Salmon Evolution ASA — Earnings Release 2022

Nov 16, 2022

Salmon Evolution ASA: Results for the third quarter 2022

Salmon Evolution ASA: Results for the third quarter 2022

Highlights in the quarter

· Proof of concept - continued strong biological performance for batch 1 with

average weight end of quarter at 3.3 kg and 4.7 kg as per 15 November. Carried

out extensive quality testing confirming good filet quality and excellent taste

· Batch 2 continuing to demonstrate excellent biological performance

· International expansion plan proceeding according to plan, both in South

Korea and North America

· Indre Harøy phase 2 preparations continuing - monitoring market development

and targeting cost savings

· Available liquidity of NOK 645 million per 30 September 2022 including

committed undrawn credit facilities

Subsequent events

· First harvest of batch 1 successfully completed early November with the

remainder of batch 1 to be harvested during Q4 - expected average harvest weight

of around 4 kg HOG for the batch as a whole

· Continuing production ramp up with new successful smolt release - about

200,000 smolt with an average weight of 220 grams stocked late October

· Håkon André Berg stepped down as CEO for personal reasons - CFO Trond Håkon

Schaug-Pettersen appointed Interim CEO

Following a little over seven months of operation at our Indre Harøy grow out

facility, we have now successfully started harvesting of batch 1 which is a

major milestone. Batch 1 was stocked late March at around 300 grams and as of 15

November the fish has reached an average weight of around 4.7 kg, validating the

assumptions in our production plan.

In early November the Company started the harvesting of batch 1 with

approximately 30,000 fish harvested. The fish was taken out of the tank using

our highly automated fish logistics system and delivered to a live fish carrier

which transported the fish in live condition to our nearby processing partner

Vikenco. The process went according to plan with minimal registered mortality

and overall good fish welfare throughout the process. The remainder of batch 1

is planned harvested during the fourth quarter and the Company expects an

average harvest weight of around 4 kg HOG for batch 1 as a whole.

On 13 July Salmon Evolution also released its second smolt batch at Indre Harøy

consisting of around 230,000 smolt with an average weight of around 125 grams.

This went according to plan, building on the experiences obtained in connection

with the first smolt release, enabling a steeper ramp-up in feeding levels.

Batch 2 is continuing to demonstrate excellent biological performance with

growth rates exceeding what seen for batch 1, clearly demonstrating the upside

potential in our operation as we obtain more and more knowledge about how to

best operate the system. As per 30 September batch 2 had an average weight of

710 grams and as of 15 November the fish had already reached 1.2 kg, continuing

to exceed our expectations.

Furthermore, the Company continued the production ramp-up post quarter with an

additional ~200,000 smolt stocked late October at an average weight of around

220 grams, successfully completing our third smolt release so far in 2022. The

fourth smolt release is expected to take place in December, with a planned

volume of around 280,000 smolt which is in line with our steady state smolt

release volume. For 2023 and onwards the Company expect to release smolt every

second month, each consisting of around 280,000 individuals.

Conditions throughout the farm have also remained stable and the Company

continues to see low mortality levels, also at higher densities. Salmon

Evolution has over the last months also carried out extensive testing of the

fish with very positive results as to quality and taste, confirming overall good

fish health and fish welfare in our system.

Salmon Evolution expects phase 1 to be completed by Q1 2023. All buildings and

structural facilities are now completed and the construction work during and

post the third quarter has been centered around installation of equipment,

piping, system integration and commissioning. As per today there are fish in 4

of the tanks with the next 2 tanks planned taken into operation shortly. The

remaining tanks are planned taken into operation over the coming months allowing

for stocking of new smolt batches and transfer of existing batches into new

tanks.

As pointed out in the 2Q 2022 report, the Company has over the last months been

experiencing somewhat lower productivity on the construction site. Furthermore,

as the project is nearing completion and many of the sub-supplier contracts now

being subject to final settlement, the Company is seeing a higher than expected

level of variation orders, which again is likely to have an impact on the

project cost. Accordingly, Salmon Evolution together with our contractor Artec

Aqua has over the last month carried out a thorough review of the project cost.

On this basis, the Company has revised its full phase 1 capex to NOK 1,560-1,590

million.

The preparatory activities for phase 2 have continued throughout the quarter

with focus on implementing learning effects from phase 1, identifying savings

and scaling effects from phase 1, defining a cooperation model designed at

further optimizing the project management and develop a cost budget for phase 2.

Salmon Evolution has made no contractual commitments as to phase 2, although the

plan is to commence phase 2 in continuation to the completion of phase 1.

For our K Smart project in South Korea activities have during the third quarter

been focused around design and engineering activities in cooperation with

Billund Aquaculture as design partner. K Smart is also working actively with the

permitting processes and significant resources have been devoted to document the

environmental effect of the project. The company is continuing to experience

strong support from both local, regional and national stakeholders and expect

clarification on several key permits over the coming months.

Salmon Evolution has also initiated a process with the aim of expanding its

farming operations into North America and at the same time raising its

production capacity target to 100,000 tonnes HOG by 2032. Salmon Evolution is

currently evaluating selected identified potential production sites in North

America. As part of the site verification processes which include fatal flaws

analyses of both water, biological, technical and regulatory aspects, the

Company is currently in dialogue with various stakeholders, both public and

private. The Company expects to use the next quarters for such site selection

and initial site verifications.

Summary and outlook

Salmon Evolution has now been operating the Indre Harøy facility for more than 7

months, successfully completed 3 smolt releases and finally completed the first

harvest. Although it has been a steep learning curve for the organization, the

Company has managed to provide the salmon with stable conditions throughout the

period, demonstrated by the low observed mortality. The performance of batch 1

has been strong with performance in line with our expectations even though there

has been a continuous process as to tuning and modification works on the

systems.

For batch 2, the performance has been exceeding batch 1, clearly demonstrating

the upside potential for this operation going forward. The Company's ambition is

to continuously identify and implement learning effects in order to maximize

output and produce a salmon with the highest possible quality.

The first harvest also marks the beginning of our commercial operations which

has been in the planning for some time. Harvest volumes in the fourth quarter

will give selected customers in Norway and abroad the opportunity to fully test

out the product and verify the quality ahead of the significant volume ramp-up

planned for 2023, where regularity on harvest volumes will significantly

increase. Initial feedback from customers have been very positive, clearly

demonstrating the strong opportunity for our product in the market.

Based on the data so far and the expectations for the remainder of year, around

neutral global supply growth is expected for the full year of 2022. Going into

2023 most analysts expect low single digit global supply growth which should

support a scenario with strong salmon prices. With Salmon Evolution now in the

process of ramping up production, the Company should be in a good position to

benefit from this over the course of 2023.

Looking further ahead, the Company continues to see a significant demand growth

potential for salmon and the Company remains firm in its belief that land-based

farming will need to play an important role alongside conventional farming for

the industry to be able utilize the demand potential.

With a fully operational Indre Harøy facility, Salmon Evolution has a unique

opportunity to significantly grow the Company's operations over the coming

decade and solidifying its position as the global leader within land-based

salmon farming.

Results presentation

Interim CEO & CFO Trond Håkon Schaug-Pettersen together with Chief Commercial

Officer Odd Frode Roaldsnes will present the results at Hotel Continental in

Oslo, Wednesday 16 November at 08:00 a.m. CET.

Participants may also follow the presentation and submit questions through a

live webcast available on www.salmonevolution.no, or with the following link:

https://events.webcast.no/viewer

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The presentation and subsequent Q&A will be held in English.

For further information, please contact:

Trond Håkon Schaug-Pettersen, Interim CEO | CFO

thsp@salmone.no

+47 91 19 13 27

About Salmon Evolution

Salmon Evolution is a Norwegian land-based salmon farming company targeting a

production capacity of 100,000 tonnes HOG by 2032. The Company's core focus is

on extending the ocean's potential by transferring the best preconditions

offered by the sea to farm fish on land through its chosen hybrid flow-through

system technology (HFS). This secures a truly sustainable production process

with controlled and optimal growth conditions and limiting operational and

biological risk.

The Company's first production facility is strategically located at Indre Harøy

on the Norwegian west coast with unlimited access to fresh seawater, renewable

energy, established infrastructure, and an educated and experienced work force.

Phase 1 is already in operation and will have an annual capacity of 7,900 tonnes

HOG at steady state. Fully developed, the Indre Harøy facility will have an

annual capacity of 31,500 tonnes HOG.

The Company has also entered into a joint venture with Dongwon Industries where

the parties will develop, construct and operate a land-based salmon farming

facility in South Korea with an annual production capacity of 16,800 tonnes HOG,

using Salmon Evolution's chosen HFS technology.

Furthermore, Salmon Evolution has initiated a process with the aim of

establishing a land-based salmon farming operation in North America.

Salmon Evolution ASA is listed on Oslo Børs under the ticker SALME.

To learn more, please visit www.salmonevolution.no

This information is subject to the disclosure requirements pursuant to section 5

-12 of the Norwegian Securities Trading Act.