Norcod — Investor Presentation 2023

Aug 24, 2023

Norcod Presentation Q2-2023

CEO: Christian Riber

CFO: Arne Kristian Hoset

Agenda

• Q2 2023 Highlights
• Operational update
• Market conditions
• Green visions for a blue future
• Financial update
• Outlook
• Q&A

Q2 2023 Highlights

• 39 MNOK in revenues, up 39% from Q2-22 driven by increased harvesting
• 47 MNOK in operating loss, compared to 41 MNOK in Q2-22
• -131 MNOK in cash flows from operations, down from -88 MNOK in Q2-22
• 1 038 tons WFE harvested, up from 963 tons WFE in Q2-22
• Entering agreement on acquisition of Kråkøy Slakteri AS
• First cycle initiated at site Labukta 2.6 mill fish set into sea
• Executed measures to improve financial robustness

H1 2023 Highlights

• 165 MNOK in revenues, up 41% YoY
• 75 MNOK in operating loss, compared to 86 MNOK in H1-22
• -123 MNOK in cash flows from operations, down from -99 MNOK in H1-22
• 4 400 tons WFE harvested, up from 2 990 tons WFE in H1-22

Operational update

• Norcod harvested the remainder of the stock that was subject to accelerated harvesting imposed by the Directorate of Fisheries in the first quarter
• All the harvested fish is sold in the market and YoY revenue growth is 41 per cent
• Total harvest volume ended on 1 038 tons WFE, up 8 % from Q2 previous year
• Good cooperation with available facilities made it possible for all harvest capacity to be used and all the fish reached the end user
• Our fifth production site, Labukta, kicked off its first production cycle. The location has the most energy efficient technology seen in Norwegian aquaculture industry and is Norcod's third site supplied with onshore power.
• Norcod entered into an agreement to purchase 100 percent of the shares in harvest facility Kråkøy Slakteri AS. This is an important step to create a robust and streamlined business model. Numerous benefits accrue from this acquisition, such as priority facility access, cost reduction and operational efficiency, enhanced process control and exploration of value-added services. This move aligns with a long-term vision of cost savings, market expansion, and higher customer satisfaction.

Operational update

• Norcod completed its efforts to improve its financial capacity and establish a robust equity base to enable further growth. In April, Norcod successfully increased its operational liquidity by 265 million NOK from sale of assets and private placement. At the same time, the company improved the equity situation by securing appx. 90 million NOK in debt restructuring, efficient from Q3-23 onwards. In May, Norcod extended its credit line with the main bank, utterly securing 75 million NOK in liquid funds. In June, Norcod was granted 50 million NOK in additional credit from Export Finance Norway.
• During the quarter, Norcod has continued its diligent work on measures to reduce risk and meet biological challenges during the quarter. Norcod continues to lead the development of Norwegian cod farming and recognizes the responsibility it entails.
• Norcod received the good news of achieved GlobalG.A.P. recertification. It is of great importance for Norcod to adhere to transparency and be able to refer to a third-party assessment.

Market conditions

• The accelerated harvest plan continued to put pressure on the market and sales situation. Our already established relations with several European retailers prooved valuable. Norcod's sales and distribution partner Sirena managed to do several promotions during the quarter, materializing in a price premium on farmed compared to shiny cod, thus minimizing the volume that had to be sold on spot level. The market absorbed the volumes of farmed cod that came from Norcod and other farmers during the quarter.
• Norcod has positive expectations on the market outlook. In the short term perspective, we know that customers are looking forward to having Norcod back during the next quarters as especially the retailers keep appreciating having Norcod in their stores due to predictability on the supply side.
• In the longer term perspective, significant quota cuts for the Barents Sea cod expected from 2024 and beyond implies bottlenecks on the supply side of Atlantic Cod. We are also looking towards overseas markets such as US, Japan and China, which is still considered to hold great potential as for volume and price as they value the high quality and freshness of the farmed cod.
• Both Norcod and our customers are having a common view. Farmed cod is a sustainable and viable alternative for the customers – securing year round supply and helping reduce the pressure on the wild stocks – positioning farmed cod as a reliable and sustainable future protein source.

Green visions for a blue future

Norcod in a sustainable global food system

• Zero use of antibiotics
• Certified feed ingredients
• Best possible score regarding seabed surveys
• Hybrid-electric vessels and feed barges
• Highly nutritious and flavourful product good for everyone and the planet – Cod above the rest
• 90 % utilization of the cod for human consumption

Looking ahead

• Aiming to increase the survival rate to 90 % within 2030
• Targeting for 98 % utilization of the cod for human consumption
• 30 % reduction in carbon footprint by 2030 (Scope 1, 2, 3)
• Zero escape incidents
• Available tools not only to prevent and detect, but fully control maturation

Devoted to

Cod	Nature	Innovation & Profit
Fish Welfare	The ocean	Research and development
Production environment	Local and global environment
Product quality	Biodiversity	Year-round harvest
Increase yield	Responsible producer
Food safety	Fish feed	Market development
	Climate action

Financial Update - Highlights

Revenues (MNOK) Available credit and cash at hand

Financial Update - Highlights

Page 9

Interim condensed consolidated statement of comprehensive income

		Consolidated statement of comprehensive income
(Amounts in NOK '000)	Note	Q2 2023	YTD 2023	Q2 2022	YTD 2022	FY 2022
Operating revenue		39 429	164 536	34 444	117 494	170 541
Cost of materials		69 489	233 976	53 748	152 544	168 730
Salaries and personnel expenses		11 429	24 928	6 573	14 762	43 031
Depreciation and amortization		5 226	10 224	3 677	6 407	16 032
Other operating expenses		24 690	54 844	14 200	31 601	65 833
Operating expenses		110 835	323 972	78 198	205 315	293 626
Operating profit/ loss(-) before fair value adj. of biomass		-71 406	-159 436	-43 754	-87 820	-123 085
Fair value adjustment biomass	1	24 104	84 331	3 022	2 079	-157 808
Operating profit/loss		-47 302	-75 105	-40 732	-85 741	-280 892
Share of profit/ loss(-) from associates Net financial items	4	3 690 -8 598	1 489 -21 360	-581 -7 576	-1 043 -8 530	1 798 -18 123
Profit/loss before tax		-52 209	-94 976	-48 889	-95 314	-297 217
Income tax expenses		0	0	0	0	0
Net profit/loss for the period		-52 209	-94 976	-48 889	-95 314	-297 217
Other comprehensive income		0	0	0	0	0
Total comprehensive income for the period		-52 209	-94 976	-48 889	-95 314	-297 217

Interim condensed consolidated statement of financial position

Consolidated statement of financial position

(Amounts in NOK '000)	Note	Q2 - 2023	Q2 - 2022	2022
ASSETS
Non-current assets
Concessions, patents, licenses, trademarks and similar rights	2	2 000	8 814	2 000
Property, plant & equipment		86 288	70 143	76 678
Right-of-use assets		195 346	127 943	123 846
Investment in associated companies	3	0	33 539	33 511
Other investments	3	502	1 003	502
Other non-current receivables	3	0	40 000	40 000
Deferred tax assets		0	0	0
Total non-current assets		284 135	281 442	276 536
Current assets
Inventories	1	7 847	3 736	8 712
Biological assets	1	207 213	221 618	206 758
Short-term receivables		81 827	31 731	46 427
Cash and cash equivalents		51 770	53 265	3 412
Total current assets		348 657	310 350	265 310
TOTAL ASSETS		632 792	591 792	541 846

Interim condensed consolidated statement of financial position

Consolidated statement of financial position

(Amounts in NOK '000)	Note	Q2 - 2023	Q2 - 2022	2022
EQUITY AND LIABILITIES
Equity
Share capital		12 784	9 609	9 609
Treasury Shares		-3 706	-3 706	-3 706
Share premium		729 108	553 019	553 043
Retained earnings		-477 243	-177 472	-382 267
Total equity		260 942	381 450	176 679
Liabilities
Non-current interest-bearing debt	4	38 424	81 943	0
Lease liabilities	4	124 445	65 635	60 939
Total non-current liabilities		162 868	147 578	60 939
Current leasing liabilities		30 667	15 971	16 275
Current interest-bearing debt		103 683	0	158 151
Trade payables		70 992	43 220	114 263
Other current liabilities		3 640	3 573	15 540
Total current liabilities		208 981	62 764	304 228
TOTAL EQUITY AND LIABILITIES		632 792	591 792	541 846

Interim condensed consolidated statement of cash flows

Interim condensed consolidated statement of cash flows

	Q2 2023	YTD 2023	Q2 2022	FY 2022
Note (Amounts in NOK '000)				Audited
Profit/loss before tax	-52 209	-94 976	-50 293	-297 217
Cash flow from operating activities
Depreciation and amortization	5 226	10 224	3 677	16 032
Change in inventory and biological assets 1	-31 942	410	-9 383	-132 554
Fair value adjustment				157 808
Share of profit/ loss(-) from associates	-3 690	-1 489	1 043	-1 798
Change in accounts receivable	10 820	-3 611	19 929	929
Change in accounts payable	-48 133	-43 271	-25 557	26 037
Change in other current receivables and other current liabilities	-11 530	9 855	-26 974	28 987
Net cash flow from operating activities	-131 459	-122 858	-87 558	-201 777
Cash flows from investing activities
Payments for purchase of property, plant & equipment	-6 548	-13 930	-23 517	-36 978
Proceeds from sale of property, plant & equipment	25 491	25 491
Payments for licences			-514
Change in loans associates and others	40 000	40 000	-10 000	-10 000
Net cash flow from investing activities	58 943	51 561	-34 031	-46 978
Cash flows from financing activities
Net change in bank overdraft	-36 018	-31 720		70 144
Repayment of lease liability	-21 061	-24 997	-3 689	-12 523
Interest paid 2	-2 160	-2 868	-301	-2 421
Proceeds from issues of shares	179 240	179 240	167 549	167 549
Net cash flow from financing activities	120 001	119 655	163 559	222 749
Net (decrease)/increase in cash and cash equivalents	47 485	48 358	41 970	-26 006
Cash and cash equivalents at the beginning of the period	4 284	3 412	11 295	29 418
Cash and cash equivalents at close of the period	51 770	51 770	53 265	3 412

Outlook

• Both internally and in collaboration with industry colleagues and other stakeholders, we work on strategy and plans to prevent and eliminate risk.
• In order to postpone and reduce gonad development in our cod, new light regimes are set up on a large scale.
• Furthermore, measures such as sorting of fish during the cycle will be carried out.
• Further development of ultrasound monitoring with regard to gonad development and for possible gender sorting will be a measure which it is realistic to assume can contribute to a long-term solution.
• The possibility of producing sterile cod is also being looked at and is a measure that is placed somewhat in the future.
• The main goal is to establish best practices in cod farming to safeguard a predictable and holistic context for everyone involved.
• Site Frosvika kicks off its second production cycle during Q3 and constitute Norcod's second stocking in 2023. Site Labukta and Frosvika will provide harvest volumes from July 2024.
• Next harvest period will be initiated in September. We look forward to being able to offer the market more of our high-quality sustainably produced cod. Our employees in operations and newly acquired slaughterhouse, Kråkøy Norcod, are ready to handle the fish gently throughout the entire process.
• Norcod is continuously investing in its resources to optimize production skills and production capacity. During the next years, Norcod's ambition is to increase production and harvest volume at a pace that is beneficial for the environment, our customers, and our shareholders.
• Our vision is clear and we are standing firm on it. Farmed cod is a sustainable and viable alternative for the customers securing year round supply and helping reduce the pressure on the wild stocks – positioning farmed cod as a reliable and sustainable future protein source.
• The world is looking for pure and sustainable sources of food to serve increased human demand. Our product clearly demonstrates its market potential and naturally fits in.

Q&A

Contact Info:

CFO

Email: arne.hoset@norcod.no Contact Info: Arne Kristian Hoset CFO Phone: +47 988 10 282 Email: arne.hoset@norcod.no

Phone: +47 988 10 282

Arne Kristian Hoset

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