Clean Seas Seafood Limited

Earnings Release • Sep 16, 2021

ASX & Media Release

16 September 2021

Trading Update ahead of Conference Presentation

Clean Seas Seafood Limited (ASX: CSS, OSE: CSS), the global leader in full cycle breeding, production and sale of Yellowtail Kingfish, is pleased to provide a trading update and presentation to the Bell Potter Home Grown Agriculture Conference.

Highlights:

• August YTD sales volumes in FY22 are 772t versus 386t (+100%) in FY21 and 427t in FY20 (+81% vs the pre-pandemic period)
• Sales revenues have grown to A\$10.3m, versus A\$6.2m in FY21 (+66%) and A\$7.5m in FY20 (+37.5% vs the pre-pandemic period)
• Australia includes sales in support of an upcoming retail program in a major supermarket chain
• Lockdowns in NSW and VIC have impacted sales volumes to restaurants, however, the new retail channel has offset this shortfall
• European sales have been exceptionally strong with revenues up 102% on FY21 and 123% ahead of FY20 in that region
• Stocking of new juvenile fish in the new full life-cycle Fitzgerald Bay (Whyalla) farm site has now commenced. Activating this location has the potential to increase Clean Seas' total production to 10,000t per annum and reflects the Company's confidence in the growth potential of Kingfish globally

Year-to-date Sales Performance Summary
Region	FY20	FY21	FY22
Australia	224	184	352
Europe	170	188	380
Americas	25	11	39
Asia	8	3	1
Total sales volumes	427	386	772
Group revenue (\$'000)	7,481	6,201	10,278
Revenue \$/k.g	17.50	16.06	13.31

Clean Seas' sales through to August FY22 have been accelerating, demonstrating a significant rebound and growth in volumes and revenues ahead of pre-pandemic levels. This is despite the ongoing impacts of lockdowns in various premium restaurant markets domestically. The sales trajectory is validating the transformative market and channel diversification strategy that Clean Seas has adopted to broaden the growth potential of the business. The reduction in revenue \$/kg is in line with expectations and reflects the Company's planned entry into new retail channels and clearance activity of aged frozen inventory.

The stocking of juvenile fish in the new full life-cycle Fitzgerald Bay (Whyalla) farm site has commenced. This new location, which complements Clean Seas' existing farming locations in Port Lincoln and Arno Bay, increases the Company's total potential production capacity to 10,000t per annum. It is also a signal of the confidence Clean Seas has in its future global growth ambitions and to lower cost of production in the years ahead.

Demand for Clean Seas' premium ocean reared Kingfish continues to expand as awareness for the species develops around the world. Clean Seas remains committed to providing the market with the highest quality fish, a native species grown in its natural waters of the Spencer Gulf in South Australia, while also aiming to be the lowest cost and most sustainable producer of Yellowtail Kingfish globally.

It is the Company's view that whilst the ongoing COVID-19 disruptions may reshape the timing of achieving its growth strategy, the ongoing development of new channels and markets is expected to deliver long-term growth that will complement Clean Seas' existing restaurant and premium food service business.

The Board notes that the inherent operational risks in aquaculture may impact future results.

Authorised for release by the Board of Clean Seas Seafood Limited.

About Clean Seas Seafood

Clean Seas Seafood is a fully integrated Australian Aquaculture business listed on the Australian Securities Exchange (ASX) and with a secondary listing on Euronext Growth Oslo (OSE) – the leading exchange for high growth seafood companies.

Clean Seas is the global leader in full cycle breeding, farming, processing and marketing of its Hiramasa or Yellowtail Kingfish (Seriola lalandi) and is renowned amongst leading chefs and restaurants around the world for its exceptional quality.

Clean Seas is recognised for innovation in its sustainable Yellowtail Kingfish farming and has become the largest producer of aquaculture Yellowtail Kingfish outside Japan.

Clean Seas is headquartered at its processing facility in Royal Park in Adelaide, South Australia while its hatchery is at Arno Bay and its fish farms are at Port Lincoln, Arno Bay and Fitzgerald Bay on the Eyre Peninsula of South Australia.

All volumes quoted are in Whole Weight Equivalents (WWE), unless otherwise specified.

For further information on Clean Seas Seafood, please contact:

Rob Gratton	Andrew Angus
CEO	Investor Relations
rob.gratton@cleanseas.com.au	andrewangus@overlandadvisers.com.au
+61 434 148 979	+61 402 823 757

Clean Seas Seafood Limited (ASX:CSS & OSE:CSS)

Bell Potter Home Grown Agriculture Conference 2021

CEO: Robert Gratton

16 September 2021

Introduction

• New Leadership & Focus - refreshed Board & Management, new partnerships and distribution channels, cost and volume focus
• Strong Sales Growth - FY21 sales volumes of 3,166t up 31% on FY20 (2,424t) and 17% on FY19 (2,698t).
• Diversification - new channels & markets are complementing the premium restaurant businesses as it recovers, and will deliver lower costs of production as volumes increase
• Inventory Sell Down / Biomass Coming Back into Balance - leveraging the sale of excess inventory has supported working capital requirements and driven channel diversification and volume growth
• Cost Focus - will further support lower costs of production and profit recovery
• Strong Balance Sheet - A\$50M of available funding
• Uniquely Positioned - to be the quality & cost leader in sustainable & environmentally friendly Kingfish production

Clean Seas Seafood – Global leader in full lifecycle farming of Yellowtail Kingfish

LONG STANDING FARMING EXPERIENCE NEW RETAIL MARKET ACCESS & GROWTH GLOBAL STRATEGIC PARTNERSHIP

20 years of experience and know-how, industry leading 13th generation of brood stock

Significant growth opportunity, existing licenses to produce up to 10,000 tonnes with a view to 30,000 tonnes in the longer term

Unique global distribution arrangement with strategic partner Hofseth International

SPENCER GULF NATURAL PROVENANCE UNIQUE PRODUCT, GLOBAL RECOGNITION SUSTAINABILITY AWARDS

Unique product quality and sustainability benefits from farming native species in its natural waters

Highly awarded and on the menu in more than 200 Michelin star restaurants across 17 countries

• Sustainable and environmentally friendly farming practices, focusing on animal welfare
• 'Aquaculture Stewardship Council' (ASC) certified and 'Friends of the Sea' Certified

Introductory video

Clear path to increase production while retaining Spencer Gulf provenance and quality

Production expansion capital at <A\$1/kg, significantly less than land based competitors

Control over the entire growth cycle – from egg to fully grown Kingfish

Farming - Cold water production is a necessity to reach the highest quality

• Seasonal warm and cold water growout cycle provides product quality versus warm water and tank farmed production
• Clean Seas Seafood produces its Kingfish in the perfect environment with temperatures in the range of 13^oC and 22^oC, ensuring the best possible product quality at acceptable growth rates
• It's possible to accelerate growth (and to some extent reduce operating costs) with temperatures in the range at or above 22^oC, but we believe it does affect the product quality
  • Texture, taste, shelf life
• This is why we farm in Kingfish's natural environment, the Spencer Gulf of South Australia

Clean Seas ensures unparalleled product quality with production in optimal temperatures

State-of-the-art freezing technology SensoryFreshTM will allow Clean Seas to deliver a high quality product globally with low cost & carbon footprint

• Freezing high value, premium quality seafood requires speed. The ice formation stage must be fast for optimum texture
• Clean Seas rapid freezing "SensoryFresh" is 10 times faster than conventional freezing
• This technology increases frozen sales to restaurants and has significant benefits in terms of carbon footprint
• Taste tests prove unmatched quality for frozen products, particularly when served raw
• Utilising frozen technology presents great opportunity for Clean Seas to benefit as the world reopens, particularly in the premium seafood and restaurant markets

Sustainability and Premium Quality is at our Core

Arguably the best raw fish in the world

Delicious Raw, Pan Seared, Baked, Roasted, And Grilled

Indicative retail packaging and branding

Marketing to retail segment

Huge potential for Yellowtail Kingfish globally

• The market for Yellowtail Kingfish has expanded significantly as awareness of the species has grown
• Clean Seas has built a substantial per capita consumption in Australia in premium restaurants
• Continued increases in per capita consumption will see total global sales grow strongly in future years
• Clean Seas has established distribution in Australia and Europe, and significant partnerships to expand into North America and Asia

Substantial progress against Strategic Priorities

	FY21	FY22	FY23
Operations	Stabilise the business following FY20 COVID shock, restructure and reduce indirect expenses	Grow and diversify kingfish production. Activate new farming sites.	Operating EBITDA and cashflow positive
Sales	Diversify channels and markets, maximise existing premium business as lockdowns ease	Develop new channels and markets, premium business	Launch volume retail channels with a price competitive lower cost fish
Inventory	Rectify Live Fish Biomass and Frozen inventory imbalance	Bring Biomass and Frozen inventory into balance to support future sales	Accelerate stocking and growth targets
Cost Of Production	Accept higher cost of production while excess inventory is sold through	Achieve significantly lower cost of production as a result of clearing excess inventory	Achieve A\$9/kg cost of production in line with FY18 levels
Funding	Secure debt and equity funding for growth ambitions	Simplify capital structure and redeem Convertible Notes

FY21 highlights turnaround and strong foundation

• Record sales volumes up 31% on FY20 and 17% on FY19
• New channels and markets developed, diversification underway
• Reduced inventory cover from 27 to 16 months
• Cost of production has peaked at A\$15.29/kg and will now decrease, targeting A\$9.00/kg in FY23
• A\$25 million capital raise completed, with secondary listing on Euronext Growth Oslo
• Significant available funds of A\$50 million, convertible note debt to be repaid

Strong recovery and diversification drive sales ahead of pre-pandemic levels

Sales Volumes by Market

• Record Sales - for FY21 of 3,166 tonnes despite ongoing restrictions
• Diversification - accelerated growth new channels and markets
• Australia - 1,809 tonnes, up 36%
• Europe - 904 tonnes, up 11%
• North America - 406 tonnes, up 80%
• Awareness Sales performance demonstrates a growing awareness and demand for Kingfish globally, as consumers look to make sustainable choices.

Inventory & Production Costs impacted by historical imbalance, but on-track for significant improvement

Inventory Cover

• Inventory Cover - Significant progress in addressing excess biomass and frozen inventory. Months cover reduced below FY18 levels
• Production Costs – have peaked at A\$15.29/kg due to excess biomass and reduced growth
  • Excess biomass - All of the excess Year Class 18's have now been harvested, and the Year Class 19's will be completed in early September. Surplus live fish biomass results in an extended growout period, and therefore an older, and significantly more expensive cohort of fish
  • Target Total production costs expected to return to historical levels of circa A\$9.00/kg in FY23 once the harvest of Year Class 20 fish is complete

Underlying EBITDA FY20 vs FY21 (A\$000's)

FY21 overview

• FY21 Underlying EBITDA benefitted from a 31% increase in sales volumes
• Indirect costs decline due to structural changes to reduce costs and promote efficiency. Further improvement expected as the Company accelerates growth strategy.
• Frozen storage costs increased due to excess frozen inventory held, significant progress to accelerate the sale of surplus stock and costs improvement expected in FY22.
• Production costs increased due to excess Live biomass and fish health issues during FY21.

^1. Underlying Operating EBITDA and Operating cash flow are categorised as non-IFRS financial information provided to assist readers to better understand 18 the financial performance of the underlying operating business. They have not been subject to audit or review by the Company's external auditors.

Funding & Cash Flow

Current cash and undrawn facilities (A\$'000)	FY21	FY20	Change	FY19
Cash at bank	30,072	22,169	7,903	1,004
Undrawn working capital facility	2,529	3,504	(975)	4,725
Undrawn senior debt facility	14,000	14,000	-	-
Undrawn asset finance facility	3,713	2,667	1,046	1,679
Total cash and undrawn facilities	50,314	42,340	7,974	7,408

Cash flow summary (A\$'000)	FY21	FY20	Change	FY19
Underlying Operating cash flow	(9,196)	(14,033)	4,837	(8,200)
Underling Adjustment
Restructuring costs	(637)	-	(637)	-
Litigation Settlement & Expense	-	14,007	(14,007)	(1,142)
Statutory Operating cash flow	(9,833)	(26)	(9,807)	(9,342)
Investing cash flow	(3,323)	(2,411)	(912)	(3,220)
Financing cash flow	21,059	30,877	(9,818)	757
Net increase / (decrease) in cash held	7,903	28,440	(20,537)	(11,805)

• Renewed A\$32.2 million Debt Facility and completed A\$25.0 million Capital Raise
• Early redemption of Convertible Notes underway
• Sufficient levels of cash and undrawn facilities to fund operations and invest in long term assets
• Underlying operating cash flow improved by A\$4.8 million versus FY20
• Cash receipts of A\$44.9 million, up 5% on FY20, while payments to suppliers and for feed were down A\$3.8 million
• Financing cash flow reflects the Completion of Capital Raise

Key Investment Highlights for Clean Seas and Spencer Gulf Kingfish

Unique market opportunity driven by megatrends

High growth potential can be realized at low costs and result in more competitive cost/kg

Proven setup with all key success factors in place

• Exposure to megatrends: consumer health, sustainable protein, rising incomes and environmental awareness
• 70% of demand for Atlantic Salmon is from retail, while Kingfish is almost entirely foodservice
• Increasing popularity for Kingfish as a premium source of seafood with limited sources of supply
• Strong recovery in sales signals successful start to the strategy
• Clean Seas is several times larger than its closest competitor and is well placed to access the growth potential in Kingfish in the near-term
• Tangible growth trajectory towards 30,000 tonnes with low license costs and ability to leverage fixed assets
• Volume growth facilitated can enable unit production costs to fall
• Industry leading production experience from 13+ generations of breeding
• Control over the entire production value chain, delivering a Michelin-starred quality product
• Distribution through exclusive agreement with Hofseth International
• Cold-water production of a native species in its natural environment, ensuring optimal and unparalleled product quality
• Exclusive access to freezing and defrosting technology, optimizing seasonality in harvesting schedules and global deliveries with a low carbon footprint

Trading Update - August YTD

• August YTD sales in FY22 are 772t versus 386t in FY21 (+100%) and 427t in FY20 (+81%)
• Sales revenues have grown to A\$10.3m, versus A\$6.2m in FY21 (+66%) and A\$7.5m in FY20 (+37.5%)
• Sales to restaurants in Australia impacted by lockdowns in NSW and VIC, however sales to new channels, including sales in support of an upcoming retail program with a major supermarket, has largely offset this shortfall
• Europe sales exceptionally strong as premium markets reopen, with incremental sales due to ongoing diversification, up 102% on FY21 and 123% ahead of FY20

Contacts

R o b G r a t t o n | C E O r o b . g r a t t o n @ c l e a n s e a s . c o m . a u + 6 1 4 3 4 1 4 8 9 7 9

D a v i d B r o w n | C F O D a v i d . b r o w n @ c l e a n s e a s . c o m . a u + 6 1 4 1 2 2 3 5 6 2 4

A n d r e w A n g u s | I n v e s t o r R e l a t i o n s a n d r e w a n g u s @ o v e r l a n d a d v i s e r s . c o m . a u + 6 1 4 0 2 8 2 3 7 5 7

D I S C L A I M E R :

Certain statements contained in this presentation, including information as to the future financial or operating performance of Clean Seas Seafood Limited ("CSS"), are forward looking statements.

Such forward looking statements may include, among other things, statements regarding targets, estimates and assumptions in respect of CSS' operations, production and prices, operating costs and results, capital expenditures, and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions; are necessarily based upon a number of estimates and assumptions that, while considered reasonable by CSS, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies; and involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward looking statements.

CSS disclaims any intent or obligation to update publicly any forward looking statements, whether as a result of new information, future events or results or otherwise. The words "believe", "expect", "anticipate", "indicate", "contemplate", "target", "plan", "intends", "continue", "budget", "estimate", "may", "will", "schedule" and similar expressions identify forward looking statements.

All forward looking statements made in this presentation are qualified by the foregoing cautionary statements. Investors are cautioned that forward looking statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward looking statements due to the inherent uncertainty therein.

All volumes are in Whole Weight Equivalents (WWE).