphire’s economic impacts will grow significantly with 9,937 jobs supported and close to $1.1 billion in Total Economic Impact each year throughout Florida. By Years 6-10 (2029- 2033), just over 34,200 jobs are supported and close to $3.4 billion in Total Economic Impact is generated each year throughout Florida. GRI 204: SPENDING ON LOCAL SUPPLIERS Atlantic Sapphire engages in active dialogue and collaboration with local vendors to employ goods, services, and labor in its daily operations. Such efforts allow both Atlantic Sapphire and its partners to mutually benefit from such partnerships and ultimately support the local community. In 2023, approximately 94% of operating expenses were from US vendors whereas approximately 6% were from foreign vendors. In 2022, approximately 77% of operating expenses were from US vendors whereas approximately 23% were from foreign vendors. 54 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ECONOMIC RESPONSIBILITY Managing Financial Risk from Climate Change GRI 201-2 Market Presence GRI 202 202-1: MINIMUM WAGE Atlantic Sapphire’s primary operations are in South Florida. The Group strives to enhance its human capital through fair wages and benefits. While the hourly minimum wage in the State of Florida for 2023 was $12.00 and does not require benefits offered, the Group offered local employees an entry level minimum wage per hour for 2023 of $16.50 plus benefits. Wages offered to the Group’s employees is based on the scope and complexity of respective job descriptions and commensurate on employee performance. 202-2: SENIOR MANAGEMENT The Group’s senior management comprises six individuals of which four are US citizens. Therefore, 67% of senior management is considered hired from the local community. All members of senior management reside locally and are actively present in the Group’s primary Bluehouse operations in Miami, Florida. Atlantic Sapphire believes this demonstrates the organization’s positive market presence. Senior management’s active involvement and proximity to day-to-day operations provides them the ability to enhance human capital and to understand the local community and its needs. Green Finance GRI 203 ATLANTIC SAPPHIRES Green Finance Framework, which was implemented in October 2020, continues to steer the financing of the business and promote low-carbon, climate- resilient, and resource-efficient development in the seafood sector, reducing negative impact on biodiversity. CICERO provided a Second Party Opinion on its Framework, giving Atlantic Sapphire an overall strong CICERO Medium Green shading and a governance score of Excellent. Even before this was in place, the Group obtained a Green Loan from DNB, the first of its kind by DNB to a seafood company, in 2019. All Atlantic Sapphire’s debt in the future will be ‘green’. Transparency around ESG performance is critical for the capital markets to take on risk and reward responsible behavior. Atlantic Sapphire is regularly in dialogue with different investors to explain how it manages climate risks and broader environmental impacts, and engages with relevant ESG rankings to help investors make informed decisions about the Group’s commitment to managing ESG risks. ATLANTIC SAPPHIRE welcomes and closely follows the expanding efforts to redirect capital flows towards sustainable economic activities and investments, for example through the EU Taxonomy. Although aquaculture has yet to have technical screening criteria for the environmental objectives finalized, the Group is monitoring the criteria for comparable activities to understand its potential alignment. The Group is also following market consultations around future disclosure requirements such as capital and operating expenditures related to taxonomy-aligned activities. This includes the pending Social Taxonomy with its focus on enhancing the positive social impacts of goods and services. As business and infrastructure investments center around sustainable food production, the Group welcomes these requirements along with the comparability such information will provide investors and other stakeholders. In part to its commitment towards a sustainable future, Atlantic Sapphire transitioned to paperless invoicing for both customers and suppliers, streamlining invoicing. The shift to paperless is part of the Group’s green finance initiative which focuses on environmental sustainability by mitigating the environmental impact associated with paper’s lifecycle. Atlantic Sapphire is also partnering with financial institutions that are incorporating sustainable banking and finance initiatives within their respective organizations. Atlantic Sapphire remains strongly committed to providing transparent and decision-useful information to the investment community about the contribution of its activities to climate change mitigation and adaptation. 55 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ECONOMIC RESPONSIBILITY Shades of green Based on our review, we rate the Atlantic Sapphire’s green finance framework CICERO Medium Green. Included in the overall shading is an assessment of the governance structure of the green finance framework. CICERO Shades of Green finds the governance procedures in Atlantic Sapphire’s framework to be Excellent. Green Bond and Green Loan Principles BASED ON THIS REVIEW, THIS FRAMEWORK IS FOUND IN ALIGNMENT WITH THE PRINCIPLES. 56 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ECONOMIC RESPONSIBILITY Ensuring Responsible Business Conduct GRI 2-23-2-24 ATLANTIC SAPPHIRE’S success depends on maintaining the highest standards of trust and integrity at all levels of the organization, as well as the reputation for honesty and transparency in its business. Atlantic Sapphire released its Code of Conduct in the first half of 2020 to set expectations and provide guidance to its Board of Directors and officers, employees (including part-time, temporary, and seasonal), independent contractors, and consultants. The Group’s suppliers and other business partners are expected to share its commitment to integrity by following the principles of the Code. In 2023, direct vendors and suppliers received the Atlantic Sapphire Code of Conduct as part of its supplier onboarding process and were expected to sign it. The Code is consistent with the Group’s core values, which also serve to guide employee actions. Ethical business is the goal, and employee conduct in performing their respective duties on behalf of the Group must always be honest, transparent, lawful, and in accordance with ethical and professional standards. The requirement of honest, lawful, and ethical conduct is broad and therefore must be stated in general terms. As such, this Code does not cover every issue that may arise, but instead sets out basic principles to guide all employees. Employees are expected to lead by example and to seek guidance when necessary to clarify any aspect of the Code. Each employee creates and increases Atlantic Sapphire’s value by acting in the Group’s best interests by properly using confidential information and protecting intellectual property. All employees are also expected to protect and properly utilize Group assets to ensure their efficient use for legitimate business purposes. Ultimately, the Group is owned by shareholders and all at Atlantic Sapphire have a responsibility to act with integrity and to protect shareholder value. Supplier assessment, environmental and social THE COMPANY REALIZES the importance of supplier assessment and monitoring starting with scope 3 GHG emissions and throughout the value chain for social and other environmental issues. This is why this topic is part of our materiality matrix. In 2023, the Group enforced that all suppliers sign the code of conduct (active as well as inactive vendors). It also worked more actively with 2 major suppliers (FPL for electricity and Skretting for feed) on GHG emissions and freshwater use. (GRI 3-08, GRI 4-14).. Improper Payments and Anti-Money Laundering ATLANTIC SAPPHIRE CONDUCTS its business in compliance with all laws that prohibit money laundering or financing for illegal or illegitimate purposes and holds a zero-tolerance policy against corruption. Corrupt activities not only represent a Code violation, but also represent a serious violation of criminal and civil anti-bribery and anti- corruption laws (GRI 2-17) in the countries in which Atlantic Sapphire conducts business. Atlantic Sapphire adheres to applicable anti-corruption laws, including the US Foreign Corrupt Practices Act, which generally prohibit companies and their intermediaries from making improper payments and require companies to keep accurate books and records, as well as appropriate internal controls. (Anti-corruption GRI 205-206) Employees review and sign the Company’s Employee Handbook which specifies anti-corruption rules and regulations. In 2023, there has not been any reported cases of corruption (GRI 205/206). Fair Competition Atlantic Sapphire competes fairly in full compliance with all applicable antitrust and competition laws. Commercial policy and pricing will be set independently and will never be agreed upon or coordinated with competitors. Concerns related to possible violations of the Code of Conduct and any violations of applicable laws or company policies are included as part of Atlantic Sapphire’s open communication policy. The Group provides different channels for reporting and encourages any affected party to report any violations or other concerns as early as possible. The Group is not aware of any breach related to anti-competitive or corrupt conduct in our operations. Tax GRI 207 The GRI 207 Standard was introduced to meet stakeholder demands for greater transparency around tax. It contains three management approach disclosures and one topic-specific disclosure, country-per-country tax guidance. 207-1, 207-2 and 207-3: the Group’s tax strategy, process and procedures, risks and stakeholder engagement, are documented in the Group Results section of this integrated report. 57 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ECONOMIC RESPONSIBILITY Economic Performance Code of Conduct EBITDA results MISSED – see consolidated financial statements 100% of employees trained and tested ACHIEVED REQUIRE 100% of new vendors and suppliers to sign and adhere to Atlantic Sapphire’s Code of Conduct ACHIEVED 58 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS SELECTED TARGETS: ECONOMIC 2023 RESULTS Economic Performance Code of Conduct GET US Phase 1 production (US) to proven state MAINTAIN 100% of employees trained and tested REQUIRE 100% of new vendors and suppliers to sign and adhere to Atlantic Sapphire’s Code of Conduct 59 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS SELECTED TARGETS: ECONOMIC TARGETS FOR 2024 Economic Performance TFCD framework fully integrated and implemented LOCAL SALMON FEED production based on locally sourced ingredients SOURCE RENEWABLE energy at a lower unitary cost than standard electricity from the grid 60 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS SELECTED TARGETS: ECONOMIC TARGETS FOR 2030 Pursuing the most sustainable salmon farming technologies while protecting the environment where it operates is fundamental to Atlantic Sapphire. Its priorities are focused on energy and water use efficiency, minimizing waste and emissions, and avoiding impacting the surrounding marine and land ecosystems. The Group has always taken precautionary measures through systematic risk assessment and risk management where activities may impact vulnerable ecosystems or resources. ATLANTIC SAPPHIRE’S Environmental and Social Management System (“ESMS”) requires all personnel, including Atlantic Sapphire employees and subcontractors, to act responsibly and maintain regard for impacts on the environment and climate. Through the ESMS, the Group ensures that employees receive guidance, support, and training to maintain the high standards set for environmental performance. 61 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ENVIRONMENTAL RESPONSIBILITY Minimizing the Group’s Carbon Footprint CLIMATE CHANGE IS one of the world’s most pressing challenges. Food production plays a major part of the climate challenges and contributes to a significant amount of global greenhouse gas emissions. Emissions from food production and impacts of climate change on agriculture and the food system will deeply affect the way the world produces food in the future. Failure to manage environmental and climate-related risks could harm the environment, the local community, and the Group’s business and reputation. Atlantic Sapphire is committed to setting science-based targets to reduce its carbon footprint as part of its effort to combat climate change. Science-based targets provide a roadmap for reducing greenhouse gas emissions and aligning with the Paris Agreement’s goal of limiting global temperature rise to well below 2 degrees Celsius. Adherence to GHG protocol framework ATLANTIC SAPPHIRE has taken significant steps in enhancing its sustainability reporting by adopting the Greenhouse Gas (GHG) Protocol framework, which marks a pivotal step in committing to environmental transparency and responsibility. This initiative aligns with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, emphasizing the importance of climate- related risk management and opportunity identification within the aquaculture industry. By setting 2023 as the baseline year for Scope 1 and Scope 2 emissions, Atlantic Sapphire has embarked on a journey to meticulously track and report direct and indirect greenhouse gas emissions. This approach underscores Atlantic Sapphire’s dedication to sustainable practices, including the management of emissions from its operations and purchased electricity. Furthermore, the strategic involvement of Atlantic Sapphire’s board and management in sustainability governance and its efforts to adapt to climate-related risks exemplify its leadership in addressing global environmental challenges. This adoption of the GHG Protocol not only enhances the accuracy and comparability of Atlantic Sapphire’s emissions reporting but also reinforces its role as a steward of environmental sustainability in the face of climate change. 62 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY Atlantic Sapphire is committed to aligning with the Task Force on Climate-Related Financial Disclosure (TCFD) recommendations, recognizing the imperative of sustainability governance in addressing climate-related risks and opportunities. Board Involvement The board guides the strategic direction for sustainability and oversight of all climate-related risks and opportunities. Because ESG is ingrained in The Group’s work and mission, board discussions on climate-related issues take place at select board meetings. All climate-related factors, risk management, and goal- setting, demonstrated throughout this Integrated Annual Report, are reviewed by the board prior to publication. Role of Management Atlantic Sapphire’s ESG committee is made up of ten members representing diverse departments within the organization (as seen in the chart below). All mechanisms for monitoring progress towards climate-related goals throughout this report are established by The Group’s ESG Committee and require the board’s comprehensive oversight. Strategy & Risk Management Compliance with regulatory requirements is ensured through The Group’s ongoing evaluation of climate-related risks and adaptation of risk management strategies. Atlantic Sapphire identifies climate-related risks and opportunities across both short and long-term targets found at the end of each ‘ESG Priorities’ section of this report: Consumer & Product Responsibility, Economic Responsibility, Environmental Responsibility, and Social Responsibility. Core Elements of Recommended Climate-Related Financial Disclosures Governance Strategy Risk Management Metric and Targets GOVERNANCE The organization’s governance around climate-related risks and opportunities. STRATEGY The actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning. RISK MANAGEMENT The processes used by the organizaion to identify, assess and manage climate- related risks. METRICS AND TARGETS The metric and targets used to assess and manage relevant climate-related risks and opportunities. The management group work on climate emissions CFO SALES & MARKETING, PEOPLE & CULTURE, FINANCE, OPERATIONS COO FARMING COO VAP, SALES & DISTRIBUTION GROUP DIRECTOR HR HEAD OF QUALITY 63 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ADHERENCE TO TCFD RECOMMENDATIONS ATLANTIC SAPPHIRE’S production facilities are located close to coastal areas. As such, the Group has assessed and prepared for the risks of wind and water-related natural disasters such as floods, tropical storms, or hurricanes. In 2023, no major ‘named’ storms affected the area where the Bluehouse is situated. Atlantic Sapphire’s business can also be impacted by climate change through the sourcing of fish feed. The Group depends on fish feed from third parties, and this is the single largest cost of production item. Although feed represents a large, global commodity, supplier prices are ultimately based on raw marine and non-marine materials. A future increase in such costs to the supplier would most likely result in a direct impact on the Group’s cost of production. Such factors could potentially include climate change, increase in global demand, and low supply increase. The Group considers this risk to be high and is therefore exploring alternative raw materials to reduce dependence on marine ingredients.. Another important input to Atlantic Sapphire’s business is electricity. Any increase in pricing in the local electricity market will result in higher costs for the Group. However, Atlantic Sapphire considers the risk of significantly higher energy prices in Florida as lower than many other geographical areas since Florida’s electricity market is controlled by the Florida Public Service Commission. This commission regulates publicly owned municipal or cooperative electric utilities and has jurisdiction regarding rate structure, territorial boundaries, bulk power supply operations, and planning. Atlantic Sapphire is currently invested in renewable power production through Florida Power & Light’s (“FPL”) community solar program. Atlantic Sapphire plans to transition over to renewable sources of power as they are not based on scarce resources and could reduce the risk of significant price increases for electricity. At the same time, Atlantic Sapphire is well-positioned to expand its supply to the market if climate change places limitations on sea-based salmon production. Farming in the ocean is being increasingly impacted by many factors including: • Ocean temperature warming • Mortality • Sea lice management • Disease management • Oxygen and CO2 fluctuations • Ocean acidification • More frequent algae blooms • More frequent extreme climate events (freezes, storms) The Group’s facilities in South Florida are not dependent on seawater, and its risk exposure is limited by using the unique groundwater resources in Florida. Similarly, Atlantic Sapphire expects to be less affected than others in the US market if climate risk were to impact the cost of air transportation (through a carbon tax for instance) because it supplies that market from local production and uses ground transportation. In conclusion, management believes the risk associated with climate change is relatively small for the Group compared to the conventional aquaculture industry. 64 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ADHERENCE TO TCFD RECOMMENDATIONS Adoption of GHG Protocol Scope 1: Direct Emissions n 2023, Atlantic Sapphire has been steadfast in committing to accurately tracking and reporting Scope 1 emissions by aligning with the GHG Protocol for the first time and setting this year as a baseline. Scope 1 encompasses direct greenhouse gas emissions associated with activities from sources owned or controlled by Atlantic Sapphire. Atlantic Sapphire’s Scope 1 reporting includes direct emissions from stationary sources which include emergency generators, mobile sources such as its fleet of vehicles, and fugitive emissions from refrigerants, which were all precisely measured to provide a comprehensive overview of Atlantic Sapphire’s operational footprint. In measuring mobile emissions from Atlantic Sapphire’s fleet of cars and trucks, fuel consumption data from the two suppliers, Sun Biodiesel LLC. and Sunshine Gasoline Distribution, Inc., has been corroborated with Atlantic Sapphire financial records. The approach used to manage fugitive emissions from air-conditioning and refrigeration units adheres to standards issued by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE). These efforts encompass blend compositions, installation figures, and refrigerant charges to meticulously determine assembly losses and leak rates. Moreover, process heaters have been carefully monitored to ensure emissions are classified correctly under Scope 1, based on the varied fuel sources. For fuel usage from rental equipment used at the Homestead facility, diesel and ethanol consumption totaled 67,694.8 gallons (approximately 256,252.57 liters), delineated as 49,193.70 gallons (approximately 186,218.32 liters) of diesel and 18,501.10 gallons (approximately 70,034.25 liters) of ethanol. Based on the figures above, emissions factors provided by the United States Environmental Protection Agency (EPA) were used to convert data from gallons of diesel and ethanol into metric tons of CO2, CH4, and NO2. The Group also consulted the IPCC’s GHG to global warming potential chart (see Figure 1 below) to CO 2 e. Disclosures adhere to the principles of transparency and responsibility in presenting their operational impact. This report not only encapsulates this year’s data but also signals Atlantic Sapphire’s ongoing commitment to sustainable practices. Atlantic Sapphire leads by example, demonstrating an unwavering commitment to environmental responsibility and addressing carbon emissions within the aquaculture industry. Scope 2: Purchased Electricity In an ongoing commitment to transparency and environmental responsibility, Atlantic Sapphire is pleased to update Scope 2 emissions for 2023. As part of the Group’s dedication to consistency and aligning with widely recognized standards, it has transitioned from utilizing the Environmental Protection Agency (EPA) calculator to adopting the Greenhouse Gas (GHG) Protocol. This shift ensures greater uniformity and comparability in reporting. The Group relies on CO 2 data provided by electric utility Florida Power & Light (FPL) for market-based estimates, which reflects the specific fuel mix utilized at the Homestead site, ensuring the most accurate estimates possible. Additionally, the Group has incorporated the Purchased Electricity Tool from the GHG Protocol to estimate location-based emissions, further enhancing the accuracy and completeness of this emissions report. These estimates are based on the most recent report of all fuels in the state of Florida grid by the Environmental Protection Agency. In this context, Global Warming Potential (GWP) is a critical metric, quantifying the heat trapped by greenhouse gases in the atmosphere, expressed as a multiple of the heat trapped by the same amount of carbon dioxide. GWP enables the Group to compare the impacts of emitting different gases. Please reference Figure 1 below for the GWP values used in the calculations, which are essential for evaluating the broader climatic effects of the operations. Moving forward, this year marks the base year for both Scope 1 and 2 emissions as Atlantic Sapphire aligns with the GHG Protocol standards and will begin reporting historical trends in the coming years. GHG GWP C02 1 wCH4 21 N20 310 HFCs 140-11,700 PFCs 6,500-9,200 SF6 23,900 FIGURE 1 65 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY EPA GHG Emissions Calculator Scope 1 Emissions EPA GHG Emissions Calculator Scope 2 Emissions EMISSION SOURCE TYPE SOURCE DESCRIPTION CONSUMPTION CO2 KG  N2O KG TONNES CO2E Mobile Sources Diesel "Agricultural equipment, offroad trucks, construction equipment and industrial/commercial equipment 9 vehicles - 12 total (7 rentals & 5 HQ Fleet)" 49,193.70 500.79 - 29.52 509.94 Mobile Sources Gasoline "Agricultural equipment and construction equipment 3 vehicles - 12 total (7 rentals & 5 HQ Fleet)" 18,501.10 164.42 9.25 185.01 221.97 Stationary Source Fuel Combustion Diesel East and West Power Center, only run 2% of the year for exercise 1000 gal of fuel 74.00 - 93.98 103.13 Fire Suppression Equipment Fire extinguishers 200 basic ABDC fire extinguishers 0 used N/A N/A N/A HFC-134a (C2H2F4) Refrigerant Fugitive emissions emitted by refrigerants used to operate refrigeration equipment 11.79 Kg 16.86 - - 16.86 R-507 (5% HFC-125 , 5% HFC143a ) Refrigerant Fugitive emissions emitted by refrigerants used to operate refrigeration equipment 124.74 Kg 497.08 - - 497.08 R-404A (44% HFC-125 , 4% HFC- 134a, 52% HFC 143a) Refrigerant Fugitive emissions emitted by refrigerants used to operate refrigeration equipment 87.09 Kg 341.57 - - 341.57 Total 1,595 9.25 308.51 1,690.55 EMISSION SOURCE TYPE SOURCE DESCRIPTION CONSUMPTION TONNES CO2 TONNES CH4 TONNES N2O TONNES CO2E Market-Based Electricty Purchased Electricity Florida Power and Light - 13 accounts 93.3 GWH 31121 31121 Location-Based Electricty Purchased Electricity Florida Power and Light - 13 accounts 93.3 GWH 38,053.80 1,989.03 253.92 38121.342 Refrigerant data was provided by management best estimates * This data was provided by FPL and management best estimates ** The information providing excludes a 14th ASA account With 14th account: 93.7 GWH Excluding the 14th account: 93.3 GWH 66 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY Looking Forward: A Focus on Scope 3 Emissions AS THE GROUP REFLECTS on current sustainability efforts, it recognizes the imperative to delve deeper into Scope 3 emissions involving the company’s supply chain. In the forthcoming year, Atlantic Sapphire is committed to enhancing its understanding of the environmental impact associated with these emissions, specifically feed supplier Skretting’s fish food production as well as all inbound and outbound transportation. The focus will be on conducting a thorough assessment of the supplier’s value chain emissions, collaborating closely with them to gather data and identify opportunities for improvement. Later integrated reports will provide a detailed account of the progress in Scope 3 emissions, underscoring Atlantic Sapphire’s dedication to transparency and performance. A cornerstone of its commitment lies in the pledge to avoid air transportation of all fish products, a significant step in reducing carbon footprint and upholding corporate sustainability. By reporting on Scope 3 emissions, the Group aims to offer a comprehensive view of its carbon footprint, including indirect emissions across the value chain, thereby setting new benchmarks for accountability and environmental stewardship in the aquaculture industry. This full analysis of Atlantic Sapphire’s value chain and its suppliers, starting with FPL (electricity), will also include the Group’s feed supply chain (Skretting) as well as many other aspects of the business such as: Oxygen, aquaculture supplies, agents, compounds, external labor and contractors, industrial supplies, construction materials, electrical parts and outbound logistics and distribution of Bluehouse Salmon. A Special Thank You Significant portions of this report pertaining to disclosures aligned with the GHG Protocol, as well as the reporting of Scopes 1 & 2 emissions calculations, were developed by a qualified team of student consultants enrolled in the Master of Science in Sustainable Business program of the Miami Herbert Business School in Coral Gables, in collaboration with Atlantic Sapphire’s ESG Committee. 67 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY Energy GRI 302 EVEN THOUGH salmon farming emits less carbon as compared to other livestock, Atlantic Sapphire recognizes that the full value chain does leave a carbon footprint and seeks to minimize it. As part of a plan to strengthen its position as a producer of land-based farmed salmon globally, the Group is committed to improving efficiency in the consumption of energy, as well as exploring increasing the use of renewable energy through direct investment in renewable energy. Excluding transportation, Atlantic Sapphire’s Bluehouse production environment requires a higher use of energy than the production of salmon at sea, as exhibited in 2023 Scope 1 and Scope 2 reporting. Therefore, one of the Group’s main priorities to explore, develop, and implement solutions to reduce the energy consumption of its operations. In 2023, Atlantic Sapphire consumed approximately 93.6 GWh of electricity (2022: approximately 93.7 GWh of electricity). The electricity is supplied from the Florida state grid, which is a mix of nuclear and natural gas generated energy. With US Phase 2 construction in progress, the Group expects to increase energy consumption in 2024 as production continues to reach steady state capacity. Atlantic Sapphire aims to eventually utilize the sludge it produces as either an energy source, biogas, or fertilizer andis determined to support growth in seafood consumption as part of lowering the global carbon footprint of the food sector. By producing and selling fresh product ‘in-market’ and close to the end- consumer, Atlantic Sapphire avoids the cost and carbon footprint incurred of using airfreight transportation to reach theend-consumer. In a study on the greenhouse gas emissions of Norwegian salmon products, published by SINTEF, it was found that salmon shipped to the US are commonly transported by truck to a major airport, for example in London, and thereafter airfreighted by passenger aircrafts to the US. Based on data from the Norwegian seafood council and industry representatives, and on calculations made from environmental calculation tool, NTM (Network for Transport Measures), this report estimates the GHG emissions of Norwegian salmon products to be 6651kg of CO2 per flight. Airfreighted products to Asia or USA have a carbon footprint in the range from 16-28 kg CO2e per kg of edible product delivered to wholesaler, and airfreight accounts for 68-82% of the carbon footprint. 68 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY 93.6 GWH 2023 ELECTRICITY CONSUMPTION Global Salmon Trade Patterns 1 HIGH FREIGHT COST, LARGE CARBON FOOTPRINT, REDUCED PRODUCT SHELF LIFE 1. Source: Kontali (Salmon world 2019, wfe, all salmonids). NORTH AMERICA KT Harvest 190 Market 595 ASIA KT Harvest 30 Market 615 EU KT Harvest 240 Market 1,142 RUSSIA KT Harvest 34 Market 130 LATAM KT Harvest 930 Market 160 OCEANIA KT Harvest 83 Market 75 NORWAY, FAROE ISLANDS, ICELAND KT Harvest 1,403 Market 54 3-6 days 5-8 days TRADE PATTERNS FOR SALMON ARE CHARACTERIZED BY HIGH FREIGHT COSTS AND A LARGE CARBON FOOTPRINT 69 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ENVIRONMENTAL RESPONSIBILITY ATLANTIC SAPPHIRE’S ESG PRIORITIES Atlantic Sapphire is proud to say that no commercial shipment of Bluehouse Salmon has ever been made via airfreight. This is in line with our commitment to reduce our carbon footprint from transportation by supplying the US market from Miami, Florida. kg CO 2 e per kg Salmon Exported 0 5 10 15 Emission from Norwegian Air Freight UAE, DUBAI JAPAN, TOKYO CHINA, HONG KONG USA, NEW YORK kg CO 2 e per kg Salmon Exported Emission from Chilean Air Freight UAE, DUBAI JAPAN, TOKYO CHINA, HONG KONG USA, NEW YORK 0 5 10 15 Source : SINTEF and Nordea estimates, 2019 70 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ENVIRONMENTAL RESPONSIBILITY ATLANTIC SAPPHIRE’S ESG PRIORITIES Reducing Energy Consumption IN 2022 Florida Power & Light (“FPL”) committed to building a future substation on Atlantic Sapphire’s property serving as a primary source of distribution for the Bluehouses. This will directly reduce energy costs and create a direct pipeline to distribution. This substation will have capacity large enough to power all phases of Atlantic Sapphire’s expansion and the nearby communities. It will also serve as another contingency should current power lines temporarily shut down, for example in the case of a storm of hurricane. Additionally, in 2023 Atlantic Sapphire became a participant in FPL’s SolarTogether community solar program, allowing the Group to directly participate in the environmental and financial benefits of Florida-based large- scale solar energy, while directly supporting the expansion of solar in Florida. Handling Water Consumption and Wastewater GRI 303 Using recirculating aquaculture systems (“RAS”) technology, Atlantic Sapphire’s water is filtered before it re-enters into a tank system. Over 99% of the water entering tanks is recirculated and filtered, which significantly limits water consumption. There is no risk of water scarcity in Homestead, Florida where Atlantic Sapphire operates. Of all the water used, approximately 5% is freshwater and 95% is saline water which is not suitable for irrigation or human consumption. For farming operations, freshwater consumption in 2023 was 127.98 million gallons, and saltwater consumption was 1.3 billion gallons. This is equivalent to 313 Liters per KG of harvested fish for 2023 (calculating 1,861 metric tons of harvest) in farming operations. Businesses that sign up for the program pay a fixed monthly subscription charge and in exchange receive monthly bill credits that increase every year for their share of the solar energy generated. Solar panels are not directly installed on the rooftop or property, but rather at SolarTogether solar energy centers. The power generated by these sites will be delivered directly to the energy grid, where it is combined with power generated from conventional energy sources in FPL’s system. For every one-megawatt-hour of renewable energy generated on Atlantic Sapphire ‘s behalf through the program, the Group will receive a Renewable Energy Certificate (REC) that documents proof of renewable energy consumption. As a participant of the program, Atlantic Sapphire is eligible to offset [45%] of its total energy consumption with solar. In 2023, Atlantic Sapphire added one account to the program and plans on increasing the amount of energy subscribed to SolarTogether once eligible. Last year, Next Era Energy, the parent company of FPL announced plans to cut carbon emissions by 70% in 2025 and to “Real Zero” in 2045 without the use of carbon offsets through continued investments and innovation in wind, solar, battery storage, green hydrogen and other renewable energy development. Atlantic Sapphire is committed to directly working with Next Era Energy and FPL to reduce and then fully eliminate carbon emissions from its operations. Chillers Being at the forefront of sustainable aquaculture, Atlantic Sapphire must continue to develop technologies and implement process enhancements to increase the performance and sustainability of its operations.Atlantic Sapphire adopted an innovative technological approach to optimize the cooling and ventilation systems in its faci-lities and to minimize energy loss in piping of water. Recirculating units and heat exchangers (chillers) enable the Group to maintain steady temperatures in the aquaculture systems for biological performance. The Group has continued to operate its chiller bank fully with electrical power without the use or reliance on diesel or generators. In September 2023, five additional chillers were installed, adding 44% more capacity (to approx. 9,000 cooling tons), resulting in a large cooling overcapacity. This created opportunity to reduce average electricity use by cooling more during off-peak hours. 71 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY Water Intake ALL THE WATER USED for farming operations comes from highly productive aquifers with stable brackish and fresh groundwater. The groundwater resources for the farm have been allocated for use by the South Florida Water Management District (“SFWMD”) under a 20-year water use permit. The permit provides an allocation of groundwater from two subsurface sources: • The Biscayne Aquifer, which contains fresh groundwater of very low salinity of 0.36 ppt • The Floridan Aquifer, which contains brackish to saline groundwater that varies in salinity from approximately 2.7 to 35.0 ppt. The Bluehouse sources freshwater from the Biscayne Aquifer only a few feet below ground surface and accounts for about 5% of total groundwater consumption based on the current permitted allocations. The brackish and salty groundwater is sourced from the Floridan Aquifer, a density stratified artesian aquifer, and is located at approximately 1,200 feet below the Miami Bluehouse. The salinity of groundwater in the aquifer generally increases with the increase in depth as saline water is denser than freshwater. Wells constructed in the Floridan Aquifer are completed in two different zones: the upper Floridan Aquifer and the middle Floridan Aquifer. These hydrogeologic units produce groundwater with salinities of 2.7 parts per thousand (“ppt”) and 35 ppt, respectively. Over 95% of the groundwater consumption for farm operations will consist of saltwater from the Floridan aquifer. The exchange of groundwater entering and exiting the Miami Bluehouse is about 10% per day. Inside the Bluehouse, the recirculation degree of filtered water in the tanks is above 99%. Less than 1% of the total water that is sent through the filtration system is discharged as non-toxic wastewater through the injection well and into the Boulder Zone of the lower Floridan Aquifer, located at a depth of nearly 3,000 feet underground. The Boulder Zone then acts as a storage zone and natural filter with a natural current that slowly filters the water over thousands of years until it eventually returns to the ocean as clean water, thus eliminating any wastewater impact on the ecosystem. The unique groundwater resources of South Florida are well suited for Bluehouse farming at scale. A stable supply of fresh, brackish, and saline groundwater, along with a proven and environmentally desirable method for wastewater disposal, are critical elements. In 2018, Atlantic Sapphire was granted a United States patent for its systems and methods of intensive recirculating aquaculture, incorporating the use of wells constructed for groundwater supply and wastewater disposal. Further, water consumption is comparatively much lower than other proteins, with the Group stating a goal of 200 liters per kilogram of edible meat. 99% RECIRCULATION DEGREE OF FILTERED WATER IN THE TANKS 72 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY Is Farmed Salmon More Sustainable Than Meat? IT IS CLEAR THAT SALMON PRODUCTION, while a well- managed industry relative to livestock production, faces a number of ESG risk that constrain production. However, does salmon have a lower environmental footprint than meat? Salmon is commonly thought to be significantly more environmentally friendly than chicken and pork, but academic literature suggests this depends on the particular environmental factor considered. In terms of water use, salmon offers some advantages over land-based proteins. When looking at feed consumption, the picture is less clear. Salmon has a lower kilo-for-kilo feed conversion ratio. But once the higher calorific content of the feed for salmon is considered (approximately 30% fishmeal and fish oil), the calorie and protein retention looks less impressive (28% and 25% respectively for salmon, versus 37% and 27% for chicken). As salmon only retains 25% of the proteins it requires in its feed, it does not produce protein more efficiently than chicken. The GHG emissions accounting of individual seafood species varies considerably, yet the science is less developed than for livestock proteins. However, the latest research suggests that GHG emissions for farmed salmon are somewhere in between chicken and pork. A SINTEF report pointed to emissions from farmed salmon at 7.9kg C0 2 eq as edible meat versus 6.1 kg for chicken, 12.2 kg for pork and 39 kg for beef. A Swedish study also found that farmed salmon’s climate impacts were greater than chicken yet less than pork. The incremental demand for farmed salmon has also come from further afield, including the Far East and America. Given that farm production could not be moved from Norway or Chile and given the customer’s strong preference for a fresh product, servicing these markets involves air transport. Salmon travels either in the bellies of passenger planes or in specialist cargo planes. A flight from Oslo is 7,500 km to Miami and 7,000 km to Beijing. On a calculated GHG per km air travel, this would add an extra 10 kg CO2-eq per kg (including approximately an extra 2.5% for conversion into edible meat). This means that a salmon product in Beijing would have emissions of 18 kg C02-eq per kg versus just 8 kg CO2-eq for the same product served in Oslo. This matters because China is the fastest-growing market for Atlantic salmon, with demand increasing by 9.7% between 2018-2019. Environmental impacts of salmon and animal protein products PROTEIN SALMON POULTRY (chicken) PORK BEEF GHG emission, kg CO 2 per kg edible meat 7.9 6.2 12.2 39 Freshwater consumption, litre per kg edible meat 2,000 4,300 6,000 15,400 Feed conversion ratio, edible meat per 100kg feed 56 39 19 7 Calorie retention 28% 37% 21% 13% Protein retention 25% 27% 16% 7% 73 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ENVIRONMENTAL RESPONSIBILITY Water Recirculation and Filtration WATER RECIRCULATION IS CONTINUOUSLY performed throughout the different farming areas and in independent systems to ensure optimal levels of water containment in line with Atlantic Sapphire’s de-risking strategy. Filtration is performed through both mechanical and biological filters. First, water is treated in mechanical filters (“drum filters”) that capture the solids generated in the tanks, mainly feces and uneaten feed pellets. Water continues to circulate to biological filters (“biofilters”) for the nitrification of the water, a process by which the ammonia generated by fish is converted into nitrite and nitrate in a two-step process. As a second step, an FDA-approved organic polymer is added in mixers to flocculate the solids. The sludge collected is pumped to a sludge treatment system. Treated sludge is collected and transported to a local waste management facility. Water Discharge NON-HAZARDOUS AQUACULTURE derived wastewater is stored underground through an injection well; domes- tic wastewater will be disposed of on-site to two permitted septic systems under construction. The treatment of the wa- ter consists of the separation of sludge and solids generat- ed during aquaculture operations, and effluent water. Wastewater is stored deep underground by way of an injection well. Regulatory monitoring and reporting associated with injection well system includes both groundwater and wastewater analytical analyses for samples collected at a permit specified frequency. Physical data including groundwater elevation from a Floridan Aquifer monitor well and the operating flows and pressures at the injection well are continuously recorded. All physical and analytical laboratory data are submitted to the Florida Department of Environmental Protection monthly. Reducing Effluents and Waste IN FLORIDA, belt presses and a centrifuge will dewater the sludge to 30% dry matter, which is accepted as a solid waste for offsite compositing or disposal by commercial of municipal solid waste facilities. The Group is actively looking into alternative options for handling sludge in the future. For example, further treatment to 90% dry matter will make it available for disposal at a local commercially run wastewater to energy facility. Other options for use as energy or soil amendments are also being evaluated. By using a closed system, the Group maintains a high degree of control over fish waste. Atlantic Sapphire’s US operations do not discharge any waste into the ocean which provides positive aspects. For example, there is no risk of: water pollution coming from antibiotics or pesticides from operations, wild species becoming dependent on eating salmon feed spilled from operations, or solid waste, mainly feces and uneaten feed, settling and solidifying on the seabed, altering natural ecosystems. Likewise, Atlantic Sapphire’s operations have not had any impact on other fauna such as seabirds or predators, and there is no risk of detachment of farming equipment (nets, plastics, or other artifacts) that can be transported by the current contaminating the water, becoming ghost gear, and potentially harming marine fauna. Atlantic Sapphire is committed to ensuring the proper handling, management, and disposal of hazardous and non-hazardous waste. This means that the Group complies with local, state, and federal regulations for the storage, identification, record keeping, prevention, reduction, reuse, recovery, recycling, removal, and disposal requirements, as well as the requirements of international standards, such as the IFC Performance Standards and EHS Guidelines. The Group operates sludge handling systems and mixers which allow it to keep sludge-containing water mixed in buffer tanks. By doing so, the water that passes through the filtration and water purifying plant does not clog up or need frequent adjustments and cleaning of filtration equipment. In the future, it is the Group’s intention to invest in technology to convert all sludge generated in Bluehouses into a resource such as agriculture fertilizer, soil amendment, or biogas energy. 74 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY Bluehouses help prevent seafood waste by reducing the amount of fish that is lost or discarded during the production process. This is because the controlled environment allows for better monitoring and management of fish health and growth, which can help reduce the risk of disease and other factors that can lead to fish mortality. Atlantic Sapphire does not generate food loss in its filleting operations. Currently the Group is selling all byproducts from filleting, including culling in early stages, to pet food processors and aquariums. Our fish trimmings and by- products can be also processed into further value-added ingredients such as Omega 3 and fish oil pills, protein or calcium powders or even other advanced pharmaceutical uses. Atlantic Sapphire is working towards a zero-waste future, where all natural fish waste continuously filtered from Bluehouse waters can be processed for reuse as an energy source, biogas, or fertilizer. The Group is excited to form relationships with traditional agriculture partners who can benefit from its upcycled fish waste through more vertical integrations. 3. Reducing Food Waste Because the Bluehouse creates a controlled environment for the fish, Atlantic Sapphire is able to tackle food waste in three ways: Recirculating aquaculture systems, such as a Bluehouse, increase production efficiency by allowing fish to be grown in a controlled environment, which reduces the risk of disease and other factors that can reduce yields. Furthermore, Bluehouse Salmon are never exposed to parasites or diseases such as sea lice. 1. INCREASING PRODUCTION EFFICIENCY REDUCING SEAFOOD WASTE Local production with a shorter value chain added to a longer shelf life allows retailers and food service operators to minimize the amount of fish that needs to be disposed of. In the seafood industry, shrink is defined by fish that needs to be thrown away as it couldn’t be sold before the best before date. The industry average is around 20% and the longer shelf life of Bluehouse Salmon minimizes that amount. 2. MINIMIZING SHRINKAGE 75 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY Feed Sourcing ATLANTIC SAPPHIRE’S GOAL is to continue net marine protein production of healthy, happy, and sustainably land- raised American salmon, while significantly reducing the level of contaminants coming from marine-sourced feed ingredients. Reducing marine ingredients from wild capture takes us one step further in our mission to achieve zero impact on the oceans. The vision is to be out of the ocean by removing marine ingredients from fish feed. Atlantic Sapphire will soon be able to produce seafood with a minimal impact and negligible amount of the contaminants coming from the ocean such as metals, PCBs, or dioxins. To achieve this, the partnership between Atlantic Sapphire and feed supplier Skretting is focused on developing innovative fish diets for the health of people and planet. Skretting’s balanced fish feed consists of a range of sustainably sourced, food safe ingredients, nutritionally formulated to provide a diet in the form of protein, fat, carbohydrates, vitamins, minerals, and antioxidant carotenoids. Atlantic Sapphire has lowered the use of marine ingredients consistently over time, resulting in a 0.4 feed fish inclusion factor (“FFIF”), and a 0.93 Fish In Fish Out ratio (“FIFO”) for 2023, making Atlantic Sapphire a net positive marine protein producer. Marine ingredient usage unfortunately went up from 0.75 in 2022 due to an increased EFCR (Economic Feed Conversion Ratio) but stays under one, meaning the Group is still a net marine protein producer (use less resources out of the ocean than producing fish). This number will improve dramatically as feed conversion becomes lower as Atlantic Sapphire reaches steady state operations in 2024 and beyond. Atlantic Sapphire’s commitment to sustainability starts with feed. Raw material availability, origin, harvesting methods, and regulations throughout the supply chain in feed selection represent key factors in the social, environmental, and economic impact of the production of the final product. There are science and data-based comprehensive standards regulating the supply chain of feed ingredients in aquaculture. In fisheries for example, scientific bodies assess wild stocks in different fishing grounds and establish catch restrictions based on biomass volumes, average size, and the natural seasonality of the species. Atlantic Sapphire carefully selects its feed and ingredient suppliers to ensure that the strictest regulations and full traceability are in place throughout the value chain from primary raw material production through feed ingredient manufacturing and feed production. Skretting Skretting’s feed ingredients are highly screened for sustainability, food safety and nutrient content to ensure the highest level of food safety and quality. Skretting meets or exceeds all regulatory requirements for the USA and Canada. 100% of Skretting North America’s marine ingredients are certified. Skretting maintains records on the species and origin of each batch of fishmeal and fish oil and assures traceability of all ingredients that make up more than 1% of the feed. Vegetable-based ingredients are purchased as non-GMO and supplier certifications are documented. Skretting and Atlantic Sapphire are committed to sustainability, investment in innovative research and continuous improvement. In pursuit of supporting Atlantic Sapphire’s goal of achieving reduced marine impact, Skretting utilizes alternative sustainable proteins and oils, such as: • Vegetable proteins and oils, primarily from North American sources • Sustainable protein from human food processing by-product, allowing transition to circular economy ingredients • Novel Algal oil, highly concentrated in Omega 3’s (EPA/DHA), produced in the USA through fermentation using renewable resources. Marine Ingredients Skretting has a Marine Ingredients Sourcing Policy for Atlantic Sapphire’s global operations aiming at ensuring that by 2025 it sources marine ingredients that are 100% certified by MSC, MarinTrust, or coming from a fishery improvement project, as well as ensuring that all the fishmeal and fish oil used to produce feed originate from fisheries that are managed according to the FAO Code of Conduct for Responsible Fisheries. Skretting’s policy includes both fish and aquatic crustaceans living in both salt- and fresh-water, and therefore krill is considered. 100% of the krill meal utilized in Atlantic Sapphire’s feed is MSC certified. Atlantic Sapphire chose to work with feed suppliers that source their marine ingredients from producers which fulfill the requirements of the MarinTrust, the internation- al program for marine ingredient certification, formerly known as the Global Standard for Responsible Supply (“IFFO RS”), in line with the FAO Code of Conduct for Responsible Fisheries. By engaging only with suppliers Sourcing of marine ingredients in Skretting Canada during 2023 details as follows: MT FI P MSC MARINE TRUST that operate under third-party recognized standards, the Group ensures that all the fish used in our feed comes from responsibly managed fisheries with well-regulated biomass stocks and with zero-tolerance policies against Il- legal, Unreported, and Unregulated (“IUU”) fishing and full traceability systems in place. 76 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY Soy Another major area of focus in aquaculture feed production is the use of sustainably sourced soy. Atlantic Sapphire believes it is a joint responsibility for both feed suppliers and salmon farmers to uphold strict requirements in the selection of soy with a strong focus on minimizing the risk of deforestation and zero tolerance against forced labor. All soy and/or soy-derived ingredient suppliers for Skretting North America have signed and meet the Nutreco Code of Conduct for Business Partners. As North American soybean meal is not Round Table on Responsible Soy “RTRS” or Proterra certified, Skretting is buying RTRS credits to uphold sustainability standards. This ensures that suppliers meet their criteria for non-deforestation areas. CJ Selecta, Skretting’s main soy supplier, has published a goal to stop entirely sourcing soybeans from the Amazon biome by 2022. By the end of 2025, Skretting’s ambition is to source soy ingredients that are free from both legal and illegal deforestation. (GRI 3-8.1) Alternative Ingredients On a global level, Skretting has made important progress in novel ingredients, increasing the overall inclusion rate from 0.064% in 2021 to 1% of total raw materials purchased in 2022. This volume increase was partially due to a higher usage of omega-3 alternatives, such as algae and omega-3 canola oil. Algae oil is already being used in small quantities in Atlantic Sapphire’s feed, though in small quantities (1.4% in 2023). Skretting fully utilizes global procurement, quality assurance and R&D resources to identify, develop and implement ingredients that fit into its novel strategy, which is to focus first and foremost on low-footprint and right-cost ingredients. It is currently looking to explore the feasibility of using black soldier fly larvae meal in sufficient quantities as provided by a capable supplier. 77 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY 0.1 0.2 0.50.40.3 Feed Conversion Feed conversion ratio of selected meat and fish worldwide (kg) CATTLE PORK CHICKEN SALMON 8 3.9 1.9 1.3 Source : Statista 2021 Raw material carbon footprint(including land use change) FISH OIL TRIMMINGS FISH MEAL WHOLE FISH MEAL TRIMMINGS CARBO- HYDRATES ANIMAL PROTEIN ANIMAL OIL MICRO INGREDIENT FISH OIL WHOLE VEGETABLE OILS VEGETABLE PROTEINS in kg C0 2 eq/kg feed 2022 2023 Carbon footprint breakdown from cradle to farm MILL OPERATION PACKAGING OUTBOUND LOGISTICS INBOUND TRANSPORT FEED, EXCLUDING LAND USE CHANGE FEED, LAND USE CHANGE 0 0.25 0.5 0.75 1.25 in kg C0 2 eq/kg feed 2022 2023 FARMED SALMON has a low carbon and water footprint compared to many other sources of protein such as beef and pork. The feed conversion ratio of Bluehouse Salmon (FCR) is a measure of the efficiency of a fish in converting feed into fish biomass. In 2023, the Group’s biological feed conversion ratio was 1.47. Due to production challenges in 2023 where the fish didn’t have optimal growth conditions, and economic feed conversion ratio was approximately 2.34. This means it took 2.34 kilograms of feed to produce one kilogram of fish biomass. In steady state production the Group expects an economic feed conversion ratio of approximately 1.2. As seen in the table below, producing a kilogram of salmon requires far less feed than producing a kilogram of beef or pork, which reduces both environmental impact and the cost of production. Beef cattle hold the highest feed conversion rate, with an average ratio of eight, while in contrast an industry average salmon needs only about 1.3 kilograms of feed to increase its bodyweight by one kilogram, making it a highly favorable conversion ratio. Atlantic Sapphire simultaneously works with feed supplier Skretting on reducing the carbon and water footprint of its feed. In 2023, Skretting helped reduce the carbon footprint of the feed by 10%. The main contributor of the carbon footprint this past year was raw materials production (58%), followed by the associated land use change (19%). The remaining 20-22% was mainly due to outbound transport (13-14%), mill operations (4%) and inbound transport of raw materials (3-4%). The main contributing raw materials to the overall carbon footprint were vegetable proteins (18%) and vegetable oils (24%) due to the land use change impact associated with these raw materials. 0 78 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY 0.002 0.004 0.010.0080.0060.1 0.2 0.50.40.3 Water (scarcity or consumption) footprint was mainly determined by water consumption for synthetic amino acids, but also by crop irrigation (in water scarce areas). Skretting used the water scarcity indicator AWARE as recommended by the European Commission in their Environmental Footprint 3.0 selected methods to determine the water footprint of the feed. Skretting did not aggregate the water consumption of each raw material, because water consumed in a water rich area does not have the same environmental impact as in a water scarce area. Atlantic Sapphire and Skretting are committed to working together to reduce the footprint of our feed while at the same time considering the impact of ingredients on fish performance and welfare. In 2021, Skretting signed an agreement with us with the intent of building a feed plant locally in South Florida. Having local feed production means that we will lower the transportation of sourcing feed while simultaneously working in an even closer collaboration to develop new feed ingredients that are better for our systems, for our fish, and for the planet. Raw material water consumption FISH OIL TRIMMINGS FISH MEAL WHOLE FISH MEAL TRIMMINGS CARBO- HYDRATES ANIMAL PROTEIN ANIMAL OIL MICRO INGREDIENT FISH OIL WHOLE VEGETABLE OILS VEGETABLE PROTEINS in m 3 consumed/kg feed 2022 2023 Raw material water scarcity FISH OIL TRIMMINGS FISH MEAL WHOLE FISH MEAL TRIMMINGS CARBO- HYDRATES ANIMAL PROTEIN ANIMAL OIL MICRO INGREDIENT FISH OIL WHOLE VEGETABLE OILS VEGETABLE PROTEINS in m 3 deprivation/kg feed 2022 2023 0 0 79 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY Processing and Packaging Solutions GRI 306-1 AND 301-3 ATLANTIC SAPPHIRE DOES primary processing onsite in Homestead. This includes slaughter, eviscerating and packing whole salmon in a state of the art facility. The Group also commissioned in 2022 a filleting line where it does pin bone in fillets on site to guarantee optimal yields, freshness and workmanship. Atlantic Sapphire’s main packaging material for HOG salmon and salmon fillets is made of fully recyclable or biodegradable material for domestic transportation. Together with a sustainability-minded supplier, SurPack, the Group is sourcing fully recyclable packaging for whole fish and fillets and using cardboard biodegradable totes or re- usable plastic bins for all byproducts from filleting operations (including heads, frames and bits and pieces). Atlantic Sapphire sells both whole fish and pin bone in fillets to customers and uses secondary processors around the country for further value added processing (pin bone out fillets, portions, smoked salmon and other value added products). The company is also planning to start using reusable bins to send pre rigor fillets to secondary processors in 2023. Thanks to this onsite processing in-market, fish arrives faster and fresher to stores and consumers. This means longer shelf life, less shrink and lower food waste on the market side as well. Protecting Biodiversity and Coastal Areas GRI 304 ATLANTIC SAPPHIRE has a limited impact on the local biodiversity in the locations where it operates due to its closed production method and efficient land occupation. For example, it can farm up to 1,000 metric tons annually of salmon on one acre of land, which is the highest yield per acre of animal protein in the world. The Group plans to raise 220,000 annual metric tons of salmon on land that once grew only 10,000 annual metric tons of tomatoes. Homestead, Florida, the home to the Florida Bluehouse, is a city within Miami-Dade County located between Biscayne National Park to the east and Everglades National Park to the west. Biscayne National Park encompasses coral reefs, islands and shoreline mangrove forest in the northern Florida Keys. America’s Everglades is the largest subtropical wilderness in the United States. Everglades National Park protects an unparalleled landscape that provides important habitat for numerous rare and endangered species like the manatee, American crocodile, and the elusive Florida panther.. In 2015, prior to Phase 1 construction of the first Bluehouse, Miami-Dade County conducted an environmental assessment of the Group’s property through reviewing photographic aerials, U.S.D.A. soil maps, Miami-Dade County Comprehensive Development Master Plan (CDMP) Departmental records, and a site inspection. The purpose of the assessment was to determine if a Miami-Dade County Class IV Permit for work in wetlands would be required. This environmental assessment revealed that the properties do not contain wetlands as defined by Chapter 24-5 of the Code of Miami-Dade County; therefore, a Miami-Dade County Class IV Permit was not required. In 2022, this environmental assessment was completed again prior to Phase 2 construction and yielded the same results. Atlantic Sapphire has a goal of no impact on the oceans, and this promise extends to all areas of high biodiversity including outside protected areas. These assessments show that Atlantic Sapphire’s activities, products, and services, do not have any significant impact on surrounding biodiversity and wetlands. Fresh water is the lifeblood of the Everglades and the South Florida economy. The Bluehouse uses less fresh water per kg of food produced than the vegetable farm it replaced. Over the past decades, aquaculture has greatly contributed to the protection of depleting wild stocks and is expected to continue to be a significant contributor in feeding the world’s increasing population. However, there is much more to be done in protecting these ecosystems and, in particular, the ocean. Atlantic Sapphire’s farming operation has zero harmful impact on coastal areas and its biodiversity by producing salmon on land, away from wild waters, using its unique groundwater resources in Florida. For more on the goal to minimize impact on the ocean, please refer to feed sourcing. 80 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ENVIRONMENTAL RESPONSIBILITY GHG Emissions & Climate Change Waste ZERO kilos of salmon flown on airplanes ACHIEVED ENGAGE with local electricity company and develop a concrete plan to transition to 100% renewable sources of electricity ACHIEVED REPORT scope 1 and 2 emissions ACHIEVED PLAN construction of a value-added facility for the Bluehouse fish waste, eliminating sludge and viscera waste. DELAYED - IN PROGRESS The feed fish inclusion factor estimates the combined fishmeal and fish oil concentration of the feed on a dry weight basis, relative to the wild fish. Thus an FFIF of 2 signifies that the feed is twice as concentrated in marine protein and oil as in wild fish. Feed Water REMAIN a net marine protein producer (“FIFO” < 1) ACHIEVED 0.98 INCREASE the inclusion of alternative ingredients (i.e. algae oil) in our salmon feed DELAYED REDUCE freshwater usage from production, processing, and feed to below 200 liters per kilo of edible meat. MISSED (313 liters per kg of harvested fish (not including feed)) 81 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS SELECTED TARGETS: ENVIRONMENT 2023 RESULTS GHG Emissions & Climate Change ZERO kilos of salmon flown on airplanes ENGAGE with local electricity company and develop a concrete plan to transition to 100% renewable sources of electricity REPORT Scope 1,2 and 3 emissions INTRODUCE at least 25% sourcing from solar energy during the second half of the year. Feed Water REMAIN a net marine protein producer (“FIFO” < 1) REDUCE freshwater usage from production, processing, and feed to below 200 liters per kilo of edible meat 82 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS TARGETS FOR 2024 SELECTED TARGETS: ENVIRONMENT GHG Emissions & Climate Change Waste ZERO kilos of salmon flown on airplanes CONSTRUCT and generate 5 MW of solar power on site ELECTRICAL onsite trucking and production equipment VALUE-ADDED facility for the Bluehouse fish waste in operation, eliminating sludge and viscera waste Feed 100% certified deforestation-free soy in salmon feed ELIMINATE the carbon footprint of feed transportation by producing feed locally 83 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS TARGETS FOR 2030 SELECTED TARGETS: ENVIRONMENT Atlantic Sapphire is dedicated to fostering a corporate culture that goes beyond regulatory compliance and engages and empowers all employees around realizing its purpose and living its values. THE GROUP IS DETERMINED to be among the industry leaders in tackling environmental as well as social responsibility issues, consistent with the Group’s core values. In recent years, its core values have been extended with new sub- values to encourage and ensure employees embrace the Group’s core values every day in dedicated efforts to help customers realize their ambitions. In 2023, Atlantic Sapphire looked at additional ways that its core values could be incorporated into daily employee activities. The objectives of the Annual Performance review were centered around each of its core values and the “Going Further” Employee Recognition Program was launched to reinforce core value related to Performance. Atlantic Sapphire’s primary focus shifted to its US Operations in Homestead, Florida. The South Florida Bluehouse is strategically positioned to help support the future growth of the company and its mission. 84 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY 2020 104 2022 177 2021 166 2023 158 Employee Growth 1 Passion 3 Innovation 4 Innovation 5 Balance 2 Performance Purpose, dedication, and courage WE ARE ALL Fish Farmers. WE ARE POSITIVE THINKERS and look for solutions. WE SHARE OUR KNOWLEDGE and energy with each other. WE ARE ALWAYS eager to learn Continuous improvement, solutions, and learning WHAT WE DO TODAY, we do better than yesterday. WE FOCUS ON THE SOLUTION, not the problem. WE LISTEN DEEPLY to understand each other. WE SHARE IDEAS with our coworkers Accountability, open communication, and care WE TALK to each other, not about each other. WE DELIVER what we promise. WE STAY HUMBLE and ask for help when need it. WE SPEAK UP to solve problems because we care. Healthy fish, wellness, and sustainable planete HEALTHY FISH are at the heart of everything we do. WE LOVE LIFE, bringing our best self to life and work. WE CARE for People, Fish, and the Planet. WE DO THE RIGHT THINGS in the right way. Initiative, collaboration, and results ALONE WE GO FAST – together we go further. WE MAKE each other better. OUR JOB IS NOT DONE until the customer is happy. GOOD BIOLOGICAL CONDITIONS drive financial performance. Atlantic Sapphire Values ATLANTIC SAPPHIRE PROMOTES a safe, healthy, and fair working environment. The Group depends deeply on all our employees’ capabilities and contributions, and it is therefore committed to providing an inclusive, motivating, and safe working environment, as described in its Human Resource Policy and its Environmental, Health, Safety, and Security (“EHSS)” Policy. Achieving its goals while living its values can only be done if employees collaborate and treat each other with respect. Atlantic Sapphire aims to be an open, positive, and supportive working environment. 85 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS SOCIAL RESPONSIBILITY Engaged Employees IN 2023, the Group restructured a number of departments to streamline operations and create greater efficiencies. Reorganization efforts continued throughout 2023 with a target of reducing headcount and overhead expenditures by 30%. As of 31 December 2023, Atlantic Sapphire had 158 full time employees. In the Phase 1 post construction period, the Group prioritized skills and experience in staffing teams to ensure that its operations are safe and secure. The group enlisted a contingent workforce as needed to help support Operations in 2023. Over time, the Group endeavors to increasingly hire full-time employees from the communities in which it operates with a goal of eliminating contingent workers entirely. Atlantic Sapphire has been working through extensive community engagement within universities, colleges, YMCA, and other promotional activities to drive a strong employer branding. (GRI 413-1) In 2023, Atlantic Sapphire made a concerted effort to cultivate relationships with local universities such as The University of Miami, Florida International University and Florida Agricultural & Mechanical University In addition to hosting onsite tours and visits, the Group networked with professors and career resource centers to help facilitate learning opportunities for students and establish relationships so students can explore future career opportunities. The hope is that the internship program established in 2022 will continue to grow as the Group partners to provide firsthand exposure to tomorrow’s future workforce while also building brand ambassadors who are engaged and excited about the mission. As part of the continuous feedback process in 2023, the Employee Satisfaction Survey, Atlantic Sapphire’s Overall Workplace Experience score increased to 63% employee and employee engagement increased 4 points to 60% 2023. The largest majority of employees reported feeling closely aligned with the company’s values and mission, but 55% reported feeling undervalued. In 2023 there was an increased effort to engage employees and their families. Some of these initiatives included a company BBQs, a Corporate Run and also participating in “Take your Child to Work 2023”. Atlantic Sapphire is focused on driving innovation by bringing experience from various industries such as conventional sea based aquaculture, wastewater, engineering, construction, maintenance, and fluid dynamics. Atlantic Sapphire believes that a diverse and inclusive workforce is essential to success. The Group recruits globally for the talent and experience that may be difficult to find locally, all while emphasizing gender equality and equal employment opportunities. Atlantic Sapphire is proud to count over 20 different nationalities in our workforce. 63% OVERALL WORKPLACE EXPERIENCE SCORE Workplace Experience Score +2 UP 2 POINTS FROM JAN. 2023 -7 7 POINTS BELOW BENCHMARK WORKPLACE EXPERIENCE THEMES We have categorizes the core survey items into the themes below SCORE THEME TREND JAN 2023 # OF ITEMS VS. BENCHMARK BELOW CLOSE ABOVE 60% ENGAGED 3 Statements +4 75% CLOSELY ALIGNED 3 Statements +6 58% EMPOWERED TO EXECUTE 5 Statements +8 67% RESPECTED & SUPPORTED 5 Statements 0 63% ENABLED TO GROW 3 Statements -3 55% FAIRLY VALUED 4 Statements -5 86 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY 75% -3% Atlantic Sapphire onboards people who bring professional experience and fit the corporate culture, and in whom potential for growth is seen. The goal is to build a diverse workforce as Atlantic Sapphire grows – with both ethnic diversity and gender diversity. Atlantic Sapphire has set representation goals to increase diversity across the Group and will focus on three key targeted areas: targeted recruitment, development, and retention and promotion paths. Pioneering in an industry also involves building up inexistent competences in the field. Driving performance while retaining talent throughout the organization in such an operationally geared industry is essential. Although Atlantic Sapphire complies with applicable international and national laws, regulations and standards, there could be risks within the Group’s activities that may potentially have a negative impact on its people and communities and therefore, by extension, on its business. These relate primarily to occupational health and safety, training and education, and diversity and inclusion. (GRI 2-17, 2-26). WORKPLACE EXPERIENCE THEMES Percent favorable by theme at the organizational level ENABLED TO GROW EMPOWERED TO EXECUTE CLOSELY ALIGNED FAIRLY VALUED ENGAGED RESPECTED & SUPPORTED ATLANTIC SAPPHIRE USA MANUFACTURING: FOOD/BEVERAGES-2023 -5%58% -7%63% 55% -7% 67% -9% 60% -10% +6% +8% -3% -5% 0% +4% TREND JAN 2023 87 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY Our Code of Conduct UNDERPINNING THE Governance and ESMS frameworks is the central principle that the success of Atlantic Sapphire depends on maintaining the highest standards of trust and integrity at all levels of the organization, as well as the Group’s reputation for honesty and transparency in its business. Therefore, the Code of Conduct (the “Code”) sets expectations and provides guidance for the Group’s Board of Directors, officers, employees, independent contractors, and consultants. It is their responsibility to understand the Code as well as exercise good judgement and follow the Code. All employees must sign the Code. Additionally, suppliers and vendor partners are also required to acknowledge and adhere to our AS Standard Vendor Terms and Conditions before engaging. These documents outline the commitment to integrity by following the principles of the Code. The Code also encourages reporting of any violations to management (GRI 414-1). The Code is consistent with the Group’s core values and is aligned with Atlantic Sapphire’s commitment to the UN Global Compact principals and SDGs. Our Human Rights Policy ATLANTIC SAPPHIRE believes that it is fundamental to its business to respect and protect human rights. The Human Rights policy therefore elaborates on the Code of Conduct to provide greater detail on how Atlantic Sapphire believes that it can positively impact human rights as a business. In accordance with principles 1 and 2 of the UN Global Compact, Atlantic Sapphire supports and respects the protection of internationally proclaimed human rights as established in the Universal Declaration on Human Rights and the International Labor Organization’s Core Conventions. Human Rights is an area of importance to our employees, contractors, shareholders and investors, customers, end-consumers, civil society groups, and the local communities in which Atlantic Sapphire operates. The Human Rights Policy informs employees, business partners, and customers of Atlantic Sapphire’s commitment to respecting and promoting human rights and in making a meaningful contribution to uphold human rights across our operations and our supply chain. Atlantic Sapphire’s Human Rights Policy applies to all Atlantic Sapphire employees, anyone doing business for or with Atlantic Sapphire (including suppliers), and others acting on Atlantic Sapphire’s behalf to ensure that the Group is not complicit in human rights abuses directly or indirectly. We focus on the following: Diversity Atlantic Sapphire is committed to equal employment opportunities and does not tolerate discrimination and harassment in the workplace. This means: 1. Selecting employees and contractors based on qualification, experience, and past performance. 2. Providing equal opportunity to all employees and applicants for employment without regard to race, creed, color, national origin, religion, ancestry, gender, sexual orientation, gender identity, marital status, familial status, or any other basis protected by federal, state, local law, and international conventions. 3. Respecting the personal rights and dignity of all employees and accordingly, will not tolerate sexual harassment or any other forms of harassment. Wages and Benefits Atlantic Sapphire compensates employees competitively and equitably relative to the industry and the local labor markets. It operates in full compliance with applicable wage, overtime, and benefits laws. Currently Atlantic Sapphires’ starting base wage is 50% higher than the state required minimum wage of $12 plus the Group offers comprehensive benefits. Child Labor Atlantic Sapphire is committed to the abolition of child labor, in line with the ILO conventions on Minimum Age and Worst Forms of Child Labor. The Group prohibits the hiring of individuals under the legal age of employment in the relevant jurisdiction and under the age of 18 for positions in which hazardous work is expected. Forced Labor and Human Trafficking Atlantic Sapphire prohibits the use of all forms of forced labor, including prison labor, indentured labor, bonded labor, military labor, slave labor, and any form of human trafficking in line with applicable UN and ILO conventions as well as any applicable Federal or State Anti-Trafficking regulation. Safe and Secure Working Conditions Atlantic Sapphire is committed to providing a safe and healthy workplace in accordance with applicable safety and health laws, regulations, and internal requirements. In addition, Atlantic Sapphire complies with the International Finance Corporation’s (“IFC”) Performance Standard 2 regarding labor and working conditions. 88 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY Freedom of Association Atlantic Sapphire respects our employees’ right to join or form unions without fear of reprisal, intimidation, or harassment. Open Communication & Grievance Mechanism Atlantic Sapphire provides processes for employees and community to use to openly discuss any issues of concern, and will respond to any such grievances in a fair and transparent manner while simultaneously respecting the need for confidentiality, if possible. Development and Growth Atlantic Sapphire encourages continuous learning, conducts new hire and annual performance reviews, and provides appropriate education, training, and guidance to support a drive towards continuous improvement. Compliance Employees and suppliers are expected to never infringe on human rights and are alerted to report any situation in which human rights infringement is suspected. Violation of this policy or the refusal to cooperate will result in disciplinary action, up to and including termination and referral to the appropriate authorities. Privacy The European Union (“EU”) introduced data privacy regulation called General Data Protection Regulation (“GDPR”) regarding human rights related to privacy. The GDPR is in scope as Atlantic Sapphire has offices in the EU and collects and transfers data from the EU to the US. Accordingly, Atlantic Sapphire engaged a third-party consultant to perform a GDPR Gap Assessment as the recommendations will directly impact Atlantic Sapphire’s GDPR compliance posture and assist in improving the Group’s overall data privacy and information security maturity. Our GDPR compliance will positively impact our stakeholders by ensuring that their confidential information is safe and secure. Responsible Sourcing Atlantic Sapphire has a large and diverse extended supply chain. Suppliers must be transparent about their human rights and labor practices and work to remedy any shortfalls, and their commitment to complying with the Code of Conduct is contractually secured through their signature of the Terms and Conditions. The Group is exploring ways of monitoring performance and expects to have a more formalized responsible sourcing program in place in the future. 89 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY New employee hires & employee turnover GRI 401-1 • 13% turnover in 2023 • Increase in total turnover due to reorganization and reduction in force Benefits provided to full time employees that are not provided to temporary or part-time GRI 401-2 ATLANTIC SAPPHIRE appreciates its team’s commitment to its success. The Group is equally committed to providing competitive, affordable health and wellness benefits to help take care of its associates and their families. Full-time employees working a minimum of 30 hours per week are eligible for the below benefits: • Medical with HRA • Dental • Vision • Company Paid STD & LTD • Company Paid Life and AD&D • Voluntary Employee and Dependent Life and AD&D • Dependent Care FSA • Pet Insurance • Aflac Supplemental Benefits • Wellness Program • 401k with Company Match Parental leave GRI 401-3 2 WEEKS OF parental leave was added as an official Atlantic Sapphire benefit in the 8th revision of our Employee Handbook. PERIOD OVERALL TURNOVER VOLUNTARY TURNOVER 2021 36.88% 24.39% 2022 28.24% 12.42% 2023 33.08% 12.97% 90 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY Fostering Diversity and Inclusion GRI 405 Ratio of basic salary and remuneration of women to men 405-2 In 2023, women earned $0.93 to every dollar earned by men in non-executive positions. In the executive tier, women earned $0.65 for every dollar earned by men in executive roles (Directors & C-Suite positions). The Group continues its commitment to fostering a culture of diversity and inclusion. In 2023, the percentage of female employees in the workforce remained at 20%. The percentage of women serving as leaders of leaders decreased to 11 % and the percentage of women serving as front line decreased to 17%. MALE FEMALE June 2019 87% 13% December 2019 78% 22% December 2020 76% 24% December 2021 76% 24% December 2022 80% 20% December 2023 80% 20% HEADCOUNT (%of total organisation) FEMALE MALE CEO and Direct Reports 16% 83% Leader of Leaders 11% 88% Front Line Managers 17% 82% Individual Contributor 21% 77% Diversity of governance bodies and employees 405-1 As part of the overall commitment to human rights, Atlantic Sapphire is committed to providing equal opportunity to all employees and applicants for employment without regard to gender, sexual orientation, race, creed, color, national origin, religion, ancestry, gender identity, marital status, familial status, or any other basis protected by law of US, Denmark, or Norway, as applicable. Through a multifaceted approach which includes strong support from leadership and culture and by establishing policies, talent attraction programs, awareness, and training programs, and rewarding employees through Performance Over Time incentive, Atlantic Sapphire is committed to fostering a work environment that is free from harassment of any kind as well as offensive or disrespectful conduct. Other examples include providing, when possible, an equal number of female and male candidates for job interviews to reduce possible bias, and the Group has started tracking recruitment diversity metrics on gender, race, disability, and veteran status. 91 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY Nondiscrimination GRI 406 ATLANTIC SAPPHIRE has starting pay bands that are consistent regardless of gender. It clearly posts required state and federal notices related to compliance including Title VII, The Genetic Information Nondiscrimination Act and ADA. Atlantic Sapphire complies with the Americans with Disabilities Act and provided reasonable accommodations to 2 employees and always strives to create an inclusive workspace in 2023. Freedom of Association and collective bargaining GRI 407 AS A COMPANY, Atlantic Sapphire has not restricted employees from communicating or working to form a collective bargaining arrangement. Child Labor GRI 408 ATLANTIC SAPPHIRE abides by the guidelines established by the Fair Labor Standards Act (FLSA). Additionally, child labor guidelines and requirement by the Florida Department of Business & Professional Regulation are posted in both English and Spanish in all common employee break areas within the facilities. Forced or Compulsory Labor GRI 409 ATLANTIC SAPPHIRE works to provide a safe working environment for employees, contractors, and its contingent work force. All employees and vendors are paid fairly based on the nature of the work and services provided. Human Resource Information System ATLANTIC SAPPHIRE uses a centralized Human Resource Information System (“HRIS”) and lifecycle experience process. Through this process, every new hire that is onboarded into Atlantic Sapphire has the same employee experience that is designed to set them up for success through alignment with its values, vision, and Code of Conduct as well as its environmental and social management systems. In 2023, Atlantic Sapphire enhanced security through single sign using Active Directory for many of the company’s systems including its HRIS (GRI 405).. To further ensure their success, all employees are guided into the performance management program. In 2023, the Group completed an annual and mid-year performance review to permit employees to receive feedback on responsibilities that may have been impacted by the reorganization. In December 2023, 90% of employees completed the performance review self-assessment tool and engaged in follow up coaching specific to their performance and career development. Employees are updated on a weekly basis with respect to the Group’s status and the biological performance of the salmon. Other regular communications informing employees on vacancies, healthcare, safety, production, and maintenance are shared centrally through the internal communication tool. In 2023, the Group launched an internal intranet portal appropriately named “The Current”. (GRI 402) In addition to The Current, the Group also holds quarterly Town Halls to update employees on the state of the business and provide a forum for direct communication between Team Members and the Senior Leadership Team. As part of driving further recommendations from improvement and growth, grievance mechanisms and suggestion boxes have been actively promoted and solutions have been communicated and updated to all employees through a centralized channel. In 2023, Atlantic Sapphire continued its “Going Further” Employee Recognition program which is tied to the company’s core value of Performance. Through this program, employees are encouraged to nominate a team member for an action or behavior that was above and beyond that positively impacted another employee or helped achieve a shared goal. Atlantic Sapphire understands that the core of its success is the ability from team members and partners to perform. In 2023, Atlantic Sapphire enhanced its training offerings to further support development and growth of employees from a technical, managerial and leadership, and a common perspective to all employee competence programs. Additionally, the Farm Operations team worked diligently to establish a Career Path for employees’ growth. 92 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY Ensuring Occupational Health & Safety GRI 403 Atlantic Sapphire works to ensure a safe and healthy environment for all employees, contractors, and visitors. The Group proactively reinforces the mindset “Think Safe, Act Safe, Be Safe” at every opportunity throughout the organization. For the year ended 31 December 2023, approximately 334,454 total work hours were recorded throughout the organization and 2,379 hours were attributed to sick or personal leave. The Environmental and Social Management System (“ESMS”) helps ensure that the Group takes extensive precautionary measures to reduce the risks. These include training of employees and a relentless focus on personal protective equipment and safe handling of hazardous materials together with systematic controls of its working processes. Employees are encouraged to always speak up and raise a concern and refuse to perform work if: • asked to do a task you consider unsafe, • asked to do a job you think you are not properly trained to perform and that may harm you or others, • they see someone performing a task that you think is unsafe or that the person is not properly trained to do, • they suspect that a piece of equipment is not operating properly and may be unsafe, or • they observe or are made aware of an unsafe condition or a potential danger to yourself or others. Atlantic Sapphire actively manages and mitigates health and safety risks in its production facilities including accidents, injuries and occupational diseases, and exposure to chemical hazards. The Group designs and operates its production facilities with an emphasis on effective process safety programs to maintain a safe work environment and prevent accidents. The Group maintains general oversight of the health and safety of its employees predominantly through ongoing auditing, monitoring, and evaluation of activities to ensure compliance, and it actively promotes a strong safety culture with its suppliers, vendors, and contractors. The Group established the KPI Lost Time Incident (“LTI”), which is also part of the Performance Over Time Incentive program. The formula is as follows: (number of lost time injuries in the reporting period) multiplied by 200,000/total hours worked. In 2023, the lost time rate decreased to 2.54 from the 2022 rate of 2.64. Atlantic Sapphire offers comprehensive medical insurance plans along with a host of additional health and welfare benefits for its employees and their families. Employees in the US are covered under the Group Medical Plan including in-patient and out-patient services covering medical, dental, vision, and company-paid benefits such as life insurance and short and long-term disability insurance. Employees in Denmark are covered for different kinds of hospital treatment including intensive health problems, out-patient examinations, and physical and mental treatments. All employees are entitled to include members of their families in their insurance coverage in both locations. (GRI 201-3) HEALTH & SAFETY • Provide a healthy and safe work environment for employees, contractors, and visitors, and promote safe behaviors. • Think Safe, Act Safe, Be Safe. Establish and maintain health and safety management standards and systems in compliance with relevant industry standards and regulatory requirements. • Identify and assess hazards to safety and health and control them as part of a total risk management process. • Require every employee and contractor to comply with relevant legislation and the health and safety management standards and systems. The Group will provide them with the necessary training to enable them to have the knowledge and skills to undertake that work in a safe and healthy manner. ENVIRONMENT & COMMUNITY • Conduct operations in compliance with all relevant environmental licenses and regulations. • Promote the efficient use of resources and energy. • Strive to minimize impact on the environment. • Strive to be a valued corporate citizen in the community • Respect neighbors, their values and cultural heritage and be considerate to them in carrying out operations. Health, Safety, and Environment Policy AT ATLANTIC SAPPHIRE is committed to: • Zero Harm • Caring for the Community & the Environment Atlantic Sapphire believes that all work-related injuries, illnesses, and environmental incidents are preventable, and wants to be a valued member of the community in which it operates. In particular, Atlantic Sapphire will: ON EACH OF THESE AREAS ATLANTIC SAPPHIRE WILL: • Strive to continually improve. • Report the progress made on health, safety, and environmental performance. • Encourage everyone to carry out its commitment to health, safety, and the environment to their homes and to the community. Atlantic Sapphire makes this commitment to its employees, contractors, customers, shareholders, and the community as it works towards Zero Harm for Everyone Everywhere and Caring for the Community & Environment. 93 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY Investing in Life- Long Competence Development GRI 404 ATLANTIC SAPPHIRE believes in the value of lifelong learning. The Atlantic Sapphire People & Culture team works to ensure that it can develop talent in a systematic and continuous way to support scaling up. The Group knows that the best learning comes from direct experience, and its programs are developed with a 70% hands-on, 20% shadowing, and 10% online or classroom approach. Atlantic Sapphire uses both the best internal and external sources to train and develop its employees, with collaboration at the core of its approach. Through the training platform, employees are continuously tracking their personal development which positions them to grow meaningful careers. In 2023, all employees documented a total of 250 safety training hours 1,825 hours of training which included safety, technical and managerial competencies, and skills for personal development. This number is higher than last year because there was a significant effort to equip managers with bi-monthly leadership trainings to help them better manage their teams. The Group also expanded their HRIS offering to incorporate a Learning Management system that is integrated and tracked by employee to support the multi- faceted development needs of employees.. Harassment and Discrimination Prevention training was provided for all employees. This training focused on cultural sensitivity and reinforced the Group’s zero tolerance policy on harassment and discrimination. In 2023, two claims of discrimination or harassment were reported and investigated. Employees receive Occupational Health and Safety (“OHS”) induction training upon hire, which teaches about the minimum safety, environmental, and security precautions required before gaining access to the facilities. Additionally, all employees are informed throughout the year of onsite hazards and controls, the location of firefighting and first aid equipment, and emergency response and evacuation procedures. As Atlantic Sapphire prepares for projected growth and expansion, it realizes that the Group needs to train and develop high-potential employees who will lead future teams. In 2023, the Group focused on equipping employees with the tools to help them develop professionally and to support the anticipated needs of the growing organization. The Group created a Management Development Program with targeted training for current mid-level managers and prospective future leaders in which 24% of full-time employees, representing 85% of our mid-level managers, participated in this initiative. 94 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY Engaging Local Communities GRI 413 BY PIONEERING FULL-CYCLE salmon farming on land, Atlantic Sapphire is spearheading the development of an entire new industry. Building and maintaining its social license to operate is a critical success factor. Stakeholder engagement is based on open communication with neighbors and other stakeholders to promote the sustainable production of salmon, to create quality jobs, and to educate communities on the importance and possibilities of aquaculture. The Group organizes visits to the farm by schools, university students, researchers, local neighbors, government, and authorities wanting to learn about Atlantic Sapphire’s operations. Group employees have also collaborated with universities and presented in classes in different academic fields related to the business. In Miami, an area of the Bluehouse is specially designed to receive visitors and provide tours through the facilities without interrupting operations or compromising safety. This facility design provides unparalleled transparency into the operations for the community and includes a reception room for presentations, and walkways with windows overlooking various stages of the salmon growth cycle. GRI 415-1, 2-28 In 2023 Atlantic Sapphire has not made any donations to political campaigns, political organizations, lobbyists or lobbying organizations. Atlantic Sapphire paid dues and memberships to the following trade associations and other tax-exempt groups: • Organic Trade Association • Oceanwise • Friend of the Sea • Seafood Nutrition Partnership • American Heart Association • Miami Waterkeeper In 2022, the Group engaged with the South Dade Chamber of Commerce, Miami Waterkeeper, FIU, St. Brendan high school and the University of Miami-where over 70 students carried out research projects on Atlantic Sapphire as part of their curriculum. The Group has always participated in local events in support of the community and local economic development. Atlantic Sapphire employees have found it immensely rewarding to help others in need and to remind ourselves of the positive outcomes achieved when coming together to support each other in a crisis. During 2023, Atlantic Sapphire supported several causes that are close to its mission and also spoke of its commitment to improve the lives of consumers and its surrounding communities. For instance, the Group donated healthy salmon to the Homestead Soup Kitchen and to Camillus House, making an impact upon those in need. Atlantic Sapphire has also contributed to the conservation efforts of Miami Waterkeeper in events such as the Shark Tagging experience. Atlantic Sapphire partners with Omhu, an organization that is a leader in conservation, in Hvide Sande, Denmark,supporting their beach cleanup efforts and their mission to educate young people on sourcing seafood sustainably, where students learn about the UN’s goals to keep life below water thriving.. Atlantic Sapphire continues to extend its stakeholder engagement plan that includes educational activities for students from schools and universities, researchers, NGOs, and the public. It also includes participation in local events whose principles and objectives align with the Group’s values, such as initiatives focused on the oceans. 95 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES SOCIAL RESPONSIBILITY Diversity Occupational Health & Safety 5% INCREASE improvement in the share of female employees represented company-wide MISSED - The percentage of female representation remained constant in 2023 due to reorganization efforts. EXPERIENCE zero fatalities or serious work-related injuries PARTIALLY ACHIEVED - Work in progress. Achieved no work-related fatalities, but we experienced 5 serious work-related injuries resulting in lost time. REDUCE number of Lost Time Incidents to 2.51 MISSED - The Group had 8 lost time incidents in 2023. The Lost Time Incident rate reduced to 2.54, but was still slightly higher than the target. Training and Education Community Engagement MINIMUM 40 hours of training and development per employee per year through our AS academy. MISSED - While all employees did not record 40 hours of training in 2023, Managers received 15 hours of training through the Management Development program and New hires working in Production all received a full week of training based on the enhanced onboarding experience that was launched in 2022. The Group is committed to its employees’ development and wants to continue to expand training opportunities in the future. DEVELOP clear career development paths and focus on recruitment to provide more high-quality jobs in the rural areas where Atlantic Sapphire operates. ACHIEVED - The Group launched a skill-based career track for Bluehouse Technicians in 2023 and looks forward to expanding to other areas in future years. CONTINUE to actively educate key stakeholders on the benefits of ESG, SDGs and Bluehouse farming. ACHIEVED - The Group supported several community initiatives and had employee involvement and representation. It is looking to expand outreach efforts in future years. SUPPORT local community development, increasing the number of involvements with community organizations. ACHIEVED - We supported several community initiatives and had employee involvement and representation. Looking to expand our outreach efforts in future years. 96 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS SELECTED TARGETS: SOCIAL 2023 RESULTS Diversity Occupational Health & Safety INCREASE the representation of underrepresented groups in the organization’s workforce by 10% MINIMUM 30 hours of training and development for new employees MINIMUM 20 hours of training and development per employee per year 25% of employees to participate in management development training DEVELOP and implement a career development program for employees that provides opportunities for growth and advancement within the organization. Training and Education Employee Engagement INCREASE employee satisfaction scores by 10% within the next year through regular surveys and feedback. INCREASED participation in wellness program and initiatives by 15% in the upcoming year. SUPPORT local community development, increasing the number of involvements with community organizations INTRODUCE a company-wide Atlantic Sapphire Impact Day where employees engage in non- profit, volunteer work Production Responsibility DEVELOP and implement a safety training program for all employees to ensure they have the necessary knowledge, skills and materials to work safely. REDUCE the number of Lost Time Incidents by 10%. CONDUCT regular safety audits to identify potential hazards and implement corrective actions to reduce the risk of accidents. 97 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS TARGETS FOR 2024 SELECTED TARGETS: SOCIAL Diversity Occupational Health & Safety MINIMUM 30% women in management roles IMPLEMENT a comprehensive leadership development program, with a target of having 80% of managers participate. IMPLEMENT a safety incentive program that rewards employees for safe behavior and adherence to safety protocols. Training and Education Employee Engagement INCREASED year over year employee retention rates INCREASE internal promotions to exceed external hires to show internal growth and development opportunities. 80% participation in Atlantic Sapphire Impact initiatives Community Engagement 98 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS TARGETS FOR 2030 SELECTED TARGETS: SOCIAL Atlantic Sapphire is committed to continuous improvement in its operations and the pursuit of its sustainability goals. The Group aims for transparency and ongoing engagement with its stakeholders, including customers, seafood industry colleagues, as well as the local and global communities it serves. Selected stakeholder affiliations, endorsements, and voluntary initiatives are listed above. 11 All logos, registered trade, and service marks are used for supporting informative purposes only and are property of their respective owners. AWARD International Taste Institute PARTNER Miami Dade Beacon Council PARTNER South Dade Chamber of Commerce USA RAISED Grown and Harvested Fresh from Florida PARTICIPANT UN Global Compact HEART HEALTHY American Heart Association Hearth-Check Certified PARTNER Seafood Nutrition Partnership BEST CHOICE Monterey Bay Aquarium Seafood Watch Green/Best Choice RECOMMENDED Parent tested parent approved CERTIFIED Friend of the Sea PARTNER Miami Waterkeepers TOP 25 Seafood Sustainability and Conversion PARTNER NASDAQ ESG Transparency RECOMMENDED Ocean Wise Recommended STAR OF INNOVATION European Small and Mid-Cap Awards * All logos, registered trade, and service marks are used for supporting informative purposes only and are property of their respective owners. 99 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS AFFILIATIONS & RECOGNITION THIS ESG REPORT covers the relevant and significant ethical, social, and environmental issues for the financial year 1 January to 31 December 2023 of Atlantic Sapphire ASA. This represents Atlantic Sapphire’s third ESG report, which we intend to publish annually. The ESG Report provides stakeholders with an overview of this years’ ESG performance, complementing the Annual Report, which primarily covers financial and economic performance. It complies with the statutory reporting requirements of the Norwegian Supervisory Authority (“Finanstilsynet”) and those for companies listed on the Oslo Stock Exchange regarding corporate social responsibility, as well as in accordance with the Norwegian Accounting Act (“Regnskapsloven”) and the Norwegian Corporate Governance Code. The ESG Report also shows Atlantic Sapphire’s Communication on Progress to the UN Global Compact and represents the Group’s commitment to the principles of the UN Global Compact and its endeavor to impact the Sustainable Development Goals. The analysis in 2023 of material ESG topics and stakeholder expectations has informed the content of this report. It has been prepared on the basis of the GRI reporting principles and guidance on topic boundaries, considering for each topic where the impact occurs and Atlantic Sapphire’s involvement with the impacts (for example, if the Group caused or contributed to an impact, or is it directly linked through its business relationships). The GRI Content Index at the end of this report provides references to sections 11 All logos, registered trade, and service marks are used for supporting informative purposes only and are property of their respective owners. in this report where GRI disclosures are presented. Atlantic Sapphire continues to work on improving data quality and related processes to enhance reporting and comprehensive disclosure going forward. Unless otherwise stated, data and statements in this report cover Atlantic Sapphire’s activities in Norway, Denmark, and the US. The Group welcomes feedback and recommendations on its sustainability efforts as it ensure that the Group fully understands, maintains, and communicates key issues accordingly. Feedback or questions on this ESG Report should be sent to investorrelations@ atlanticsapphire.com. 100 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES ABOUT THIS REPORT 11 All logos, registered trade, and service marks are used for supporting informative purposes only and are property of their respective owners. GRI STANDARD DISCLOSURE Page Number / Comment GRI 102 GENERAL DISCLOSURE 102-1 Name of organization 6 102-2 Activities, brands, products, and services 10, 40, 44, 45 102-3 Location of headquarters 6, 7 102-4 Location of operations 6, 7 102-5 Ownership and legal form 6 102-6 Markets served 6, 7 102-7 Scale of the organization 6, 54 102-8 Information on employees and other workers 6, 85, 91 102-9 Supply chain 12, 48 102-10 Significant changes to the organization and its supply chain None 102-11 Precautionary Principle or approach 25, 26, 27, 32, 33, 61-80 102-12 External initiatives 28, 29, 99 102-13 Membership of associations 99 STRATEGY 102-14 Statement from senior decision-maker 5 102-15 Key impacts, risks, and opportunities 18, 19, 23-27 ETHICS AND INTEGRITY 102-16 Values, principles, standards, and norms of behavior 28-38, 84, 85, 88, 89, 92, 94, 95 GRI STANDARD DISCLOSURE Page Number / Comment GRI 102 GENERAL DISCLOSURE 102-17 Mechanisms for advice and concerns about ethics 57, 84 GOVERNANCE 102-18 Governance structure 13-17 102-19 Delegating authority 13-17 102-20 Executive-level responsibility for economic, environmental, and social topics 30-33, 35 102-21 Consulting stakeholders on economic, environmental, and social topics 23, 27-29 STAKEHOLDER ENGAGEMENT 102-40 List of stakeholder groups 28, 29 102-41 Collective bargaining agreements 31, 92 102-42 Identifying and selecting stakeholders 28, 29 102-43 Approach to stakeholder engagement 27-29 102-44 Key topics and concerns raised 27, 28, 29 REPORTING PRACTICE 102-45 Entities included in the consolidated financial statements 6 102-46 Defining report content and topic Boundaries 22 102-47 List of material topics 24-27 102-48 Restatements of information There is no restatement of ESG information. 101 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES GRI CONTENT INDEX 11 All logos, registered trade, and service marks are used for supporting informative purposes only and are property of their respective owners. GRI STANDARD DISCLOSURE Page Number / Comment GRI 102 GENERAL DISCLOSURE REPORTING PRACTICE CONTINUED 102-49 Changes in reporting There are no significant changes from the prior report in the list of material topics and topic boundaries. 102-50 Reporting period January to December 2023 102-51 Date of most recent report April 2023 102-52 Reporting cycle Annual 102-53 Contact point for questions regarding the report esg@atlanticsapphire.com 102-54 Claims of reporting in accordance with the GRI Standards 100 102-55 GRI Content Index 101-103 102-56 External assurance We have not obtained assurance for this ESG report GRI 103 MANAGEMENT APPROACH 103-1 Explanation of the material topic and its Boundary 23-27 103-2 The management approach and its components 31-33 103-3 Evaluation of the management approach 23-27, 31-33, 35, 53, 61, 84 GRI 201 ECONOMIC PERFORMANCE 201-1 Direct economic value generated and distributed 54 201-2 Financial implications and other risks and opportunities due to climate change 55 201-4 Financial assistance received from government None GRI 203 INDIRECT ECONOMIC IMPACTS 203-1 Infrastructure investments and services supported 54 203-2 Significant indirect economic impacts 54 GRI 205 ANTI-CORRUPTION 205-2 Communication and training about anti-corruption policies and procedures 57 205-3 Confirmed incidents of corruption and actions taken We are not aware of any incidents of corruption during the financial year. GRI 206 ANTI-COMPETITIVE BEHAVIOR 206-01 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices We are not aware of any legal action for such breaches during the financial year. GRI STANDARD DISCLOSURE Page Number / Comment 102 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES GRI CONTENT INDEX 11 All logos, registered trade, and service marks are used for supporting informative purposes only and are property of their respective owners. GRI 302 ENERGY 302-1 Energy consumption within the organization 68, 71 302-4 Reduction of energy consumption 71 GRI 303 WATER 303-1 Interactions with water as a shared resource 79 303-2 Management of water discharge-related impacts 71, 74 303-3 Water withdrawal 72 303-4 Water discharge 74 303-5 Water consumption 71, 72 GRI 304 BIODIVERSITY 304-2 Significant impacts of activities, products, and services on biodiversity 55, 80 GRI 306 EFFLUENTS & WASTE 306-1 Water discharge by quality and destination 74 GRI 307 ENVIRONMENTAL COMPLIANCE 307-1 Non-compliance with environmental laws and regulations We are not aware of any non-compliance with environmental laws and regulations. GRI STANDARD DISCLOSURE Page Number / Comment GRI 403 OCCUPATIONAL HEALTH & SAFETY 403-2 Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities 93 GRI 404 TRAINING & EDUCATION 404-3 Percentage of employees receiving regular performance and career development reviews 100 % GRI 405 DIVERSITY & EQUAL OPPORTUNITY 405-1 Diversity of governance bodies and employees 87-89, 91 GRI 406 NON-DISCRIMINATION 406-1 Incidents of discrimination and corrective actions taken In 2023, two claims of discrimination or harassment were reported and investigated GRI 413 LOCAL COMMUNITIES 413-1 Operations with local community engagement, impact assessments, and development programs 95 GRI 416 CUSTOMER HEALTH & SAFETY 416-2 Incidents of non-compliance concerning the health and safety impacts of products and services We are not aware of any non-compliance with health & safety standards for our products. GRI STANDARD DISCLOSURE Page Number / Comment 103 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS ATLANTIC SAPPHIRE’S ESG PRIORITIES GRI CONTENT INDEX 11 All logos, registered trade, and service marks are used for supporting informative purposes only and are property of their respective owners. The following table provides an overview of the UNGC principles and the page(s) each principle is covered in the report. HUMAN RIGHTS Read more on page 1 Business should support and respect the protection of internationally proclaimed human rights; and 88 2 Make sure that they are not complicit in human rights abuse 88, 89, 92 ANTI-CORRUPTION Read more on page 10 Businesses should work against corruption in all its forms, including extortion and bribery. 57 LABOR STANDARDS Read more on page 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining, 92 4 The elimination of all forms of forced and compulsory labor; 92 5 The effective abolition of child labor; and 92 6 The elimination of discrimination in respect of employment and occupation. 88, 91-92 ENVIRONMENT Read more on page 7 Businesses should support a precautionary approach to environmental challenges; 40, 61-64 8 Undertake initiatives to promote greater environmental responsibility 35, 61-80 9 Encourage the development and diffusion of environmentally friendly technologies 44, 45 ATLANTIC SAPPHIRE’S ESG PRIORITIES 104 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW GROUP RESULTS UNITED NATIONS GLOBAL COMPACT TABLE 04 106. Board of Directors’ Report 168. Atlantic Sapphire ASA Financial Statements 122. Atlantic Sapphire Consolidated Financial Statements 1 1 7. Board of Directors 1 8 7. Statement of Responsibility 118. Corporate Governance 189. Auditor’s Report ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES 105 GROUP RESULTS 2023 IN REVIEW FOR THE HEALTH OF PEOPLE AND PLANET GROUP RESULTS ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES 106 2023 IN REVIEW FOR THE HEALTH OF PEOPLE AND PLANET GROUP RESULTS BOARD OF DIRECTORS’ REPORT To our stakeholders, Atlantic Sapphire ASA (“ASA”) is a Norwegian company headquartered in Vikebukt, Norway and listed on the Oslo Stock Exchange with the ticker symbol ASA. ASA owns the following subsidiaries (collectively, “Atlantic Sapphire”, the “Company”, or the “Group”): • Atlantic Sapphire Denmark A/S (“ASDK”, registered in Hvide Sande, Denmark) • Atlantic Sapphire USA LLC (“ASUS”, registered in Miami, Florida, US) • AS Purchasing, LLC (“ASP”, registered in Miami, Florida, US) • S.F. Development, L.L.C. (“ASSF”, registered in Miami, Florida, US) • Atlantic Sapphire IP, LLC (“ASIP”, registered in Miami, Florida, US) The Group owns and operates a land-based Atlantic salmon farm in Homestead, Florida, US (the “Miami Bluehouse” facility) and previously operated a land-based Atlantic salmon farm in Hvide Sande, Denmark (the “Denmark Bluehouse” facility). A Bluehouse® facility (“Bluehouse”) is proprietary production technology developed by the Group in collaboration with a wide range of supply chain partners to optimize growing conditions for Atlantic salmon. Each Bluehouse contains the facilities needed to grow and produce Atlantic salmon from egg hatchery to grow-out tanks to primary processing. The Miami Bluehouse also incorporates value-added processing. Consolidated operations enable the Group to control the entire production cycle without having to transport salmon to and from ocean-based net pens. Phase 1 of the Miami Bluehouse has an annual design production capacity of approximately 9,500 tons HOG 1 . Subsequently on 4 March 2024, AS Purchasing, LLC, a wholly owned subsidiary of ASA, filed for voluntary dissolution under the Florida Division of Corporations as it was utilized for US Phase 1 construction and no longer held formal operations since its completion. Strategies and Objectives The Group’s goal is to strengthen its position as the leading producer of land-based farmed salmon globally. To achieve this objective, the Group focuses on innovation and execution of the following key strategies: • Endeavour stable production with optimal parameters towards fish quality and welfare. • Continuous identification, investment, and implementation of risk mitigation strategies in all areas of its business. • Promote efficiency and cost reduction opportunities by developing integrated facilities in the market. • Capitalize on consumer trends and branding towards premium, healthy, and sustainable products. • Partner in vertical integration opportunities including value-added products, genetics, feed, renewable energy, sustainable packaging, and oxygen production. • Continue the development and protection of patents and other intellectual property rights related to our Bluehouse facilities. Farm Operations Completion of US Phase 1 Bluehouse allows for the continuous fine-tuning of systems and stable production. In Q4 2022, the Group experienced higher-than-normal mortality in its Miami Bluehouse which negatively impacted production. As a direct response, the Company performed a full audit of the US Phase 1 Bluehouse infrastructure to identify the root cause and to reduce the risk moving forward. Such efforts pinpointed sedimentation and anoxic areas (those in which water was without any current or movement, with potential absence in oxygen that may contain gases) as a leading cause. Accordingly, an action plan was executed in which we “reset” and upgraded all our biofilter systems, enacted organizational changes, implemented protocol improvements, performed significant upgrades to equipment and automation, and installed over 100 new camera inspection points in the RAS to proactively identify and prevent potential risks of sludge sedimentation. The first half of 2023 was marked by the continued implementation of US Phase 1 Bluehouse infrastructure upgrades to achieve stable operating conditions for the salmon and to mitigate risk. Our ability to perform upgrades in specific systems, notably our biofilter and water filtration systems, required work performed in parallel to live fish systems with temporary shutdown of components or full shutdowns of fish systems. As a result, it was critical for us adequately balance the timing of ongoing production with the execution of such upgrades, while simultaneously adequately balancing optimal fish welfare and feeding volumes given the reduced capacity of our biofilter and water filtration systems. The third quarter of 2023 was marked by elevated temperatures in our saltwater systems which further impacted the biological performance of the batches in the growout systems at the time (the “Lead Batches”). The initial increase in temperatures resulted in a gradual reduction in water quality and ultimately resulted in reduced feeding and production volume. Increased chiller capacity through modifications to the existing chiller bank and new chillers added in September and October 2023 resulted in a reduction in temperatures down to targeted parameters and provided stable conditions across our saltwater systems in Q4 2023. Although 2023 was marked by challenges, the Group’s efforts towards infrastructure upgrades and increased chiller capacity set the stage in Q4 2023 for strong operational performance for the newer batches moving forward. Such batches were largely unaffected by the infrastructure upgrades and increased temperatures, and the Group noted a significant improvement in feed conversation rates, which is a leading indicator of improved fish health and water quality conditions. The Group expects to increase the standing biomass in the facility and harvest volumes towards full production in H2 2024. The Group continued to experience increased pressure on its supply chain throughout 2023 due to continued inflationary pressure at both the local and global economy scale. To mitigate production cost increases as best as possible, the Group actively reviews and adjusts its procurement strategy and focuses on cost-cutting initiatives across the Company. Skretting continues to partner as our global feed supplier, and we entered into an agreement in 2021 that aims to secure local feed supply in the future. Skretting intends to construct a specialized state-of-the-art feed plant for land- based salmon in Florida to serve the Group’s US operations with market-leading feeds specialized for Bluehouse farming. A local feed plant will minimize the carbon footprint of transporting the feed to the facility, and is expected to cut the Group’s logistics cost, and thereby its cost of production, by approximately USD 0.4/kg HOG. 1 HOG – “Head-On-Gutted” fish, approximately 83% of live weight fish. GROUP RESULTS 107 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT The table below shows the Group’s registered and allowed patents: The Group is currently working on numerous other patent applications which are currently pending. PATENT TITLE GEOGRAPHICAL AREA APPLICATION NUMBER PATENT NUMBER ISSUE DATE EXPIRATION DATE Systems and Methods of Intensive Recirculating Aquaculture US 15/867,100 10,034,461 31 July 2018 17 May 2036 Systems and Methods of Intensive Recirculating Aquaculture US 15/157,296 10,694,722 30 June 2020 25 March 2037 Bottom Grading Apparatuses for Aquaculture Systems US 15/862,573 10,959,411 30 March 2021 1 April 2039 Method for Optimization of Filtration in an Aquaculture System US 17/079,007 11,425,895 30 August 2022 23 October 2040 Systems and Methods of Intensive Recirculating Aquaculture US 16/916,986 11,484,015 1 November 2022 31 October 2036 Transfer Assembly and System for Aquaculture US 16/990,271 11,596,132 7 March 2023 12 February 2040 Transfer Assembly and System for Aquaculture US 16/990,697 11,627,729 18 April 2023 28 March 2037 System and Method for Feed Validation Measurement US 17/351,997 11,662,291 30 May 2023 27 September 2041 Bottom Grading Apparatuses for Aquaculture Systems US 16/952,828 11,785,921 17 October 2023 14 August 2038 Processing The Group’s harvest volumes for the years ended 31 December 2023 and 2022 were 1,545 and 2,253 tons HOG, respectively, which represents a 708-ton HOG decrease from prior year. Fiscal year 2022 was marked by a ramp-up in production and harvest volumes solely attributed to the US with stable water quality and temperatures prior to the challenges faced in Q4. Such challenges led to reduced feeding and production which continued throughout 2023 while the Group took active efforts to upgrade its infrastructure and later strides to optimize and stabilize temperatures across the farm. Sales and Marketing The Group has positioned itself over the last decade with strong relationships with retailers, food service players, distributors, and other selected partners. The Miami Bluehouse has been harvesting weekly since September 2020, and currently supplies over 2,000 retail locations with continued strong demand for locally raised salmon in the US. The Group continues to draw new customers, which demonstrates the strong demand for Bluehouse Salmon. For the year ended 31 December 2023, the premium graded Bluehouse Salmon consistently achieved an average US price achievement of approximately 11 USD / kg on a revenue returned-to-farm basis (net of outbound freight costs) for fish graded as superior. In comparison, the commodity Fishpool index price during the same period, converted to USD, averaged approximately 9 USD / kg. Brand Development The Group strides to promote brand awareness and recognition with the purpose of generating product desirability, gaining strong traction from mainstream media of public relations efforts, and supporting a price premium via differentiated attributes and communication of environmental benefits. We continue to promote our mission of Sustainable Profitable Growth by being relevant and top of mind, meeting consumers at the point of sale, and engaging consumers with social media and education. We have found that such methods have been successful in achieving consumer engagement above benchmark levels. Construction The Group strategically partnered with Hazen & Sawyer, an engineering company with extensive and proven experience in designing large scale US wastewater projects, as our US Phase 2 construction design consultants. The Group also selected Wharton-Smith, a construction contractor with vast experience in water facilities, as our construction partner who has worked together with Hazen & Sawyer on numerous water treatment infrastructure projects. Given the additional learnings from the latest infrastructure updates following Q4 2022, we believe certain systems will gain efficiency through redesign. Such redesigns, in conjunction with all previous learnings from US Phase 1 construction, will lead to efficiencies from both production and risk mitigation standpoints once Phase 2 is operational. As such, we shifted our focus to prioritize planning and placed most of Phase 2 construction on pause. We have taken various measures to optimize our project approach prior to resuming full US Phase construction accordingly. The first step consists of value engineering and working with contractors to optimize cost and quality for existing US Phase 2 construction items. The next step is to then finalize the design for remaining construction items towards the US Phase 2 construction budget during the first half of 2024. Ultimately, it is the Group’s discretion when and how funds should be deployed towards US Phase 2 construction. Intellectual Property Rights The Group, through its direct, wholly owned subsidiary Atlantic Sapphire IP, LLC, owns and controls intellectual property. This intellectual property includes, but is not limited to, patents, proprietary information, and applications that in the aggregate are material to the Group’s business. The Group holds, and continues to seek and protect, numerous patents, trade secrets, or other intellectual property rights covering its processes, designs, or inventions in general. Subsequent Events The Group has evaluated subsequent events from 31 December 2023 through the date in which the consolidated financial statements were issued (see Note 23 – Subsequent Events for further details). GROUP RESULTS 108 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT Group Financial Performance Going Concern The Board confirms that it is appropriate to prepare the Annual Report based on a going concern assumption pursuant to section 3-3a of the Norwegian Accounting Act. This confirmation is based on the Group’s forecasted performance in 2024 and the Group’s plans to receive external financing to support funding of the Phase 2 expansion. The Group believes it has sufficient financing to achieve proven state biomass and generate positive cash flow from operations. As it relates to US Phase 2 expansion, the Group has full discretion over the speed of the construction which allows the Group to better manage liquidity. Subsequently on 29 February 2024, the Group raised NOK 369.0m (approximately USD 35.0m) in gross proceeds through a private placement of 307,125,000 new shares, at a price per share of NOK 1.20. The issuance of the new shares was approved by the Extraordinary General Meeting on 22 March 2024. Further, the Group’s 2020 Credit Facility was amended further on 25 March 2024 which, among other things, extended the maturity date to 21 October 2026. See Note 23 – Subsequent Events for further detail. Group Operations Below are the Group’s consolidated statements of operations for the years ended 31 December 2023 and 2022: (USD 1,000) 31 DECEMBER 2023 31 DECEMBER 2022 CHANGE IN USD AS A % OF 2023 REVENUE AS A % OF 2022 REVENUE Revenue 13,995 18,954 (4,959) 100% 100% Cost of goods sold (67,141) (75,890) 8,749 -480% -400% Fair value adjustment on biological assets (14,095) 95 (14,190) -101% 1% Salary and personnel costs (4,051) (6,294) 2,243 -29% -33% Selling, general, and administrative costs (7,984) (10,449) 2,465 -57% -55% Other income (expense), net 1,927 25,542 (23,615) 14% 135% Impairment of non-current assets (35,000) - (35,000) -250% 0% Depreciation and amortization (13,839) (14,217) 378 -99% -75% Operating loss (EBIT) (126,188) (62,259) (63,929) -902% -328% Finance income 1,516 4,907 (3,391) 11% 26% Finance expense (9,086) (7,654) (1,432) -65% -40% Loss before income tax (133,758) (65,006) (68,752) -956% -343% Income tax - - - 0% 0% Net loss (133,758) (65,006) (68,752) -956% -343% Non-IFRS measures Operating loss (EBIT) (126,188) (62,259) (63,929) -902% -328% Add back: depreciation and amortization 13,839 14,217 (378) 99% 75% EBITDA (112,349) (48,042) (64,307) -803% -253% Add back: fair value adjustment on biological assets 14,095 (95) 14,190 101% -1% Add back: impairment of non-current assets 35,000 - 35,000 250% 0% Less: insurance proceeds from Denmark fire - (25,322) 25,322 0% -134% EBITDA, adjusted (63,254) (73,459) 10,205 -452% -388% GROUP RESULTS 109 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT Group net loss for the years ended 31 December 2023 and 2022 was USD 133.8m and USD 65.0m, respectively, which represents a USD 68.8m increase in net losses over the prior year. Overall, the Group decreased harvest volume in 2023 given the infrastructure modifications performed in parallel to production along with the elevated temperature issues in Q3 2023 and recognized a downward fair value adjustment on its biological assets for harvestable batches that were affected and expected to be sold in H1 2024. Further, 2023 operating loss was inclusive of a USD 35.0m impairment on non-current assets in the US, and the 2022 operating loss was net of USD 25.3m of insurance proceeds from the September 2021 Denmark Bluehouse fire. The non-IFRS measures above are meant to provide an alternative understanding of the Group’s underlying performance and derived from, but do not replace, IFRS measures or financial statements. Such amounts have been reviewed and approved by management and the Board of Directors as they pertain to the Group and may be used differently by other companies. Revenue and Harvest Volume The Group’s revenue for the years ended 31 December 2023 and 2022 was USD 14.0m and USD 19.0m, respectively, which represents a USD 5.0m decrease over the prior year. The Group’s harvest volumes for the years ended 31 December 2023 and 2022 were 1,545 and 2,253 tons HOG, respectively, which represents a 708-ton HOG decrease from prior year. Given that 2022 and 2023 were both driven by US-only harvest volumes, the decreased 2023 harvest volume was primarily driven by operational challenges in 2023 that resulted in reduced feeding and production. Cost of Goods Sold The Group’s cost of goods sold for the years ended 31 December 2023 and 2022 was USD 67.1m and USD 75.9m, respectively, which represents a USD 8.8m decrease over the prior year. The decrease in the Group’s cost of goods sold was attributed to a decrease in cost of goods sold and harvesting, processing, and shipping costs in line with the decrease in harvest volume decrease from 2022 to 2023. However, overall underutilized plant capacity increased from USD 21.8m in 2022 to USD 25.6m in 2023 as a result. Although there were no biomass incidents in 2023, there were elevated mortality levels that resulted in USD 12.3m in aggregate write-offs and incidental costs for 2023 vs USD 14.3m in 2022 that included Q3 biomass incidents. Fair Value Adjustment on Biological Assets The Group’s fair value adjustment on biological assets for the year ended 31 December 2023 was negative USD 14.1m vs upward USD 0.1m for the year ended 31 December 2022, which represents a negative USD 14.2m year-over-year change. The negative fair value adjustment in 2023 was primarily attributed to the expected decrease in upcoming 2024 price achievement of our Lead Batches held as of 31 December 2023, linked to the Q3 2023 temperature issue that caused lower harvest weights and a higher share of quality downgrades on these fish groups. Salary and Personnel Costs The Group’s administrative salary and personnel costs for the years ended 31 December 2023 and 2022 were USD 4.1m and USD 6.3m, respectively, which represents a USD 2.2m decrease over the prior year. The reduction was primarily driven by a reduction of administrative headcount from 2022 to 2023 and decreases in bonus estimates, share-based compensation, and other payroll costs and benefits. Selling, General, and Administrative Costs The Group’s selling, general, and administrative costs (“SG&A”) for the years ended 31 December 2023 and 2022 were USD 8.0m and USD 10.4m, respectively, which represents a USD 2.4m decrease over the prior year. The decrease was primarily driven by various cost-cutting initiatives across the Group and the fact that 2022 included certain lease termination costs attributed to previously leased office premises in Brickell, Florida. Insurance Settlement Proceeds On 10 May 2022, the Group agreed on a cash settlement of DKK 180.0m (USD 25.3m equivalent upon receipt in June 2022) which is included as part of the Group’s other income, net. The Group allocated the settlement proceeds towards US operations and construction, and the Group is currently reviewing its strategy for its Danish site given that demolition was significantly completed by end of 2023. Impairment of Non-Current Assets For the year ended 31 December 2023, given certain impairment indicators, notably the current market cap lower than the balance value of the Group’s net assets, led to a weighted scenario-based discounted cash flow analysis. The assessment was based on forecasts and management determined that the estimated recoverable amount of the cash generating unit (the “CGU”) to be lower than the carrying amount of the CGU as of 31 December 2023. As such, management elected to recognize a USD 35.0m impairment allowance of non-current assets in the US allocated based on each respective fixed asset category’s cost basis at year end. See Note 9 – Property, Plant, and Equipment for further details. Depreciation and Amortization The Group’s net depreciation and amortization for the years ended 31 December 2023 and 2022 was USD 13.8m and USD 14.2m, respectively, which represents a USD 0.4m decrease over the prior year. The decrease in depreciation was primarily attributed to the fact that there was a USD 0.6m net amount of depreciation allocated to biomass from production in 2023 rather than a USD 0.1m net amount of depreciation allocated from biomass upon harvest in 2022. Financial Items The Group’s net financial losses for the years ended 31 December 2023 and 2022 were USD 7.6m and USD 2.7m, respectively, which represents a USD 4.9m increase of financial losses over the prior year. The increase in financial net losses was primarily attributed to a decrease in year-over-year net foreign currency exchange gain, an increase in interest expense given the year-over-year increase in the SOFR and loss on loan modifications tied to the Group’s credit facilities. GROUP RESULTS 110 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT Group Financial Position The Group’s total assets as of 31 December 2023 and 2022 were USD 342.3m and USD 357.6m, respectively, which represents a USD 15.3m decrease compared to the prior year. The increase was primarily driven by the USD 35.0m impairment on non-current assets in the US offset by a decreased level of year-over-year capital investments in connection with US Phase 2 construction of the Miami Bluehouse and a higher comparative total cash position in comparison to the prior year. The Group’s total equity as of 31 December 2023 and 2022 was USD 283.1m and USD 296.4m, which represents a USD 13.3m decrease compared to the prior year. The increase was primarily attributed to proceeds of the 2023 and 2022 capital contributions offset by net losses. The Group completed capital raises on 29 June 2022 of NOK 1,231m (~USD 125.0m), 10 August 2022 for NOK 44.0m (~USD 4.5m), 16 March 2023 for NOK 595m (~USD 56.4m), 28 April 2023 for NOK 32.5m (~USD 3.0m), 19 September 2023 for NOK 702m (~USD 64.8m), and 19 November 2023 for NOK 24.7m (~USD 2.3m). As of 31 December 2023, 798,603,172 shares were issued and outstanding. The Group’s total liabilities as of 31 December 2023 and 2022 were USD 59.1m and USD 61.2m, respectively, which represents a USD 2.1m decrease compared to the prior year. The decrease was primarily attributed to payments made towards its US term loan under the amended 2020 Credit Facility (the “US Term Loan”) and lease liabilities offset by a slight increase in year-over-year trade and other payables. The Group’s debt to equity ratio as of 31 December 2023 and 2022 was 20.9% and 20.6%, respectively, which represents a 0.3% increase compared to the prior year. The increase was primarily driven by the USD 35.0m impairment on non-current assets in the US, offset by a decrease in year-over-year debt and an increase to year-over-year equity attributed to capital contributions offset by net losses from 2022 to 2023. As of 31 December 2023, the amended 2020 Credit Facility totaled USD 165.9m and was fully committed, of which USD 45.9m was attributed to the drawn US Term Loan, USD 20.0m was attributed to the revolving credit facility (“RCF”), and USD 100.0m was attributed to a delayed undrawn Term Loan for Phase 2 capital expenditures. Of the amounts extended to the Group, USD 42.1m was outstanding on the US Term Loan and USD 2.6m of the RCF was allocated to letters of credit towards Meridian Leasing for the leasing of processing equipment as of 31 December 2023. Group Cash Flows Group cash outflows from operations for the years ended 31 December 2023 and 2022 were USD 77.8m and USD 52.9m, respectively, which represents a USD 24.9m increase in cash outflows over the prior year. The increase in Group cash outflows from operations was primarily since the 2022 amounts included USD 25.3m proceeds from the insurance settlement from the Denmark Bluehouse. Group cash outflows from investing activities for the years ended 31 December 2023 and 2022 were USD 33.5m and USD 55.8m, respectively, which represents a USD 22.3m decrease in cash outflows over the prior year. The decrease in Group cash outflows from investment activities was primarily attributed to the slowdown of US Phase 2 construction in 2023 driven by the strategic prioritization of proving Phase 1 operations before resuming full speed construction of the Phase 2 expansion. Further, the Group transferred USD 15.0m from its capital raise cash proceeds into an interest- bearing restricted deposit account as required under the amended terms of the 2020 Credit Facility. Group cash inflows from financing activities for the years ended 31 December 2023 and 2022 were USD 110.3m and USD 116.5m, respectively, which represents a USD 6.2m decrease in cash inflows over the prior year. The decrease in Group cash inflows from financing activities was primarily attributed to the difference in proceeds from the 2023 capital raises in comparison to those from 2022 and an overall increase of year-over-year principal and interest paid towards borrowings. This, in combination with the above cash flows from operating and investing activities, increased the Group’s overall 2023 cash position in comparison to 2022, and the Group believes it has access to additional financing until full Phase 1 production is achieved to provide cash inflows from operations. On 29 February 2024, the Group raised NOK 369.0m (approximately USD 35.0m) in gross proceeds through a private placement of 307,125,000 new shares at a price per share of NOK 1.20. In connection with the Private Placement, the underwriters' underwriting commission of 5% was settled through the issuance of 15,356,243 in new shares at a price per share of NOK 1.20. Following the issuance of the new shares, the total number of shares issued and outstanding was 1,121,084,415. See Note 23 – Subsequent Events for further detail. Parent Company Operations For the years ended 31 December 2023 and 2022, the Norwegian parent company (“ASA”) generated standalone revenue of NOK 6.7m (USD 0.6m) and NOK 11.6m (USD 1.2m), respectively, mainly related to management fee income from the Group entities. For the years ended 31 December 2023 and 2022, ASA had a net loss of NOK 1.3b (USD 125.7m) and net loss of NOK 2.1b (USD 214.5m), respectively, which was primarily attributed to financial income and expense generated from intercompany loans to the Group entities offset by write-downs of ASA’s investments and intercompany balances in its respective entities, notably ASA’s investment in ASUS as a result of ASUS’s accumulated losses. As of 31 December 2023 and 2022, ASA’s total assets were NOK 2.8b (USD 281.6m) and NOK 2.9b (USD 302.0m), of which NOK 2.6b (USD 262.4m) and NOK 2.8b (USD 290.8m) were related to shares and loans to Group entities. ASA’s debt to equity ratio as of 31 December 2023 and 2022 was 0.2% and 0.1%, respectively. Related Party Transactions During the ordinary course of business, the Group engages in transactions with related parties similar to what management believes would have been agreed upon between unrelated parties. During the ordinary course of business, the Group may sell salmon products to NovoMar, Inc. (“NovoMar”), an entity under majority ownership by a related party of Johan E. Andreassen, the CEO of ASA. NovoMar was formerly Platina Seafood, Inc. prior to a rebrand on 8 September 2022. For the years ended 31 December 2023 and 2022, the Group sold USD 0.7m and USD 0.2m of salmon products to NovoMar, respectively. During the ordinary course of business, NovoMar provides harvesting services for the Group (the provision of such services commenced in June 2023). For the year ended 31 December 2023, the Group incurred harvesting costs of USD 0.2 million. Such amounts are included as part of cost of goods sold in the accompanying consolidated statements of operations. As of 31 December 2023 the Group had USD 0.1m due from NovoMar and the amounts are included as part of the Group’s current trade and other receivables balance. The Group did not have any outstanding balances due from NovoMar as of 31 December 2022. GROUP RESULTS 111 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT Reporting Segments US Operations The Group’s US production facility in Homestead, Florida is located approximately 35 miles southwest of the City of Miami, Florida. The US operations are managed through ASUS. The land in which the Miami Bluehouse is constructed on is owned by ASSF. Both ASUS and ASSF are wholly owned subsidiaries of the Group. All fish systems from US Phase 1 construction were substantially complete as of 31 December 2021. ASUS selected Homestead, Florida as the location for its operations in the US because it is uniquely situated above abundant sources of both stable fresh and saline groundwater from different layers of the Florida aquifers. ASUS accesses freshwater from the Biscayne Aquifer and saline water from the Floridan Aquifer. Discharge wastewater from the Miami Bluehouse is sustainably disposed to the Boulder Zone, a lower Floridan Aquifer. ASUS expects that the use of groundwater will reduce the risk of contamination and increase the stability in operations. ASUS has secured groundwater infrastructure rights and received a discharge permit for 19.93 million gallons of water per day. ASUS extracts fresh and saline water from right below the surface and 2,000 ft, respectively. After use, ASUS treats and disposes the water through a disposal well 3,000 ft down below the surface. The processes and technologies used by ASUS to extract and dispose of the water used in its operations are currently patented through the year 2036. Phase 1 of the Miami Bluehouse is expected to have an annual production capacity of approximately 9,500 tons HOG and a tank volume of approximately 66,000 m³, distributed across seven freshwater systems (six sets of tank systems plus a hatchery) and twelve grow-out systems (three grow-out tanks in each system), totaling 19 independent water systems. ASUS commenced a capacity expansion project at the Miami Bluehouse (“US Phase 2”) in Q2 2021 that will add an additional estimated 15,000 tons HOG of annual production capacity, for a total capacity of approximately 25,000 tons HOG. The Group’s long-term goal is to achieve an annual production capacity of approximately 220,000 tons HOG. Fish processed from the Miami Bluehouse is transported via ground freight to most states within the US, as well as to Canada and Mexico. From an operational standpoint, 2023 was marked by finalization of significant infrastructure upgrades, including a full “reset” of the biofilters, through April 2023. Feeding and production during this time were limited coupled with other challenges. After a period of stable operating condition, the Group encountered issues with elevated and unstable temperatures in Q3 2023. Although the Lead Batches that were in the growout systems at the time were impacted, driving down our expected H1 2024 price achievement and fair value of biological assets, the younger batches at the time were exposed to intended temperatures and stable conditions. Consequently, we have seen good results in the younger batches that were then introduced into the growout systems after the temperature issues were resolved. The Group expects to have all the Lead Batches of fish harvest out by the end of May 2024. Denmark Operations The Group’s initial production facility in Hvide Sande, Denmark is a wholly owned subsidiary located on the west coast of Denmark and was in operation from 2011 to 2022. Since commencement of operations, approximately 45 batches of Atlantic salmon were introduced into the Denmark Bluehouse. The Denmark Bluehouse had an annual production capacity of approximately 2,400 tons HOG and a tank volume of approximately 17,000 m³, distributed across twenty tanks. Following the 15 September 2021 Denmark Bluehouse fire, production operations consisted of smolt production up until 2022 and clean-up efforts thereafter. On 10 May 2022, the Group agreed on a cash settlement of DKK 180.0m (USD 25.3m equivalent upon receipt in June 2022) which is included as part of the Group’s other income. The Group allocated the settlement proceeds towards US operations and construction, and the Group is currently reviewing its strategy for its Danish site with all demolition efforts complete by the end of 2023. Principal Risks and Uncertainties Atlantic Sapphire is pioneering Bluehouse® (land-raised) salmon farming, locally, and transforming protein produc- tion, globally. As pioneers in the land-based salmon farming industry, there are inherent challenges that arise as the Group continues to develop and improve upon its infrastructure, technology, and operating procedures. The Group established its innovation center in Denmark in 2011 with a focus on developing sustainable, environmentally friendly farming methods that enable the Group to produce at scale in consumer end markets. Since its inception, the Group has identified and developed strategies to mitigate key operational, systemic, and diversification risks. The Group faced operational risk through a fragmented subcontractor network, a smaller internal team, rapid organizational growth, and initial operational procedures that were yet to be established and fine-tuned. As Atlantic Sapphire continues to mature as a company, critical in- house systems have been established related to design, construction, and automation. The Group also faced systemic risk through subpar equipment that resulted in frequent alarms (among other things), unfinished design at construction commencement, and production while constructing in the same systems. After many challenges and a long period of commissioning work, the Group is now experiencing stable US Phase 1 conditions. The Group further faced diversification risk towards potential biomass incidents and has diligently worked in splitting its fish systems to reduce systemic risk. For example, US Phase 1 originally commissioned six ongrowing systems with six tanks each. Today, each US Phase 1 ongrowing system has been split in two to provide twelve ongrowing systems with three tanks each. More recently in 2022, we identified areas of sedimentation and anoxic areas in our biofilter systems. Therefore, we executed an action plan to reset and upgrade all biofilter systems, among other organization-wide protocol improvements and changes. The successful construction of the Group’s Bluehouse facilities and continuous improvements to its operational procedures are critical for the Group to successfully achieve its business plan. Material delays, cost overruns, or errors in design and execution on the Group’s Bluehouse facilities could result in an adverse situation that may hinder the Group’s ability to successfully achieve its business plan. Capital Management and Financial Risk Capital management represents the Group’s policy to assess, acquire, and utilize its capital base efficiently towards satisfactory operations and future development of the business to foster and maintain investor, lender, and market confidence. The Group’s capital management contemplates available alternatives, the cyclical nature of the fish farming industry, and current socioeconomic factors. Access to borrowings is monitored periodically and the Group engages in dialogue continuously with its lenders. The Group has obtained capital primarily from equity raises and interest-bearing borrowings. The Group’s interest- GROUP RESULTS 112 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT bearing borrowings require certain financial covenants to be maintained. In anticipation of potentially not being able to meet its EBITDA requirement as of 31 December 2023, the Group received a formal waiver from the Lenders dated 21 December 2023 (see Note 19 – Borrowings). As of 31 December 2023 and 2022, the Group’s consolidated equity consisted of USD 283.1m and USD 296.4m, respectively, equity share, which comprise of total equity divided by total assets, was 83% in both years, and net interest-bearing debt, which comprise of total interest-bearing borrowings excluding the effects of IFRS 16, was USD 20.1m and USD 23.2m, respectively. The Group’s Board of Directors considers the Group’s capital base adequate given the scale of its operations. On 19 May 2022, ASA’s Board of Directors were given proxy to increase total authorized share capital by up to NOK 1,800,000 through the issuance of up to 18,000,000 total shares, with a face value of NOK 0.10. On 23 May 2023, the Group held its Annual General Meeting (the “2023 AGM”). Through the 2023 AGM, ASA’s Board of Directors (the “Board”) withdrew its previous 19 May 2022 authorization to issue up to 18,000,000 new shares, with a face value of NOK 0.10. In turn, the Board was given the authority to increase total authorized share capital by up to NOK 5,500,000 through the issuance of up to 55,000,000 total shares, with a face value of NOK 0.10. The authorization may be used several times within this limit. The Group holds the financial instruments necessary for its operations. The Group’s principal financial liabilities, other than interest-bearing borrowings and excluding the effects of IFRS 16, consist of trade and other payables and comprise most of the Group’s third-party financing. The Group’s principal financial assets consist of trade and other receivables, cash and restricted cash, restricted deposits, and other investments. The Group’s risk management is carried out by the Group’s Finance Department, under supervision of the Audit Committee and the Board of Directors. The Group is exposed to market risk, credit risk, and liquidity risk. Market Risk The Group is exposed to interest rate risk and exchange rate risk. The Group’s interest rate risk relates primarily to borrowings from financial institutions with variable interest rates. When possible, the Group manages its interest rate risk by entering fixed-interest loans. The Group currently holds debt with a floating interest rate and does not maintain a program to hedge this exposure. Changes in the interest rate may affect future investment opportunities. The Group’s foreign currency risk relates to the Group’s operating, investing, and financing activities denominated in a foreign currency. This includes the Group’s revenues, expenses, capital expenditures, and net investments in foreign subsidiaries. The Group’s reporting currency is the United States dollar (“USD”), and the predominant currencies transacted by the Group’s subsidiaries are the USD, the Norwegian krone (“NOK”), the Danish krone (“DKK”), and the EU euro (“EUR”). The Group manages its foreign currency risk by maintaining cash balances in foreign denominated bank accounts, analyzing future obligations by currency, and transferring available funds as needed. The Group has not entered into derivative or other agreements to reduce the exchange rate risk and the related market risk. Credit Risk The Group is exposed to credit risk from its operating activities, primarily from cash and trade receivables. Cash is maintained with major financial institutions. Management regularly monitors trade receivables for aging. The Group trades only with recognized and creditworthy third parties. The Group subjects all potential customers to credit verification procedures as part of its policy and monitors its outstanding trade receivable balances on an ongoing basis. Further, the Group’s trade receivables are credit insured unless an exception is approved by the CEO. The Group monitors exposure towards individual customers closely and was not substantially exposed in relation to any individual customer or contractual partner as of 31 December 2023 and 2022. Liquidity Risk The Group continuously monitors liquidity and financial projections through budgets and monthly updated forecasts. The Group’s financial position depends significantly on salmon spot prices which have historically been volatile. Other liquidity risks include the impacts from fluctuations in production and harvest volumes, biological issues, and changes in feed prices. Feed prices generally correlate to the marine and agricultural commodity prices of the main ingredients. Delays in continued construction towards the expansion of future phases of construction of the Miami Bluehouse may affect the Group’s ability to achieve its operational plan and full schedule of production, thereby impacting the Group’s future business and results of operations. The provisions of the amended 2020 Credit Facility contain financial covenants to be maintained by the Group (see Note 19 – Borrowings). Corporate Governance Atlantic Sapphire believes good corporate governance is paramount to create and maximize sustainable, long-term shareholder value and maintain investor, lender, and market confidence. The Group’s Board of Directors (the “Board”) is responsible for the development and implementation of internal procedures and regulations to ensure that the Group follows applicable principles and maintains good corporate governance. We believe that our current procedures and regulations effected towards corporate governance are consistent with the latest version of the Norwegian Code of Practice for Corporate Governance. The Group has a Directors and Officers liability insurance policy for an aggregate of up to USD 1.0m of claims against all persons who were, are, or shall become appointed directors, managers, officers, in- house general counsel, or controller of the Group. Further, the Group has Directors and Officers liability insurance for an aggregate amount of up to NOK 75.0m for executive officers and board members. The Group’s assessment of the various 15 issues covered by the Norwegian Code is detailed in the Corporate Governance section following the Board of Directors’ Report. GROUP RESULTS 113 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT Board Composition On 3 August 2022, Runar Vatne stepped down as a director and Kenneth Jarl Andersen was elected as a new director. On 5 December 2022, Alexander Reus stepped down as a director. As such, the Board’s composition of directors from 2021 to 2022 was reduced from seven to six. On 23 May 2023, Patrice Flanagan and Tone Bjørnov stepped down as directors, Eirik Welde was elected as new Deputy Chairman, and Marta Rojo Alonso was elected as a new director. Further, Director Kenneth Jarl Andersen replaced Johan E. Andreassen as Chairman of the Board, and Johan E. Andreassen replaced Karl Øystein Øyehaug as Managing Director of ASA. As such, the Board’s composition of directors from 2022 to 2023 was reduced from six to five. Additionally, Patrick Dempster was elected as Observer to the Board of Directors. Information regarding the background and competence of the Group’s Board members is detailed later in the Annual Report and available on Atlantic Sapphire’s website: atlanticsapphire.com. Statement on Remuneration of Executive Management The Group’s Board of Directors determines the principles applicable to the Group’s policy for compensation of executive management and presented its statement on such principles for the 2023 financial year during the Group’s Annual General Meeting (“AGM”) in accordance with Section 6-16a of the Norwegian Public Limited Liability Companies Act. The Board of Directors’ Statement on Remuneration of Executive Management is included in Note 6 – Salary and Personnel Costs of the Group’s notes to the consolidated financial statements. Sustainability, Environmental, and Social Responsibility Sustainability Actions and Joining the UN Global Compact The Group supports the UN Sustainable Development Goals (the “UN SDG Goals”) and sees them as a blueprint for business leadership. Food production lies at the intersection of almost all major global challenges encapsulated in the UN SDG Goals. The Group believes it has a duty to find a balance between producing enough healthy proteins to feed the world and protecting the limited resources of the planet. The Group joined the UN Global Compact in support of their Ten Principles for human rights, labor, the environment, and anti-corruption. Environmental Responsibility Activities from the Group’s production facilities are believed to meet all regulatory requirements in the countries in which they operate. For further information, please refer to the “Environmental Responsibility” section within Atlantic Sapphire’s Environmental, Social, and Governance (“ESG”) Priorities. Social Responsibility Atlantic Sapphire holds the utmost respect for human rights, labor rights and social conditions, the external environment, and anti-corruption efforts in our business strategies insofar as it pertains to our daily operations and our stakeholders. Accordingly, the Group’s Environmental and Social Management System (“ESMS”) was built following an external review of our Environmental and Social Management Plan (“ESMP”) for compliance with the International Finance Corporation’s (“IFC”) Performance Standards (“PS”) (2012), IFC Environmental, Health, and Safety (“EHS”) Guidelines for Aquaculture (2007), and EHS General Guidelines (2007). The ESMS comprises a set of policies across a range of ESG topics – from environment, health and safety, security and emergency preparedness to employment conditions, rights and obligations, grievance management, whistleblower policy, community engagement and communication. Atlantic Sapphire is dedicated to fostering a corporate culture that goes beyond regulatory compliance and engages and empowers all employees around realizing our purpose and living our values. In accordance with the Norwegian Transparency Act, the Group will update its transparency statement based on the human rights assessment performed in 2022. This statement is available on our website and will be updated by 30 June 2024. Our Code of Conduct (the “Code”) is aligned with the Group’s core values and sets expectations and guidance for the Group’s Board of Directors, officers, employees, independent contractors, and consultants. It is their responsibility to understand the Code as well as exercise good judgement and follow the Code. All employees must sign the Code and our suppliers and vendor partners are also required to acknowledge and adhere to our Code through our standard vendor terms and conditions before engaging. These documents outline our commitment to integrity by following the principles of the Code. Our Human Rights Policy informs employees, business partners, and customers of Atlantic Sapphire’s commitment to respecting and promoting human rights and in making a meaningful contribution to uphold human rights across our operations and our supply chain. Such areas of focus include diversity, competitive wages and benefits, prohibition of child labor, forced labor, and human trafficking, safe and secure work conditions, freedom of association, and open communication, among others detailed in our ESG Priorities. Atlantic Sapphire is an equal opportunity employer that celebrates diversity and is committed to creating an inclusive environment for all employees. The Group does not discriminate based upon race, religion, color, national origin, gender, sexual orientation, gender identity, gender expression, age, status as a protected veteran, status as an individual with a disability, or other applicable legally protected characteristics. For the years ended 31 December 2023 and 2022, the Group employed 158 and 177 permanent employees, respectively. No employee work-related accidents resulting in significant material damage or prolonged personal injury occurred during 2023 and 2022. The Group’s ESMS helps ensure that extensive precautionary measures are taken to reduce risks in the working environment. These measures include the training of its employees and a focus on personal protective equipment and safe handling of hazardous materials, together with systematic controls of our working processes. The Group maintains general oversight of the health and safety of its employees predominantly through ongoing auditing, monitoring, and evaluation of activities to ensure compliance. The Group actively promotes a strong safety culture with employees, suppliers, vendors, and contractors. For further information, please refer to the “Social Responsibility” section within Atlantic Sapphire’s ESG Priorities. GROUP RESULTS 114 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT Outlook US Biological Outlook After a long period of commissioning, fine-tuning and, in 2023, significant infrastructure upgrades, the US Bluehouse has seen improvements in overall operational conditions (including water quality and temperatures). Improved biological performance in Q4 2023 is a positive indicator that demonstrates the ability to produce high quality products and future financial performance with stable infrastructure and the right water quality conditions for the fish to thrive in. Total biomass gain for 2023 was approximately 3,700 tons RLW (vs 4,200 tons RLW in 2022). Sales and Marketing Outlook The Group continues to invest in the development of the Bluehouse Salmon brand and in the education of buyers and consumers. Since the first US harvest in September 2020, Atlantic Sapphire has consistently achieved a revenue per kg of approximately USD 12 for fish graded as superior. Notably, the price achievement has been stable despite significant fluctuations in the salmon commodity price, proving that Bluehouse Salmon is not seen as a direct substitute for other farmed Atlantic salmon. The product has been met by high demand, both among existing customers and potential new customers, giving the Group confidence that premium price achievement will be sustained. Monthly harvest volumes are expected to increase throughout H1 2024 until Q3 2024, when the Group expects to have a fully stocked Phase 1 facility. Key Developments on Risk Mitigation Atlantic Sapphire has taken large steps in minimizing operational risks, most notably against mortality events. Bluehouse farming is designed to produce high-quality biomass at scale. With high intensity farming comes added complexity. Atlantic Sapphire has over a decade of unique experience in identifying and mitigating risks that come with scaling RAS technologies to large size. Today, Atlantic Sapphire is more robust than at any other point in its past. Tangible and quantifiable changes have been made in response to historical incidents and operational experience, including: • A full review and “reset” of the RAS systems, specifically the biofilters, to minimize the risk of sedimentation and anoxic areas. This also included the installation of 100+ new camera inspection points in the RAS to identify and tackle potential risks of sludge sedimentation early on. • The commissioning of a new chiller system in September 2023, which decreases operational risk, achieves significant financial savings, and allows us to maintain lower and more stable temperatures across the farm. • A new ozone system that has improved water clarity and reduced nutrient load. • Changes to the nutrition of the salmon that has had a positive effect on fillet color. • Operational changes in water chemistry to reduce the risk of hydrogen sulfide intoxication (H2S). • Changes to organizational structure and protocols. • Additional tank lights installed across all systems to enhance appetite and mitigate early maturation. US Phase 2 Construction We have changed our approach on the US Phase 2 construction project to optimize quality and efficiency. In contrast to the US Phase 1 construction project, we now have the appropriate staffing level for a large-scale project, we have strategically selected a design consultant with proven experience on water facilities, and we have partnered with a construction contractor with vast experience in constructing water treatment facilities. The US Phase 2 budget is estimated to be USD 275-300m (subject to new pricing in 2024) attributed to approximately 15,000t HOG of production capacity expansion. In 2023, the Group decided to pause Phase 2 construction while focusing on delivering the Phase 1 business first. The Group expects to be ready to resume construction with a final budget and design in H2 2024, but the decision to move ahead remains solely at the Company’s discretion and subject to having the necessary financing in place. Grand Master Plan The Group is working on a detailed plan for the full buildout of the 160 acres of land it owns in Homestead, FL (the “Grand Master Plan”). The Grand Master Plan will include an overview of centralized functions and a more modular approach to building out additional grow-out capacity. These initiatives are expected to reduce the construction time and capex/ kg of new capacity in the future, as the Group continues its path to 220,000t HOG of harvest volume. Outlook for Atlantic Sapphire and Its Associates The Group expects to decide later in 2024 on the future of its Danish facility following the fire in September 2021. The site in Hvide Sande with all infrastructure, permits and water allocations is seen as a valuable aquaculture asset. Further, Atlantic Sapphire Denmark A/S has a significant tax loss carryforward for tax purposes. Salmon Market Outlook US consumption of fresh, farmed Atlantic salmon continues to increase higher than the single-digit global supply growth of farmed Atlantic salmon, highlighting the relative attractiveness of the US salmon market. With the Group’s offtake focused on the North American market, it is ideally positioned to take advantage of the strong growth in demand that is expected to continue, while also offering a product with a lower carbon footprint and lower logistical cost thanks to the avoidance of airfreight. The global commodity market for farmed Atlantic salmon is expected to continue to be strong for the rest of 2024, supporting the sales efforts of the Group. As of the date of this report, the FishPool forward price for Q2 2024 was at approximately NOK 115/kg, while the forward price for H2 2024 was around NOK87/kg. Further, airfreight prices for commodity salmon are high for fresh, imported salmon from South America or Europe, which further improves the competitiveness of the Group’s product in the North American market. GROUP RESULTS 115 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT The Board’s Assessment 2023 was a challenging year for the Group, where continuous positive operational improvements on the operational side were overshadowed by maintenance work and temperature issues. However, it was also a year that sets the stage for improved biological and financial performance in 2024, with better operational stability and water quality going into 2024 than the Group has ever seen. Following by significant infrastructure upgrades through April 2023, the Group encountered temperature-related challenges in the summer of 2023 that negatively impacted the biomass that was in the growout systems at the time, and fish from these systems have since been harvested at lower average weights and with a higher share of downgrades than originally planned. The fish from the Lead Batches are expected to be harvested out by May 2024, which means that the farm will be fully stocked with fish that are performing significantly better. Since October 2023, the Group has seen strong biological KPIs on the younger batches of fish, including low feed conversion rates and good appetite, while mortality rates have been consistently low. The Group expects to continue to see good performance with stable conditions across the facility. The Phase 2 expansion, which will bring total annual harvest volume capacity up to approximately 25,000t HOG, is a critical part of the Company’s strategy to achieve the economies of scale that are necessary to return an attractive long-term return on investment for our shareholders. Although currently focusing on cash conservation, the Group is spending the pause on the construction side to work on design optimization and preparatory work that can minimize the time from construction continuation until the new systems are ready for fish. Atlantic Sapphire is leading the technological development of large-scale land-based salmon farming globally, and despite facing some challenges as a pioneer in a new production form in a new market, the Group is well positioned to handle these challenges both on the operational and construction side. With a scalability that is unmatched thanks to the unique water infrastructure that the Group has secured in South Florida, growth is set to continue in all the foreseeable future, with cost of capital being the main consideration in determining the speed of construction. VIKEBUKT, 18 APRIL 2024 ELLEN MARIE SÆTRE Director ANDRÉ SKARBØ Director MARTA ROJO ALONSO Director EIRIK WELDE Deputy Chairman JOHAN E. ANDREASSEN CEO KENNETH JARL ANDERSEN Chairman GROUP RESULTS 116 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT Board of Directors Kenneth Jarl Andersen CHAIRMAN Kenneth Jarl Andersen has served as a Director since August 2022 and was appointed as Chairman of the Board on 23 May 2023. Mr. Andersen is the CEO of Strawberry Equities AS, which recently made a significant investment in the Group in the private placement announced on 28 June 2022. Mr. Andersen has extensive experience from the Strawberry Group, where he has been employed since 2007. In addition, Andersen has experience from Terra Fondsforvaltning and Arthur Andersen Consulting. Mr. Andersen is a Norwegian citizen, currently residing in Oslo, Norway. Eirik Welde DEPUTY CHAIRMAN Eirik Welde is a Norwegian national who holds a veterinarian degree from the Norwegian School of Veterinary Science (2001) and has over 20 years of experience from the Norwegian aquaculture industry. He has worked with fish health, production management, and the design of live fish support systems, including hatcheries and post-smolt facilities. He has experience as a project manager and as a project executive within several aquaculture species and RAS technology. Welde was the general manager of Nordlaks Smolt AS from 2012 to 2019 and was appointed as CEO of the Nordlaks Group in 2019. André Skarbø DIRECTOR André Skarbø has served as a director since 2015. Mr. Skarbø is owner and managing director of Platina Seafood AS, a Norwegian fish distribution company headquartered in Stranda, Norway. Mr. Skarbø has been involved in the salmon processing and sales industry for 30 years. Mr. Skarbø is a Norwegian citizen, currently residing in Stranda, Norway. Ellen Marie Sætre DIRECTOR Ellen Marie Sætre is an educated veterinary from the Norwegian School of Veterinary Science (2006). She has been working as a consultant in private fish health companies on questions regarding fish health, welfare, hygiene, and biosecurity since 2006. Now she is leader of the fish health department in Møre og Romsdal for Åkerblå AS. Ms. Sætre is a Norwegian citizen, currently residing in Vikebukt, Norway. Marta Rojo Alonso DIRECTOR Marta Rojo Alonso is a Spanish national with over 25 years of international experience in Europe, Asia, and Latin America. She has worked with various large companies within the aquaculture industry, such as Mowi, Skretting, as CFO of Salmones Camanchaca in Chile (listed on the Oslo Stock Exchange), and as CEO of Sterner Group, a Norwegian water treatment technology provider working with RAS. She has a master’s degree in economics and management from the University of Madrid, as well as an Executive MBA from Nyenrode Business University in the Netherlands. GROUP RESULTS 117 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES BOARD OF DIRECTORS’ REPORT ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES 118 2023 IN REVIEW FOR THE HEALTH OF PEOPLE AND PLANET GROUP RESULTS CORPORATE GOVERNANCE The Group follows the Norwegian Code of Practice for Corporate Governance (the “Norwegian Code”), and a full description of the Norwegian Code is available on the Oslo Stock Exchange’s website. The Group has addressed the various 15 issues covered by the Norwegian Code as follows: The Group has reviewed its reporting on Corporate Governance based on the latest Code of Practice and is fully compliant with the Norwegian Code, except Section 14 regarding lack of explicit guidelines for dealing with take-over bids. The following sections detail how the Group has addressed the various 15 issues covered by the Norwegian Code: NORWEGIAN CODE COMPLIANCE TO THE CODE 1. Implementation and Reporting on Corporate Governance Principles Compliant 2. Business Compliant 3. Equity and Dividends Compliant 4. Equal Treatment of Shareholders Compliant 5. Shares and Negotiability Compliant 6. General Meetings Compliant 7. Nomination Committee Compliant 8. Board of Directors: Composition and Independence Compliant 9. The Work of the Board of Directors Compliant 10. Risk Management and Internal Control Compliant 11. Remuneration of the Board of Directors Compliant 12. Remuneration of Executive Personnel Compliant 13. Information and Communications Compliant 14. Take-overs Partly Compliant 15. Auditor Compliant 1. Implementation and Reporting of Corporate Governance Principles The Group’s Board of Directors (the “Board”) is responsible for the development and implementation of internal procedures and regulations to ensure that the Group follows applicable principles and maintains good corporate governance. The Group’s overall position with such principles is assessed annually by the Board and reported accordingly in the Group’s Annual Report in accordance with the requirements for listed companies and the Norwegian Code. The Board has defined the Group’s overall vision as “For the Health of People and Planet” which is further exemplified through the Group’s core values of passion, performance, innovation, integrity, and balance: • Passion – Purpose. Dedication. Courage. • Performance – Initiative. Collaboration. Results. • Innovation – Continuous improvement. Solutions. Learning. • Integrity – Accountability. Open communication. Care. • Balance – Healthy Fish. Stakeholder wellness. Sustainable planet. Our central principle is that Atlantic Sapphire’s success depends on maintaining the highest standards of trust and integrity at all levels of the organization, as well as its reputation for honesty and transparency in its business. Further, the Group is made up of diverse individuals with different backgrounds such as national origins, cultures, religions, and other customs. The Group’s Code of Conduct (the “Code”), which was updated in January 2022, sets expectations and provides guidance for the Group’s Board of Directors, officers, employees, independent contractors, and consultants. It is their responsibility to understand the Code as well as exercise good judgement and follow the Code. The Code must be signed by all employees, and suppliers are also expected to understand the Code and share our commitment to integrity by following the principles of the Code. The Code encourages reporting of any violations to management. The Code is consistent with the Group’s core values and is aligned with Atlantic Sapphire’s commitment to the UN Global Compact principals and the UN SDGs. 2. Business The Group’s objective is defined in Article 3 of ASA’s Articles of Association as follows: “The objective of the Company is to engage and participate in land-based salmon production, both nationally and internationally, including through investments in other companies, and other activities in relation to this.” The Group aims to transform salmon farming by managing an integrated value chain of salmon production and bring full traceability from egg to final product. Our activities include farming, harvesting, processing, marketing, and sales of its products. Through the specialized, efficient design of the Recirculating Aquaculture System (“RAS”), The Group can consistently control the key drivers of the production cycle with the ultimate goal of creating value for shareholders in a sustainable manner. Such key drivers consist of routinely assessing the Group’s objectives, strategies, and risk profiles which are detailed in the Board of Directors’ Report. 3. Equity and Dividends As of 31 December 2023, the Group’s total equity totaled USD 283.1m, which represented 83% of the Group’s total assets. The Group’s objective is to maintain an equity level that is appropriate for the Group’s objectives, strategy, and risk profile. The Group is focused on developing and commercializing its products, production methods and technology, as well as increasing facility capacity, and intends to retain future earnings to finance development activities, operations, and growth of the business. As a result, the Group does not expect to pay any dividend in the near future. GROUP RESULTS 119 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES CORPORATE GOVERNANCE Any future decision to pay a dividend will also depend on the Group’s financial position, operating profit, capital requirement, and the terms and conditions of the Group’s debt facilities. The Group has not previously distributed any dividends to its shareholders. ASA’s Board of Directors are responsible for any share capital increases, dividends, and employee stock options granted. Share capital increases are conducted through private placements and subsequent offerings. Such proxy is proposed and ratified through the Group’s AGM and other EGMs that may be performed during the year. 4. Equal Treatment of Shareholders The Group has one class of shares. Any purchase or sale by the Group of its own shares will be carried out either through the Oslo Stock Exchange or at prices quoted on the Oslo Stock Exchange. 5. Shares and Negotiability The Group has one class of Shares in issue, and in accordance with the Norwegian Private Limited Liability Companies Act and the Norwegian Public Limited Liability Companies Act, all Shares in that class provide equal rights in the Group. Each share has a nominal value of NOK 0.10 and carries one vote. The Group’s shares are freely transferable. 6. General Meetings Through the general meeting, shareholders exercise supreme authority in a Norwegian company. In accordance with Norwegian law, the annual general meeting of shareholders is required to be held each year on or prior to 30 June. Norwegian law requires that written notice of annual general meetings setting forth the time, the venue, and the agenda of the meeting be sent to all shareholders with a known address no later than 21 days before the annual general meeting of a Norwegian private limited liability company shall be held, unless ASA’s Articles of Association stipulate a longer deadline, which is not currently the case for the Group. A shareholder may vote at the general meeting either in person or by proxy appointed at their own discretion. In accordance with the requirements of the Norwegian Securities Trading Act, the Group will include a proxy form with notices of general meetings. All the Group’s shareholders who are registered in the register of shareholders maintained with the Norwegian Central Securities Depository (“VPS”) as of the date of the general meeting, or who have otherwise reported and documented ownership to Shares, are entitled to participate at general meetings, without any requirement of pre-registration. Apart from the annual general meeting, extraordinary general meetings of shareholders may be held if the Board of Directors considers them necessary. An extraordinary general meeting of shareholders must also be convened if, to discuss a specified matter, the auditor or shareholders representing at least 5% of the share capital demands this in writing. The requirements for notice and admission to the annual general meeting also apply to extraordinary general meetings. However, the annual general meeting of a Norwegian public limited liability company may with a majority of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a general meeting resolve that extraordinary general meetings may be convened with a fourteen days’ notice period until the next annual general meeting provided the Group has procedures in place allowing shareholders to vote electronically. 7. Nomination Committee Article 6 of ASA’s Articles of Association provides for a Nomination Committee composed of two or three members. The members of the Nomination Committee, including its chair, are elected by the AGM for a term of two years. The Nomination Committee is responsible for proposing candidates for the Board and the Nomination Committee and holds individual discussions with each Board member. As of 31 December 2023, the Nomination Committee comprised of Bjørn-Vegard Løvik (Chair) and Kjell Bjordal, none of which are active Board members. 8. Board of Directors: Composition and Independence ASA’s Articles of Association provide that the Board shall consist of between three and seven members of the Board elected by the Group’s shareholders. The Group’s registered business address, Daugstadvegen 445, 6392 Vikebukt, Norway, serves as the business address for the Board with respect to their directorships. The Chairman of the Board together with one Director jointly have the right to sign for and on behalf of the Group. The Board may grant procuration. Board members are normally elected for a period of two years at a time. The Board is independent of Group management. Ellen Marie Saetre, related party of nomination committee member Bjørn-Vegard Løvik, is the only individual represented on the Board and non-independent members. As per Norwegian law, the Board shall always have at least 40% of both genders represented. In 2023, the Group’s Board comprised of two female members out of five in total. 9. The Work of the Board of Directors According to the Norwegian Public Limited Liability Companies Act, the Board has overall responsibility for the management of the Group, and the supervision of the Group’s business activities and daily management. The Board is also responsible for approving the Group’s plans and budgets and ensuring that the Group’s activities are well organized. Members of the Board owe a fiduciary duty to the Group and its shareholders, and their principal task is to safeguard the interests of the Group. Such fiduciary duty requires that the Board act in the best interests of the Group when exercising their functions and exercise a general duty of loyalty and care towards the Group. This includes a continuous assessment of the Group’s related parties and any agreements and transactions conducted with them. Any transaction between the Group and a related party will be similar to what management believes would have been agreed upon between unrelated parties. The Group will make sure that major transactions with related parties are approved by the AGM in accordance with the Norwegian Public Limited Liability Companies Act. Related party transactions are discussed in Note 21 in the Group’s consolidated financial statements. The Board has formally assessed its performance, expertise, and capacity to carry out its duties both individually and as a group in 2023 as recommended by the Norwegian Code. The Board conducted one formal shareholder Annual General Meeting on 23 May 2023. The overall shareholder attendance rate was 46%. 10. Risk Management and Internal Control The Board shall annually review the Group’s most important areas of risk exposure and the internal control arrangement in place for such areas. The review shall pay attention to any material shortcomings or weaknesses in the Group’s internal control systems and how risks are being managed. Internal controls consist of guidelines, processes, duties, conduct, and other matters related to the Group’s commercial objectives, internal and external reporting, and compliance with relevant legislation, regulations, and internal guidelines in Group operations. GROUP RESULTS 120 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES CORPORATE GOVERNANCE The Finance Department performs monthly closing procedures on a monthly basis towards internal and external reporting and actively monitors the Group’s internal control systems throughout to identify risks and proactive solutions to mitigate them. Such findings are then communicated to the Board and Audit Committee for further feedback and action plan accordingly. The Group’s Finance Department consists of approximately 8 full- time employees of which one is a Certified Public Accountant (“CPA”) licensed in the State of Florida. Accounting advisory service firms are engaged as needed to support the Finance Department in a wide range of complex accounting transactions including adherence to new and revised IFRS standards. 11. Remuneration of the Board of Directors The remuneration payable to the Board is approved by the AGM. Board remuneration shall reflect the Board’s responsibilities, competence, time spent, and the complexity of the business. Board remuneration is not performance- related and contains no share option element. Additional information relating to Board remuneration can be found in Note 6 in the Group’s consolidated financial statements. 12. Remuneration of Executive Personnel The Board determines the principles applicable to the Group’s policy for compensation of executive management and presented its statement on such principles for the 2023 financial year during the Group’s AGM in accordance with Section 6-16a of the Norwegian Public Limited Liability Companies Act. The principles supporting the Group’s remuneration policy are as follows: • Offer executive compensation that is competitive, both on industry and national (US) levels, to attract and retain top managerial talent. • Emphasize a collaborative culture and a lean organizational structure. • Provide incentives that foster the creation of sustainable, long-term shareholder value. • Ensure that the Group’s executive management is aligned with key organizational goals. In compliance with the Norwegian Public Limited Liability Companies Act, the Board prepares a statement regarding the remuneration of the executive management team for consideration by the AGM. The remuneration package for corporate executive staff consists of the following main elements: • Fixed Compensation • Variable Compensation • Long-Term Incentive Program • Retirement Benefits • Severance Pay • Benefits in Kind 13. Information and Communications The Group strives to build long-term relationships with its stakeholders; the management team therefore meets on an ongoing basis in open and transparent dialogue with all stakeholders interested in its business from a social, environmental, or economic perspective. The Group proactively engages them through different platforms to address their needs, listening, and providing information about the Group’s projects. The dialogue always strives to raise awareness of both the value and the challenges of what the Group does. In turn, the Group has had valuable dialogue with stakeholders around various topics, including: product attributes, environmental, and animal welfare aspects related to Bluehouse salmon farming, technology, the R&D investment in Recirculating Aquaculture Systems (“RAS”), the viability of the business model, financial aspects of the business, and the socio- economic impacts of its operations in Miami and Denmark. The Group uses different platforms to communicate with stakeholders on a regular basis, the frequency of communications depending on the interest and the level of involvement of these stakeholders. The Group also complies with the Oslo Stock Exchange’s investor relations recommendations by publishing its financial calendar, on an annual basis, which provides the dates on which it will present its Half-Year Report, Annual Report, and when the AGM will be held. The Group publicly discloses all information concerning major events on its website (atlanticsapphire.com) and through the distribution channels of the Oslo Stock Exchange, in line with the requirements of the Oslo Stock Exchange. All financial reports and other information are prepared and disclosed in such a way as to ensure that the Group’s stakeholders are treated equally and receive accurate, clear, relevant, and up-to-date information in a timely manner. The Group holds public presentations of its results semi-annually. 14. Take-overs In a bid situation, the Group’s Board of Directors and management have an independent responsibility to ensure that the interests of shareholders are safeguarded, all shareholders are treated equally, and that operations are not disrupted unnecessarily. The Board should not hinder or obstruct any take-over bid, unless it believes such an action is justified to protect the interests of the Group and its shareholders. The Board has not yet determined specific guidelines or principles with respect to dealing with take-over bids as recommended by the Norwegian Code. 15. Auditor The Group has engaged PricewaterhouseCoopers AS (“PwC”) as its external auditor. PwC is independent from the Group and was appointed by the Board during the AGM. The AGM’s selection of the auditor contemplated several factors including the firm’s competence, size, global availability, and expected audit fee. Accordingly, the AGM also approved the auditor’s fee (see Note 7 in the Group’s consolidated financial statements). The Group’s Audit Committee Charter was formally approved by the Board on 27 October 2021 and was established to continuously improve corporate governance and the quality and compliance of the Group’s financial reporting. In turn, the auditor presents its plan regarding the preparation of the annual accounts and audited financial statements to the Group’s Audit Committee and Finance Department. The Finance Department holds regular meetings with the auditor without the presence of management prior to summary communication to the Board and Audit Committee to ultimately sign off on the Group’s financials and corporate governance report. In addition to the audit fee, the Group’s remuneration to the auditor may be split with other non-audit services such as advisory and authorization services. Such non-audit services are assessed on an ad-hoc basis to ensure that there are no conflicts of interest in independence. PwC was selected as our auditor in 2022 with Jon Haugervåg as lead audit partner for the Group and 2023 represents his second year as lead partner PwC. PwC replaces BDO AS, which was our predecessor auditor with Roald Viken as lead audit partner for the Group since 2015. GROUP RESULTS 121 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES CORPORATE GOVERNANCE ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES 122 2023 IN REVIEW FOR THE HEALTH OF PEOPLE AND PLANET GROUP RESULTS ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statements of Operations YEARS ENDED 31 DECEMBER 2023 AND 2022 Accompanying notes are an integral part of the consolidated financial statements. Accompanying notes are an integral part of the consolidated financial statements. (USD 1,000) NOTE 2023 2022 Revenue 3 13,995 18,954 Expenses Cost of goods sold 5,15 67,141 75,890 Fair value adjustment on biological assets 5 14,095 (95) Salary and personnel costs 6,18,20 4,051 6,294 Selling, general, and administrative costs 4,7,8 7,984 10,449 Other income, net 4 (1,927) (25,542) Impairment of non-current assets 35,000 - Depreciation and amortization 9 13,839 14,217 Total expenses 140,183 81,213 Operating loss (126,188) (62,259) Finance income 10 1,516 4,907 Finance expense 10,19 (9,086) (7,654) Loss before income tax (133,758) (65,006) Income tax 11 - - Net loss (133,758) (65,006) Earnings per share: Retrospectively adjusted basic earnings per share 12 (0.33) (0.44) Retrospectively adjusted diluted earnings per share 12 (0.33) (0.44) GROUP RESULTS 123 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Accompanying notes are an integral part of the consolidated financial statements. Consolidated Statements of Comprehensive Loss YEARS ENDED 31 DECEMBER 2023 AND 2022 (USD 1,000) NOTE 2023 2022 Net loss (133,758) (65,006) Exchange difference on translation of foreign operations 323 (2,960) Total comprehensive loss (133,435) (67,966) GROUP RESULTS 124 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS (USD 1,000) NOTE 2023 2022 Assets Non-current assets Property, plant, and equipment, net 9 275,599 303,122 Right of use asset 8 1,971 2,512 Restricted deposits 13,16 15,172 - Security deposits 1,353 1,167 Other investments 13 6 6 Trade and other receivables (non-current) 13,14 481 1,343 Total non-current assets 294,582 308,150 Current assets Prepaid and other current assets 2,213 393 Inventories, net 15 5,139 4,368 Biological assets 5 16,218 18,690 Trade and other receivables, net 13,14 1,155 1,847 Restricted cash 13,16 415 420 Cash 13,16 22,536 23,683 Total current assets 47,676 49,401 Total assets 342,258 357,551 Consolidated Statements of Financial Position 31 DECEMBER 2023 AND 2022 Accompanying notes are an integral part of the consolidated financial statements. GROUP RESULTS 125 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS 1/2 (USD 1,000) NOTE 2023 2022 Equity and liabilities Equity Share capital 17,18 8,644 1,716 Share premium 17,18 691,430 577,805 Employee stock options 17,18 3,959 4,319 Accumulated deficit (414,167) (280,409) Accumulated translation differences (6,726) (7,049) Total equity 283,140 296,382 Non-current liabilities Borrowings (non-current) 13,19 37,603 28,287 Lease liability (non-current) 8 1,729 2,218 Total non-current liabilities 39,332 30,505 Current liabilities Borrowings (current) 13,19 5,000 18,550 Lease liability (current) 8 450 416 Trade and other payables 13 14,336 11,698 Total current liabilities 19,786 30,664 Total liabilities 59,118 61,169 Total equity and liabilities 342,258 357,551 Consolidated Statements of Financial Position 31 DECEMBER 2023 AND 2022 Accompanying notes are an integral part of the consolidated financial statements. GROUP RESULTS 126 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS 2/2 Consolidated Statements of Changes in Equity YEARS ENDED 31 DECEMBER 2023 AND 2022 (USD 1,000) NOTE SHARE CAPITAL SHARE PREMIUM EMPLOYEE STOCK OPTIONS ACCUMULATED DEFICIT ACCUMULATED TRANSLATION DIFFERENCES TOTAL EQUITY Balance at 1 January 2022 1,051 454,256 3,741 (215,403) (4,089) 239,556 Comprehensive income (loss) Net loss - - - (65,006) - (65,006) Foreign currency translation adjustments - - - - (2,960) (2,960) Transactions with owners Contributions from issuance of capital 17,18 665 123,549 - - - 124,214 Contributions from employee stock options 17,18 - - 578 - - 578 Balance at 31 December 2022 1,716 577,805 4,319 (280,409) (7,049) 296,382 Comprehensive income (loss) Net loss - - - (133,758) - (133,758) Foreign currency translation adjustments - - - - 323 323 Transactions with owners Contributions from issuance of capital 17,18 6,928 113,625 - - - 120,553 Net forfeitures from employee stock options 17,18 - - (360) - - (360) Balance at 31 December 2023 8,644 691,430 3,959 (414,167) (6,726) 283,140 Accompanying notes are an integral part of the consolidated financial statements. GROUP RESULTS 127 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statements of Cash Flows YEARS ENDED 31 DECEMBER 2023 AND 2022 (USD 1,000) NOTE 2023 2022 Cash flows from operating activities Net loss (133,758) (65,006) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 9 13,838 14,217 Bad debt - 145 Inventory write-down 15 243 2,301 Fair value adjustment on biological assets 9 14,095 (95) Loss (gain) on loan modification 19 601 - Impairment of non-current assets 9 35,000 - Disposition of other assets 9 56 (243) Net interest expense 10 3,635 3,387 Non-cash employee stock options 18 (365) 578 Net foreign currency exchange rate differences 558 (1,824) Changes in operating assets and liabilities Trade and other receivables 13,14 1,554 (1,873) Biological assets, at cost 5,15 (12,209) (1,933) Inventories, at cost 15 (1,014) (79) Prepaid and other current assets (1,821) 1,196 Security deposits (186) (419) Trade and other payables 13 2,011 (3,256) Net cash used in operating activities (77,762) (52,904) Accompanying notes are an integral part of the consolidated financial statements. GROUP RESULTS 128 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS 1/2 (USD 1,000) NOTE 2023 2022 Cash flows from investing activities Payments towards property, plant, and equipment 9 (19,599) (56,442) Restricted deposits 16 (15,172) - Interest received 10 1,290 618 Net cash used in investing activities (33,481) (55,824) Cash flows from financing activities Proceeds from borrowings 19 12,500 29,500 Payments towards borrowings 19 (17,335) (32,663) Payments towards lease liability 8 (468) (511) Proceeds from issuance of capital 17 120,553 124,214 Interest paid 10 (4,925) (4,005) Net cash provided by financing activities 110,325 116,535 Net increase (decrease) in cash and restricted cash (918) 7,807 Cash and restricted cash at beginning of year 24,103 17,480 Effects of exchange rate on cash and restricted cash (234) (1,184) Cash and restricted cash at end of year 22,951 24,103 Consolidated Statements of Cash Flows YEARS ENDED 31 DECEMBER 2023 AND 2022 Accompanying notes are an integral part of the consolidated financial statements. GROUP RESULTS 129 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS 2/2 VIKEBUKT, 18 APRIL 2024 ELLEN MARIE SÆTRE Director ANDRÉ SKARBØ Director MARTA ROJO ALONSO Director JOHAN E. ANDREASSEN CEO EIRIK WELDE Deputy Chairman KENNETH JARL ANDERSEN Chairman GROUP RESULTS 130 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 Summary of Material Accounting Policies General Information Atlantic Sapphire ASA (“ASA”) is a Norwegian company headquartered in Vikebukt, Norway and listed on the Oslo Stock Exchange with the ticker symbol ASA. ASA owns the following subsidiaries (collectively, “Atlantic Sapphire”, the “Company”, or the “Group”): • Atlantic Sapphire Denmark A/S (“ASDK”, registered in Hvide Sande, Denmark) • Atlantic Sapphire USA LLC (“ASUS”, registered in Miami, Florida, US) • AS Purchasing, LLC (“ASP”, registered in Miami, Florida, US) • S.F. Development, L.L.C. (“ASSF”, registered in Miami, Florida, US) • Atlantic Sapphire IP, LLC (“ASIP”, registered in Miami, Florida, US) The Group owns and operates a land-based Atlantic salmon farm in Homestead, Florida, US (the “Miami Bluehouse” facility) and previously operated a land-based Atlantic salmon farm in Hvide Sande, Denmark (the “Denmark Bluehouse” facility). A Bluehouse® facility (“Bluehouse”) is proprietary production technology developed by the Group in collaboration with a wide range of supply chain partners to optimize growing conditions for Atlantic salmon. A Bluehouse contains the facilities needed to grow and produce Atlantic salmon from egg hatchery to grow-out tanks to primary processing. The Miami Bluehouse also incorporates value-added processing. Consolidated operations enable the Group to control the entire production cycle without having to transport salmon to and from ocean-based net pens. Phase 1 of the Miami Bluehouse has an annual design production capacity of approximately 9,500 tons HOG 1 . Subsequently on 4 March 2024, AS Purchasing, LLC, a wholly owned subsidiary of ASA, filed for voluntary dissolution under the Florida Division of Corporations as it was utilized for US Phase 1 construction and no longer held formal operations since its completion. Basis for Preparation of the Annual Accounts The consolidated financial statements were prepared in accordance with IFRS® Accounting Standards (“IFRS”) as adopted by the European Union (“EU”) and mandatory for financial years beginning on or after 1 January 2023, and additional Norwegian disclosure requirements under the Norwegian Accounting Act as of 31 December 2023. References to “IFRS” in these consolidated financial statements refer to IFRS as adopted by the EU. The consolidated financial statements have been prepared based on uniform accounting principles for similar transactions and events under otherwise similar circumstances and are expressed in United States (“US”) dollars (“USD”). The consolidated financial statements are based on historical cost, except for biological assets at fair value less cost to sell. Going Concern The Board confirms that it is appropriate to prepare the Annual Report based on a going concern assumption pursuant to section 3-3a of the Norwegian Accounting Act. This confirmation is based on the Group’s forecasted performance in 2024 and the Group’s plans to receive external financing to support funding of the Phase 2 expansion. The Group believes it has sufficient financing to achieve proven state biomass and generate positive cash flow from operations. As it relates to US Phase 2 expansion, the Group has full discretion over the speed of the construction which allows the Group to better manage liquidity. Subsequently on 29 February 2024, the Group raised NOK 369.0m (approximately USD 35.0m) in gross proceeds through a private placement of 307,125,000 new shares, at a price per share of NOK 1.20. The issuance of the new shares was approved by the Extraordinary General Meeting on 22 March 2024. Further, the Group’s 2020 Credit Facility was amended further on 25 March 2024 which, among other things, extended the maturity date to 21 October 2026. See Note 23 – Subsequent Events for further detail. New and Amended IFRS Standards Adopted by the Group There are numerous standards, amendments to standards, and interpretations in 2023 that have been issued by the IASB that are effective in future accounting periods. The Group has decided not to early adopt any as they are not expected to have a significant effect on the Group’s consolidated financial statements. The Group did not adopt any new standards, amendments to standards, and interpretations in 2023 that would impact the Group’s consolidated financial statements for the year ended 31 December 2023. Other amendments, interpretations, and changes based on the annual improvement cycle were assessed by the Group but had no material impact nor were they expected to significantly affect the current or future reporting periods. Consolidation Subsidiaries are all entities over which the Group has control. The Group considers control over an entity to exist when the Group is exposed to, or has the right to, variable returns from its involvement with the entity and can affect those returns through its ability to direct the operations of the entity. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. The accompanying consolidated financial statements include the accounts of ASA, ASDK, ASUS, ASP, ASSF, and ASIP. When necessary, adjustments are made to the local financial statements of the Group subsidiaries to conform with the consolidated Group’s accounting policies presented under IFRS. All intercompany balances, transactions, and unrealized gains from intercompany transactions are eliminated upon consolidation. Unrealized losses from intercompany transactions are also eliminated upon consolidation unless the transaction provides evidence of an impairment of the transferred asset. The assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date in which the Group gains control until the date in which the Group ceases to control the subsidiary. 1 HOG – “Head-On-Gutted” fish, a term used industry-wide, is approximately 83% of live weight fish. GROUP RESULTS 131 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Foreign Currency Items included in the respective financial statements of each entity within the Group are measured using the functional currency of the primary economic environment in which the entity operates. The accompanying consolidated financial statements are presented in USD. Foreign currency transactions are translated using the applicable exchange rate at the time of the transaction. Receivables, debt, and other monetary items in foreign currency are measured at the exchange rate at the end of the reporting period, and the translation differences are recognized as part of the Group’s consolidated net profit or loss. Other assets in foreign currencies are translated at the exchange rate in effect on the transaction date. Upon consolidation, exchange differences arising from the translation of non-USD denominated Group entities and non-USD denominated investments are recognized as part of consolidated other comprehensive income or loss (“OCI”). When a foreign operation is sold, the associated exchange differences related to the gain or loss on sale are reclassified to profit or loss. The profit and loss transactions of non-USD denominated Group entities are translated into the presentation currency using the average exchange rate for the reporting period. The assets and liabilities of respective entities are translated at the exchange rate at the end of the reporting period. Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing exchange rate. Use of Estimates and Judgements The preparation of the consolidated financial statements in accordance with IFRS requires management to make accounting estimates and assumptions that affect the recognized amounts of consolidated assets, liabilities, income, and expenses. The estimates and underlying assumptions are based on the Group’s prior experience and information perceived to be relevant and probable when the judgments are made. Estimates are reviewed on an ongoing basis and actual values and results may deviate from these estimates. Adjustments to accounting estimates are recognized in the period in which the estimates are revised. The evaluations and estimates deemed to be of greatest significance for the Group are as follows: FAIR VALUE ADJUSTMENT OF BIOMASS Biological assets are measured at fair value less cost to sell, with any change therein recognized in profit or loss. The estimated fair value of the biological assets is based on historical prices achieved and the most relevant forward prices for salmon at the reporting period date in the respective markets in which the Group operates. The fair value calculation considers estimates of biomass volumes, quality, size distribution, production cost, mortality, and normal costs of harvest and sale (see Note 5 – Biological Assets). Provisions A provision is recognized when the Group has a legal or constructive obligation as a result of a past event, it is likely that there will be a financial settlement as a result of this obligation, and the amount can be reliable. If the effect is significant, the provision is calculated by discounting future cash flows using a discounted pre-tax rate that reflects market assessments of time, value of money, and if relevant, risks specifically related to the obligation. Provisions are reviewed at each reporting period date and their level reflects the best estimate of the liability. Changes in best estimates are recognized in the accompanying consolidated statements of operations. Classification of Current vs. Non-Current Items Assets are classified as current when they are expected to be realized or sold, to be used in the Group’s normal operating cycle, falls due, or is expected to be realized within 12 months after the end of the reporting period date. Other assets are classified as non-current. Liabilities are classified as current when they are expected to be settled in the normal operating cycle of the Group, are expected to be settled within 12 months of the end of the reporting period, or if the Group does not have an unconditional right to postpone settlement for at least 12 months after the reporting period date. Revenue Recognition The Group operates proprietary Bluehouse facilities for land- based salmon farming and derives revenue from the sale of salmon. Revenue from salmon sales is recognized when the customer obtains control of the goods transferred and there is no unfulfilled obligation that could affect the customer’s acceptance of the goods upon delivery (i.e. at a point in time). The Group grants certain customers sales incentives such as rebates or discounts and treats these as a reduction of revenue at the time the sale is recognized. Receivables are recognized when the goods are delivered as this is the point in time in which consideration is unconditional and only the passage of time is required before payment is due. Depending on credit assessment, customers are generally provided 30-day payment terms. Leases Leases are recognized under IFRS 16, Leases, in which all leasing agreements with a duration exceeding 12 months are to be capitalized as financial leases. The Group assesses whether a legally enforceable contract is or contains a lease at the inception date of the contract. The assessment includes several criteria to be determined based on judgment that includes whether there is an identifiable asset in connection to the lease, whether the Group has the right to control the use of the identifiable asset, and whether the Group can obtain substantially all economic benefits from the identifiable asset. The Group recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date. The lease liability is calculated based on the present value of the contractual minimum lease payments using the implicit interest rate of the lease. The Group uses the incremental borrowing rate in the case the implicit rate cannot be readily determined from the lease contract. The contractual minimum lease payments consist of fixed or variable payments, including those resulting from options in which management is reasonably certain it will exercise during the lease term. The lease liability is subsequently measured at amortized cost under the effective interest rate during the lease term and may also be adjusted to management’s reassessment of future lease payments based on options exercised, renegotiations, or changes of an index rate. GROUP RESULTS 132 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS The ROU asset is calculated based on the lease liability, plus initial direct costs towards the lease, and less any incentives granted by the lessor. The ROU asset is subsequently amortized under the straight-line method under the shorter of the lease term or the useful life of the underlying asset and is included as part of depreciation and amortization in the accompanying consolidated statements of operations. Leases that fall under the IFRS 16 short-term exception are recognized on a straight-line method over the lease term. Taxes Tax expense consists of the tax payable and changes to deferred tax. Tax is recognized in the accompanying consolidated statements of operations, except to the extent that it relates to items recognized in consolidated OCI or directly in consolidated equity. Deferred tax assets and liabilities are calculated based on the temporary differences between the carrying amount of assets and liabilities in the consolidated financial statements and their tax bases, together with tax losses carried forward at the consolidated statement of financial position date. Deferred tax assets and liabilities are calculated based on the applicable tax rates and legislations that are expected to apply when the assets are realized or the liabilities are settled, based on the tax rates and legislations that have been enacted or substantially enacted on the consolidated statement of financial position date. Deferred tax assets are recognized only when convincing evidence can support the availability of future taxable profits will be available, against which the assets can be utilized. Deferred tax assets and liabilities are not discounted. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity. The entities included in the Group’s consolidated financial statements are subject to income tax in the respective countries in which they are domiciled. Investments and Other Financial Assets The Group classifies its financial assets based on the following measurement categories: • Those to be measured at amortized cost, • Those to be measured subsequently at fair value (through other comprehensive income or loss), and • Those to be measured subsequently at fair value (through profit or loss). Upon initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in the accompanying consolidated statements of operations. Financial Assets at Amortized Cost Trade receivables consist of amounts due from customers for goods sold in the ordinary course of business and are generally due for settlement within 30 days and classified as current. Trade receivables are initially recognized at the amount of consideration that is unconditional and when no element of financing is present. The Group holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortized cost using the effective interest method. Other financial assets are classified at amortized cost only if both of the following criteria are met: • The asset is held within a business model whose objective is to collect the contractual cash flows, and • The contractual terms give rise to cash flows that are solely payments of principal and interest. Property, Plant, and Equipment Property, plant, and equipment is capitalized at acquisition cost, which includes capitalized borrowing costs under IAS 23, Borrowing Costs, less accumulated depreciation and impairment losses, if any. Acquisition costs include expenditures that are directly attributable to the acquisition and placement of fixed assets in service. Costs of major replacements and renewals that substantially extend the economic life and functionality of a fixed asset are capitalized. Costs associated with normal maintenance and repairs are expensed as incurred. Assets are normally considered property, plant, and equipment if the useful economic life exceeds one year. Straight-line depreciation is applied over the useful life of property, plant, and equipment based on the asset’s historical cost and estimated residual value at disposal. If a substantial part of an asset has an individual and different useful life, that portion is depreciated separately. The asset’s residual value and useful life are evaluated annually. Gains or losses arising from the disposal or retirement of an asset are determined as the difference between the sales proceeds and the carrying amount of the asset and recognized as part of other income in the accompanying consolidated statements of operations. Depreciation is charged to expense when the property, plant or equipment is ready for use or placed in service. As such, assets under construction are not depreciated. Impairment Management reviews long-lived assets for impairment annually, or more frequently, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows, which are largely independent of the cash inflows from other assets or groups of assets (cash- generating units). If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying value to determine if an adjustment for impairment to such asset is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value. Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. As of 31 December 2023 and 2022, management considered an allowance for impairment necessary for non-current assets in the US and for those lost in the September 2021 Denmark fire (see Note 9 – Property, Plant, and Equipment). Inventories Inventories consist of feed, raw materials, packaging, spare parts, and processed fish. Inventories are measured at the lower of cost or net realizable value under the first-in-first-out principle. Cost price includes both the production or acquisition costs for goods and the costs of bringing goods into saleable condition. Net realizable value consists of estimated sales price minus remaining costs to sell. Generally, feed, raw materials, packaging, and spare parts are maintained at cost whereas processed fish is recognized at net realizable value. Live fish are accounted for separately as biological assets under IAS 41, Agriculture, and IFRS 13, Fair Value Measurement. GROUP RESULTS 133 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Biological Assets Under the provisions of IAS 41, Agriculture, and IFRS 13, Fair Value Measurement, biological assets (“biomass”) are measured at fair value less cost to sell, unless fair value is not readily measured. For further information regarding the Group’s biological assets, see Note 5 – Biological Assets. Cash and Restricted Cash Cash includes cash on hand and bank deposits. Current restricted cash is not available for immediate or general business use and is presented separately from cash in the accompanying consolidated statements of financial position. Non-current restricted cash is presented separately as restricted deposits in the accompanying consolidated statements of financial position and is not included as part of the cash and restricted cash balances presented in the accompanying consolidated statements of cash flows. Cash equivalents consist of short-term investments that can be converted into a known amount in cash within three months and contain an insignificant risk element. The Group did not hold any cash equivalents as of 31 December 2023 and 2022. Borrowings Borrowings are recognized at fair value when proceeds have been received, less transaction costs. In subsequent periods, borrowings are recognized at amortized cost calculated using the effective interest method. The difference between the proceeds from borrowings received (less transaction costs) and its redemption value is reflected over the term of the borrowing as part of financial expense in the accompanying consolidated statements of operations. Share Option Program Share-based compensation benefits are provided to employees through an employee share scheme (see Note 18 – Share Option Program). The total expense is recognized over the vesting period, which is the period over which all specified vesting conditions are to be satisfied. At the end of each period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions and recognizes the impact of the revision to original estimates, if any, in the accompanying consolidated statements of operations, with a corresponding adjustment to equity. Social security contributions payable in connection with an option grant are considered an integral part of the grant itself and the charges are treated as cash- settled transactions. Statements of Cash Flows The accompanying consolidated statements of cash flows are prepared in accordance with the indirect method. Reclassification Certain amounts in the Group’s 2022 consolidated financial statements have been reclassified to conform to the 2023 presentation. The reclassifications have no effect on the Group’s consolidated financial position. In the 2022 Annual Report, the financial statement line item for “Cost of Goods Sold” was previously named “Cost of Materials”. The change in name aims to enhance clarity about what the amounts represent and to denote that such amounts also include cost elements other than materials but exclude depreciation, which is accounted for in a separate financial statement line item. In the 2022 Annual Report, the financial statement line item for “Selling, General, and Administrative Costs” was previously named “Other Operating Expenses”. The change in name aims to enhance clarity about what the amounts represent and to denote that such costs are not associated with production either when incurred or sold. In the 2022 Annual Report, the financial statement line item for “Selling, General, and Administrative Costs” included the cost of temporary chiller leases of USD 5.9m. Temporary chiller leases represent part of the Group’s cost of production. Prior to 2023 however, such amounts were previously recognized directly under “Selling, General, and Administrative Costs” to denote a direct write off as a period cost. Because similar amounts from 2023 onwards were prospectively capitalized as part of cost of production without an immediate write off, we reclassified the prior year USD 5.9m cost of temporary chiller leases from “Selling, General, and Administrative Costs” as part underutilized plant capacity under “Cost of Goods Sold”. The reclassification resulted in an increase of USD 5.9m to “Cost of Goods Sold” and a corresponding decrease to “Selling, General, and Administrative” costs in 2022. Further, although there is no balance sheet effect on biological assets, the cost of temporary chiller leases increases the line item of “Increases due to production and purchases” by USD 5.9m and similarly reduces the line item of “Decreases due to underutilized plant capacity” in the reconciliation of changes in the carrying amount (see Note 5 – Biological Assets). The change in classification aims to enhance what the amounts represented prior to 2023 and have no effect on previously reported results of consolidated operations. GROUP RESULTS 134 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 Capital Management And Financial Risk Capital management represents the Group’s policy to assess, acquire, and utilize its capital base efficiently towards satisfactory operations and future development of the business to foster and maintain investor, lender, and market confidence. The Group’s capital management contemplates available alternatives, the cyclical nature of the fish farming industry, and current socioeconomic factors. Access to borrowings is monitored periodically and the Group engages in dialogue continuously with its lenders. The Group has obtained capital primarily from equity raises and interest-bearing borrowings. The Group’s interest- bearing borrowings require certain financial covenants to be maintained. In anticipation of potentially not being able to meet its EBITDA requirement as of 31 December 2023, the Group received a formal waiver from the Lenders dated 21 December 2023 (see Note 19 – Borrowings). As of 31 December 2023 and 2022, the Group’s consolidated equity consisted of USD 283.1m and USD 296.4m, respectively, equity share, which comprise of total equity divided by total assets, was 83% in both years, and net interest-bearing debt, which comprise of total interest-bearing borrowings excluding the effects of IFRS 16, was USD 20.1m and USD 23.2m, respectively. The Group’s Board of Directors (the “Board”) considers the Group’s capital base adequate given the scale of its operations. On 19 May 2022, ASA’s Board of Directors were given proxy to increase total authorized share capital by up to NOK 1,800,000 through the issuance of up to 18,000,000 total shares, with a face value of NOK 0.10. On 23 May 2023, the Group held its Annual General Meeting (the “2023 AGM”). Through the 2023 AGM, the Board was given the authority to increase total authorized share capital by up to NOK 5,500,000 through the issuance of up to 55,000,000 total shares, with a face value of NOK 0.10. The authorization was used as part of the September 2023 Private Placement. Further, the Extraordinary General Meeting (“EGM”) on 11 October 2023 granted an authorization to the Board to increase the share capital by up to NOK 15,608,000 through the issuance of up to 156,080,000 new shares in the Company. This authorization was subsequently used as part of the 29 February 2024 Private Placement. The Group holds the financial instruments necessary for its operations. The Group’s principal financial liabilities, other than interest-bearing borrowings and excluding the effects of IFRS 16, consist of trade and other payables and comprise most of the Group’s third-party financing. The Group’s principal financial assets consist of trade and other receivables, cash and restricted cash, restricted deposits, and other investments. The Group’s material accounting policies regarding financial instruments are disclosed in Note 1 – Summary of Material Accounting Policies, and the Group’s financial instruments are detailed in Note 13 – Financial Instruments. The Group believes it has sufficient financing to achieve proven state biomass and generate positive cash flow from operations. As it relates to US Phase 2 expansion, the Group has full discretion over the speed of the construction which allows the Group to better manage liquidity. Subsequently on 29 February 2024, the Group raised NOK 369.0m (approximately USD 35.0m) in gross proceeds through a private placement of 307,125,000 new shares, at a price per share of NOK 1.20. The issuance of the new shares was approved by the EGM on 22 March 2024. Further, the Group’s 2020 Credit Facility was amended further on 25 March 2024 which, among other things, extended the maturity date to 21 October 2026. See Note 23 – Subsequent Events for further detail. The Group’s risk management is carried out by the Group’s Finance Department. The Group is exposed to market risk, credit risk, and liquidity risk. Market Risk INTEREST RATE The Group’s interest rate risk relates primarily from borrowings from financial institutions with variable rate interest. When possible, the Group manages its interest rate risk by entering fixed-interest loans. The Group through ASUS holds the US Term Loan which carried an annualized borrowing rate of SOFR plus 5.0% as of 31 December 2023 (see Note 19 – Borrowings). The margin grid calls for a maximum of 5.0% and allows for a lower margin based on the net debt to EBITDA ratio. Currently, the Group does not maintain a program to hedge its variable rate exposure. Changes in the interest rate can affect future investment opportunities. INTEREST RATE SENSITIVITY For the years ended 31 December 2023 and 2022, the following represents the Group’s potential interest expense effect based on a 1% increase on the floating interest rate: (USD 1,000) 2023 2022Interest expense effect on a 1% increase on floating interest rate 454 598 GROUP RESULTS 135 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS (USD 1,000) 2023 2022USD 15,347 21,117 NOK 6,733 2,446 DKK 403 97 EUR 53 23 Total cash 22,536 23,683 Market Risk FOREIGN CURRENCY The Group’s foreign currency risk relates to the Group’s operating, investing, and financing activities denominated in a foreign currency. This includes the Group’s revenues, expenses, capital expenditures, and net investments in foreign subsidiaries. The Group’s reporting currency is the United States dollar (“USD”), and the predominant currencies transacted by the Group’s subsidiaries are the USD, the Norwegian krone (“NOK”), the Danish krone (“DKK”), and the EU euro (“EUR”). As of 31 December 2023 and 2022, all of the Group’s long-term interest-bearing borrowing balances were held in USD. As of 31 December 2023 and 2022, the Group’s cash balances were held in the following currencies: FOREIGN CURRENCY SENSITIVITY For the years ended 31 December 2023 and 2022, the Group’s sensitivity to exchange rate movement was limited to its exposure to monetary items in a currency different than their functional currency. The Group manages its foreign currency risk by maintaining cash balances in foreign currency denominated bank accounts, analyzing future obligations by currency, and transferring funds as needed. The Group has not entered into derivative or other agreements to reduce the exchange rate risk and the related market risk. Credit Risk Financial instruments, which potentially subject the Group to credit risk, consist principally of cash and trade receivables. Cash is maintained with major financial institutions. The Group extends credit to some of its customers and management recognizes that extending credit and setting appropriate reserves for accounts receivable is largely a subjective decision based on knowledge of the customer. Accordingly, the Group trades only with recognized and creditworthy third parties and does not require collateral on trade receivables from its customers. Management periodically evaluates credit exposure in the aggregate and by individual credit and periodically reviews the creditworthiness of its customers to ensure the overall quality of the Group’s credit portfolio. This takes into consideration expected 12-month and lifetime credit losses as well as other risks that may have arisen since original recognition. Further, the Group’s trade receivables are credit insured unless an exception is approved by the CEO. The Group has not experienced any material losses on its trade receivables. Credit risk associated with revenue is limited to the amount of trade receivables outstanding for each customer. GROUP RESULTS 136 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Liquidity Risk The Group continuously monitors liquidity and financial projections through budgets and monthly updated forecasts. The Group believes that it is appropriate to prepare the Annual Report based on a going concern assumption based on its forecasted performance in which it has sufficient financing to achieve proven state biomass and generate positive cash flow from operations. Subsequently, the 2020 Credit Facility was amended further on 25 March 2024 (see Note 23 – Subsequent Events for further details). The Group’s estimation on its future financial position and liquidity requirements is based on several key assumptions, which are subject to various risks and uncertainties: • Our internal outlook on price achievement (vs salmon spot prices, which have historically been volatile). • Impacts from fluctuations in production, harvest volumes, and biological issues. • Changes in feed process, which generally correlate to the marine and agricultural commodity prices of the main ingredients. • Full discretion over the speed of US Phase 2 construction, which may allow the Group to better manage liquidity, but at the potential cost of delays and timing of expanded production. The provisions of the amended 2020 Credit Facility contain financial covenants to be maintained by the Group (see Note 19 – Borrowings). The Group believes it has made reasonable judgments and estimates with respect to the key assumptions above. Should there be any potential adverse impacts or factors to the above that may materially affect the Group’s overall operational and construction plan, it could lead to a breach in the Group’s required minimum EBITDA covenant. In turn, this would require the Group to obtain a formal waiver from its Lenders to prevent outstanding borrowings from becoming currently due. AS OF TRADE AND INTEREST ON INTEREST 31 DECEMBER 2023 OTHER LEASE LEASE ON (USD 1,000)PAYABLESLIABILITIESLIABILITIES BORROWINGSBORROWINGS TOTALUp to 3 months 14,336 109 43 1,250 1,106 16,844 Between 3 and 12 months - 341 114 3,750 3,143 7,348 Between 1 and 2 years - 489 120 37,603 1,274 39,486 Between 2 and 5 years - 873 189 - - 1,062 Over 5 years - 367 187 - - 554  14,336 2,179 653 42,603 5,523 65,294 AS OF TRADE AND INTEREST ON INTEREST 31 DECEMBER 2022 OTHER LEASE LEASE ON (USD 1,000)PAYABLESLIABILITIESLIABILITIES BORROWINGSBORROWINGS TOTALUp to 3 months 11,698 101 51 1,450 903 14,203 Between 3 and 12 months - 315 140 18,550 1,726 20,731 Between 1 and 2 years - 473 156 26,837 705 28,171 Between 2 and 5 years - 1,357 271 - - 1,628 Over 5 years - 388 181 - - 569  11,698 2,634 799 46,837 3,334 65,302 The following are the remaining contractual maturities of the Group’s financial liabilities as of 31 December 2023 and 2022, which include gross undiscounted principal and interest payments and exclude the impact of netting agreements: The tenth amendment to the 2020 Credit Facility was formally signed and committed on 17 October 2023. The debt was structured under many of the same key terms while others were modified, and the total amounts were restructured into a fully committed credit facility of USD 165.9m and represents the amounts extended as of 31 December 2023 (see Note 19 – Borrowings for further details). Subsequently, the 2020 Credit Facility was amended further on 25 March 2024 (see Note 23 – Subsequent Events for further details). GROUP RESULTS 137 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 Segments The Group has two strategic divisions, which represent its reportable segments. The Group’s executive management reviews the internal management reports of each division. As of 31 December 2023 and 2022, the Group’s reportable segments consisted of the following: Denmark Operations The Group’s initial production facility in Hvide Sande, Denmark is a wholly owned subsidiary located on the west coast of Denmark and was in operation from 2011 to 2022. Since commencement of operations, approximately 45 batches of Atlantic salmon were introduced into the Denmark Bluehouse. The Denmark Bluehouse had an annual production capacity of approximately 2,400 tons HOG and a tank volume of approximately 17,000 m³, distributed across twenty tanks. Following the 15 September 2021 Denmark Bluehouse fire, production operations consisted of smolt production up until 2022 and clean-up efforts thereafter. On 10 May 2022, the Group agreed on a cash settlement of DKK 180.0m (USD 25.3m equivalent upon receipt in June 2022) which is included as part of the Group’s other income. The Group allocated the settlement proceeds towards US operations and construction, and the Group is currently reviewing its strategy for its Danish site with significant demolition efforts significantly complete by end of 2023. YEAR ENDED 31 DECEMBER 2023 DENMARK US OTHER AND(USD 1,000)OPERATIONSOPERATIONSELIMINATIONS CONSOLIDATEDRevenue from sale of salmon - 13,995 - 13,995 EBITDA (12) (111,651) (686) (112,349)EBITDA, pre-fair value adjustment (12) (97,556) (686) (98,254)EBITDA, adjusted (12) (62,556) (686) (63,254)Pre-tax income (loss) (65) (137,748) 4,055 (133,758)Total assets 1,246 329,292 11,720 342,258 Total liabilities 1,282 154,773 (96,937) 59,118 Depreciation and amortization 23 13,815 1 13,839 Interest income 4 743 769 1,516 Interest expense 34 13,025 (3,973) 9,086 Capital expenditures - 21,399 - 21,399 Cash flows from operating activities (153) (77,988) 379 (77,762)Cash flows from investing activities 4 (34,252) 767 (33,481)Cash flows from financing activities 378 103,758 6,189 110,325 * EBITDA adjusted for fair value adjustment on biological assets, impairment of non-current assets, and insurance settlement proceeds from Denmark US Operations The Group owns the land in Homestead, FL, US through ASSF and operates the proprietary Bluehouse land-based salmon farm through ASUS. US Phase 1 construction of the Miami Bluehouse was complete as of 31 December 2021 and is projected to reach full production in H2 2024 once the Group has a fully stocked Phase 1 facility. The US Phase 2 expansion project is currently under construction and is expected to add an additional estimated 15,000 tons HOG of annual production capacity, for a total capacity of approximately 25,000 tons HOG. For the years ended 31 December 2023 and 2022, the Group’s segment information consisted of the following: GROUP RESULTS 138 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022DENMARK US OTHER AND(USD 1,000)OPERATIONSOPERATIONSELIMINATIONS CONSOLIDATEDRevenue from sale of salmon - 18,954 - 18,954 EBITDA 37,974 (71,489) (14,527) (48,042)EBITDA, pre-fair value adjustment 37,974 (71,584) (14,527) (48,137)EBITDA, adjusted 12,652 (71,584) (14,527) (73,459)Pre-tax loss 37,904 (96,529) (6,381) (65,006)Total assets 910 351,821 4,820 357,551 Total liabilities 870 152,089 (91,790) 61,169 Depreciation and amortization 36 14,182 (1) 14,217 Interest income - 506 4,401 4,907 Interest expense 34 11,364 (3,744) 7,654 Insurance proceeds 25,322 - - 25,322 Capital expenditures - 52,447 - 52,447 Cash flows from operating activities 24,888 (79,055) 1,263 (52,904)Cash flows from investing activities - (56,323) 499 (55,824)Cash flows from financing activities (24,916) 148,757 (7,306) 116,535 * EBITDA adjusted for fair value adjustment on biological assets, impairment of non-current assets, and insurance settlement proceeds from Denmark For the years ended 31 December 2023 and 2022, significantly all the Group’s revenue consisted of the sale of salmon, and the Group’s disaggregation of revenue with customers consisted of the following:For the years ended 31 December 2022, the Group’s segment information consisted of the following: (USD 1,000) 2023 2022Revenue from external customers in:United States 13,806 18,604 Canada 189 350 Other countries - - Total revenue from external customers 13,995 18,954 For the years ended 31 December 2023 and 2022, the Group’s concentration of revenue consisted of the following: (USD 1,000) 2023 2022Sales per customer:Customer A 3,468 7,594 Customer B 1,226 1,402 Customer C 684 1,430 Customer D 650 177 Customer E 641 1,948 Other customers 7,326 6,403 Total revenue from external customers 13,995 18,954 GROUP RESULTS 139 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Selling, General, and Administrative Costs For the years ended 31 December 2023 and 2022, the Group’s selling, general, and administrative (“SG&A”) costs consisted of the following: Other Income, Net For the years ended 31 December 2023 and 2022, the Group’s other income, net consisted of the following: NOTE 4 Other Operating Expenses and Income (USD 1,000) NOTE 2023 2022General and administrative costs 4,444 5,845 Professional fees 7 2,233 2,411 Sales and marketing 1,113 1,385 Leases 8 68 357 Maintenance and supplies 126 451 Total selling, general, and administrative costs 7,984 10,449 (USD 1,000) 2023 2022Other income and gain 2,060 583 Income from insurance settlement - 25,322 Other expense and loss (137) (133)Disposal of non-current assets 4 (230)Total other income, net 1,927 25,542 The Group incurred property taxes of USD 1.4m (USD 1.1m through ASUS and USD 0.3m through ASSF) for the year ended 31 December 2023 and USD 1.6m (USD 1.2m through ASUS and USD 0.4m through ASSF) for the year ended 31 December 2022. The amounts are included as part of general and administrative costs within the Group’s SG&A costs. Insurance Settlement Proceeds On 10 May 2022, the Group agreed on a cash settlement of DKK 180.0m (USD 25.3m equivalent upon receipt in June 2022) which is included as part of the Group’s other income. The Group allocated the settlement proceeds towards US operations and construction, and the Group is currently reviewing its strategy for its Danish site given that demolition was significantly completed by end of 2023. GROUP RESULTS 140 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 Biological Assets Fair Value Measurement of Biological Assets Under the provisions of IAS 41, Agriculture, and IFRS 13, Fair Value Measurement, biological assets (“biomass”) are measured at fair value less cost to sell, unless fair value is not readily measured. Biomass comprises of salmon roe and live fish in tanks from fry to adult grow-out. The historical cost of biological assets (“production costs”) includes all costs required to raise salmon from roe to harvest. Direct production costs, which include salmon roe and other raw materials such as feed, are allocated fully to production costs. Indirect production costs, which consist of salary and personnel costs, depreciation, and other overhead costs, are allocated based on a ratio of actual vs hypothetical feed capacity per fish system that approximates normal capacity under IAS 2. Portions of indirect production costs attributed to underutilized Bluehouse tank capacity are recognized as period cost under cost of goods sold in the accompanying consolidated statements of operations. NON-HARVESTABLE FISH MEASURED AT COST Fish with a live weight below 1 kg, including salmon roe, are considered non-harvestable due to their little biological conversion and are therefore measured at historical cost (IAS 41.24). Fish measured at cost are routinely assessed for impairment losses whenever events or changes in circumstances indicate that the carrying value may not be recoverable. HARVESTABLE FISH MEASURED AT FAIR VALUE LESS COST TO SELL Fish held in tanks with a live weight over 1 kg are considered harvestable and is therefore calculated based on an implied estimated fair value of the fish in a hypothetical market using a future cash flow model that calculates the net present value of the estimated revenue cash flows from harvested biomass based on the available biomass as of the reporting period date as a starting point, less estimated remaining costs to sell until the fish is harvested from a specific batch. The Group utilizes several key assumptions to estimate the fair value of biological assets: • Estimated revenues: The key element in approximating fair value is the assumed market price expected to be achieved on the future date in which the fish is to be harvested. Our estimated market price is based on a variety of sources including, but not limited to, the Group’s historical sales prices achieved and quoted forward market prices as per the NASDAQ salmon index to improve reliability and comparability of the price estimation. • Remaining costs to sell: Estimated revenues are reduced by remaining costs to sell (production costs, processing costs, and freight costs) to determine the Group’s gross margin returned to farm. • Biological performance: Our estimated market price and remaining cost to sell are based on an overall understanding of the quality of the batch being harvested. Changes in biology, anticipated quality and size, or overall biomass volume may affect the market price and remaining costs to sell. • Time to market: The time to market for live fish is based on a growth table for each generation of fish. The Group considers a live fish weight of approximately 4 kg to be the optimal harvest weight with an expected growth period of approximately 20 to 22 months. • Mortality: Expected mortality rates are used to estimate the expected volume of biomass that will reach optimal harvest weight. On average, an estimated 64% of the number of fish is expected to reach the optimal harvest weight. This considers both natural mortality and culling. • Discount rate: The discount rate used towards the Group’s net present value calculation is based on the Group’s weighted average cost of capital. The difference between the fair value and the remaining cost to sell is recognized under fair value adjustments in the accompanying consolidated statements of operations to adjust the biomass value on the balance sheet accordingly. As the key assumptions above towards biomass input are not derived from observable markets, biomass valuation is categorized at Level 3 in the fair value hierarchy under IFRS 13. As of 31 December 2023, all biological assets weighing above 1 kg were classified as Level 3 and there were no transfers to or from Level 1 or Level 2 during the year. Incident-Based Mortality Incident-based mortality is recognized when a Bluehouse system experiences elevated or substantial mortality due to an incident out of expected normal capacity. In such cases, mortality expense is included as part of cost of goods sold in the accompanying consolidated statements of operations, and the fair value associated with the affected biomass is then adjusted under fair value adjustments in the accompanying consolidated statements of operations. GROUP RESULTS 141 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS As of 31 December 2023 and 2022, the Group’s biological assets consisted of the following: As of 31 December 2023 and 2022, the Group’s physical volumes of biological assets consisted of the following: The following represents a reconciliation of changes in the carrying amount of the Group’s consolidated biological assets for the years ended 31 December 2023 and 2022: (USD 1,000) 2023 2022Cost of biological assets 38,112 26,489 Fair value adjustments (21,894) (7,799)Total biological assets 16,218 18,690 Cost of biological assets (harvestable fish) 30,474 19,505 Fair value adjustments (21,894) (7,799)Total biological assets of harvestable fish 8,580 11,706 Cost of biological assets (non-harvestable fish) 7,638 6,984 Total biological assets 16,218 18,690 2023 2022Live weight of biomass (in tons RLW)Non-harvestable fish 647 581 Harvestable fish 2,402 1,815 Total live weight of biomass (in tons RLW) 3,049 2,396 Number of fish (in thousands)Non-harvestable fish 4,013 4,623Harvestable fish 1,558 1,152 5,571 5,775Volume of fish harvested during the year (tons gutted weight) 1,545 2,253 (USD 1,000) 2023 2022Biological assets at beginning of year 18,690 16,795 (Loss) gain arising from changes in fair value less costs to sell (14,095) 95 Increases due to production and purchases 72,568 66,267Net changes in production depreciation 586 (120)Decreases due to harvest (23,755) (28,738)Decreases due to mortality (12,150) (13,803)Decreases due to underutilized plant capacity (25,626) (21,789)Net exchange rate differences - (17)Biological assets at end of year 16,218 18,690 GROUP RESULTS 142 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Sensitivity Analysis Although the Group has acquired expertise in assessing various factors regarding biomass, the estimate of unrealized fair value adjustment under IFRS 13 is based on several uncertain assumptions, and the realized profit ultimately achieved upon the sale of inventory may differ from the calculations of fair value accordingly. Such assumptions include biomass volume and growth rate, biomass quality and size distribution, production costs, fish mortality, and market price. BIOMASS VOLUME AND GROWTH RATE: Biomass volume and growth rate is estimated from the changes between known tank density prior to the release of fish in tanks and the current tank density with live fish. The difference in densities is then used to estimate growth between any given period, which gives little uncertainty with respect to biomass volume and growth rate. BIOMASS QUALITY AND SIZE DISTRIBUTION: Biomass quality prior to harvest is estimated based on periodic samples obtained throughout the life of a given batch. However, the actual biomass quality for the entire batch population is difficult to assess prior to harvest and some degree of variation of quality is expected. Fair value is first assessed as superior quality fish and the estimated price per kg is reduced on downgraded ordinary and production grade fish based on standard rates from industry benchmarks. Biomass size distribution prior to harvest is estimated from counting and grading systems prior to harvest. Although some degree of variation is expected, actual fish size is not expected to deviate substantially from the average distribution for the overall batch and therefore, the Group’s estimated value of biomass with this respect. PRODUCTION COSTS: Estimated future production costs are based on the Group’s prognoses taking into consideration factors such as uncertainty with feed prices or other biomass cost developments. Changes in the Group’s estimation towards production costs would influence the value of biomass and are recognized accordingly as part of the fair value adjustments in the accompanying consolidated statements of operations. FISH MORTALITY: Mortality under normal capacity is expected and directly affects the fair value estimates as it ultimately results in a reduction in harvestable biomass volumes. Further, overall production costs for a given batch includes the cost of fish that will perish under expected mortality. MARKET PRICE: The key element in the fair value model of biological assets is the estimated forward market price that is expected to be received in the future when the fish is harvested. The estimated market price in each market is normally derived from the Group’s latest price achievement and overall understanding of the quality of the batch being harvested. An increase in anticipated forward market prices would increase the fair value of the biological assets and vice versa. A change in production costs will generally have lesser impact on the estimated fair value calculation than a similar change in anticipated forward market prices. The fair value of the Group’s biological assets was calculated based on different parameters. As of 31 December 2023 and 2022, the estimated effect on the book value of biological assets was as follows: (USD 1,000) INCREASE 2023 2022Change in biomass size 2% 403 217 Change in forward price 2% 490 272 Change in discount rate 2% (86) (48) Incident-Based Mortality During the year ended 31 December 2023, ASUS experienced elevated mortality levels in the periods where water quality conditions were suboptimal as described in the Board of Directors’ report, but no single incident-based mortality occurred. During the year ended 31 December 2022, ASUS experienced above normal and increasing mortality in certain systems, notably from September 2022 through December 2022. In turn, fish from these systems were harvested earlier and at a lower average weight of approximately 2kg HOG than originally planned. A thorough investigation and audit of our systems was set in place and no sign of diseases or any issues with any production inputs were identified. ASUS attributed the elevated mortality levels primarily to sedimentation and anoxic areas inside the RAS systems. Accordingly, an action plan was executed to reset and upgrade all biofilters, to enact organizational changes, protocol improvements, and upgrades to equipment and automation. Additionally, over 100 new camera inspection points were installed in the RAS systems to enable us to monitor new areas through visible inspection that were not previously available due to the design of the systems and to minimize the potential risk of sludge sedimentation. GROUP RESULTS 143 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS During the ordinary course of business, the Group capitalizes portions of total salary and personnel costs towards biological assets and assets under construction. For the years ended 31 December 2023 and 2022, the Group’s salary and personnel costs consisted of the following: For the years ended 31 December 2023 and 2022, the Group employed 158 and 177 full-time employees, respectively. For the years ended 31 December 2023 and 2022, total compensation to the Group’s Board of Directors consisted of the following: (USD 1,000) 2023 2022Salaries, including holiday pay and bonuses 14,509 17,100 Payroll taxes 1,167 1,119 Pension costs 392 346 Share-based compensation benefits (365) 576 Temporary labor 725 893 Other payroll costs and benefits 164 278 Total salary and personnel costs 16,592 20,312 Less: production labor capitalized towards biological assets (9,977) (10,083)Less: construction labor capitalized towards assets under construction (450) (1,632)Less: processing labor recognized towards cost of materials (2,114) (2,303)Total administrative salary and personnel costs 4,051 6,294 (USD 1,000) 2023 2022Kenneth Jarl Andersen, Chairman (2, 5) 99 34 Johan E. Andreassen, Chairman (4) - - Eirik Welde, Deputy Chairman 50 - Marta Rojo Alonso, Director (5) 57 - Tone Bjørnov, Director (4) 23 89 Patrice Flanagan, Director (4) 21 64 Alexander Reus, Director (3) - 68 André Skarbø, Director 68 64 Ellen Marie Sætre, Director 72 74 Runar Vatne, Director (1) - 34 Total Board of Directors 390 427 (1) Stepped down on 3 August 2022(2) Stepped in on 3 August 2022(3) Stepped down on 5 December 2022(4) Stepped down on 23 May 2023(5) Stepped in on 23 May 2023 NOTE 6 Salary and Personnel Costs GROUP RESULTS 144 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS For the years ended 31 December 2023 and 2022, the Group’s remuneration to executive management consisted of the following: EXECUTIVE MANAGEMENTPENSIONOTHERSHARE-BASED(USD 1,000) SALARY BONUSCONTRIBUTIONBENEFITS TOTALCOMPENSATIONYear ended 31 December 2023Johan E. Andreassen, CEO 500 - 13 2 515 848 Alejandro Castro, CBO (Stepped down on 26 March 2023) 69 - 3 - 72 - Valerie Leath, Director of Human Resources (Stepped in 01 March 2023) 168 3 7 2 180 7 Jon-Birger Løvik, COO (Stepped down on 30 November 2023) 300 - 12 2 314 - Karl Øystein Øyehaug, CFO 270 - 10 2 282 246 Mario Palma, COO (Stepped in on 30 October 2023) 228 9 - - 237 - Svein Taklo, CDIO 296 - 12 2 310 - Total remuneration to executive management 1,831 12 57 10 1,910 1,101 Year ended 31 December 2022Johan E. Andreassen, CEO 500 - 12 - 512 - Alejandro Castro, CBO 255 - 10 - 265 - Jon-Birger Løvik, COO (Stepped in on 7 March 2022) 308 - 7 - 315 - Karl Øystein Øyehaug, CFO and Managing Director of ASA 255 - 10 - 265 - Svein Taklo, CDIO 290 - 12 - 302 - Danielle Villoch, CLO (Stepped down on 19 June 2022) 127 - 5 - 132 - Total remuneration to executive management 1,735 - 56 - 1,791 - Total remuneration to executive management is included as part of total salary and personnel costs in the accompanying consolidated statements of operations. A bonus scheme is in place for executive management based on the Group’s revenue, operating profits, and commensurate performance. The Group’s remuneration to executive management consists of the Group’s ordinary pension schemes (see Note 20 – Pensions) and no additional pension scheme for executive management is in place. There are severance clauses in each respective executive officer’s employment agreements with varying terms based on termination for cause or not-for-cause. For the year ended 31 December 2023, USD 23k was paid to Jon-Birger Løvik (who stepped down as the Group’s COO on 30 November 2023). For the year ended 31 December 2022, USD 177k was paid to Dharma Rajeswaran (who stepped down as the Group’s COO on 16 August 2021) and USD 164k was paid to Cristina Espejo (who stepped down as the Group’s CPO on 11 August 2021). GROUP RESULTS 145 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Board of Directors’ Statement on Remuneration of Executive Management The Group’s Board of Directors determines the principles applicable to the Group’s policy for compensation of executive management and, as a separate document from this Annual Report, presented its statement on such principles for the 2022 financial year during the Group’s Annual General Meeting (“AGM”) in accordance with Section 6-16a of the Norwegian Public Limited Liability Companies Act. Pursuant to Section 5-6 (3) of the Norwegian Public Limited Companies Act, the Group’s AGM held a consultative vote over this statement. However, the guidelines related to share-based incentive schemes (see “Long-Term Incentive Program” below) was voted on and binding for the Group’s Board of Directors (cf. Section 5-6 (3) of the Norwegian Public Limited Companies Act). The following principles guide the determination of compensation and other incentive awards regarding the remuneration of the Group’s executive management. The Group’s remuneration policy seeks to promote growth, reward performance, and motivate executive management to maximize the creation of sustainable, long-term shareholder value. GUIDELINES FOR EXECUTIVE MANAGEMENT COMPENSATION Atlantic Sapphire’s long-term goal is to transform the salmon farming industry and become a global leader in sustainable, high-quality protein production through innovation and the responsible implementation of land-based aquaculture technology. Executive management plays a critical role in achieving this goal. The principles supporting the Group’s remuneration policy are as follows: • Offer executive compensation that is competitive, both on industry and national (US) levels, to attract and retain top managerial talent. • Emphasize a collaborative culture and a lean organizational structure. • Provide incentives that foster the creation of sustainable, long term shareholder value. • Ensure that the Group’s executive management is aligned with key organizational goals. FIXED COMPENSATION Fixed compensation comes in the form of base salaries paid to executive management and are intended to attract and retain talented individuals. It is set to reflect market standards, each executive’s respective roles and responsibilities within the Group, as well as such person’s experience as it relates to his or her position. Over time, Atlantic Sapphire expects the base salaries of executive management to be at or around the market median for comparable positions in the industry and in the US. The Group may pay above or below the market median for certain individuals for a variety of reasons, including, but not limited to, knowledge and skill, scarcity of qualified candidates, individual capabilities and contributions, time in the industry and organization, importance of the role to the Group overall and potential for future growth. VARIABLE COMPENSATION The Group offers a short-term annual cash incentive program plan designed to drive desired performance and business results throughout the Group. This program is based on predetermined goals and key performance indicators for each fiscal year with corresponding compensation awards determined at a “minimum”, “target”, or a “maximum” level. The program for 2023 was comprised of the following three performance areas: US construction costs, biomass growth, and EBITDA. This program has a maximum payout for any senior executive at 12% of such an individual’s annual base salary. No amounts were paid out in 2023 or 2022 with this respect. LONG-TERM INCENTIVE PROGRAM The key objectives of Atlantic Sapphire’s long-term incentive (“LTI”) program are to align the interests of executive management, employees and shareholders and provide the Group’s employees an opportunity to share in the value creation and long-term development of the Group. The Group has a share option scheme that was approved by the Group’s Annual General Meeting in 2022, which authorized up to 2,000,000 shares. In 2022, no new share options were granted to employees under the share option scheme, and no options were granted as part of the Group’s annual long-term incentive program. On 23 May 2023, a share option scheme was approved by the Group’s Annual General Meeting in 2023 that granted 14,000,000 share options to the CEO and 2,800,000 share options to the CFO. During 2023, an additional 1,710,000 share options were granted to other key personnel. See Note 18 – Share Option Program for further details. Individual LTI grants will be determined based on the Group’s performance, comparable market practices and performance. At this time, the LTI grants provided by the Group include the following: 1) Share options granted at the five-day trading average as of the date of grant, and 2) Performance-based share options granted at a strike price of 30% above the five-day trading average as of the date of grant. All share options referenced above and granted under the LTI program are subject to a four-year vesting period and certain other requirements. RETIREMENT BENEFITS The Group has a 401(k) plan, which is open to all employees after the first three months of employment. The Group will make a matching contribution on each employee’s behalf equal to (1) 100% of such employee’s contribution up to 3% of such employee’s base salary, plus (2) 50% of the amount of such employee’s contribution that exceeds 3% of base salary, up to 5% of the employee’s base salary, for the calendar year. The 401(k) plan has no vesting requirements. SEVERANCE PAY The Group has individual employment agreements with executive management, which also provide for certain terms and conditions with respect to notice periods and severance pay should the Group terminate or request the resignation of the executive. BENEFITS IN KIND In addition to fixed and variable compensation, members of executive management are provided with other benefits, such as a mobile phone, laptop, and transportation reimbursement. Executive management also receive health, vision, and dental insurance, as well as short-term and long-term disability and life insurance. Other than health insurance, the total value of these benefits are de minimis and account only for a limited portion of each executive’s total remuneration package. GROUP RESULTS 146 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS For the years ended 31 December 2023 and 2022, remuneration to the Group’s auditors, excluding VAT, consisted of the following: Total amounts towards auditor’s fees are included as part of professional fees in SG&A costs (see Note 4 – Other Operating Expenses and Income). NOTE 7 Auditor’s Fees (USD 1,000) 2023 2022Statutory auditing services 586 380 Tax advisory services - - Other services - - Total auditor's fees 586 380 For the years ended 31 December 2023, the reconciliation of the Group’s right-of-use asset and liability consisted of the following: The Group leases certain land, offices, vehicles, and equipment under various lease agreements with lessors under IFRS 16, Leases, in which the Group establishes a right-of-use asset and lease liability for material leases. The Group’s leases do not contain variable lease payment terms. For the years ended 31 December 2023 and 2022, total rent expense recognized under the short-term exemption under IFRS 16 consisted of USD 0.1m and USD 0.4m, respectively, and is included as part of leases in SG&A costs (see Note 4 – Other Operating Expenses and Income). NOTE 8 Leases YEAR ENDED 31 DECEMBER 2023RIGHT-OF-USE LEASE (USD 1,000)ASSETLIABILITYCarrying amount, opening balance 2,512 2,634 Amortization (495) - Lease payments - (418)Termination of agreements (54) (50)Currency effects 8 13 Carrying amount, closing balance 1,971 2,179 GROUP RESULTS 147 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS For the years ended 31 December 2023 and 2022, amortization of the Group’s right-of-use assets was USD 0.5m and USD 0.3m, respectively, and is included as part of depreciation and amortization in the accompanying consolidated statements of operations. Lease liability interest expense for both years ended 31 December 2023 and 2022 was USD 0.2m, and the amounts are included as part of finance expense in the accompanying consolidated statements of operations. Land Lease The Denmark Bluehouse was built upon land that is currently leased under an agreement with a third party. The current lease commenced on 1 April 2018 and expires on 31 October 2037. Equipment Leases During the ordinary course of business, the Group leases certain equipment under lease agreements with third parties to facilitate operations. ASDK held a lease for its automated feed system through a right-of-use asset and the related lease liability. As a result of the September 2021 Denmark fire, an impairment was recognized over the right-of-use asset and the related lease liability was settled in 2022. In 2022, ASUS entered into lease agreements of processing equipment in Miami, Florida under Meridian Leasing. Subject to the provisions of the lease agreements, two separate components were identified: a fileting line and a packing line with total minimum lease contract payments of approximately USD 2.5m and USD 0.3m, respectively. In accordance with IFRS 16, ASUS recognized the present value of the allocated minimum lease payments towards the filleting line and packing line components as a right-of-use YEAR ENDED 31 DECEMBER 2022RIGHT-OF-USE LEASE (USD 1,000)ASSETLIABILITYCarrying amount, opening balance 2,604 3,166 New contracts 2,361 2,361 Amortization (333) - Lease payments - (262)Termination of agreements (2,095) (2,584)Currency effects (25) (47)Carrying amount, closing balance 2,512 2,634 For the years ended 31 December 2022, the reconciliation of the Group’s right-of-use asset and liability consisted of the following: Future Lease Payments As of 31 December 2023 and 2022, the Group’s future lease payments under non-cancellable leases consisted of the following: (USD 1,000) LAND VEHICLES EQUIPMENT TOTALAs of 31 December 2023Less than one year 35 - 572 607 Between one and five years 211 - 1,460 1,671 More than five years 555 - - 555 Total future lease payments 801 - 2,032 2,833 As of 31 December 2022Less than one year 35 10 571 616 Between one and five years 160 10 2,032 2,202 More than five years 584 - - 584 Total future lease payments 779 20 2,603 3,402 asset and the related lease liability in June and December 2022, respectively. The fileting line and packing line lease terms commenced on 1 July 2022 and 1 January 2023, respectively, and both respective components are payable in 60 monthly installments based on an annual interest rate of Prime Lending Rate plus 4.5%. In January 2021, ASUS experienced a breakdown in its internal chiller plant causing temporary temperature instability. As a result, ASUS incurred costs including USD 4.4m and USD 5.9m on temporary chiller leases for the years ended 31 December 2023 and 2022, respectively. Amounts prior to 2023 were immediately written off as part of underutilized plant capacity within the Group’s cost of goods sold and amounts from 2023 onwards were prospectively capitalized as part of monthly cost of production. The Group subsequently incurred approximately USD 1.1m in temporary chiller leases as of the date of this report. GROUP RESULTS 148 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS As of 31 December 2023 and 2022, the Group’s property, plant, and equipment, net consisted of the following: PRODUCTION, EQUIPMENT PLANT, AND AND OTHER ASSETS UNDER (USD 1,000) LAND BUILDINGSMACHINERYMOVABLES SOFTWARECONSTRUCTION TOTALAt 1 January 2023Cost 8,714 157,519 111,057 3,643 765 99,055 380,753 Less: accumulated depreciation, amortization, and impairment - (29,564) (45,912) (1,278) (504) (373) (77,631)Opening net book amount 8,714 127,955 65,145 2,365 261 98,682 303,122 Year ended 31 December 2023Opening net book amount 8,714 127,955 65,145 2,365 261 98,682 303,122 Additions - - - - - 21,401 21,401 Depreciation and amortization charge - (4,658) (8,498) (548) (225) - (13,929)Impairment loss - (14,985) (9,107) (336) - (10,572) (35,000)Net exchange rate differences - 5 - - - - 5 Closing net book amount 8,714 108,317 47,540 1,481 36 109,511 275,599 At 31 December 2023Cost 8,714 157,524 111,057 3,643 765 120,456 402,159 Less: accumulated depreciation, amortization, and impairment - (49,207) (63,517) (2,162) (729) (10,945) (126,560)Closing net book amount 8,714 108,317 47,540 1,481 36 109,511 275,599 Economic life (Perpetuity) 15-25 years 10-15 years 3-7 years 3 years (not in service)Depreciation plan (Perpetuity) 20 years 15 years 5 years 3 years (not in service) NOTE 9 Property, Plant, and Equipment GROUP RESULTS 149 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS As of 31 December 2023 and 2022, the Group’s property, plant, and equipment, net consisted of the following: PRODUCTION, EQUIPMENT PLANT, AND AND OTHER ASSETS UNDER (USD 1,000) LAND BUILDINGSMACHINERYMOVABLES SOFTWARECONSTRUCTION TOTALAt 1 January 2022Cost 8,714 154,833 96,616 1,364 782 66,007 328,316 Less: accumulated depreciation, amortization, and impairment - (24,905) (37,414) (888) (287) (373) (63,867)Opening net book amount 8,714 129,928 59,202 476 495 65,634 264,449 Year ended 31 December 2022Opening net book amount 8,714 129,928 59,202 476 495 65,634 264,449 Additions - - - 12 (17) 52,454 52,449 Reclassifications 2,697 14,442 2,267 - (19,406) - Depreciation and amortization charge - (4,659) (8,498) (390) (217) - (13,764)Net exchange rate differences - (11) (1) - - - (12)Closing net book amount 8,714 127,955 65,145 2,365 261 98,682 303,122 At 31 December 2022Cost 8,714 157,519 111,057 3,643 765 99,055 380,753 Less: accumulated depreciation, amortization, and impairment - (29,564) (45,912) (1,278) (504) (373) (77,631)Closing net book amount 8,714 127,955 65,145 2,365 261 98,682 303,122 Economic life (Perpetuity) 15-25 years 10-15 years 3-7 years 3 years (not in service)Depreciation plan (Perpetuity) 20 years 15 years 5 years 3 years (not in service) GROUP RESULTS 150 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Depreciation and Amortization Expense For the years ended 31 December 2023 and 2022, the Group’s depreciation and amortization consisted of the following: Gross depreciation attributed to the US Phase 1 Bluehouse is capitalized to biological assets during production and subsequently expensed as period cost upon the harvest of live fish out of the Bluehouse. As such, the total depreciation and amortization expense presented on the Group’s accompanying consolidated statements of operations includes the net effect of biomass depreciation from production and harvest. Debt Secured by Borrowings Substantially all the Group’s property, plant, and equipment are secured by its borrowings (see Note 19 – Borrowings). Contractual Commitments The Group has built, or is in the process of building, Bluehouse facilities in Homestead, Florida, US. As of 31 December 2023 and 2022, significant capital expenditures contracted for at the end of the reporting periods, but not recognized as liabilities, were related to US Phase 2 construction based on signed bid packages. Such amo unts are based on projected billings on work completed based on the speed of construction determined solely at the Group’s discretion. The Group expects to incur only demobilization costs should the scope of work not be completed. Impairment of Non-Current Assets ATLANTIC SAPPHIRE USA LLC For the year ended 31 December 2023, certain indicators existed that led us to test for impairment under IAS 36. Such factors included market value declines in ASA’s share price from 2022 to 2023, accumulated losses from prior years, higher-than-normal mortality levels and production challenges throughout 2023, and external market factors that caused inflationary pressure and increased market interest rates. For purposes of the impairment assessment, we viewed both Phase 1 and Phase 2 of the Miami Bluehouse as one single cash generating unit (“CGU”) for ASUS. Phase 2 expansion comprises ongrowing saltwater farm capacity to Phase 1 and is reliant on the existing freshwater systems to bring biomass from egg to smolt. Therefore, Phase 2’s ability to increase overall farm capacity with ongrowing saltwater systems cannot exist without the existence of Phase 1. The impairment assessment consisted of a discounted cash flow analysis based on forecasts for the next 5 years, with a terminal value thereafter, based on underlying key assumptions as detailed below, which are subject to various risks and uncertainties. As the key assumptions are not derived from observable markets, the recoverable amount of the CGU calculated is categorized at Level 3 in the fair value hierarchy under IFRS 13. Should there be a change in such assumptions or performance, which directly influence our discounted cash flow projections and scenarios, such change may result in a need to adjust or reverse the impairment allowance in future periods. The Group believes it has made reasonable judgments and estimates with respect to the underlying key assumptions below: • Discount rate. • Production and harvest assumptions. • EBITDA / margins. • Capital expenditure assumptions. • Weighted scenario analyses that contemplated sensitivity on the key inputs indicated above. Discount Rate To discount cash flows towards our discounted cash flow analysis, we used an internal weighted average cost of capital (“WACC”) calculation of 9.1%. The WACC is estimated based on a market approach and management applied an extra risk factor of 1% point on top of our baseline WACC given our limited operational history and as a new part of the salmon farming industry, and use of a weighted scenario approach. The growth rate in the terminal year is assumed to be zero. Production and Harvest Assumptions Baseline Phase 1 production and harvest assumptions were based on those used towards the 2024 budget and subsequent modifications to the revised forecast. Our biological growth assumptions are based on empirical data obtained from the conventional industry and supported by growth seen under similar conditions in other land-based facilities. Although we believe that it is possible to achieve higher growth rates upon proven state, we also acknowledge that we’ve historically faced operational challenges that have affected our ability to maintain stable water quality at times. Therefore, at times, we may adjust the expected growth and resulting harvest at the individual batch level in the facility to provide a more accurate view specific to the respective batch. (USD 1,000) 2023 2022Fixed asset depreciation and amortization 13,929 13,764 Right of use depreciation 496 333 Changes in biomass (586) 120 Total depreciation and amortization 13,839 14,217 GROUP RESULTS 151 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Under Phase 1 proven state production, the Phase 2 production ramp-up is modeled to start approximately nine months prior to the commissioning of Phase 2 saltwater systems. The commissioning of Phase 2 increases production flexibility, allowing for an increase in harvest weights which temporarily results in lower harvest volumes to reach a fully stocked farm. This will result in accumulation of balance sheet cost of production and operational losses until total combined Phase 1 and 2 proven state standing biomass is achieved and full Phase 2 harvest can commence. Phase 1 Bluehouse design capacity is 9.5k kg HOG annual production, and Phase 2 Bluehouse design capacity provides for an additional 15.5k kg HOG annual production. Therefore, combined annual production capacity upon proven state Phase 1 and 2 is approximately 25.0k kg HOG. EBITDA / Margins • The budgeted EBITDA margin is expected to ramp up to 28% by terminal year. • Revenue / kg (HOG) is expected to increase once average harvest sizes and product quality have reached targeted levels, corresponding to an EBITDA / kg (HOG) of USD 4.2. • Cost of production: Variable costs are expected to directly correlate with the level of production and standing biomass levels. Of note, average feed costs are expected to be steady at approximately USD 2/kg. Overhead costs are expected to increase in correlation to the available volume of commissioned systems used in production. • Selling, general, and administrative costs: General administrative costs are expected to slightly increase over time while selling costs are expected to increase in line with the increase in harvest and revenue volumes. Capital Expenditure Assumptions In 2023, the Group decided to pause Phase 2 construction while focusing on delivering the Phase 1 business first. As of 31 December, approximately 40% of Phase 2 construction had been completed. The Group assumes to be ready to resume construction with a final budget and design towards the end of H2 2024, but the decision to move ahead remains solely at the Company’s discretion and subject to having the necessary financing in place. Our baseline scenario below assumes the completion and commissioning of Phase 2 construction by the terminal year for modeling purposes. Sensitivity Analysis An EBITDA sensitivity of +/- 15% was incorporated in reference to scenarios C and D above towards the calculated NPV for the scenarios presented. An additional WACC sensitivity of +/- 0.5% would affect the above weighted scenarios as follows: INPUT DESCRIPTION (USD MILLIONS) SENSITIVITYEFFECT ON WEIGHTED NPVWACC sensitivity +0.5% (33)WACC sensitivity -0.5% 35 Weighted Scenario Assessment Given the impairment indicators above, notably the current market cap lower than the balance value of the Group’s net assets, management utilized weighted scenarios towards its value in use test on the CGU based on the discounted cash flow analysis to quantitatively demonstrate risk directly as follows: • Scenario A – Baseline (25% weight): The baseline scenario represents the Company’s best assessment of the business today, and it is understood that the achievement of economies of scale is driven by the completion of Phase 2 construction and beyond. Although this is regarded as the most likely scenario and would have not resulted in an estimated impairment as a standalone, higher weights were assigned to the unfavorable scenarios below given our historical operational challenges and in the interest of taking a conservative approach. • Scenario B – Phase 1 only (10%): Based on the baseline scenario above, Company’s clear expectation is that the goal is to finalize Phase 2 design and construction as soon as possible. Although not expected, a weight was assigned to this scenario to be conservative. • Scenario C – EBITDA +15% (5% weight): The Company assigned a lower weight to a scenario in which EBITDA was 15% above our baseline scenario given past performance. • Scenario D – EBITDA -15% (60% weight): Given previous past performance and taking a more conservative approach, the Company has assigned over double the baseline’s weight to this scenario in which EBITDA was 15% under the baseline scenario from any single factor or combination thereof. We also added a price risk on remaining Phase 2 construction costs to complete at the higher range of our estimate. GROUP RESULTS 152 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS For the years ended 31 December 2023 and 2022, finance income and expense, net consisted of the following: In accordance with IFRS 9, Financial Instruments, debt modification costs are considered towards presenting borrowings at amortized cost using the effective interest rate method and amortized over the life of borrowings as part of finance and commitment fees as part of total finance expense, net in the accompanying consolidated statements of operations. For the years ended 31 December 2023 and 2022, ASUS incurred USD 1.6m and 1.4m of debt modification costs in connection with the amended 2020 Credit Facility, respectively. As of 31 December 2022, USD 0.3m of unamortized effective interest over the stated interest was recognized against borrowings. Upon further amendment in 2023, the existing net carrying value of the Group’s borrowings was compared against the net present value of revised cash flows under the updated terms of borrowing. As a result, a modification loss on borrowings was recognized based on the difference between the stated interest over the effective interest and for the year ended 31 December 2023, the Group recognized USD 0.6m of loss on loan modification. As of 31 December 2023, the unamortized effective interest premium in connection to 2023 debt modifications was USD 0.5m and presented as part of borrowings in the Group’s consolidated statements of position. No proceeds from borrowings were obtained in 2022 or 2023 towards construction that would require interest to be capitalized under IAS 23, Borrowing Costs. As such, all borrowing costs were expensed as period cost as interest expense during the years ended 31 December 2023 and 2022. For both years ended 31 December 2023 and 2022, other finance income consisted of USD 0.2m in a patronage refund in connection with the amended 2020 Credit Facility (see Note 19 – Borrowings). NOTE 10 Finance Income and Expense (USD 1,000) 2023 2022Interest income 1,290 618 Interest expense (4,925) (4,005)Loss on loan modification (601) - Finance and commitment fees (3,554) (3,649)Other finance income 226 202 Currency exchange effects (6) 4,087  (7,570) (2,747) ATLANTIC SAPPHIRE DENMARK A/S On 15 September 2021, a fire broke out in the Denmark Bluehouse. Substantially all property, plant, and equipment related to its saltwater ongrowing systems were lost in the fire and an impairment of non-current assets of USD 34.8m was recognized. On 10 May 2022, the Group agreed on a cash settlement of DKK 180.0m (USD 25.3m equivalent upon receipt in June 2022) which is included as part of the Group’s other income (see Note 4 – Other Operating Based on our procedures and given the impairment indicators above, notably the current market capitalization of the Group being lower than the balance value of the Group’s net assets, the Group estimated the recoverable amount of the CGU to be lower than the carrying amount of the CGU as of 31 December 2023 as follows: As such, the Group elected to recognize a USD 35.0m impairment allowance of non-current assets in the US and allocated the amount based on each respective fixed asset category’s cost basis as of the 31 December 2023 year end. (USD MILLIONS) NPV WEIGHT % WEIGHTED NPVScenario A: Baseline 410 25% 103Scenario B: Phase 1 only 28 10% 3Scenario C: EBITDA (+15%) 505 5% 25Scenario D: EBITDA (-15%) 296 60% 178 100% 309Carrying amount of the CGU (as of 31 December 2023) 344Estimated impairment allowance (35) Expenses and Income). No adjustment or reversal of the impairment allowance has been recognized upon further assessment since the initial recognition in 2021. GROUP RESULTS 153 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS For the years ended 31 December 2023 and 2022, the Group’s income tax expense consisted of the following: For the years ended 31 December 2023 and 2022, the reconciliation of the Group’s tax expense with the Norwegian tax rate consisted of the following: (USD 1,000) 2023 2022Income tax expenseCurrent tax - - Deferred tax - - Income tax expense (benefit) - - Current tax on profits for the year - - Current tax - - Deferred tax due to changes in temporary differences (35,478) (15,975)Effect of change in tax rate 12 1,968 Tax losses for which no deferred tax asset is recognized 35,466 14,007 Deferred tax - - Effective tax rate 0.00% 0.00% (USD 1,000) 2023 2022Reconciliation of tax benefit with the nominal tax rate(Loss) profit before tax (133,758) (65,006)Nominal tax rate 22.00% 22.00%Expected tax benefit using nominal tax rate (29,427) (14,301)Non-deductible expenses (income) (1,296) (855)Effect from different tax rate in other countries (3,409) (1,973)Tax losses for which no deferred tax asset is recognized 34,132 17,003 Non-deductible share-based payment expenses - 126 Income tax - - NOTE 11 Taxes GROUP RESULTS 154 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Changes in Tax Rate The nominal tax rate in Norway remained at 22% in 2023 and 2022. The Group’s set-off tax represents a netting of deferred tax liabilities against deferred tax assets given that the Group’s deferred tax assets exceeded deferred tax liabilities as of 31 December 2023 and 2022. As of 31 December 2023 and 2022, the Group’s deferred tax balances consisted of the following: As of 31 December 2023 and 2022, the Group’s carry forward of tax losses consisted of the following: As of 31 December 2023, the Group had an estimated USD 433.0m of carry forward of tax losses attributed to Norway (USD 11.6m), Denmark (USD 40.9m), and US (USD 386.6m). (USD 1,000) 2023 2022Deferred tax balancesThe balance comprises temporary differences attributable to:Deferred tax assets:Tax losses 104,795 84,114 Property, plant, and equipment 1,525 1,788 Lease liability 433 526 Other 5,437 2,021 Employee stock options 969 - Set-off tax (6,025) (16,779)Net deferred tax assets after set-off 107,134 71,670 Unrecognized deferred tax assets (107,134) (71,670)Net deferred tax assets - - Deferred tax liabilities:Property, plant, and equipment 5,614 16,262 Right of use asset 411 517 Other - - Set-off tax (6,025) (16,779)Net deferred tax liabilities - - (USD 1,000) 2023 2022Tax losses carried forwardExpires (2033 and forward) 4,320 4,320 Never expires 434,814 353,687 Total tax losses carried forward 439,134 358,007 Tax losses for which deferred tax asset is recognized - - Tax losses for which no deferred tax asset is recognized 439,134 358,007 Potential tax benefit 104,795 84,114 GROUP RESULTS 155 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Basic earnings per share calculations are based on the weighted average number of common shares outstanding during the period, while diluted earnings per share calculations are performed using the average number of common shares and dilutive common shares equivalents outstanding during each period. Options are dilutive when they result in the issue of ordinary shares for less than the average market price of ordinary shares during the period. The difference between the number of ordinary shares issued and the number of ordinary shares that would have been issued at the average market price in the period is treated as an issue of ordinary shares for no consideration. For the years ended 31 December 2023 and 2022, the Group’s earnings per share consisted of the following: 2023 2022Loss attributable to the ordinary equity holders of the Group (133,758,000) (65,006,000)Loss for calculation of diluted earnings per share (133,758,000) (65,006,000)Weighted average number of shares outstanding 379,961,553 123,298,000 Stock options - - Weighted average number of ordinary and potential shares 379,961,553 123,298,000 Basic earnings per share (USD per share) (0.35) (0.53)Diluted earnings per share (USD per share) (0.35) (0.53)Retrospectively adjusted weighted average number of shares outstanding 408,065,954 147,770,382 Stock options - - Retrospectively adjusted weighted average number of ordinary and potential shares 408,065,954 147,770,382 Retrospectively adjusted basic earnings per share (USD per share) (0.33) (0.44)Retrospectively adjusted diluted earnings per share (USD per share) (0.33) (0.44) * Stock options are not included in the calculation of diluted earnings per share because they are anti-dilutive and would decrease loss per share. NOTE 12 Earnings per Share Under IAS 33, the calculation of earnings per share for the years ended 31 December 2023 and 2022 were presented retrospectively and adjusted as the private placements in 2023 and 2024 represented shares issued below the market rate prior to the respective transactions. Following the 19 September 2023 private placement and subsequent offering, the number of shares for 2022 and 2023 prior to the new shares were adjusted with a factor of 1.03, while an additional factor of 1.05 was used for both 2022 and 2023 following the subsequent 29 February 2024 private placement. GROUP RESULTS 156 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS As of 31 December 2023 and 2022, the Group’s financial instruments consisted of the following: FINANCIAL ASSETSAMORTIZED FAIR VALUE (USD 1,000)COSTTHROUGH OCI TOTALAs of 31 December 2023Trade and other receivables 1,636 - 1,636 Cash 22,536 - 22,536 Restricted cash 415 - 415 Restricted deposits 15,172 - 15,172 Other investments - 6 6  39,759 6 39,765 As of 31 December 2022Trade and other receivables 3,190 - 3,190 Cash 23,683 - 23,683 Restricted cash 420 - 420 Other investments - 6 6  27,293 6 27,299 FINANCIAL LIABILITIESAMORTIZED FAIR VALUE (USD 1,000)COSTTHROUGH OCI TOTALAs of 31 December 2023Trade and other payables 14,336 - 14,336 Borrowings 42,603 - 42,603  56,939 - 56,939 As of 31 December 2022Trade and other payables 11,698 - 11,698 Borrowings 46,837 - 46,837  58,535 - 58,535 CASH AND RESTRICTED CASH(USD 1,000) 2023 2022A+ or better 22,951 24,103 NOTE 13 Financial Instruments ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS GROUP RESULTS 157 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES As of 31 December 2023 and 2022, the Group’s trade and other receivables consisted of the following: As of 31 December 2023 and 2022, the Group’s trade and other receivables, specified by currencies, consisted of the following: (USD 1,000) 2023 2022Trade receivables 1,146 1,847 Other current receivables 9 - Other non-current receivables 481 1,343 Total trade and other receivables, net 1,636 3,190 (USD 1,000) 2023 2022Raw materials 991 1,562 Spare parts inventory 3,792 2,107 Finished goods inventory 356 699 Total inventories 5,139 4,368 (USD 1,000) 2023 2022USD 1,636 3,190 Other currencies - - Total trade and other receivables, net 1,636 3,190 NOTE 14 Trade and Other Receivables ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS As of 31 December 2023 and 2022, the Group’s inventories consisted of the following: The Group’s inventory consists primarily of raw materials, spare parts, and finished products. Raw materials comprise mainly of feed for smolt and marine-phase fish production, and packaging materials used for processing. Spare parts comprise of consumables to be used at a future date through operations. Finished goods comprise of all salmon products ready for sale which include fresh head-on-gutted salmon, processed salmon products, and frozen salmon products. For the year ended 31 December 2022, the Group recognized a USD 2.3m write-off of its finished goods inventory related to frozen stock, attributed to excess costs above the expected selling price minus future costs to sell. For the year ended 31 December 2023, there were no write-offs of its finished goods inventory. NOTE 15 Inventories As of 31 December 2023 and 2022, the Group’s trade and other receivables were due within one year and considered fully collectible. Due to the short-term nature of current receivables, the fair value of the Group’s trade and other receivables was equal to nominal value, no material bad debt was recognized for the years then ended, and management did not consider a provision for uncollectible accounts necessary. GROUP RESULTS 158 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES As of 31 December 2023 and 2022, the Group’s cash and restricted cash consisted of the following: The Group’s current restricted cash was obtained in connection with agency bonding requirements for water well permits in Florida and required to be maintained accordingly. Potential withdrawal of current restricted cash is perfunctory by the Group and therefore included as part of the accompanying statements of cash flows. However, the Group views the amounts as partly restrictive in nature given its connection with operational permitting requirements and elected to maintain the amounts in a separate line item from cash in the accompanying statements of financial position. NOTE 16 Cash and Restricted Cash NOTE 17 Share Capital and Shareholders ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Atlantic Sapphire ASA has one class of shares that confer the same rights in the Group. As of 31 December 2023 and 2022, the Group’s share capital consisted of the following: On 29 June 2022, the Group raised NOK 1,231m (approximately USD 125m) in gross proceeds through a private placement of 60,060,976 new shares, at a price per share of NOK 20.50. The private placement was divided in two tranches in which the first tranche (“Tranche 1”) consisted of 18,000,000 new shares and the second tranche (“Tranche 2”) consisted of 42,060,976 new shares. Tranche 1 of 18,000,000 new shares was issued pursuant to Board authorization granted by the 2022 AGM. On 30 June 2022, the share capital increase from Tranche 1 was registered with the Norwegian Register of Business Enterprises (“NRBE”) and share capital increased by NOK 1.8m through issuance of 18,000,000 new shares, each with a par value of NOK 0.10. Net proceeds from Tranche 1 were NOK 356.6m (USD 36.1m). On 21 July 2022, the share capital increase from the first sub-tranche of Tranche 2 was registered with the NRBE and share capital increased by NOK 3.1m through issuance of 31,047,666 new shares, each with a par value of NOK 0.10. Net proceeds from the first sub-tranche of Tranche 2 were NOK 615.2m (USD 61.8m). On 27 July 2022, the share capital increase from the second sub-tranche of Tranche 2 was registered with the NRBE and share capital increased by NOK 1.1m through issuance of 11,013,310 new shares, each with a par value of NOK 0.10. Net proceeds from the second sub tranche of Tranche 2 were NOK 218.4m (USD 22.1m). 2023 2022Total number of shares as of 1 January 153,266,409 91,048,551Shares issued during the year 645,336,763 62,217,858Total number of shares as of 31 December 798,603,172 153,266,409Nominal value as of 31 December (NOK) 0.10 0.10Share capital (total number of shares at nominal value) (NOK 1,000) 79,860 15,327Share capital (total number of shares at nominal value) (USD 1,000) 7,663 1,677 (USD 1,000) 2023 2022Cash 22,536 23,683 Restricted cash 415 420 Total cash and restricted cash 22,951 24,103 The Group’s non-current restricted cash consists of an interest-bearing restricted deposit in connection with amounts required to be held under the provisions of the amended 2020 Credit Facility (see Note 19 – Borrowings for further details). Potential withdrawal on the restricted deposit would require bank approval and is not perfunctory by the Group. Therefore, such amounts are treated as a separate investment account and presented separately from total cash and restricted cash in the accompanying consolidated statements of financial position, and the amounts are excluded from the Group’s consolidated cash and restricted cash balances in the accompanying consolidated statements of cash flows. GROUP RESULTS 159 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES On 10 August 2022, the Group approved and published a prospectus (the “2022 Prospectus”), and on 11 August 2022, commenced the subscription period in the subsequent offering (the “Subsequent Offering”) of up to 9,000,000 new shares (the “Offer Shares”), each at a subscription price per share of NOK 20.50. By the end of the subscription period on 24 August 2022, the Group received valid subscriptions for a total of 2,156,882 Offer Shares and these were allocated by the Board of Directors in accordance with the allocation criteria set out in the 2022 Prospectus. The Subsequent Offering raised gross proceeds of approximately NOK 44.0m (approximately USD 4.5m). Accordingly, the Board of Directors resolved to increase the Group’s share capital with NOK 215,688.20 through the issuance of 2,156,882 Offer Shares, each with a par value of NOK 0.10. On 16 March 2023, the Group raised NOK 595m (approximately USD 55m) in gross proceeds through a private placement of 119,000,000 new shares, at a price per share of NOK 5.00. The private placement was divided in two tranches in which the first tranche (“Tranche 1”) consisted of 30,653,281 new shares and the second tranche (“Tranche 2”) consisted of 88,346,719 new shares. On 11 April 2023, the Group held an Extraordinary General Meeting (the “April 2023 EGM”). Through the April 2023 EGM, the Board of Directors was given the authority to increase the Company’s share capital with up to NOK 11,900,000 through the issuance of 119,000,000 shares, each with a face value of NOK 0.10, at a subscription price of NOK 5.00 per share. Further, the Board of Directors was authorized to increase the Company’s share capital with up to NOK 2,000,000 through the issuance of 20,000,000 new shares, each with a par value of NOK 0.10, as part of a Subsequent Offering. The subscription price per new share upon use of the authorization shall be NOK 5.00. Tranche 1 of 30,653,281 new shares was issued pursuant to Board authorization granted by the April 2023 EGM. On 12 April 2023, the share capital increase from Tranche 1 was registered with the Norwegian Register of Business Enterprises (“NRBE”) and share capital increased by NOK 3.1m through issuance of 30,653,281 new shares, each with a par value of NOK 0.10. Gross proceeds from Tranche 1 were NOK 153.3m (approximately USD 14.2m). On 12 April 2023, the share capital increase from Tranche 2 was registered with the NRBE and share capital increased by NOK 8,834,671.90 through issuance of 88,346,719 new shares, each with a par value of NOK 0.10. Gross proceeds from Tranche 2 were NOK 441.7m (approximately USD 40.8m). These shares became tradeable under the same ISIN number as the existing shares of the Company upon approval of the prospectus on 14 April 2023. On 14 April 2023, the Group approved and published a prospectus (the “April 2023 Prospectus”) and commenced the subscription period in the subsequent offering (the “April 2023 Subsequent Offering”) of up to 20,000,000 new shares each at a subscription price per share of NOK 5.00. By the end of the subscription period on 17 April 2023, the April 2023 Subsequent Offering raised gross proceeds of approximately NOK 32.5m (approximately USD 3.0m) through the issuance of 6,706,606 new shares, each with a par value of NOK 0.10. On 19 September 2023, the Group raised NOK 702m (approximately USD 64.7m) in gross proceeds through a private placement of 501,428,571 new shares, at a price per share of NOK 1.40. The private placement was divided in two tranches in which the first tranche (“Tranche 1”) consisted of 55,000,000 new shares and the second tranche (“Tranche 2”) consisted of 446,428,571 new shares. On 21 September 2023, the share capital increase from Tranche 1 was registered with the Norwegian Register of Business Enterprises (“NRBE”) and share capital increased by NOK 5.5m through the issuance of 55,000,000 new shares, each with a par value of NOK 0.10. Gross proceeds from Tranche 1 were NOK 77.0m (approximately USD 7.1m). On 11 October 2023, the Group held an Extraordinary General Meeting (the “October 2023 EGM”). Through the October 2023 EGM, the Board of Directors was given the authority to increase the Company’s share capital with up to NOK 44,642,857 through the issuance of 446,428,571 shares, each with a face value of NOK 0.10, at a subscription price of NOK 1.40 per share. Further, the Board of Directors was authorized to increase the Company’s share capital with up to NOK 10,000,000 through the issuance of 100,000,000 new shares, each with a par value of NOK 0.10, as part of a Subsequent Offering. The subscription price per new share upon use of the authorization shall be NOK 1.40. On 12 October 2023, the share capital increase from Tranche 2 was registered with the NRBE and share capital increased by NOK 44.6m through issuance of 446,428,571 new shares, each with a par value of NOK 0.10. Gross proceeds from Tranche 2 were NOK 625.0m (approximately USD 57.6m). ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS On 18 October 2023, the Group approved and published a prospectus (the “October 2023 Prospectus”) and commenced the subscription period in the subsequent offering (the “November 2023 Subsequent Offering”) of up to 100,000,000 new shares each at a subscription price per share of NOK 1.40. By the end of the subscription period on 7 November 2023, the November 2023 Subsequent Offering raised gross proceeds of approximately NOK 1.8m (approximately USD 0.2m) through the issuance of 18,201,586 new shares, each with a par value of NOK 0.10. No shares were exercised and issued related to the Group’s employee share option program for the years ended 31 December 2023 and 2022. GROUP RESULTS 160 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES As of 31 December 2023 and 2022, the Group’s total number of shares issued and outstanding consisted of the following: 2023 2022NUMBER OF 2023NUMBER OF 2022SHAREHOLDERSHARES% OF SHARESSHARES% OF SHARESNORDLAKS HOLDING AS 98,357,244 12.32% 7,317,073 4.77%MORGAN STANLEY & CO. LLC 97,428,571 12.20% - 0.00%UBS SWITZERLAND AG 81,950,533 10.26% 619,442 0.40%STRAWBERRY CAPITAL AS 65,096,062 8.15% 9,229,380 6.02%JOH JOHANNSON EIENDOM AS 63,935,643 8.01% 7,649,929 4.99%MORGAN STANLEY & CO. INT. PLC. 48,592,756 6.08% 4,990,420 3.26%THE BANK OF NEW YORK MELLON 36,114,983 4.52% 51,849 0.03%BLUE FUTURE HOLDING AS 29,976,478 3.75% 721,621 0.47%J.P. MORGAN SE 23,290,093 2.92% - 0.00%THE NORTHERN TRUST COMP, LONDON BR 15,367,800 1.92% 2,400,000 1.57%CITIBANK, N.A. 20,369,196 2.55% 3,534,230 2.31%SKAGEN KON-TIKI VERDIPAPIRFOND 14,475,000 1.81% 8,148,000 5.32%WENAASGRUPPEN AS 12,137,038 1.52% 1,210,441 0.79%VATNE EQUITY AS 11,864,024 1.49% 7,439,024 4.85%ALSCO AS 10,427,344 1.31% 10,427,344 6.80%J.P. MORGAN SE 8,933,470 1.12% 950,843 0.62%ASINVEST AS 8,403,599 1.05% 1,764,066 1.15%FOUGNER INVEST AS 7,442,718 0.93% 1,298,108 0.85%NORSK LANDBRUKSKJEMI AS 4,396,110 0.55% 1,700,000 1.11%TACONIC AS 4,185,487 0.52% 1,135,487 0.74%Total number of shares attributed to the 20 largest shareholders 662,744,149 82.99% 70,587,257 46.06%Total number of shares attributed to other shareholders 135,859,023 17.01% 82,679,152 53.94%Total number of shares issued and outstanding 798,603,172 100.00% 153,266,409 100.00% GROUP RESULTS 161 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS Equity Transaction Costs For the years ended 31 December 2023 and 2022, total equity transaction costs arising on share issues amounted to USD 5.9m and USD 4.6m, respectively. Such amounts are net against the Group’s share premium balance in the accompanying consolidated statements of financial position. As of 31 December 2023 and 2022, shares directly or indirectly held by members of the Board of Directors, Chief Executive Officer, and Executive Management consisted of the following: 2023 2022NUMBER OF 2023NUMBER OF 2022NAME AND TITLESHARES% OF SHARESSHARES% OF SHARESJohan E. Andreassen, CEO 6,287,442 0.79% 6,287,442 4.10%Andre Skarbø, Director of the Board 9,643,599 1.21% 1,764,066 1.15%Bjørn-Vegard Løvik, Chair of the Nomination Committee 5,213,672 0.65% 5,213,672 3.40%Jon-Birger Løvik, COO (as of 31 October 2023 step-down date) 1,272,911 0.16% 158,086 0.10%Svein Taklo, CDIO 299,099 0.04% 44,814 0.03%Karl Øystein Øyehaug, CFO 184,145 0.02% 29,850 0.02%Tone Bjørnov, Director of the Board (as of 23 May 2023 step-down date) 39,406 0.00% 19,406 0.01%Patrice Flanagan, Director of the Board (as of 23 May 2023 step-down date) 4,900 0.00% 4,900 0.00%Alejandro Castro, CBO (as of March 2023 step-down date) 920 0.00% 920 0.00%Runar Vatne, Director of the Board (as of 3 August 2022 step-down date) - 0.00% 7,839,024 5.11%Alexander Reus, Director of the Board (as of 5 December 2022 step-down date) - 0.00% 1,601,051 1.04%Danielle Villoch, CLO (As of 19 June 2022 step-down date) - 0.00% 487 0.00% Certain shares are held indirectly by Johan E. Andreassen and Bjørn-Vegard Løvik through Alsco AS, a jointly owned company by Mr. Andreassen and Mr. Løvik, and are allocated based on their respective ownership interests in Alsco AS. Further, certain shares are held indirectly by Mr. Andreassen through JEA Invest AS, a wholly owned company by Mr. Andreassen. GROUP RESULTS 162 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS As of 31 December 2023 and 2022, the Program included up to 19,008,586 and 1,584,491 outstanding share options granted, respectively, with contractual vesting terms between one and five years as follows: For the year ended 31 December 2023, a negative expense of USD 0.4m was driven by a high number of forfeitures over the value of options vested. For the year ended 31 December 2022, an expense of USD 0.6m was recognized from the value of options vested. 2023 WEIGHTED 2022 WEIGHTED AVERAGE 2023AVERAGE 2022EXERCISE PRICE NUMBER OF EXERCISE PRICE NUMBER OF SHARESSHARESOutstanding at 1 January 212.92 1,584,491 208.88 1,650,535 Granted during the year 12.03 18,510,000 - - Forfeited during the year 246.87 (1,060,905) 137.99 (38,735)Exercised during the year - - - - Lapsed during the year 71.19 (25,000) 75.17 (27,309)Outstanding at 31 December 15.60 19,008,586 212.92 1,584,491 Outstanding share options as of 31 DecemberNumber of share options with a weighted average share price over NOK 15 127.99 498,586 212.92 1,584,491 Number of share options with a weighted average share price under NOK 15 12.03 18,510,000 - - Total outstanding share options as of 31 December 15.60 19,008,586 212.92 1,584,491 NOTE 18 Share Option Program In accordance with the authorization granted by the Group’s AGM, the Group’s Board of Directors introduced a share option program for senior executives and key personnel employed by the Group and its subsidiaries (the “Program”). GROUP RESULTS 163 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS The following information is relevant in the determination of the fair value of options granted for the years ended 31 December 2023 and 2022: 2023 2022Option pricing model used Black Scholes Black ScholesWeighted average share price at grant date (NOK) 5.01 - Exercise price (NOK) 2.91 14.74 Weighted average contractual life (days) 1,572 1,825 Expected volatility 52.90% 31.18%Expected dividend growth rate 0.00% 0.00%Risk-free interest rate 2.08% 1.12% NOTE 19 Borrowings DNB Credit Agreement The Group holds a Green credit facility (the “2020 Credit Facility”) with DNB Bank ASA (“DNB”) which can be utilized towards the Group’s Bluehouses and operations therein considered green. ASUS and ASDK are listed as borrowers (the “Borrowers”), and ASA, ASSF, and ASP are listed as guarantors (the “Guarantors”). As of 1 January 2021, the Group’s amended 2020 Credit Facility consisted of USD 150.0m through a USD 50.0m term loan (the “US Term Loan”), USD 20.0m revolving credit facility (“RCF”), and USD 80.0m in delayed draw term loans. The amended 2020 Credit Facility bore an amended interest rate of LIBOR plus an applicable margin and maturity date of 21 April 2023, with a portion of the RCF available for use towards ASDK’s working capital requirements or as standby Letters of Credit towards equipment financing. As of 1 January 2022, the Group’s amended 2020 Credit Facility consisted of USD 200.0m through a USD 50.0m US Term Loan, USD 20.0m revolving credit facility, and USD 130.0m in delayed draw term loans. The amended 2020 Credit Facility bore an amended interest rate of LIBOR plus an applicable margin and maturity date of 21 April 2023, with a portion of the RCF available for use towards ASDK’s working capital requirements or as standby Letters of Credit towards equipment financing. On 31 March 2022, the seventh amendment to the 2020 Credit Facility was formally signed and committed. The amendment provided an additional three-month credit facility in an aggregate amount of up to USD 25.0m (the “Facility”) with DNB Capital, LLC as lender. The Facility was secured by a second priority security interest and lien on all assets and equity interests held by the Group and carried an annualized borrowing rate of SOFR plus an applicable margin of 7.0% from 31 March 2022 to 30 April 2022, 7.5% from 1 May 2022 to 31 May 2022, and 8.0% from 1 June 2022 to 30 June 2022. Further, the annualized borrowing rate on all credit facilities was amended to SOFR plus an applicable margin determined by a margin grid, which calls for a maximum of 4.0% and allows for a lower margin upon reaching certain milestones, and the Group’s minimum EBITDA covenant was adjusted towards all credit facilities. On 1 July 2022, the USD 25.0m Facility under the amended 2020 Credit Facility was repaid following Tranche 1 proceeds from the 29 June 2022 equity raise. On 25 August 2022, the eighth amendment to the 2020 Credit Facility was formally signed and committed. The debt was structured under the same key terms such as interest margin and covenants, and the total amounts were restructured into a fully committed credit facility of USD 200.0m, of which USD 50.0m is attributed to the drawn US Term Loan, USD 20.0m is attributed to the RCF, and USD 130.0m is attributed to a delayed undrawn Term Loan for Phase 2 capital expenditures. Of the drawn USD 50.0m US Term Loan, USD 30.0m bears a maturity date of 21 April 2024 and USD 20.0m bears a maturity date of 21 April 2023. The USD 20.0m RCF bears a maturity date of 21 April 2024. Of the delayed undrawn USD 130.0m Term Loan, USD 118.0m bears a maturity date of 21 April 2024 and USD 12.0m bears a maturity date of 21 April 2023. The Group incurred amendment and extension fees of approximately USD 1.9m, of which USD 1.6m was expensed upon modification, while USD 0.3m was recognized against borrowings as part of effective interest. On 23 May 2023, Johan E. Andreassen was granted a total of 14,000,000 share options divided into two tranches of 7,000,000 share options. The first tranche of 7,000,000 share options shall vest by 31 December 2024 and will lapse automatically if not exercised by 31 December 2025. The second tranche of 7,000,000 share options shall vest annually over five years and will lapse automatically if not exercised by 31 December 2028. The previous share options granted to Mr. Andreassen as part of the 2021 AGM shall expire upon the grant of these share options. On 23 May 2023, Karl Øystein Øyehaug was granted a total of 2,800,000 share options that shall vest annually over four years and will lapse automatically if not exercised by 31 December 2028. An additional 1,710,000 share options were granted to other key personnel during the year ended 31 December 2023 resulting in a total amount of 18,510,000 share options granted for the year ended 31 December 2023. No share options were granted for the year ended 31 December 2022. Further, no share options were exercised and issued related to the Group’s employee share option program for the years ended 31 December 2023 and 2022. GROUP RESULTS 164 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS As of 31 December 2023 and 2022, the Group’s borrowings consisted of the following: (USD 1,000) 2023 2022ASUS has an amended USD 45.9m term loan with DNB (the “US Term Loan”). The US Term Loan bears an amended interest rate of SOFR plus an applicable margin (5.0% as of 31 December 42,603 46,837 2023) and matures on 21 April 2025. USD 42.1m was outstanding on the US Term Loan as of 31 December 2023 and is presented at amortized cost.ASUS has an amended USD 20.0m revolving credit facility commitment with DNB (the “RCF”). The RCF will finance ASUS’ working capital requirements or serve as standby Letters of Credit towards equipment financing. Of the total RCF amount, USD 4.0m is also available towards - - ASDK’s working capital requirements. As of 31 December 2023, USD 17.4m was available on the RCF (USD 20.0m undrawn, less USD 2.6m allocated to a letter of credit towards Meridian Leasing for the leasing of processing equipment).Total borrowings 42,603 46,837 Less: current portion of borrowings 5,000 18,550 Non-current portion of borrowings 37,603 28,287 On 31 March 2023, the ninth amendment to the 2020 Credit Facility was formally signed and committed. The debt was structured under many of the same key terms while others were modified. Of note, the maximum applicable interest margin was increased from 4.0% to 5.0% and allows for a lower margin based upon an interest rate grid, with NIBD to EBITDA as the criteria. Further, the total amounts were restructured into a fully committed credit facility of USD 170.0m directly with DNB with an extended maturity date of April 21, 2025, of which USD 50.0m was attributed to the drawn US Term Loan, USD 20.0m was attributed to the RCF, and USD 100.0m was attributed to a delayed undrawn Term Loan for Phase 2 capital expenditures. The EBITDA covenant levels were also reset, and the Company incurred amendment and extension fees of approximately USD 1.0m. On 17 October 2023, the tenth amendment to the 2020 Credit Facility was formally signed and committed. The debt was structured under many of the same key terms while others were modified. Of note, the minimum required cash balance of USD 15.0m covenant was replaced with a required interest- bearing restricted deposit account of USD 15.0m. The total amounts were restructured into a fully committed credit facility of USD 165.9m extended to the Group, of which USD 45.9m is attributed to the drawn US Term Loan (of which USD 2.5m had been repaid as of the date of this report), USD 20.0m is attributed to the RCF (of which USD 17.4m is available), and USD 100.0m is attributed to a delayed undrawn Term Loan for Phase 2 capital expenditures. The EBITDA covenant levels were also reset, and the Company incurred amendment and waiver fees of approximately USD 0.4m. As of 31 December 2023, the amended 2020 Credit Facility carried an annualized borrowing rate of SOFR plus an applicable margin determined by a grid (5.0% as of 31 December 2023). The following are the remaining contractual maturities on the Group’s borrowings as of 31 December 2023 and 2022: (USD 1,000) 2023 2022Up to 3 months 1,250 1,450 Between 3 and 12 months 3,750 18,550 Between 1 and 2 years 37,603 26,837 Between 2 and 5 years - - Over 5 years - - Total 42,603 46,837 The above amounts are presented at amortized cost using the effective interest rate method. The borrowing base on the USD 20.0m RCF is tied to the amount of outstanding trade receivables, product inventory, and standing biomass. This calculation is reviewed periodically, and the balance is adjusted accordingly. The amended delay draw USD 100.0m Term Loan will be available for the Group’s use subject to a one-time fulfillment of an incurrence tests related to an operational milestone with respect to harvest volume and reaching certain EBITDA metrics. The main operational milestones and financial metrics are a minimum required annualized production level to be maintained for at least two months, aggregate positive EBITDA over the last three months prior to drawdown, a minimum EBITDA level prior to drawdown, and compliance with financial covenants agreed under the amended 2020 Credit Facility. The amended 2020 Credit Facility is secured by substantially all Group’s assets, which includes existing and after-acquired personal and real property held, the equity interest held by the Borrowers and the Guarantors in their respective subsidiaries, certain receivables, and certain bank accounts perfected under First Priority security. The provisions of the amended 2020 Credit Facility require, among other things, certain financial performance covenants to be maintained as defined in the agreements. This includes certain covenants that limit the Group’s ability to, among other things, grant liens, incur additional indebtedness, make acquisitions or investments, dispose of certain assets, make dividends and distributions, change the nature of their businesses, enter certain transactions with affiliates, or amend the terms of material indebtedness. Material financial covenants include maintaining a minimum book equity ratio of 45%, various trailing EBITDA requirements, and maintaining a minimum restricted USD 15.0m cash balance. In anticipation of potentially not being able to meet its EBITDA requirement as of 31 December 2023, the Group received a formal waiver from the Lenders dated 21 December 2023. Subsequently, the Group’s 2020 Credit Facility was amended further on 25 March 2024 (see Note 23 – Subsequent Events). GROUP RESULTS 165 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS The following represents a reconciliation of changes in the carrying amount of the Group’s borrowings and lease liabilities for the years ended 31 December 2023 and 2022: LEASE (USD 1,000) BORROWINGSLIABILITIESBalance at 1 January 2023 46,837 2,634 Changes from financing cash flowsProceeds from borrowings 12,500 - Payments towards borrowings (17,335) (468)Total changes from financing cash flows 42,002 2,166 Amortization 601 - Currency effects - 13 Balance at 31 December 2023 42,603 2,179 LEASE (USD 1,000) BORROWINGSLIABILITIESBalance at 1 January 2022 50,000 3,166 Changes from financing cash flowsProceeds from borrowings 29,500 - Payments towards borrowings (32,663) (262)Total changes from financing cash flows 46,837 2,904 Amortization - 2,361 Forgiveness of debt - (2,584)Currency effects - (47)Balance at 31 December 2022 46,837 2,634 NOTE 20 Pensions The Group’s employees are covered by different pension plans that vary from country to country depending on the respective subsidiary’s location. All pension plans are assessed to be defined contribution plans. In Norway, ASA is subject to the requirements of the Mandatory Company Pensions Act, and ASA’s pension plan follows its requirements. In the US, the Group offers a Safe Harbor 401(k) salary deferral participation retirement plan to all employees. As of 31 December 2023 and 2022, 131 and 118 employees participated in the Group’s pension plans, respectively. The Group’s pension plan provisions require the Group to pay premiums to public or private administrative pension plans on a mandatory, contractual, or voluntary basis. There are no further obligations once the annual premiums are paid. The premiums are accounted for as personnel expenses as soon as they are incurred. Prepaid premiums are accounted for as an asset to the extent that future benefits can be determined as plausible. For the years ended 31 December 2023 and 2022, the Group’s total pension cost consisted of USD 0.4m and USD 0.3m, respectively, and are included as part of salary and personnel costs in the accompanying consolidated statements of operations. NOTE 21 Related Party Transactions During the ordinary course of business, the Group engages in transactions with related parties similar to what management believes would have been agreed upon between unrelated parties. During the ordinary course of business, the Group may sell salmon products to NovoMar, Inc. (“NovoMar”), an entity under majority ownership by a related party of Johan E. Andreassen, the CEO of ASA. NovoMar was formerly Platina Seafood, Inc. prior to a rebrand on 8 September 2022. For the years ended 31 December 2023 and 2022, the Group sold USD 0.7m and USD 0.2m of salmon products to NovoMar, respectively. During the ordinary course of business, NovoMar provides harvesting services for the Group (the provision of such services commenced in June 2023). For the year ended 31 December 2023, the Group incurred harvesting costs of USD 0.2 million. Such amounts are included as part of cost of goods sold in the accompanying consolidated statements of operations. As of 31 December 2023 the Group had USD 0.1m due from NovoMar and the amounts are included as part of the Group’s current trade and other receivables balance. The Group did not have any outstanding balances due from NovoMar as of 31 December 2022. GROUP RESULTS 166 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS NOTE 22 Contingencies and Legal Claims The Group has evaluated contingencies and legal claims from 31 December 2023 through the date in which the consolidated financial statements were issued. The Group is currently involved in an arbitration against OHLA Building, Inc. (“OHL”), who performed work in connection with the construction of Phase 1 of the Miami Bluehouse, which is ongoing and not settled as of the date of this report. OHL has made a claim for the Group’s alleged failure to pay for approved work and change order, in the aggregate amount of approximately USD 5.6m, and reimbursement of attorneys’ fees and interest. The Group is denying that there has been a failure of payment, and has filed a counterclaim in the arbitration, in the aggregate amount of USD 20.0m (such number may be adjusted up significantly later in the process), on the grounds of alleged faulty workmanship by OHL and its subcontractors. In connection with the dispute with OHL, the sub-contractors Billund Aquaculture A/S (“Billund Design”), a company that was engaged by the Group for design work related to Phase 1 and acted as sub- contractor to OHL in the construction of Phase 1, and Billund Aquaculture US Corp. (“Billund Construction”), a company that was engaged by OHL as a sub-contractor to OHL in the construction of Phase 1, have also each become party to the arbitration process. The Group, OHL, Billund Design and Billund Construction participated in a mediation with a view to reach an amicable solution in October 2022. Such mediation was unsuccessful, and the matter moved forward to a formal arbitration hearing and is currently underway and expected to be concluded, at the earliest, in H1 2025. As of 31 December 2023 and 2022, no claim receivable or payable was recognized within the consolidated financial statements given the ongoing nature of the legal claim and the uncertainty of settlement towards either party as of the reporting dates and as of the date of this report. NOTE 23 Subsequent Events The Group has evaluated subsequent events from 31 December 2023 through the date in which the consolidated financial statements were issued. Private Placement On 29 February 2024, the Group raised NOK 369.0m (approximately USD 35.0m) in gross proceeds through a private placement of 307,125,000 new shares at a price per share of NOK 1.20. In connection with the Private Placement, the underwriters' underwriting commission of 5% was settled through the issuance of 15,356,243 in new shares at a price per share of NOK 1.20. Following the issuance of the new shares, the total number of shares issued and outstanding was 1,121,084,415. Eleventh Amendment to 2020 Credit Facility On 25 March 2024, the eleventh amendment to the 2020 Credit Facility was formally signed and committed. The debt was structured under many of the same key terms while others were modified. Of note, the maturity date was extended to 21 October 2026 and the borrowing base on the RCF was extended to include additional biomass and higher trade receivable levels. The total amounts were restructured into a fully committed credit facility of USD 162.1m, of which USD 42.1m is attributed to the drawn US Term Loan, USD 20.0m is attributed to the RCF (of which USD 17.4m is available), and USD 100.0m is attributed to a delayed undrawn Term Loan for Phase 2 capital expenditures. The EBITDA covenants and delay draw term loan incurrence test levels were also reset, and the Company incurred amendment and waiver fees of approximately USD 1.1m. AS Purchasing, LLC On 4 March 2024, AS Purchasing, LLC, a wholly owned subsidiary of ASA, filed for voluntary dissolution under the Florida Division of Corporations. ASP had previously served as the purchasing arm for ASUS while construction of the Phase 1 Miami Bluehouse was underway and has not held active operations since its completion and therefore did not have any impact on the financial statements or accompanying notes presented within this report. GROUP RESULTS 167 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES 168 2023 IN REVIEW FOR THE HEALTH OF PEOPLE AND PLANET GROUP RESULTS ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS Atlantic Sapphire ASA Statements of Operations YEARS ENDED 31 DECEMBER 2023 AND 2022 Accompanying notes are an integral part of the financial statements. (NOK 1,000) NOTE 2023 2022 Management fee revenue 8 6,665 11,616 Expenses Other operating expenses 2,8 8,757 9,604 Salary and personnel costs 2 5,140 7,481 Total expenses 13,897 17,085 Operating loss (7,232) (5,469) Finance income 3,8 50,093 78,281 Finance expense 3 (6) (10,235) Impairment of non-current assets 3,4,8 (1,370,727) (2,116,265) Loss before income tax (1,327,872) (2,053,688) Income tax 5 - - Net loss (1,327,872) (2,053,688) Allocation to controlling interest (1,327,872) (2,053,688) Application and allocation To accumulated deficit 6 (1,327,872) (2,053,688) Total application and allocation (1,327,872) (2,053,688) GROUP RESULTS 169 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS Atlantic Sapphire ASA Statements of Financial Position 31 DECEMBER 2023 AND 2022 Accompanying notes are an integral part of the financial statements. (NOK 1,000) NOTE 2023 2022 Assets Non-current assets Investment in subsidiaries 4,11 1,792,467 1,995,081 Due from related parties (non-current) 8 804,920 758,796 Total non-current assets 2,597,387 2,753,877 Current assets Due from related parties (current) 8 69,386 59,466 Trade and other receivables (current) 162 111 Cash 7 124,600 50,107 Total current assets 194,148 109,684 Total assets 2,791,535 2,863,561 GROUP RESULTS 170 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS 1/2 Atlantic Sapphire ASA Statements of Financial Position 31 DECEMBER 2023 AND 2022 Accompanying notes are an integral part of the financial statements. (NOK 1,000) NOTE 2023 2022 Equity and liabilities Equity Share capital 6,9 79,860 15,327 Share premium 6,9 6,388,009 5,161,428 Employee stock options 6,9 - 38,157 Accumulated deficit 6 (3,681,947) (2,354,075) Total equity 2,785,922 2,860,837 Current liabilities Trade payables 2,920 736 Other current payables and liabilities 1,520 1,429 Due to related parties (current) 1,173 559 Total current liabilities 5,613 2,724 Total liabilities 5,613 2,724 Total equity and liabilities 2,791,535 2,863,561 GROUP RESULTS 171 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS 2/2 Atlantic Sapphire ASA Statements of Cash Flows YEARS ENDED 31 DECEMBER 2023 AND 2022 Accompanying notes are an integral part of the financial statements. (NOK 1,000) NOTE 2023 2022 Cash flows from operating activities Net loss (1,327,872) (2,053,688) Adjustments to reconcile net loss to net cash provided by operating activities Impairment of current and non-current assets 4,8 1,370,727 2,116,265 Changes in operating assets and liabilities Trade and other receivables (51) 109 Trade and other payables 2,184 9 Other liabilities 91 16 Net cash provided by operating activities 45,079 62,711 Cash flows from investing activities Contributions towards investment in subsidiaries 4 (1,208,169) (1,499,203) Loans to subsidiaries 8 (55,430) 151,917 Net cash used in investing activities (1,263,599) (1,347,286) Cash flows from financing activities Proceeds from issuance of capital 6 1,293,013 1,230,368 Net cash provided by financing activities 1,293,013 1,230,368 Net increase (decrease) in cash and restricted cash 74,493 (54,207) Cash and restricted cash at beginning of year 50,107 104,314 Cash and restricted cash at end of year 124,600 50,107 GROUP RESULTS 172 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS VIKEBUKT, 18 APRIL 2024 ELLEN MARIE SÆTRE Director ANDRÉ SKARBØ Director MARTA ROJO ALONSO Director JOHAN E. ANDREASSEN CEO EIRIK WELDE Deputy Chairman KENNETH JARL ANDERSEN Chairman GROUP RESULTS 173 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS NOTE 1 Summary of Significant Accounting Policies General Information Atlantic Sapphire ASA (“ASA”) is a Norwegian company headquartered in Vikebukt, Norway and listed on the Oslo Stock Exchange with the ticker symbol ASA. ASA owns the following subsidiaries (collectively, the “Group”): • Atlantic Sapphire Denmark A/S (“ASDK”, registered in Hvide Sande, Denmark) • Atlantic Sapphire USA LLC (“ASUS”, registered in Miami, Florida, US) • AS Purchasing, LLC (“ASP”, registered in Miami, Florida, US) • S.F. Development, L.L.C. (“ASSF”, registered in Miami, Florida, US) • Atlantic Sapphire IP, LLC (“ASIP”, registered in Miami, Florida, US) The Group owns and operates a land-based Atlantic salmon farm in Homestead, Florida, US (the “Miami Bluehouse” facility) and previously operated a land-based Atlantic salmon farm in Hvide Sande, Denmark (the “Denmark Bluehouse” facility). A Bluehouse® facility (“Bluehouse”) is proprietary production technology developed by the Group in collaboration with a wide range of supply chain partners to optimize growing conditions for Atlantic salmon. A Bluehouse contains the facilities needed to grow and produce Atlantic salmon from egg hatchery to grow-out tanks to primary processing. The Miami Bluehouse also incorporates value- added processing. Consolidated operations enable the Group to control the entire production cycle without having to transport salmon to and from ocean-based net pens. Phase 1 of the Miami Bluehouse has an annual production capacity of approximately 9,500 tons HOG 1 . Subsequently on 4 March 2024, AS Purchasing, LLC, a wholly owned subsidiary of ASA, filed for voluntary dissolution under the Florida Division of Corporations as it was utilized for US Phase 1 construction and no longer held formal operations since its completion.. Basis for Preparation of the Annual Accounts The financial statements were prepared in accordance with the Norwegian Accounting Act and accounting principles generally accepted in Norway (“Norwegian GAAP”). The financial statements have been prepared based on uniform accounting principles for similar transactions and events under otherwise similar circumstances and are expressed in Norwegian kroner (“NOK”). The annual financial statements below are applied only to ASA as the parent company of the Group. The Group’s consolidated financial statements were prepared in accordance with IFRS® Accounting Standards (“IFRS”) as adopted by the European Union (“EU”). 1 HOG – “Head-On-Gutted” fish, a term used industry-wide, is approximately 83% of live weight fish. Foreign Currency Foreign currency transactions are translated using the applicable exchange rate at the time of the transaction. Receivables, debt, and other monetary items in foreign currency are measured at the exchange rate at the end of the reporting period, and the translation differences are recognized as part of ASA’s net profit or loss. Other assets in foreign currencies are translated at the exchange rate in effect on the transaction date. Revenue Recognition ASA’s revenue consists of intercompany management fees charged to its affiliates and is recognized when services are rendered. A receivable is recognized accordingly as this is the point in time in which consideration is unconditional and only the passage of time is required before the payment is due. Use of Estimates and Judgements The preparation of the financial statements in accordance with Norwegian GAAP requires management to make accounting estimates and assumptions that affect the recognized amounts of assets, liabilities, income, and expenses. The estimates and underlying assumptions are based on ASA’s prior experience and information perceived to be relevant and probable when the judgments are made. Estimates are reviewed on an ongoing basis and actual values and results may deviate from these estimates. Adjustments to accounting estimates are recognized in the period in which the estimates are revised. Taxes Tax expense consists of the tax payable and changes to deferred tax. Tax is recognized in the accompanying statements of operations, except to the extent that it relates to items recognized in equity. Deferred tax assets and liabilities are calculated based on the temporary differences between the carrying amount of assets and liabilities in the financial statements and their tax bases, together with tax losses carried forward at the statement of financial position date. Deferred tax assets and liabilities are calculated based on the applicable tax rates and legislations that are expected to apply when the assets are realized or the liabilities are settled, based on the tax rates and legislations that have been enacted or substantially enacted on the statement of financial position date. Deferred tax assets are recognized only when convincing evidence can support the availability of future taxable profits will be available, against which the assets can be utilized. Deferred tax assets and liabilities are not discounted. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity. GROUP RESULTS 174 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS Subsidiaries ASA’s investment in subsidiaries is valued at the cost of the shares in each respective subsidiary, less any impairment losses. In accordance with Norwegian GAAP, an impairment loss is recognized if the impairment is not considered temporary. Impairment losses are reversed if the reason for the impairment loss disappears in a later period. Classification of Current vs. Non-Current Items Assets are classified as current when they are expected to be realized or sold, to be used in ASA’s normal operating cycle, falls due, or is expected to be realized within 12 months after the end of the reporting period date. Other assets are classified as non-current. Liabilities are classified as current when they are expected to be settled in ASA’s normal operating cycle, are expected to be settled within 12 months of the end of the reporting period, or if ASA does not have an unconditional right to postpone settlement for at least 12 months after the reporting period date. Cash and Restricted Cash Cash includes cash on hand and bank deposits. Restricted cash is not available for immediate or general business use and is presented as part of cash balances as the amounts are not material to ASA’s financial statements as a whole. Cash equivalents consist of short-term investments that can be converted into a known amount in cash within three months and contain an insignificant risk element. ASA did not hold any cash equivalents as of 31 December 2023 and 2022. Statements of Cash Flows The accompanying statements of cash flows are prepared in accordance with the indirect method. Other Operating Expenses For the years ended 31 December 2023 and 2022, ASA’s other operating expenses consisted of the following: Auditor Fees For the years ended 31 December 2023 and 2022, remuneration to ASA’s auditors, excluding VAT, consisted of the following: Total amounts towards auditor’s fees are included as part of professional fees in other operating expenses. NOTE 2 Operating Expenses (NOK 1,000) 2023 2022 Selling, general, and administrative 4,100 5,412 Professional fees 4,556 3,914 Leases - 168 Maintenance and supplies 101 110 Total other operating expenses 8,757 9,604 (NOK 1,000) 2023 2022 Statutory auditing services 3,087 2,944 Other services - - Total auditor's fees 3,087 2,944 GROUP RESULTS 175 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS Salary and Personnel Costs For the years ended 31 December 2023 and 2022, ASA’s salary and personnel costs consisted of the following: Pensions ASA satisfies the requirements of the Mandatory Company Pensions Act related to mandatory occupational pensions (Norwegian: OTP). The schemes are mainly established as defined contribution schemes. ASA’s pension plan provisions require ASA to pay premiums to public or private administrative pension plans on a mandatory, contractual, or voluntary basis. There are no further obligations once the annual premiums are paid. The premiums are accounted for as personnel expenses as soon as they are incurred. Prepaid premiums are accounted for as an asset to the extent that future benefits can be determined as plausible. For the years ended 31 December 2023 and 2022, the ASA’s total pension cost consisted of NOK 7.0k and NOK 0.1m, respectively, and are included as part of salary and personnel costs in the accompanying statements of operations. ASA employed one full-time employee during the years ended 31 December 2023 and 2022. ASA did not hold any full-time employees as of 31 December 2023. For the years ended 31 December 2023 and 2022, remuneration to members of the Board consisted of NOK 4.4m. Board of Directors’ Statement on Remuneration of Executive Management The Group’s Board of Directors determines the principles applicable to the Group’s policy for compensation of executive management and, as a separate document from this Annual Report, presented its statement on such principles for the 2023 financial year during the Group’s Annual General Meeting (“AGM”) in accordance with Section 6-16a of the Norwegian Public Limited Liability Companies Act. The Board of Directors’ Statement on Remuneration of Executive Management is included in Note 6 – Salary and Personnel Costs of the Group’s notes to the consolidated financial statements. (NOK 1,000) 2023 2022 Salary 4,753 7,026 Employer's national insurance contribution 581 330 Pension costs 7 90 Other personnel (reimbursements) expenses, net (201) 35 Total salary and personnel costs 5,140 7,481 For the years ended 31 December 2023 and 2022, ASA’s finance income and expense, net consisted of the following: Impairment of Non-Current Assets For the year ended 31 December 2023, ASA recognized an impairment of non-current assets of NOK 1.4b towards ASA’s investment in ASUS. For the year ended 31 December 2022, ASA recognized an impairment of non-current assets of NOK 57.8m towards ASA’s investment in ASDK and intercompany loan due from ASDK and NOK 2.0b towards ASA’s investment in ASUS. See Note 8 – Related Party Transactions. NOTE 3 Finance income and expense (NOK 1,000) 2023 2022 Interest income 8,122 4,779 Interest income - intercompany 41,524 36,163 Interest expense (1) (112) Impairment of non-current assets (1,370,727) (2,116,265) Currency exchange effects 447 37,339 Currency exchange effects - intercompany (5) (10,123)  (1,320,640) (2,048,219) GROUP RESULTS 176 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS NOTE 4 Investment in Subsidiaries As of 31 December 2023 and 2022, ASA’s investment in subsidiaries consisted of the following: COMPANY (NOK, 1,000) REGISTERED OFFICE VOTING SHARE OWNERSHIP SHARE EQUITY AT 31 DECEMBER 2023 NET LOSS FOR YEAR ENDED 31 DECEMBER 2023 BALANCE SHEET IN PARENT COMPANY Atlantic Sapphire Denmark A/S Hvide Sande, DK 100% 100% (369) (686) - Atlantic Sapphire USA LLC Miami, FL, US 100% 100% 1,709,847 (1,451,205) 1,709,851 S.F. Development, L.L.C. Miami, FL, US 100% 100% 80,942 (3,464) 82,616 Atlantic Sapphire IP LLC Miami, FL, US 100% 100% - - - Employee stock options - COMPANY (NOK, 1,000) REGISTERED OFFICE VOTING SHARE OWNERSHIP SHARE EQUITY AT 31 DECEMBER 2022 NET LOSS FOR YEAR ENDED 31 DECEMBER 2022 BALANCE SHEET IN PARENT COMPANY Atlantic Sapphire Denmark A/S Hvide Sande, DK 100% 100% 391 362,851 - Atlantic Sapphire USA LLC Miami, FL, US 100% 100% 1,874,306 (920,352) 1,874,308 S.F. Development, L.L.C. Miami, FL, US 100% 100% 80,419 (3,714) 82,616 Atlantic Sapphire IP LLC Miami, FL, US 100% 100% - - - Employee stock options 38,157 GROUP RESULTS 177 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS For the years ended 31 December 2023 and 2022, ASA’s income tax calculation consisted of the following: For the years ended 31 December 2023 and 2022, the specification of the basis for ASA’s deferred tax consisted of the following: (NOK, 1,000) 2023 2022 Tax payable calculation: Current year loss before tax (1,327,871) (2,053,688) Permanent differences 1,307,597 2,078,241 Change in temporary differences - (47,442) Utilization of tax losses carried forward from prior years 20,274 22,889 Taxable base - - Tax payable - - Tax expense distribution: - - Tax payable - - Change in deferred tax due to change in basis for calculation - - Change in deferred tax due to new tax rate - - Too much or too little allocated earlier years - - Total tax expense Tax payable in the statements of financial position: - - Tax payable on current year profit - - Tax effect from contributions - - Total tax payable - - (NOK, 1,000) 2023 2022 Temporary differences: Fixed assets - (3,194) Deficit that can be carried forward (119,253) (98,979) Total temporary differences (119,253) (102,173) Tax payable 22% 22%  (26,236) (22,478) NOTE 5 Taxes GROUP RESULTS 178 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS NOTE 6 Equity and Shareholder information For the years ended 31 December 2023 and 2022, changes in ASA’s equity consisted of the following: (NOK 1,000) SHARE CAPITAL SHARE PREMIUM EMPLOYEE STOCK OPTIONS ACCUMULATED DEFICIT TOTAL EQUITY Balance at 1 January 2022 9,105 3,937,282 32,630 (300,387) 3,678,630 Comprehensive income (loss) Net loss - - - (2,053,688) (2,053,688) Transactions with owners Contributions from issuance of capital 6,222 1,224,146 - - 1,230,368 Contributions from employee stock options - - 5,527 - 5,527 Balance at 31 December 2022 15,327 5,161,428 38,157 (2,354,075) 2,860,837 Comprehensive income (loss) Net loss - - - (1,327,872) (1,327,872) Transactions with owners Contributions from issuance of capital 64,533 1,226,581 - - 1,291,114 Derecognition of employee stock options - - (38,157) - (38,157) Balance at 31 December 2023 79,860 6,388,009 - (3,681,947) 2,785,922 GROUP RESULTS 179 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS Atlantic Sapphire ASA has one class of shares that confer the same rights in ASA. As of 31 December 2023 and 2022, the Group’s share capital consisted of the following: On 29 June 2022, the Group raised NOK 1,231m (approximately USD 125m) in gross proceeds through a private placement of 60,060,976 new shares, at a price per share of NOK 20.50. The private placement was divided in two tranches in which the first tranche (“Tranche 1”) consisted of 18,000,000 new shares and the second tranche (“Tranche 2”) consisted of 42,060,976 new shares. Tranche 1 of 18,000,000 new shares was issued pursuant to Board authorization granted by the 2022 AGM. On 30 June 2022, the share capital increase from Tranche 1 was registered with the Norwegian Register of Business Enterprises (“NRBE”) and share capital increased by NOK 1.8m through issuance of 18,000,000 new shares, each with a par value of NOK 0.10. Net proceeds from Tranche 1 were NOK 356.6m (USD 36.1m). On 21 July 2022, the share capital increase from the first sub-tranche of Tranche 2 was registered with the NRBE and share capital increased by NOK 3.1m through issuance of 31,047,666 new shares, each with a par value of NOK 0.10. Net proceeds from the first sub-tranche of Tranche 2 were NOK 615.2m (USD 61.8m). On 27 July 2022, the share capital increase from the second sub-tranche of Tranche 2 was registered with the NRBE and share capital increased by NOK 1.1m through issuance of 11,013,310 new shares, each with a par value of NOK 0.10. Net proceeds from the second sub tranche of Tranche 2 were NOK 218.4m (USD 22.1m). On 10 August 2022, the Group approved and published a prospectus (the “2022 Prospectus”), and on 11 August 2022, commenced the subscription period in the subsequent offering (the “Subsequent Offering”) of up to 9,000,000 new shares (the “Offer Shares”), each at a subscription price per share of NOK 20.50. By the end of the subscription period on 24 August 2022, the Group received valid subscriptions for a total of 2,156,882 Offer Shares and these were allocated by the Board of Directors in accordance with the allocation criteria set out in the 2022 Prospectus. The Subsequent Offering raised gross proceeds of approximately NOK 44.0m (approximately USD 4.5m). Accordingly, the Board of Directors resolved to increase the Group’s share capital with NOK 215,688.20 through the issuance of 2,156,882 Offer Shares, each with a par value of NOK 0.10. On 16 March 2023, the Group raised NOK 595m (approximately USD 55m) in gross proceeds through a private placement of 119,000,000 new shares, at a price per share of NOK 5.00. The private placement was divided in two tranches in which the first tranche (“Tranche 1”) consisted of 30,653,281 new shares and the second tranche (“Tranche 2”) consisted of 88,346,719 new shares. On 11 April 2023, the Group held an Extraordinary General Meeting (the “April 2023 EGM”). Through the April 2023 EGM, the Board of Directors was given the authority to increase the Company’s share capital with up to NOK 11,900,000 through the issuance of 119,000,000 shares, each with a face value of NOK 0.10, at a subscription price of NOK 5.00 per share. Further, the Board of Directors was authorized to increase the Company’s share capital with up to NOK 2,000,000 through the issuance of 20,000,000 new shares, each with a par value of NOK 0.10, as part of a Subsequent Offering. The subscription price per new share upon use of the authorization shall be NOK 5.00. Tranche 1 of 30,653,281 new shares was issued pursuant to Board authorization granted by the April 2023 EGM. On 12 April 2023, the share capital increase from Tranche 1 was registered with the Norwegian Register of Business Enterprises (“NRBE”) and share capital increased by NOK 3.1m through issuance of 30,653,281 new shares, each with a par value of NOK 0.10. Gross proceeds from Tranche 1 were NOK 153.3m (approximately USD 14.2m). On 12 April 2023, the share capital increase from Tranche 2 was registered with the NRBE and share capital increased by NOK 8,834,671.90 through issuance of 88,346,719 new shares, each with a par value of NOK 0.10. Gross proceeds from Tranche 2 were NOK 441.7m (approximately USD 40.8m). These shares became tradeable under the same ISIN number as the existing shares of the Company upon approval of the prospectus on 14 April 2023. On 14 April 2023, the Group approved and published a prospectus (the “April 2023 Prospectus”) and commenced the subscription period in the subsequent offering (the “April 2023 Subsequent Offering”) of up to 20,000,000 new shares each at a subscription price per share of NOK 5.00. By the end of the subscription period on 17 April 2023, the April 2023 Subsequent Offering raised gross proceeds of approximately NOK 32.5m (approximately USD 3.0m) through the issuance of 6,706,606 new shares, each with a par value of NOK 0.10. On 19 September 2023, the Group raised NOK 702m (approximately USD 64.7m) in gross proceeds through a private placement of 501,428,571 new shares, at a price per share of NOK 1.40. The private placement was divided in two tranches in which the first tranche (“Tranche 1”) consisted of 55,000,000 new shares and the second tranche (“Tranche 2”) consisted of 446,428,571 new shares. On 21 September 2023, the share capital increase from Tranche 1 was registered with the Norwegian Register of Business Enterprises (“NRBE”) and share capital increased by NOK 5.5m through the issuance of 55,000,000 new shares, each with a par value of NOK 0.10. Gross proceeds from Tranche 1 were NOK 77.0m (approximately USD 7.1m). On 11 October 2023, the Group held an Extraordinary General Meeting (the “October 2023 EGM”). Through the October 2023 EGM, the Board of Directors was given the authority to increase the Company’s share capital with up to NOK 44,642,857 through the issuance of 446,428,571 shares, each with a face value of NOK 0.10, at a subscription price of NOK 1.40 per share. Further, the Board of Directors was authorized to increase the Company’s share capital with up to NOK 10,000,000 through the issuance of 100,000,000 new shares, each with a par value of NOK 0.10, as part of a Subsequent Offering. The subscription price per new share upon use of the authorization shall be NOK 1.40. 2023 2022 Total number of shares as of 1 January 153,266,409 91,048,551 Shares issued during the year 645,336,763 62,217,858 Total number of shares as of 31 December 798,603,172 153,266,409 Nominal value as of 31 December (NOK) 0.10 0.10 Share capital (total number of shares at nominal value) (NOK 1,000) 79,860 15,327 Share capital (total number of shares at nominal value) (USD 1,000) 7,663 1,677 GROUP RESULTS 180 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS On 12 October 2023, the share capital increase from Tranche 2 was registered with the NRBE and share capital increased by NOK 44.6m through issuance of 446,428,571 new shares, each with a par value of NOK 0.10. Gross proceeds from Tranche 2 were NOK 625.0m (approximately USD 57.6m). On 18 October 2023, the Group approved and published a prospectus (the “October 2023 Prospectus”) and commenced the subscription period in the subsequent offering (the “November 2023 Subsequent Offering”) of up to 100,000,000 new shares each at a subscription price per share of NOK 1.40. By the end of the subscription period on 7 November 2023, the November 2023 Subsequent Offering raised gross proceeds of approximately NOK 1.8m (approximately USD 0.2m) through the issuance of 18,201,586 new shares, each with a par value of NOK 0.10. No shares were exercised and issued related to the Group’s employee share option program for the years ended 31 December 2023 and 2022. As of 31 December 2023 and 2022, the total number of shares issued and outstanding consisted of the following: SHAREHOLDER 2023 NUMBER OF SHARES 2023 % OF SHARES 2022 NUMBER OF SHARES 2022 % OF SHARES NORDLAKS HOLDING AS 98,357,244 12.32% 7,317,073 4.77% MORGAN STANLEY & CO. LLC 97,428,571 12.20% - 0.00% UBS SWITZERLAND AG 81,950,533 10.26% 619,442 0.40% STRAWBERRY CAPITAL AS 65,096,062 8.15% 9,229,380 6.02% JOH JOHANNSON EIENDOM AS 63,935,643 8.01% 7,649,929 4.99% MORGAN STANLEY & CO. INT. PLC. 48,592,756 6.08% 4,990,420 3.26% THE BANK OF NEW YORK MELLON 36,114,983 4.52% 51,849 0.03% BLUE FUTURE HOLDING AS 29,976,478 3.75% 721,621 0.47% J.P. MORGAN SE 23,290,093 2.92% - 0.00% THE NORTHERN TRUST COMP, LONDON BR 15,367,800 1.92% 2,400,000 1.57% CITIBANK, N.A. 20,369,196 2.55% 3,534,230 2.31% SKAGEN KON-TIKI VERDIPAPIRFOND 14,475,000 1.81% 8,148,000 5.32% WENAASGRUPPEN AS 12,137,038 1.52% 1,210,441 0.79% VATNE EQUITY AS 11,864,024 1.49% 7,439,024 4.85% ALSCO AS 10,427,344 1.31% 10,427,344 6.80% J.P. MORGAN SE 8,933,470 1.12% 950,843 0.62% ASINVEST AS 8,403,599 1.05% 1,764,066 1.15% FOUGNER INVEST AS 7,442,718 0.93% 1,298,108 0.85% NORSK LANDBRUKSKJEMI AS 4,396,110 0.55% 1,700,000 1.11% TACONIC AS 4,185,487 0.52% 1,135,487 0.74% Total number of shares attributed to the 20 largest shareholders 662,744,149 82.99% 70,587,257 46.06% Total number of shares attributed to other shareholders 135,859,023 17.01% 82,679,152 53.94% Total number of shares issued and outstanding 798,603,172 100.00% 153,266,409 100.00% GROUP RESULTS 181 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS Equity Transaction Costs For the years ended 31 December 2023 and 2022, total equity transaction costs arising on share issues amounted to NOK 63.1m and NOK 45.1m, respectively. Such amounts are net against ASA’s share premium balance in the accompanying statements of financial position. As of 31 December 2023 and 2022, shares directly or indirectly held by members of the Board of Directors, Chief Executive Officer, and Executive Management consisted of the following: NAME AND TITLE 2023 NUMBER OF SHARES 2023 % OF SHARES 2022 NUMBER OF SHARES 2022 % OF SHARES Johan E. Andreassen, CEO 6,287,442 0.79% 6,287,442 4.10% Andre Skarbø, Director of the Board 9,643,599 1.21% 1,764,066 1.15% Bjørn-Vegard Løvik, Chair of the Nomination Committee 5,213,672 0.65% 5,213,672 3.40% Jon-Birger Løvik, COO (as of 31 October 2023 step-down date) 1,272,911 0.16% 158,086 0.10% Svein Taklo, CDIO 299,099 0.04% 44,814 0.03% Karl Øystein Øyehaug, CFO 184,145 0.02% 29,850 0.02% Tone Bjørnov, Director of the Board (as of 23 May 2023 step-down date) 39,406 0.00% 19,406 0.01% Patrice Flanagan, Director of the Board (as of 23 May 2023 step-down date) 4,900 0.00% 4,900 0.00% Alejandro Castro, CBO (as of March 2023 step-down date) 920 0.00% 920 0.00% Runar Vatne, Director of the Board (as of 3 August 2022 step-down date) - 0.00% 7,839,024 5.11% Alexander Reus, Director of the Board (as of 5 December 2022 step-down date) - 0.00% 1,601,051 1.04% Danielle Villoch, CLO (As of 19 June 2022 step-down date) - 0.00% 487 0.00% Certain shares are held indirectly by Johan E. Andreassen and Bjørn-Vegard Løvik through Alsco AS, a jointly owned company by Mr. Andreassen and Mr. Løvik, and are allocated based on their respective ownership interests in Alsco AS. Further, certain shares are held indirectly by Mr. Andreassen through JEA Invest AS, a wholly owned company by Mr. Andreassen. GROUP RESULTS 182 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS NOTE 7 Cash and Restricted Cash As of 31 December 2023 and 2022, ASA’s cash and restricted cash consisted of NOK 124.6m and NOK 50.1m, respectively. From time to time, ASA may hold restricted cash in its tax withholding accounts. ASA did not hold any material restricted cash amounts as of 31 December 2023 and 2022. NOTE 8 Related Party Transactions During the ordinary course of business, ASA engages in transactions with subsidiaries within the Group similar to what management believes would have been agreed upon between unrelated parties. During the ordinary course of business, ASA performs management and administrative tasks on behalf of subsidiaries within the Group. For the years ended 31 December 2023 and 2022, ASA charged management fees of NOK 6.7m and NOK 11.6m, respectively. As of 31 December 2023 and 2022, total outstanding amounts due from related parties in connection to such transactions consisted of NOK 32.3m and NOK 25.6m, respectively. During the ordinary course of business, ASA may loan amounts or pay expenses on behalf of subsidiaries within the Group. Such transactions create amounts due from and to related parties. As of 31 December 2023 and 2022, total outstanding amounts due from related parties in connection with amounts loaned consisted of NOK 804.9m and NOK 758.8m, respectively. Such transactions may result in intercompany finance income and expense (see Note 3 – Finance Income and Expense). On 15 September 2021, a fire broke out in the Denmark Bluehouse that destroyed substantially all property, plant, and equipment related to its saltwater ongrowing systems. For the year ended 31 December 2022, ASA wrote down an additional NOK 57.8m against the intercompany loan due from ASDK to reflect ASDK’s current book value. No amounts were written down for the year ended 31 December 2023. For the years ended 31 December 2023 and 2022, ASA recognized an impairment of assets of NOK 1.4b and NOK 2.1b, respectively, towards ASA’s investment in ASUS as a result of ASUS’s accumulated losses. GROUP RESULTS 183 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS As of 31 December 2023 and 2022, the Program included up to 19,008,586 and 1,584,491 outstanding share options granted, respectively, with contractual vesting terms between one and five years as follows: For the year ended 31 December 2023, a negative expense of USD 0.4m was driven by a high number of forfeitures over the value of options vested. For the year ended 31 December 2022, an expense of USD 0.6m was recognized from the value of options vested. 2023 WEIGHTED AVERAGE EXERCISE PRICE  2023 NUMBER OF SHARES 2022 WEIGHTED AVERAGE EXERCISE PRICE  2022 NUMBER OF SHARES Outstanding at 1 January 212.92 1,584,491 208.88 1,650,535 Granted during the year 12.03 18,510,000 - - Forfeited during the year 246.87 (1,060,905) 137.99 (38,735) Exercised during the year - - - - Lapsed during the year 71.19 (25,000) 75.17 (27,309) Outstanding at 31 December 15.60 19,008,586 212.92 1,584,491 Outstanding share options as of 31 December Number of share options with a weighted average share price over NOK 15 127.99 498,586 212.92 1,584,491 Number of share options with a weighted average share price under NOK 15 12.03 18,510,000 - - Total outstanding share options as of 31 December 15.60 19,008,586 212.92 1,584,491 NOTE 9 Share Option Program In accordance with the authorization granted by the Group’s AGM, the Group’s Board of Directors introduced a share option program for senior executives and key personnel employed by the Group and its subsidiaries (the “Program”). GROUP RESULTS 184 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS The following information is relevant in the determination of the fair value of options granted for the years ended 31 December 2023 and 2022: 2023 2022 Option pricing model used Black Scholes Black Scholes Weighted average share price at grant date (NOK) 5.01 - Exercise price (NOK) 2.91 14.74 Weighted average contractual life (days) 1,572 1,825 Expected volatility 52.90% 31.18% Expected dividend growth rate 0.00% 0.00% Risk-free interest rate 2.08% 1.12% On 23 May 2023, Johan E. Andreassen was granted a total of 14,000,000 share options divided into two tranches of 7,000,000 share options. The first tranche of 7,000,000 share options shall vest by 31 December 2024 and will lapse automatically if not exercised by 31 December 2025. The second tranche of 7,000,000 share options shall vest annually over five years and will lapse automatically if not exercised by 31 December 2028. The previous share options granted to Mr. Andreassen as part of the 2021 AGM shall expire upon the grant of these share options. On 23 May 2023, Karl Øystein Øyehaug was granted a total of 2,800,000 share options that shall vest annually over four years and will lapse automatically if not exercised by 31 December 2028. An additional 1,710,000 share options were granted to other key personnel during the year ended 31 December 2023 resulting in a total amount of 18,510,000 share options granted for the year ended 31 December 2023. No share options were granted for the year ended 31 December 2022. Further, no share options were exercised and issued related to the Group’s employee share option program for the years ended 31 December 2023 and 2022. NOTE 10 Contingencies and Legal Claims ASA has evaluated contingencies and legal claims from 31 December 2023 through the date in which the consoli- dated financial statements were issued. The Group is currently involved in an arbitration against OHLA Building, Inc. (“OHL”), who performed work in connection with the construction of Phase 1 of the Miami Bluehouse, which is ongoing and not settled as of the date of this report. OHL has made a claim for the Group’s alleged failure to pay for approved work and change order, in the aggregate amount of approximately USD 5.6m, and reimbursement of attorneys’ fees and interest. The Group is denying that there has been a failure of payment, and has filed a counterclaim in the arbitration, in the aggregate amount of USD 20.0m (such number may be adjusted up significantly later in the process), on the grounds of alleged faulty workmanship by OHL and its subcontractors. In connection with the dispute with OHL, the sub-contractors Billund Aquaculture A/S (“Billund Design”), a company that was engaged by the Group for design work related to Phase 1 and acted as sub- contractor to OHL in the construction of Phase 1, and Billund Aquaculture US Corp. (“Billund Construction”), a company that was engaged by OHL as a sub-contractor to OHL in the construction of Phase 1, have also each become party to the arbitration process. The Group, OHL, Billund Design and Billund Construction participated in a mediation with a view to reach an amicable solution in October 2022. Such mediation was unsuccessful, and the matter moved forward to a formal arbitration hearing and is currently underway and expected to be concluded, at the earliest, in H1 2025. As of 31 December 2023 and 2022, no claim receivable or payable was recognized within the consolidated financial statements given the ongoing nature of the legal claim and the uncertainty of settlement towards either party as of the reporting dates and as of the date of this report. GROUP RESULTS 185 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 Commitments The amended 2020 Credit Facility is secured by substantially all Group’s assets, which includes existing and after-acquired personal and real property held, the equity interest held by the Borrowers and the Guarantors in their respective subsidiaries, certain receivables, and certain bank accounts perfected under First Priority security. NOTE 12 Subsequent Events ASA has evaluated subsequent events from 31 December 2023 through the date in which the financial statements were issued. Private Placement On 29 February 2024, the Group raised NOK 369.0m (approximately USD 35.0m) in gross proceeds through a private placement of 307,125,000 new shares at a price per share of NOK 1.20. In connection with the Private Placement, the underwriters' underwriting commission of 5% was settled through the issuance of 15,356,243 in new shares at a price per share of NOK 1.20. Following the issuance of the new shares, the total number of shares issued and outstanding was 1,121,084,415. Eleventh Amendment to 2020 Credit Facility On 25 March 2024, the eleventh amendment to the 2020 Credit Facility was formally signed and committed. The debt was structured under many of the same key terms while others were modified. Of note, the maturity date was extended to 21 October 2026 and the borrowing base on the RCF was extended to include additional biomass and higher trade receivable levels. The total amounts were restructured into a fully committed credit facility of USD 162.1m, of which USD 42.1m is attributed to the drawn US Term Loan, USD 20.0m is attributed to the RCF (of which USD 17.4m is available), and USD 100.0m is attributed to a delayed undrawn Term Loan for Phase 2 capital expenditures. The EBITDA covenants and delay draw term loan incurrence test levels were also reset, and the Company incurred amendment and waiver fees of approximately USD 1.1m. AS Purchasing, LLC On 4 March 2024, AS Purchasing, LLC, a wholly owned subsidiary of ASA, filed for voluntary dissolution under the Florida Division of Corporations. ASP had previously served as the purchasing arm for ASUS while construction of the Phase 1 Miami Bluehouse was underway and has not held active operations since its completion and therefore did not have any impact on the financial statements or accompanying notes presented within this report. GROUP RESULTS 186 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES ATLANTIC SAPPHIRE ASA FINANCIAL STATEMENTS ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES 187 2023 IN REVIEW FOR THE HEALTH OF PEOPLE AND PLANET GROUP RESULTS STATEMENT OF RESPONSIBILITY VIKEBUKT, 18 APRIL 2024 We confirm that, to the best of our knowledge, the consolidated financial statements for the period from 1 January to 31 December 2023 have been prepared in accordance with IFRS as adopted by the EU, with such additional information as required by the Norwegian Accounting Act and give a true and fair view of the Group’s consolidated and ASA’s assets, liabilities, financial position, and results of operations. We confirm that the Board of Directors’ report provides a true and fair view of the development and performance of the business and the position of the Group and ASA, together with a description of the key risks and uncertainty factors that the Group and ASA are facing. ELLEN MARIE SÆTRE Director ANDRÉ SKARBØ Director MARTA ROJO ALONSO Director JOHAN E. ANDREASSEN CEO EIRIK WELDE Deputy Chairman KENNETH JARL ANDERSEN Chairman GROUP RESULTS 188 ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES STATEMENT OF RESPONSIBILITY ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 ATLANTIC SAPPHIRE’S ESG PRIORITIES 189 GROUP RESULTS 2023 IN REVIEW FOR THE HEALTH OF PEOPLE AND PLANET AUDITOR’S REPORT GROUP RESULTS ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES AUDITOR’S REPORT GROUP RESULTS ATLANTIC SAPPHIRE’S ANNUAL REPORT 2023 FOR THE HEALTH OF PEOPLE AND PLANET 2023 IN REVIEW ATLANTIC SAPPHIRE’S ESG PRIORITIES AUDITOR’S REPORT INVESTOR RELATIONS Karl Øystein Øyehaug, Chief Financial Officer 1-786-292-3632 investorrelations@atlanticsapphire.com DOMICILE OF ENTITY Vestnes, Norway LEGAL FORM OF ENTITY Public limited liability company: Allmennaksjeselskap (ASA) COUNTRY OF INCORPORATION Norway PRINCIPAL PLACE OF BUSINESS Homestead, Florida DESCRIPTION OF PRINCIPAL OPERATIONS 45102010, Farming, Fishing, Ranching, and Plantations ATLANTIC SAPPHIRE ASA Daugstadvegen 445, 6392 Vikebukt, Norway CVR: 895436232 ABOUT ATLANTIC SAPPHIRE 2138007BY85FI48VX6662023-01-012023-12-312138007BY85FI48VX6662022-01-012022-12-312138007BY85FI48VX6662023-12-312138007BY85FI48VX6662022-12-312138007BY85FI48VX6662021-12-31ifrs-full:IssuedCapitalMember2138007BY85FI48VX6662022-01-012022-12-31ifrs-full:IssuedCapitalMember2138007BY85FI48VX6662022-12-31ifrs-full:IssuedCapitalMember2138007BY85FI48VX6662021-12-31ifrs-full:SharePremiumMember2138007BY85FI48VX6662022-01-012022-12-31ifrs-full:SharePremiumMember2138007BY85FI48VX6662022-12-31ifrs-full:SharePremiumMember2138007BY85FI48VX6662021-12-31ifrs-full:ReserveOfSharebasedPaymentsMember2138007BY85FI48VX6662022-01-012022-12-31ifrs-full:ReserveOfSharebasedPaymentsMember2138007BY85FI48VX6662022-12-31ifrs-full:ReserveOfSharebasedPaymentsMember2138007BY85FI48VX6662021-12-31ifrs-full:RetainedEarningsMember2138007BY85FI48VX6662022-01-012022-12-31ifrs-full:RetainedEarningsMember2138007BY85FI48VX6662022-12-31ifrs-full:RetainedEarningsMember2138007BY85FI48VX6662021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember2138007BY85FI48VX6662022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember2138007BY85FI48VX6662022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember2138007BY85FI48VX6662021-12-312138007BY85FI48VX6662023-01-012023-12-31ifrs-full:IssuedCapitalMember2138007BY85FI48VX6662023-12-31ifrs-full:IssuedCapitalMember2138007BY85FI48VX6662023-01-012023-12-31ifrs-full:SharePremiumMember2138007BY85FI48VX6662023-12-31ifrs-full:SharePremiumMember2138007BY85FI48VX6662023-01-012023-12-31ifrs-full:ReserveOfSharebasedPaymentsMember2138007BY85FI48VX6662023-12-31ifrs-full:ReserveOfSharebasedPaymentsMember2138007BY85FI48VX6662023-01-012023-12-31ifrs-full:RetainedEarningsMember2138007BY85FI48VX6662023-12-31ifrs-full:RetainedEarningsMember2138007BY85FI48VX6662023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember2138007BY85FI48VX6662023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberiso4217:USDiso4217:USDxbrli:shares