Salmon Evolution ASA — Earnings Release 2022

Aug 18, 2022

Salmon Evolution - Results for the second quarter 2022

Salmon Evolution - Results for the second quarter 2022

Highlights in the quarter

· Strong batch 1 biological performance with growth well exceeding

expectations. Average weight around 20% ahead of plan and already ~2.3 kg as per

15 August - on track for first commercial harvest in Q4 2022

· Carried out extensive quality testing confirming good filet quality and

excellent taste

· Launched North America expansion plan and increasing long term production

target to 100,000 tonnes

· Indre Harøy phase 2 preparations continuing - monitoring market development

and targeting cost savings

· Completed NOK 300 million private placement to partly fund planned Indre

Harøy phase 2 build out and smolt facility expansion

· Available liquidity of NOK 762 million per 30 June 2022 including committed

undrawn credit facilities

Subsequent events

· Successfully completed the upsized second smolt release at Indre Harøy which

comprised about 230,000 smolt with an average weight of ~125 grams

· Completed limited test slaughter at Vikenco ahead of first commercial

harvest

On 26 March 2022 Salmon Evolution completed its first smolt release at Indre

Harøy comprising around 100,000 smolt with an average weight of around 300

grams. As per 30 June the fish had reached an average weight of around 1.5 kg,

significantly exceeding our expectations. The strong performance has continued

into the third quarter and the fish now have an average weight of around 2.3 kg,

confirming that we are on track for first harvest in Q4 2022.

In June the Company also carried out an extensive quality testing with very

positive results, confirming good fish health and filet quality, firm meat

texture, nice and consistent red meat colour, no maturation issues and excellent

salmon taste.

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

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

As of 15 August batch 2 had an average weight of around 235 grams, which

corresponds to a growth rate higher than what observed for batch 1 for the same

time period.

All buildings and structural facilities at Indre Harøy are now completed. The

remaining construction works are mainly related to installation of equipment and

piping as well as system integration. As per today, we are holding fish in two

of the fish tanks. Over the coming months we will gradually put the remaining

tanks into operation following the stocking of new smolt batches and transfer of

existing batches into new tanks. We are currently seeing somewhat lower

productivity on the construction site which we expect will push the final

completion date from Q4 2022 to Q1 2023. We do however not expect any changes in

the production plan at this time due to the built-in flexibility during the ramp

-up phase.

Phase 1 capex during the second quarter amounted to 190 million. In addition,

NOK 9.7m of internal G&A was capitalized. With phase 1 now nearing completion

and remaining construction work focused on piping, equipment installation and

system integration, the capex intensity is expected to come significantly down

over the coming months. Following the expected change in final completion date

from Q4 2022 to Q1 2023 as well as a lower productivity at the construction

site, we now expect full phase 1 capex of about NOK 1,500 million compared to

earlier estimate of NOK 1,400 million.

With first harvest now only a few months away, the Company has over the last

quarters intensified its commercial focus. The Company has an agreement for

slaughter services with Vikenco, one of the leading salmon processors in Norway.

Vikenco is located only 10 km from Indre Harøy, facilitating cost effective

logistics. Moreover, the agreement with Vikenco ensures that Salmon Evolution

will benefit from industry scale slaughter costs from day one, rather than

building internal slaughter capacity at a suboptimal scale. As part of the

commercial strategy the Company is also working on how to position our product

in the market, reflecting a perceived premium quality and alignment with our

values.

During the quarter Salmon Evolution 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, and the Company is

currently evaluating selected identified potential production sites in North

America. To facilitate this expansion, the Company has established a dedicated

team of both in-house and external resources. Additionally, the Company is in

the process of incorporating a US corporate structure under its full ownership.

Indre Harøy phase 2 preparations are continuing with focus so far centred around

implementing the learnings from phase 1, identifying cost 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. The

Company is currently seeing inflation pressure on parts of the project, in

particular the parts with high raw material intensity. On the other hand, many

raw material prices have come somewhat down over the last months, but there is

still significant uncertainty, both in terms of how the market will develop and

lead times with respect to the time needed for changes in the raw material

prices to be passed through the value chain. The Company will continue to

monitor the market situation closely, seek additional cost savings and revert

with a final capex estimate in due course.

Summary and outlook

Following the first smolt release in late March, Salmon Evolution has now been

operating the Indre Harøy facility for almost 5 months. Taking a facility of

this magnitude into operation is a highly complex process involving a lot of

tuning and adjustments in the beginning. Nevertheless, we have been able to

maintain stable conditions and providing a good environment for our salmon not

only to live, but also to thrive.

The Company is very pleased with the performance of the fish so far. During the

first months of operations, we have seen growth rates and appetite well

exceeding the targets set out in our production plan. Although we have not yet

completed a full production cycle, this performance is a strong validation of

our concept and a demonstration that our design throughput is realistic, which

is critical for a capex intensive land-based farming operation, given the

relatively higher share of fixed costs.

Furthermore, the Company is also pleased to see that the quality of the salmon

looks very good, with firm meat texture, red and consistent meat colour and

excellent salmon taste.

Over the coming months and quarters we will gradually ramp up production as the

existing batches grow bigger while we at the same time include new batches and

start utilizing the remaining parts of the facility. Preparations are already

underway for the first harvest which is scheduled for the fourth quarter and the

Company look forward to start supplying a record-high salmon market with our

premium quality product.

The average Fish Pool salmon price was NOK 107.3/kg in Q2 2022 compared to NOK

63.3/kg in Q2 2021, representing an increase of 70% year over year. Looking at

the forward prices for the remainder of 2022, this points to a full year 2022

salmon price of more than NOK 80/kg. In comparison the full year salmon price

for 2021 was NOK 58.4/kg. The Company also notes that airfreight costs for in

particular the Asian market has been at elevated levels following the pandemic

and war in Ukraine, resulting substantially higher salmon prices locally, e.g.

in South Korea.

Looking at 2022 most analysts now expect neutral or slightly negative global

supply growth which should support a scenario with high salmon prices. Salmon

Evolution sees a significant demand growth potential for salmon over the coming

decade subject to the industry being able to grow the supply side. In this

context the Company remains firm in its belief that land-based farming will need

to play an important role alongside conventional farming.

Building on the experiences from our flagship facility at Indre Harøy, the

ambition is to significantly grow the Company's operations over the coming

decade. As such, operations in overseas markets are a key pillar in our

strategy, but always enabled by a strong operation in Norway.

As part of this strategy, Salmon Evolution launched an expansion plan into the

North American market during the second quarter. Given the long lead times

developing a land-based project, having a solid pipeline of quality projects is

critical to the long-term value creation in Salmon Evolution. With eventually

having a major farming operation on all the three major salmon consuming

continents, Salmon Evolution is uniquely positioned to be the global leader

within land-based salmon farming.

Results presentation

CEO Håkon André Berg and CFO Trond Håkon Schaug-Pettersen will present the

results at Hotel Continental in Oslo, Thursday 18 August at 08:00 a.m. CEST.

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-registration/wrKUc8MG/register

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

For further information, please contact:

Håkon André Berg, CEO, Salmon Evolution

hakon.andre.berg@salmone.no

+47 41 19 22 57

Trond Håkon Schaug-Pettersen, CFO, Salmon Evolution

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, the 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.