Gigante Salmon AS

Quarterly Report • Nov 15, 2022

REPORT FOR

THE THIRD QUARTER OF

Highlights THIRD QUARTER OF 2022

• The project is moving forward in accordance with prepared and approved plans and is in line with planned and approved cost limits
• Blasting resumed in September. Heavy construction activity, including blasting, must halted before 28 February 2023
• Establishment of the rockfill in the waters north-east of Lille Indre Rosøy is underway and expected to be completed during Q1 2023
• A contract for the purchase of land-based feeding facilities has been agreed with Aquagroup
• A decision about the landing of the submarine power cable is expected in Q4

Helge E. W. Albertsen CEO

TABLE OF CONTENTS

The report has been prepared in both Norwegian and English. In case of any discrepancy between the two versions, the Norwegian version shall prevail.

The journey has begun

Our first smolt will soon hatch — and we will be one step closer towards their release at the Gigante Salmon Rødøy facility. Benchmark Genetics Salten produced and fertilised the roe and, and on 8 November it arrived at Grytåga Settefisk, where it is now incubating.

Grytåga Settefisk AS is our contractual partner for smolt. Its hatchery in Grytåga in Vefsn council, in Helgeland county, has been producing smolt since 2008.

The roe is being well looked after at the Grytåga facility. Signs of life are already visible inside some of the eggs, and they are expected to hatch early December. The alevins will continue their lives in fresh water taken from the mountains of Vefsn.

In the autumn of 2023, these juvenile salmon will undergo the biological process known as smoltification, which allows them to continue their life at sea. At that point, they will weigh between 80 and 120 grams. They will then be transported aboard a well boat to our facility in Rødøy.

We're looking forward to their arrival!

Timeline towards 20,000 tons of yearly production

The smolt-release basin is expected to be fully blasted and cleared of rubble in late November.

Three new employees started in Q3: Tore Bakk, technician (1 August), Oda Risvik, fishfarmer (1 September) and Marianne Jensen, technician (September). All are employed by Gigante Salmon Rødøy AS.

In February, Gigante Salmon Rødøy AS applied for permission to establish a rockfill in the waters to the north-east of Lille Indre Rosøy. Work is underway and is due to be completed as planned during Q1 2023.

Work with Arva, the regional utility, to establish a submarine cable is on-going. The necessary agreements are expected to be signed in Q4 2022.

Operational review

According to the construction schedule, there is no blasting between 1 March and 1 September, out of consideration for local fauna. After a break for the summer holiday, construction resumed in mid-August, and blasting resumed on 1 September.

There has been a significant increase in costs in the past two or three years for electricity and energy. The pandemic has passed, but we are still dealing with its consequences. The biggest challenge at the current time, however, is the increased cost of equipment and materials, as well as generally longer delivery times for critical equipment and materials, resulting from Russia's on-going war against Ukraine. We have reason to believe that other project deliveries

may also be affected, but there is no indication this will happen.

We continue to work towards completion of the most critical planning activities in order to establish a technical and quality-assured documentation basis for the procurement, implementation and installation phases.

The project is proceeding according to plan. The plan will be revised if market conditions require. The

procurement and construction phase will draw to a close by the end of Q1 2023, though we expect some activities to extend beyond this timeframe. The installation phase will start in mid-February and will last until mid-July 2023. Completion, system-testing and commissioning before the planned September 2023 start-up of the facility are scheduled to be carried out in Q3 2023.

The project is progressing according to plan, and, aside from costs for electricity, energy, electrical equipment and automation, our preliminary forecasts indicate that we are within budget.

Project implementation

Financial review

PROPOSAL FOR NEW TAX RULES FOR THE AQUACULTURE INDUSTRY

On 28 September, the government proposed changes to the tax rule for the aquaculture industry, including the introduction of what is known as base-rate taxation that would take effect in the 2023 tax year.

The rule, as proposed, would not affect Gigante Salmon, since it would only apply to conventional, at-sea production of salmon for consumption, not land-based production of the sort we will operate.

The proposal is in the public-consultation phase and will come before the Storting in the first half of 2023.

IMPACT OF THE DECISION BY THE TAX APPEALS BOARD

The Tax Appeal Board has ruled in Gigante Salmon AS's favour in a matter relating to the 2009 fiscal year. The ruling, issued on 30 August, calls for Gigante Salmon to be reimbursed a total of NOK 2,631,994 (equal to NOK 2,576,801 for taxes paid in 2013, with interest, and NOK 55,193 for taxes paid in 2014, with interest).

In addition, Gigante Salmon has increased the amount of negative balance it can carry forward to NOK 11,133,003. This results in a deferred tax benefit of NOK 2,449,261 and an overall increase in profits of NOK 5,081,255.

See the table below for details and calculated effect:

BACKGROUND FOR THE APPEAL

Gigante Salmon AS was founded in 2001, and, until December 2009, it owned Gigante Pechenga OOO and Gigante Pechenga ZAO, which farmed salmon in the Pechenga Fjord, in north-western Russia. On 29 December 2009, the companies were sold to Baltiyskiy Bereg ZAO. The buyer did not want to take over the companies' claims, and Gigante

Salmon therefore registered them as a loss of NOK 19.8m in 2009.

The Tax Appeals Board was asked to settle a disagreement about whether the claims were of a financial or commercial nature. Gigante Salmon successfully argued that they were commercial.

Following the sale of the Russian firms, Gigante Salmon had no operational activities until 2021. In connection with the listing on Euronext Growth on 5 July 2021, legal and financial due diligence going back 10 years was carried out. There are no other claims or demands related to the company's 2001-2021 activities.

	Effect on taxes	Effect on interest — non-taxable	Total effect
Tax reimbursement (2013)	2 377 033	199 768	2 576 801
Tax reimbursement (2014)	52 087	3 106	55 193
Increased deferred tax benefit	2 449 261	0	2 449 261
Total	4 878 381	202 874	5 081 255

Q3 RESULT

As the group is still in a development phase, Q3 sales revenue was again this year NOK 0m. Other operating income of NOK 0.1m derives from the seconding of staff. Operating costs declined in Q3 from NOK 2.0m in 2021 to NOK 0.7m in 2022, as a result of capitalisation related to the group's development project in Rødøy council. Operating profit for the period was NOK -0.6m.

Total cash flow from group operations was NOK 3.4m. The discrepancy with the operating result is mainly due to interest income and increased receivables. The group's total investments in Q3 amounted to NOK 20.8m, of which NOK 18.7m was related to the development project in Rødøy and the remainder to payment of trade payables for previous investment costs.

As of 30 September, short-term debt amounted to 100% of total group debt, compared with 21% on 30 September 2021. The increase is mainly related to trade payables in connection with construction of the Rødøy facility, which is a natural consequence of the group's increased activity. Long-term bank financing for development of Gigante Salmon Rødøy has been approved but has yet to be drawn on. This is longterm financing from Sparebanken

Nord-Norge, and we expect to begin drawing on the construction loan before Q2 2023. The group's financial position is good, and, as of 30 September, the group is able to repay short-term debt using its most liquid funds.

Total capital at the end of Q3 was NOK 286.7m, compared with NOK 274.7m at the end of Q3 2021. Equity as of 30 September was 97%, compared with 99% on 30 September 2021.

The group's liquid assets were NOK 198.5m as of 30 September. The group's ability to self-finance investments is assessed as good.

Bodø 15 November 2022

Eirik Sørgård Chairman of the board

Helge E. W. Albertsen CEO

Kristin Ingebrigtsen Member of the board

Liv Monica Stubholt Member of the board

Kjell Lorentsen Member of the board

The board of directors and the CEO hereby declare that the consolidated accounts for the period 01.01.22-30.09.22 have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway, and provide a correct picture of the company's assets, liabilities, financial status and income and expenses as a whole. We further declare that the Q3 update includes an accurate summary of the company's most important activities up to the presentation of the results.

Statement by the board and CEO

Income statement

(Amount in NOK)

Report for the third quarter of 2022

Balance sheet

(Amount in NOK)

				Group
Assets	Note	30.09.2022	30.06.2022	31.12.2021	30.09.2021	30.06.2021
Research, development, licenses, goodwill		0	0	0	42 870	53 588
Deferred tax asset	4	6 025 006	3 741 113	3 840 756	4 194 321	472 877
Total intangible assets		6 025 006	3 741 113	3 840 756	4 237 191	526 465
Land, buildings and other property		65 326 920	45 358 099	20 508 663	4 005 671	3 592 263
Ships		798 042	820 417	865 167	887 542	0
"Fixtures/fittings, tools, office machinery and equipment"		11 588	13 099	16 122	18 137	0
Total tangible assets	1	66 136 550	46 191 615	21 389 952	4 911 350	3 592 263
Total fixed assets		72 161 556	49 932 728	25 230 708	9 148 541	4 118 728
Trade receivables		63 376	0	0	0	539
Other receivables		15 994 963	11 362 731	6 781 507	3 694 516	224 983 144
Total receivables		16 058 339	11 362 731	6 781 507	3 694 516	224 983 683
Cash and bank deposits		198 515 711	215 895 049	258 703 997	261 870 147	61 502 793
Total current assets		214 574 050	227 257 780	265 485 504	265 564 663	286 486 476
Total assets		286 735 606	277 190 508	290 716 212	274 713 204	290 605 204

				Group
Income Statement	Note	Q3 2022	Q3 2021	YTD 2022	YTD 2021	2021
Other income		128 100	0	128 100	0	0
Total income		128 100	0	128 100	0	0
Employee benefits expense		79 553	844 431	534 050	1 277 319	226 290
Depreciation and amortisation expenses 1		23 886	7 458	71 658	7 458	31 848
Other operating expenses		603 720	1 189 746	2 238 630	2 300 110	1 548 164
Total operating expenses		707 159	2 041 635	2 844 338	3 584 887	1 806 302
Net income		-579 059	-2 041 635	-2 716 238	-3 584 887	-1 806 302
Interest income		1 496 750	197 402	3 033 476	241 681	848 011
Other finance income		0	0	0	0	194
Interest expenses		0	92 969	29 426	93 042	73
Other financial expense		201	0	1 684	0	92
Net finances		1 496 549	104 433	3 002 366	148 639	848 040
Profit before income tax		917 490	-1 937 202	286 128	-3 436 248	-958 262
Income tax expense	4	-4 713 013	-3 721 444	-4 613 473	-4 051 234	-3 697 669
Net profit or loss for the period	2	5 630 503	1 784 242	4 899 601	614 986	2 739 407
To minority interests				0	0
To majority interests		5 630 503	1 784 242	4 899 601	614 986	2 739 407
Disposal
Transferred from/to equity		5 630 503	1 784 242	4 899 601	614 986	2 739 407

Balance sheet

(Amount in NOK)

Cash flow statement

(Amount in NOK)

			Group
Cash flow from operations	Q3 2022	Q3 2021	YTD 2022	YTD 2021	2021
Profit before income taxes	917 490	-1 937 202	286 128	-3 436 248	-958 262
Depreciation	23 886	7 458	71 658	7 458	31 848
Change in trade debitors	-63 376	539	-53 376	0	0
Deduction of recurring VAT settlement	0	20 864	0	20 864	28 285
Change in trade creditors	-124 994	-255 574	-1 201 072	197 831	1 517 531
Change in other provisions	2 729 374	-616 076	4 634 450	-3 410 321	-2 463 272
Net cash flow from operations	3 482 380	-2 779 991	3 737 788	-6 620 416	-1 843 870
Cash flow from investments
Purchase of fixed assets	-18 770 241	-1 336 691	-57 348 712	-3 616 717	-5 733 414
Purchase of intangible assets	0	0	0	-53 588	0
Repayment of short term loans	-2 091 479	0	-6 577 359	-40 939	0
Proceeds from short term loans	0	221 906 308	0	0	-3 678 044
Net cash flow from investments	-20 861 720	220 569 617	-63 926 071	-3 711 244	-9 411 458
Cash flow from financing
Repayment of short term loans (group companies)	0	0	0	57 700	0
Proceeds from short term loans	0	0	0	0	0
Proceeds from issuance of equity	0	0	0	222 000 004	222 000 004
Repayment of long term loans	0	-2 000 000	0	0	-1 705 318
Issuance costs recognized directly in equity	0	-15 422 273	0	-15 422 273	-15 901 736
Net cash flow from financing	0	-17 422 273	0	206 635 431	204 392 950
Exchange gains / (losses) on cash and cash equivalents
Net change in cash and cash equivalents	-17 379 340	200 367 353	-60 188 283	196 303 771	193 137 622
Cash and cash equivalents at the beginning of the period	215 895 049	61 502 793	258 703 997	65 566 375	65 566 375
Cash and cash equivalents at the end of the period	198 515 711	261 870 147	198 515 711	261 870 147	258 703 997

				Group
Equity and liabilities	Note	30.09.2022	30.06.2022	31.12.2021	30.09.2021	30.06.2021
Share capital	3	105 556 037	105 556 037	105 556 037	105 556 037	65 192 400
Share premium		165 734 431	165 734 431	165 734 431	166 214 094	0
Non-registered capital increase		0	0	0	0	222 000 004
Other paid-in equity		113 935	113 935	113 935	-967 664	-967 664
Total paid-in equity	2	271 404 403	271 404 403	271 404 403	270 802 467	286 224 740
Other equity		7 615 522	1 985 021	2 715 562	1 672 939	0
Uncovered losses		0	0	0	0	-111 303
Total retained earnings	2	7 615 522	1 985 021	2 715 562	1 672 939	-111 303
Minority interests		0	0	0	0	0
Total equity	2	279 019 925	273 389 424	274 119 965	272 475 406	286 113 437
Other non-current liabilities		0	0	0	1 763 018	3 763 018
Total other non-current liabilities		0	0	0	1 763 018	3 763 018
Trade creditors		2 200 707	1 127 121	15 932 235	208 103	463 677
Public duties payable		280 068	454 881	280 343	121 887	43 138
Other short-term liabilities		5 234 906	2 219 084	383 667	144 790	221 934
Total current liabilities		7 715 681	3 801 086	16 596 246	474 780	728 749
Total liabilities		7 715 681	3 801 086	16 596 246	2 237 798	4 491 767
Total equity and liabilities		286 735 606	277 190 508	290 716 212	274 713 204	290 605 204

ACCOUNTING PRINCIPLES

The quarterly accounts have been prepared in compliance with the Accounting Act and accounting principles generally accepted in Norway, including principles for interim accounting (NRS 11). All significant accounting principles are described in the Groups annual report for 2021.

The annual report is available at www.gigantesalmon. no. For a complete statement of the accounting principles, please see the annual report.

The quarterly report is non-audited.

Notes

NOTE 1 - FIXED ASSETS

NOTE 2 - SHAREHOLDERS' EQUITY

Gigante Salmon is currently constructing its land-based fish farm at Lille Indre Rosøy in Rødøy kommune. This explains the recent additions of fixed assets.

The construction is in line with the investment budget and time frame.

The construction phase ends August 2023, with the first release of smolt in August 2023.

*The Group has capitalized own work with NOK 892 567.

CHANGE IN PLAN OF DEPRECIATION

There has not been a change in plan of depreciation.

NOTE 3 - SHARE CAPITAL AND SHAREHOLDER INFORMATION

The share capital of NOK 105 556 037 consists of 105 556 037 shares with nominal value of NOK 1 each.

LIST OF 20 MAJOR SHAREHOLDERS AT 30.09.22.

Shareholder Number of shares Ownership Gigante Havbruk AS 64 238 000 60,86 % T Kolstad Eiendom AS 7 272 728 6,89 % J.P. Morgan SE 3 123 631 2,96 % Helgeland Invest AS 2 727 272 2,58 % Torghatten Aqua AS 2 727 272 2,58 % Verdipapirfondet Nordea Avkastning 2 082 424 1,97 % Ravi Investering AS 1 970 125 1,87 % IHA Invest AS 1 455 000 1,38 % Commuter 2 AS 1 090 909 1,03 % Yannick AS 1 000 000 0,95 % Olav Olsen Holding AS 1 000 000 0,95 % LIMT AS 910 000 0,86 % DNOR AS 909 093 0,86 % Nyhamn AS 909 091 0,86 % UBS Switzerland AG 667 485 0,63 % Oxvold Invest AS 600 000 0,57 % Aino Aktiv AS 574 255 0,54 % Maria Olaisen AS 545 455 0,52 % Hausta Vekst AS 545 454 0,52 % Occasione By Olaisen AS 545 454 0,52 % Other owners 10 662 389 10,10 %

Shareholder	Number of shares	Ownership
Gigante Havbruk AS	64 238 000	60,86 %
T Kolstad Eiendom AS	7 272 728	6,89 %
J.P. Morgan SE	3 123 631	2,96 %
Helgeland Invest AS	2 727 272	2,58 %
Torghatten Aqua AS	2 727 272	2,58 %
Verdipapirfondet Nordea Avkastning	2 082 424	1,97 %
Ravi Investering AS	1 970 125	1,87 %
IHA Invest AS	1 455 000	1,38 %
Commuter 2 AS	1 090 909	1,03 %
Yannick AS	1 000 000	0,95 %
Olav Olsen Holding AS	1 000 000	0,95 %
LIMT AS	910 000	0,86 %
DNOR AS	909 093	0,86 %
Nyhamn AS	909 091	0,86 %
UBS Switzerland AG	667 485	0,63 %
Oxvold Invest AS	600 000	0,57 %
Aino Aktiv AS	574 255	0,54 %
Maria Olaisen AS	545 455	0,52 %
Hausta Vekst AS	545 454	0,52 %
Occasione By Olaisen AS	545 454	0,52 %
Other owners	10 662 389	10,10 %
Total	105 556 037	100,0 %

SHARES OWNED BY THE MANAGEMENT AND RELATED PARTIES OF THE MANAGEMENT

Name	Position	Number of shares	Ownership
Helge E. W. Albertsen	CEO	200 000	0,19 %
Rune Johansen	CFO	310 000	0,29 %
Linda Storholm	CCO	15 500	0,01 %
Eirik Sørgård	Chairman of the Board	200 000	0,19 %
Kristin Ingebrigtsen	Member of the Board	15 000	0,01 %

	Buildings and land	Machines	Movables	Total fixed assets
Purchase cost pr. 30.06.22	45 358 099	895 000	18 136	46 271 235
Accumulated depreciation 30.06.22	0	74 583	5 037	79 620
Net book value 30.06.22	45 358 099	820 417	13 099	46 191 615
Additions*	19 968 821	0	0	19 968 821
Purchase cost 30.09.22	65 326 920	895 000	18 136	66 240 056
Accumulated depreciation 30.09.22	0	96 958	6 548	103 506
Net book value 30.09.22	65 326 920	798 042	11 588	66 136 550
Depreciation in Q3 2022	0	22 375	1 511	23 886

Eirik Sørgård owns 200 000 shares through his wholly-owned company Pronord AS. Rune Johansen owns 35 000 shares privately and 275 000 shares through his wholly-owned company Nord-Norsk Eiendom AS. Kjell Lorentsen has controlling influence through Gigante Havbruk AS who owns 64 238 000 shares (ownership 60,86 %). 16 3. QUARTERLY REPORT GIGANTE SALMON 17

The Group owns two islands that are not depreciated.

Equity changes in the period		Share capital Share premium	Other paid-in equity	Other equity	Total
Equity 01.01.22	105 556 037	165 734 431	113 935	2 715 562	274 119 965
Profit for Q1	0	0	0	-619 065	-619 065
Equity 31.03.22	105 556 037	165 734 431	113 935	2 096 497	273 500 900
Profit for Q2	0	0	0	-111 475	-111 475
Equity 30.06.22	105 556 037	165 734 431	113 935	1 985 022	273 389 424
Profit for Q3	0	0	0	5 630 503	5 630 503

NOTE 4 - TAXES NOTE 5 - OVERVIEW OF AND TRANSACTIONS WITH RELATED PARTIES

CALCULATION OF DEFERRED TAX/DEFERRED TAX ASSET

Temporary differences	30.09.2022	30.09.2021	31.12.2021
Net temporary differences	5 699 001	2 067 949	3 271 062
Tax losses carried forward	-33 085 392	-21 133 043	-20 729 041
Basis for deferred tax asset	-27 386 391	-19 065 094	-17 457 979
Deferred tax asset	-6 025 006	-4 194 321	-3 840 756
Deferred tax asset in the balance sheet	-6 025 006	-4 194 321	-3 840 756

BASIS FOR INCOME TAX EXPENSE, CHANGES IN DEFERRED TAX AND TAX PAYABLE

Basis for income tax expense

Result before taxes	917 490	-1 493 381	-958 462
Permanent differences	-201 617	-15 422 273	-15 849 126
Basis for the tax expense for the year	715 873	-16 915 654	-16 807 588
Change in temporary differences	-810 172	-828 348	-3 271 062
Basis for payable taxes in the income statement	-94 299	-17 744 002	-20 078 650
Taxable income (basis for payable taxes in the balance sheet)	-94 299	-17 744 002	-20 078 650
Basis for income tax expense, changes in deferred tax and tax payable	30.09.2022	30.09.2021	31.12.2021
Tax payable	0	0	0
Total tax payable	0	0	0
Change in deferred tax asset*	-2 283 893	-3 721 444	-3 697 670
Tax refund 2013/2014*	-2 429 120	0	0

*The company has been successful in a tax appeal, which results in a profit of NOK 5 million.

	Related party	Ownership
a)	Gigante Havbruk AS	Eier Gigante Salmon 61%
b)	KapNord AS	Gigante Havbruk eier 51%
c)	Polarplast AS	Gigante Havbruk eier 40%
d)	Gildeskål Forskningsstasjon AS	Gigante Havbruk eier 100%
e)	Salten Aqua AS	Gigante Havbruk eier 35%
f)	Salmon Center AS	Gigante Havbruk eier 100%
g)	Gigante Havbruk AS	Eier Gigante Salmon 61%
h)	Fish Farm International AS	Eies 100% av Gigante Havbruk AS

	Amount	Detail of transaction
a)	177 600	Purchase of hours in connection with the design and production of The Groups land-based fish farm.
b)	169 200	Purchase of hours in connection with the design and production of The Groups land-based fish farm.
c)	267 273	Purchase of hours in connection with the design and production of The Groups land-based fish farm.
d)	323 750	Purchase of hours in connection with the design and production of The Groups land-based fish farm and rental of boat.
e)	67 500	Purchase of admin fees
f)	16 500	Office rent - Bodø
g)	117 600	Income - media relations provided to the Group Gigante Havbruk
h)	10 500	Income - boat rental/fuel/personell

The design and production is capitalized at the line Land, buildings and other property.