Salmon Evolution ASA — Interim / Quarterly Report 2020

Mar 2, 2021

Extending the ocean potential Q4 2020

Extending the ocean potential 0

Salmon Evolution – Extending the Ocean Potential

A Norwegian salmon farming company targeting a global leading position in sustainable production of high-quality salmon from land-based facilities.

• First production facility under construction at Indre Harøy in Norway, with annual harvesting capacity of 31,500 tonnes HOG fully developed
• Signed joint venture term sheet with Dongwon Industries for a 20,000 tonnes production facility in South Korea – first grow-out production targeted in 2024
• Utilizing hybrid flow-through ("HFS") system with 30%-35% fresh seawater intake, reducing complexity and biological risk and securing optimal growth at low cost
• Targeting a position as a global leading land-based farmer, enabled by a strong ESG profile
• On track for ~25,000 tonnes by 2024, clear roadmap for 70,000 by 2030
• Preparations for listing at Oslo Stock Exchange (main list) has started, and is expected to be materialized in Q2/Q3 2021

Salmon Evolution – Indre Harøy, Norway

State of the art hybrid flow-through production facility under construction

Strategically located on the Norwegian west coast, with access to an educated and experienced work force, established salmon farming infrastructure, renewable energy, and unlimited fresh seawater

International expansion ambitions, with planned first step in South Korea together with Dongwon Industries. Potential for additional opportunities in both Asia, North America and Europe

Photo: Salmon Evolution

Highlights in the quarter

• Construction of Phase 1 at Indre Harøy progressing according to plan on time and on budget
• Critical infrastructure completed including wastewater tunnel project execution risk significantly reduced
• Received a NOK 96.8 million funding commitment from Enova and granted NOK 14 million in funding from the Norwegian Skattefunn tax incentive scheme
• Available cash of NOK 648 million (NOK 2.95 per share) at 31 December

Subsequent events

• Signed Joint Venture term sheet with Dongwon Industries for the establishment of a 49/51 joint venture for construction and operation of a 20,000 tonnes LWE land-based salmon farming facility in South Korea
• Constructive discussions with banks for long term debt financing of phase 1 at Indre Harøy – committed term sheet expected finalized Q1/Q2 2021

(figures in NOK 1000)	Q4 2020	Q4 2019	YTD 2020	YTD 2019
IFRS main figures
Operating Revenues	0	0	704	-175
EBITDA	-1,821	-3,835	-17,126	-11,681
EBIT	-2,158	-3,926	-17,676	-11,862
Profit / (loss) before taxes	-1,192	-3,313	-16,826	-11,269
Cash flow from investment activities	-58,755	-14,732	-146,092	-25,021
Cash flow from financing activities	6,094	-1,479	802,664	48,328
Net cash flow	-60,972	-11,464	626,682	20,753
Available cash	647,806	21,124
Available cash per share	2.95	0.70
Net Interest-bearing liabilities	-646,873	-19,396
Total assets	892,810	50,483
Equity	788,442	38,198
Equity ratio	88%	76%

Key figures

Roadmap to 70,000 tonnes in 2030

Salmon Evolution targets a leading position in the production of sustainable high-quality salmon from land-based facilities. In addition to its 31,500 tonnes project Norway, the company has international ambitions. Through utilisation of technology, competence and experience from domestic projects, Salmon Evolution aim to develop projects in targeted growth markets in collaboration with local partners. The company has a clear road map towards +70,000 tonnes production capacity by 2030 and is already on track for ~25,000 tonnes by 2024.

Roadmap towards +70kt HOG annual harvest

Signed JV agreement for South Korean expansion

On 26 February 2021 Salmon Evolution signed a Joint Venture term sheet with Dongwon Industries for the establishment of a 49/51 owned joint venture to develop, construct and operate a land-based salmon farming facility in South Korea using Salmon Evolution's HFS technology.

The joint venture will be named K Smart Farming ("K-Smart"). The project will be completed in two phases, with each phase aiming to achieve an annual capacity of 10,000 tonnes LWE, 20,000 tonnes combined.

Total project cost for phase 1 including capex, project management and working capital build up, is estimated to NOK 1.6 billion.

Under the terms of the Joint Venture term sheet, Dongwon Industries will facilitate debt financing for K-Smart and Salmon Evolution's total equity contribution for 49% ownership is estimated to approximately NOK 200 million on a fully funded basis. Phase 2 of the project is planned financed through a combination of bank debt and retained earnings.

Salmon Evolution's equity contribution will be split in tranches, reflecting the overall progress of

the project. Initially the parties expect to make a moderate capital contribution which will be used to fund (i) design and engineering, (ii) site evaluation and permitting and (ii) general corporate purposes.

The parties' subsequent equity contributions will be paid in tranches subject to certain milestones being met, including final technical, operational and financial review of the project and K Smart receiving the necessary permits.

Salmon Evolution and Dongwon target construction start during 2022, with commencement of grow out production in 2024.

The parties have identified a production site in Yangyang on the north east coastline of South Korea with solid data points on water quality and temperatures. Preliminary estimates indicate an EBITDA cost of NOK 39-41/kg (HOG) and an EBIT cost of NOK 44-46/kg (HOG).

As part of the collaborations, the parties will cooperate to establish branding and marketing of premium, land-based Atlantic salmon from K-Smart and Salmon Evolution in the Korean market. K Smart will be responsible for all development-costs and investments related to the project.

The Joint Venture term sheet also contains a comprehensive set of corporate governance principles, aimed at serving as a solid foundation for a long-term partnership between Salmon Evolution and Dongwon.

The two parties will jointly consider future opportunities for scaling similar projects in other attractive markets in the region.

The Joint Venture term sheet is expected formalized into definitive agreements during Q2 2021.

Project review

Status - Indre Harøy

Since the groundwork started in May, the Phase 1 project at Indre Harøy has developed according to plan.

The main contractor, Artec Aqua, has entered into agreements with subcontractors who are currently working on site.

Blasting work for the fish-tanks and buildings is completed, and the masses have been transported out or crushed for reuse. Concrete works, including foundations for buildings and tanks, started in September and will continue in the coming quarters. Tunnel for wastewater was successfully finished in December.

Construction work through the first quarter 2021 will mainly be on production facilities, where the company is to start the assembly of fish-tanks.

The company remains on track for the first smolt release which is scheduled to be in March 2022.

Currently some 80 workers are working on site. As workload increase the number of workers on site will increase going forward and is expected to peak at around 200 people during summer 2021.

Along with the higher activity work complexity increase. To reduce risk for accidents, Salmon Evolution aims for a close dialogue with contractors and workers to secure controlled and safe project progression.

Completion of wastewater tunnel (December 2020)

Photo: Salmon Evolution

Milestones

Following the ongoing groundworks, Phase 1 includes a stepwise construction of 12 grow-out tanks with an annual combined capacity of 7,900 tonnes HOG.

Handover of the first four tanks is scheduled for late Q1 2022, followed by completion of the remaining eight tanks consecutively throughout Q2 2022 to Q4 2022.

Production of the first batches is expected to commence in Q1 2022, with first harvest expected in Q4 2022 and steady state annualized harvest volumes of 7,900 tons HOG from Q3 2023.

Indre Harøy facility to be built in three Phases with a total annual harvest volume of 31.5kt HOG

Phase	Description	Capacity	Capex est.	EBIT Cost/kg
Phase 1	− Land acquisition	~7,900t HOG	NOK 1.2 bn*	NOK 40.8
	− Building of foundations
	− Construction of 12 grow-out tanks
Phase 2	− Construction of additional 12 grow-out tanks	~7,900t HOG	NOK 1.2 bn**	NOK 38.6
Phase 3	− Construction of additional 24 grow-out tanks − Construction of 4 holding tanks	~15,700t HOG	NOK 2.1 bn	NOK 36.1
	− Construction of intake station
Total		~31,500t HOG	NOK 4.5 bn	NOK 36.1

*Capex exclusively related to phase 1

** Smolt facility not included

Project financials

When comparing cost estimates for Phase 1 and a fully built out facility, efficiency gains in both capex and opex are expected. Capex efficiencies are related to synergies between Phases (groundwork, reduced mobilization costs, etc.), increased efficiency in assembly, and increased efficiency in planning and executing together with suppliers. As of 31 December, total capital expenditure amounts to NOK 197 million1, representing some 15% of total capital expenditure of about NOK 1.3 billion.

Capex overview Indre Harøy Phase 1

	NOKm	%
Paid per 31.12.20	197	15 %
Distribution
2019	19	1 %
2020	177	13 %
Remaining payment	1 079	85 %
Distribution
2021	687	52 %
2022	468	35 %
2023	24	2 %

Source: Company data

According to the company's capex plan, payments will peak in Q4 2021 and gradually decrease towards completion.

¹ Net of grants directly tied to capital expenditure and exclusive of internal capitalized G&A costs.

Capex plan Indre Harøy Phase 1 (NOK million)

Source: Company data

Capital Expenditures

Total capital expenditures during the fourth quarter amounted to NOK 71.8 million, of which NOK 68.3 million were investments related to the turnkey project with Artec Aqua and NOK 3.2 million was capitalized personnel and shared cost.

Accumulated CAPEX 2020 (NOK million)

Source: Company data

As per 31 December 2020, accumulated capex from project initiation in 2019 amounts to NOK 220.0 million.

In May 2020, Salmon Evolution acquired necessary land for development and construction of the operations at Indre Harøy. Capex related to land investments accounts for approximately 1/4 of the total capex year to date.

The groundwork also started in May and the investments on Indre Harøy are gradually increasing along with higher workload on site and increased complexity.

Financial obligations

The turnkey project agreement with Artec Aqua includes a clause for financing reservations until further financing is secured. This means that Artec Aqua as main contractor cannot enter agreements with subcontractors until the financial reservation for the specific contract is related.

In fourth quarter the company committed contracts with subcontractors of approximately NOK 116 million. These commitments consist of contracts and deliveries including concrete elements, energy installation- and plant and fish-feeding system.

Financial capex commitments (NOK million)

Source: Company data

Project timeline

Funding

During 2020 the company secured both equity and debt financing and is continuously seeking to optimize the capital structure.

In March 2020, Salmon Evolution issued 77,503,182 new shares in a Private Placement, increasing equity by NOK 258 million.

In July, the company entered into a partnership agreement with South Korean Dongwon Industries, where Dongwon invested NOK 50 million for a minority stake in the company, and in September the Salmon Evolution completed a private placement raising NOK 500 million in connection with the listing on Euronext Growth.

The issuance of shares, related to the company's incentive program, has raised an additional NOK 2.0 million. As of 31 December 2020, the accumulated equity increases amounted to NOK 860 million.

Development in paid-in equity (NOK million)

Source: Company data

During the third quarter the company also secured debt financing of NOK 40 million for the land acquisition on Indre Harøy. The loan was fully drawn in fourth quarter.

As of 31 December 2020, Salmon Evolution had available cash and cash equivalents amounting to NOK 648 million.

Financial review

Profit/loss for the period	-1,192	-3,313	-16,826	-11,269
Income tax expense	0	0	0	0
Profit/loss before tax	-1,192	-3,313	-16,826	-11,269
Financial expense - net	966	614	850	593
Financial expenses	-147	-9	-263	-30
Financial income	1,113	622	1,114	622
Operating profit (EBIT)	-2,158	-3,926	-17,676	-11,862
Other operating expenses	214	-1,570	-8,954	-7,752
Depreciations	-337	-91	-550	-181
Personnel expenses	-2,034	-2,265	-8,877	-3,754
Total operating income	0	0	704	-175
(figures in NOK 1000)	Q4 2020	Q4 2019	YTD 2020	YTD 2019
Summary of result

Q4 2020 results

Personnel expenses for the quarter totalled NOK 2.0 million. During the quarter approx. 60% of the total personnel expenses were capitalized.

Other operating expenses totalled to NOK -0.2 million during the quarter. Costs deemed to be part of the ongoing assets under construction are capitalized consecutively throughout the year. Following a review of other operating expenses for the full year of 2020, about NOK 2.0 million has been reclassified into a direct reduction in equity as they were costs directly associated with the equity issues carried out in 2020.

The loss for the period was NOK 1.2 million in the fourth quarter.

FY 2020 results

Full year 2020 sales amounted to NOK 0.7 million.

Personnel expenses summed up to NOK 8.9 million, which includes NOK 2.5 million in provisions for the company's incentive program. Other operating expenses totalled NOK 9.0 million. The increases from last year reflect the higher activity level in the company and continued progress at Indre Harøy. Operating loss was NOK 17.7 million.

Total depreciations were NOK 0.6 million and net financials was positive at NOK 0.9 million, resulting in a loss before tax of NOK 16.8 million.

Assets under construction are not depreciated.

Cash flow

Consolidated net cash flow from operating activities was NOK -8.3 million in the fourth quarter.

Net cash flow from investing activities was NOK -58.8 million during the quarter. Investments are related to the increasing activity at the facility at Indre Harøy, and will gradually increase as the extent of the project increases going forward.

Cash flow from financing activities during the quarter was positive by NOK 6.1 million. This includes proceeds from new borrowings at NOK 40.0 million, less transaction cost relating to the NOK 500 private placement in September 2020.

Total net cash flow during quarter was NOK –61.0 million. The level of free liquidity at the end of the period was strong, with available cash and cash equivalents totalling NOK 647.8 million.

Year-to-date the company had a positive cash flow of NOK 626.7 million, where the negative cash flow from operating- and investments activities of NOK 176.0 million, was offset by the cash flow from financing activities of NOK 802.7 million.

Cash flow summary

(figures in NOK 1000)	Q4 2020	Q4 2019	YTD 2020	YTD 2019
Net cash flow from operating activities	-8,311	4,746	-29,890	-2,553
Net cash flow from investments activities	-58,755	-14,732	-146,092	-25,021
Net cash flow from financing activities	6,094	-1,479	802,664	48,328
Net change in cash and cash equivalents	-60,972	-11,464	626,682	20,753
Cash and cash equivalents at start of period	708,778	32,588	21,124	370
Cash and cash equivalents at end of period	647,806	21,124	647,806	21,124

Financial position

The carrying amount of Salmon Evolution's total fixed assets at 31 December was NOK 222.4 million, compared to NOK 26.6 million at 31 December 2019. The increase is mainly related to the purchase of the land and construction work at Indre Harøy, comprising capitalized costs related to both personnel expenses and construction cost, land acquisition, in addition to some minor amounts in inventory and receivables.

Total equity amounted to NOK 788.4 million. With total assets of NOK 892.8 million, this corresponds to an equity ratio of 88%. Consolidated noninterest-bearing liabilities totalled NOK 62.7 million

On 31 December the consolidated interestbearing debt was NOK 41.6 million of which NOK 1.6 million was related to financial leases. The remaining NOK 40 million relates to the purchase of the land at Indre Harøy.

In November, Salmon Evolution was granted a funding commitment of NOK 96.8 million from the state-owned enterprise Enova SF. The funding support is related to the ongoing construction of Salmon Evolution's fish farm at Indre Harøy. The commitment is a cash grant, and the funding will not require any material additional investment needs from Salmon Evolution. The proceeds from this grant is expected paid out in tranches over the course of Indre Harøy phase 1.

Balance sheet as per 31.12.2020 (NOK million)

Source: Company data

In October, Salmon Evolution was granted NOK 14 million in funding form the Norwegian tax incentive scheme Skattefunn. The tax incentive scheme will be distributed over a three-year period and is designed to stimulate research and development (R&D).

As per the Admission Document prepared in connection with the listing on Euronext Growth in September 2020, the company estimated a remaining equity funding requirement for Indre Harøy phase 1 of NOK 450 to 550 million. Following strong project execution and cost control at Indre Harøy, combined with Salmon Evolution's demonstrated ability to attract nonequity funding, the company expects to finance its estimated NOK 200 million equity contribution in K Smart within the already communicated equity funding plan for Indre Harøy phase 1.

The company is also in process of obtaining long term bank financing for Indre Harøy phase 1 and expects to conclude a committed bank term sheet during Q1/Q2 2021.

COVID-19

Salmon Evolution is managing the COVID-19 situation with its highest priority to safeguard its employees, suppliers and partners.

Salmon Evolution strives to follow and implement the local and national advice and recommendations regarding COVID-19. The company has taken necessary measures in all sites and locations to be able to limit the spread of the virus. The company has not registered any infection among the company's employees or contracted workers.

At the same time, the company works to ensure that the construction work progresses on time and budget.

The construction work currently involves 8 partners and suppliers with more than 50 workers on site. Artec Aqua as contractor, is responsible for project coordination of all activities, and Salmon Evolution is in continuous close dialogue with the contractor on the status, progress and actions taken to address and handle the challenges.

To minimize the risk of contamination among workers, the work force is organized in teams, each operating separately.

Further, the company has developed extensive contingency plans to address possible outbreaks, including transport and logistics, isolation and quarantine routines.

Transactions with related parties

During the ordinary course of business, the company engages in certain arm's length transactions with related parties.

Pursuant to the agreement entered with Artec Aqua, Salmon Evolution has had a significant volume of transactions in the third quarter related to the ongoing construction of the production facilities at Indre Harøy. Artec Aqua is a 100%-owned subsidiary of Artec Holding AS, which per 31.12.2020 holds 3.6% of total shares outstanding in Salmon Evolution.

Salmon Evolution has also sold leftover rock to Vikomar AS at market terms during the quarter. CEO Kristofer Reiten in Vikomar is also represented as board member in Salmon Evolution.

Share information

Salmon Evolution was successfully listed on Merkur Market (now Euronext Growth) 19 September 2020. Per 31 December 2020, Salmon Evolution Holding AS had 219.73 million issued shares, divided between 2,255 shareholders.

Ronja Capital is the company's largest shareholder with 25,021,021 shares, corresponding to 11.4% of total number of share outstanding. The 20 largest shareholders own 76.4% of the shares in the company.

The closing price for the company's share was NOK 6.85 per share as per 30 December, which corresponds to a market capitalization of NOK 1.5billion.

During the quarter the average daily, traded volume was about 728,000 shares and the average daily traded value was about NOK 4.1 million.

Shareholder	# of shares	% share
Ronja Capital AS	25 021 021	11,4 %
Romsdalsfisk AS	20 256 006	9,2 %
Farvatn Private Equity AS	15 427 212	7,0 %
The Bank of New York Mellon SA/NV	14 451 124	6,6 %
Rofisk AS	12 107 508	5,5 %
Hongkong And Shanghai Banking Corp	11 627 906	5,3 %
Stette Invest AS	10 402 672	4,7 %
Kjølås Stansekniver AS	9 706 006	4,4 %
Jakob Hatteland Holding AS	8 706 006	4,0 %
Artec Holding AS	7 806 006	3,6 %
Verdipapirfondet Dnb Norge	5 736 528	2,6 %
Verdipapirfondet Norge Selektiv	5 686 575	2,6 %
Salmoserve AS	3 459 546	1,6 %
Vpf Dnb Am Norske Aksjer	3 286 106	1,5 %
SEB Prime Solutions CARN	3 213 759	1,5 %
Klaveness Marine Finance AS	2 526 308	1,1 %
Småge Eiendom AS	2 200 000	1,0 %
Verdipapirfondet DNB Miljøinvest	2 097 324	1,0 %
Verdipapirfondet Delphi Norge	2 066 611	0,9 %
Ocean Supreme Holding AS	2 041 501	0,9 %
Total 20 largest shareholders	167 825 725	76,4 %
Other shareholders	51 905 363	23,6 %
Total number of shares	219 731 088	100,0 %

20 largest shareholders 31 December 2020

Market and Outlook

The COVID-19 pandemic has had severe impact on both the economy as a whole and the salmon industry. In particular, the food service segment which traditionally accounts for a substantial share of global salmon demand, has been hardly hit with major parts of the world under very strong regulations and restrictions. In addition, due to general travel restrictions, global airfreight has dropped dramatically, impacting the salmon industry in a combination of reduced airfreight capacity and increased freight costs.

During these challenging times, Salmon Evolution's highest priority is to safeguard its employees, suppliers, and other partners, where focus is to follow and implement the local and national advice regarding COVID-19. Looking ahead, the global roll out of vaccines gives reason for optimism and a belief that the world gradually starts reverting to normality over the next quarters.

Global supply of Atlantic salmon in 2021 is expected to increase some 2%. Historically, due to stable growth in demand, supply growth below the 4% mark normally initiated higher prices. However, with the COVID-19 situation still inconclusive, the market situation and price expectations remain uncertain.

The average fish pool salmon price for 2020 ended at NOK 55.4/kg. The forward price for 2020 when entering the year was NOK 61.1/kg. The forward price is currently NOK 54.4/kg for the full year of 2021 and NOK 57.9/kg for 2022.

According to the Norwegian Seafood Council, total export volumes of Atlantic salmon out of Norway in 2020 ended at 1.31 million tonnes WFE compared to 1.28 million tonnes WFE in 2019, corresponding to an increase of 2.4%

Interestingly, the export volumes out of Norway for January 2021 are up 10.7% compared to January 2020.

Salmon Evolution sees this as a clear demonstration of continued strong underlying demand for sustainably raised Atlantic salmon and the market's ability to quickly adapt to changing market conditions.

As demand from the food service market has been significantly reduced, retail demand has increased substantially during the same period and although retail demand is likely to normalize once food service demand picks up again, the high retail consumption over the last 9 months is expected to have attracted new customers that will continue consuming salmon post COVID-19.

Currently, there are some 80+ land-based salmon farming projects being planned globally, with a combined capacity of some 1.9 million tonnes. Many of these may from various reason not be realized, whether that is financial constraints, limited access technology and competence or lack of necessary licences and regulatory approvals. Either way, with limited growth potential within conventional farming, Salmon Evolution is confident that land-based salmon farming will play an important role when addressing the increasing demand for healthy, sustainably produced proteins in the coming years

In Salmon Evolution we acknowledge the complexity of building land-based salmon mega farms, while we at the same time embrace the challenge. That is why we have taken a conservative approach along three dimensions: (i) we have chosen a proven and low risk technology (HFS), (ii) we build our first production facility in Norway where access to the right competence is no bottleneck and (iii)

when expanding overseas we do so with first class partners.

Over the next months, the magnitude of the project at Indre Harøy will be visualized as we start the installation of fish tanks and construction of buildings. Salmon Evolution has also initiated the preparations of the company's first smolt release scheduled for March 2022 and will over the course of 2021 start the recruitment of relevant personnel ensuring a smooth transition when entering the operating phase some 12 months from now.

The company is also pleased to have formalized the Joint Venture term sheet with Dongwon Industries for our next project which will be in South Korea. Firstly, South Korea is a highly attractive and fast-growing market for fresh Atlantic Salmon and secondly, landing such a landmark project with a first-class partner like Dongwon Industries, is a solid testament to all stakeholders of Salmon Evolution.

While we will continue to evaluate other opportunities in the market where we see strong financial differentiators where we can create value, the combination of a fully developed Indre Harøy and South Korea, represents a production volume of close to 50,000 tons HOG, which will place Salmon Evolution as a major salmon farmer, even in a global context.

Dongwon joint venture signing ceremony

The Board of Directors of Salmon Evolution Holding AS Aalesund/Molde 1 March 2021

Tore Tønseth Chair

Frode Kjølås Director

Glen Allan Bradley Director

Kristofer Reiten Director

Peder Stette

Anne Breiby Director

Director Kiyun Yun Director

Håkon Andre Berg CEO

Interim financial statements (IFRS)

Statement of Profit and Loss

		Summary of result
--	--	-------------------

(figures in NOK 1000)	Q4 2020	Q4 2019	YTD 2020	YTD 2019
Total operating income	0	0	704	-175
Personnel expenses	-2,034	-2,265	-8,877	-3,754
Depreciations	-337	-91	-550	-181
Other operating expenses	214	-1,570	-8,954	-7,752
Operating profit (EBIT)	-2,158	-3,926	-17,676	-11,862
Financial income	1,113	622	1,114	622
Financial expenses	-147	-9	-263	-30
Financial expense - net	966	614	850	593
Profit/loss before tax	-1,192	-3,313	-16,826	-11,269
Income tax expense	0	0	0	0
Profit/loss for the period	-1,192	-3,313	-16,826	-11,269

Statements of financial position

(figures in NOK 1000)	31 Dec 2020	31 Dec 2019
Assets
Intangible assets	432	0
Assets under construction	219,926	25,546
Property, plant & equipment	331	352
Right-of-use assets	1,678	712
Total non-current assets	222,367	26,610
Other current receivables Cash and cash equivalents	22,638 647,806	2,749 21,124
Total current assets	670,444	23,873
Total assets	892,810	50,483
Equity and liabilities
Share capital	10,987	1,500
Share premium	850,097	49,500
Other reserves	2,974	780
Other equity	-45,209	0
Uncovered losses	-30,407	-13,581
Total equity	788,442	38,198
Long-term interest-bearing debt	0	1,500
Lease liabilities - long term	933	227
Total non-current liabilities	933	1,727
Short-term interest-bearing debt	40,000	0
Trade payables	60,104	8,401
Social security and other taxes	1,144	799
Lease liabilities - short term	696	394
Other current liabilities	1,491	963
Total current liabilities	103,435	10,557
Total liabilities	104,368	12,285
Total equity and liabilities	892,810	50,483

Statement of cash flow

Cash flow from operations Profit before income taxes -1,192 -3,313 -16,826 -11,269
Adjustments for:
Depreciation 337 91 550 181
Net interest -966 -614 -850 -593
Share based payment expenses 447 780 2,714 780
Gain on lease modification 0 0 -7 0
Changes in working capital:
Change in other current receivables -10,205 978 -19,889 0
Change in trade payables 1,101 -4,456 2,695 -2,049
Change in social security and other taxes 599 7,898 345 8,235
Change in other current liabilities 602 2,768 528 1,570
Cash generated from operations -9,277 4,133 -30,740 -3,146
Interest paid -147 -9 -263 -30
Interest received 1,113 622 1,114 622
Net cash flow from operations -8,311 4,746 -29,890 -2,553
Cash flow from investment activities
Payments for fixed assets and other
capitalizations -58,323 -14,732 -145,660 -25,021
Payments for intangible assets -432 0 -432 0
Net cash flow from investment activities -58,755 -14,732 -146,092 -25,021
Cash flow from financing activities
Proceeds from issue of equity -32,346 0 764,355 50,000
Proceeds from new borrowings 40,000 0 40,000 0
Repayment of borrowings -1,500 -1,500 -1,500 -1,500
Repayment of lease liabilities -60 21 -191 -172
Net cash flow from financing activities 6,094 -1,479 802,664 48,328
Net change in cash and cash equivalents -60,972 -11,464 626,682 20,753
Cash and cash equ. at the beginning of the
period 708,778 32,588 21,124 370 Cash and cash equ. at the end of the period 647,806 21,124 647,806 21,124

(figures in NOK 1000)	Share capital	Share premium	Other reserves	Other equity	Uncovered losses	Total equity
Balance at 1 January 2019	1 000	0	0	0	-2 312	-1 312
Profit/loss for the period	0	0	0	0	-11 269	-11 269
Other comprehensive income	0	0	0	0	0	0
Total comprehensive income	0	0	0	0	-11 269	-11 269
Capital increase, net of transaction costs	500	49 500	0	0	0	50 000
Share options issued	0	0	780	0	0	780
Transactions with owners	500	49 500	780	0	0	50 780
Balance at 31 December 2019	1 500	49 500	780	0	-13 581	38 198
Balance at 1 January 2020	1 500	49 500	780	0	-13 581	38 198
Profit/loss for the period	0	0	0	0	-16 826	-16 826
Other comprehensive income	0	0	0	0	0	0
Total comprehensive income	0	0	0	0	-16 826	-16 826
Capital increase, net of transaction costs	9 457	798 629	0	-45 728	0	762 357
Share options issued	0	0	2 714	0	0	2 714
Share options exercised	30	1 968	-520	520	0	1 998
Transactions with owners	9 487	800 597	2 194	-45 209	0	767 069
Balance at 31 December 2020	10 987	850 097	2 974	-45 209	-30 407	788 442

Statement of Changes in Equity

Selected notes to the quarterly financial statements

Note 1 – Summary of significant accounting policies

General information

Salmon Evolution Holding AS and its subsidiary, Salmon Evolution AS, (together "SE" or "the Group") is a Norwegian business headquartered at Indre Harøy in Møre og Romsdal. SE is building a land-based salmon farming facility with a planned annual production of 31,500t HOG. The build-out is expected to be in three phases, with the first phase expected to consist of build out of land acquisition, building of foundation, water pumps supporting all three phases and build out of 12 grow out tanks and hatchery. SE will operate a hybrid flow-through (HFS) system, replacing the water every four hours with clear

Consolidation

Salmon Evolution Holding AS was incorporated on 23 July 2020 prior to the planned listing on Merkur Market (now Euronext Growth) which was completed on 18 September 2020. These condensed consolidated statements for the period ended 31 December 2020 include

Consolidation principles

Subsidiaries are all entities over which the Group has control. The Group considers control over an entity to exist when the Group is exposed to, or has the right to, variable returns from its involvement with the entity and can affect those returns through its ability to direct the operations of the entity. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. The accompanying consolidated financial statements include the accounts of Salmon Evolution AS. When necessary, adjustments are made to the local financial statements of the Group subsidiaries to conform with the consolidated Group's and fresh water from the Norwegian coast. Construction start of phase I was in Q2 2020 with expected completion in Q4 2022. Production is expected to start during Q1 2022 when the first smolt is expected to enter the holding tanks with expected harvest in Q4 2022.

These interim financial statements were approved by the Board of Directors for issue on 01 March 2021.

These interim financial statements have not been audited.

Salmon Evolution Holding together with its subsidiary Salmon Evolution AS (together "SE" or "the Group"). Please note that the comparable previous periods financial statement periods (2019 and Q4 2019) only reflect Salmon Evolution AS.

accounting policies presented under IFRS. All intercompany balances, transactions, and unrealized gains from intercompany transactions are eliminated upon consolidation. Unrealized losses from intercompany transactions are also eliminated upon consolidation unless the transaction provides evidence of an impairment of the transferred asset. The assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date in which the Group gains control until the date in which the Group ceases to control the subsidiary.

Basis of preparation

These interim financial statements have been prepared in accordance with International Accounting Standard 34, "Interim financial reporting". These interim financial statements do not provide the same scope of information

Going concern

The Group has adopted the going concern basis in preparing its consolidated financial statements. When assessing this assumption, management has assessed all available information about the future. This comprises information about net cash flows from existing customer contracts and other service

Accounting principles

The accounting policies adopted are consistent with those of the previous financial year except that income tax expense is recognized in each interim period using the expected weighted average annual income

Borrowing costs

The Group has entered into loan agreements during Q4 2020, of which the following principles related to borrowing costs have been applied, in accordance with IAS 23:

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time as the annual financial statement and should therefore be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with IFRS.

contracts, debt service and obligations. After making such assessments, management has a reasonable expectation that the Group has adequate resources to continue its operational existence for the foreseeable future.

tax rate for the full financial year. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Other borrowing costs are expensed in the period in which they are incurred.

Note 2 – Property, plant and equipment

	Assets under	Fixtures and
(figures in NOK 1000)	construction	fittings	Total
Cost 1 January 2020	25 546	450	25 997
Additions	194 379	289	194 668
Disposals	0	0	0
Cost 31 December 2020	219 926	739	220 665
Accumulated depreciation 1 January 2020	0	-99	-99
Depreciation for the period	0	-310	-310
Net book value 31 December 2020	219 926	331	220 256
	Assets under	Fixtures and
(figures in NOK 1000)	construction	fittings	Total
Cost 1 January 2019	975	0	975
Additions	24 571	450	25 021
Disposals	0	0	0
Cost 31 December 2019	25 546	450	25 997
Accumulated depreciation 1 January 2019	0	0	0
Depreciation for the period	0	-99	-99

Straight-line depreciation is applied over the useful life of property, plant, and equipment based on the asset's historical cost and estimated residual value at disposal. Depreciation is charged to expense when the property, plant or equipment is ready for use or placed in service. As such, assets under

Contractual and financial commitments

The company is in the process of building a land-based salmon farming facility at Indre Harøy. The turnkey project agreement includes a clause for financing reservations until further financing is secured, limiting the construction are not depreciated. Assets under construction as at 31 December 2020 consisted mainly of capitalised costs related to the turnkey project with Artec Aqua for building a land-based salmon farming facility at Indre Harøy, Møre.

Group's financial commitments to the following items where the financing reservation has been lifted as of 31 December 2020:

Total financial comittments	296 343
Fish handling and transport	5 503
Concrete element	21 167
Fishing tanks	26 274
Technical equipment	33 960
Engineering	55 981
Ground enterprise contract	153 458
(figures in NOK 1000)	31 Dec 2020

Note 3 –	Share capital and capital history
-------------	-----------------------------------	--	--	--

(figures in NOK 1000)	Date	Capital Increase	Share Capital After Change Par Value		Subscription price per share	New shares	Total no. of outstanding shares
Opening balance 1 July 2020				0,05			107 503 182
Share options exercised	10 July 2020	5 405 159	5 405 159	0,05	3,33	600 000	108 103 182
Private placement	23 July 2020	581 395	5 986 554	0,05	4,30	11 627 906	119 731 088
Private placement	11 September 2020	5 000 000	10 986 554	0,05	5,00	100 000 000	219 731 088

The Company entered into an investment agreement with Dongwon Industries and completed a NOK 50 million private placement towards Dongwon Industries in July 2020.

The Company raised NOK 500 million in a private placement in connection with its initial public offering related to the admission on Merkur Market (now Euronext Growth) in September 2020.

ABOUT SALMON EVOLUTION

A Norwegian land-based salmon farming company with a goal to be a global supplier of high quality and sustainable salmon from landbased facilities.

The company is using hybrid flow-through system with 30%-35% freshwater intake, reducing the complexity and biological risk, and securing optimal growth at low cost.

Targeting a position as a global leading land-based farmer, enable by a unique ESG profile.

OFFICE ADDRESS Eikremsvingen 4, 6422 Molde, Norway

PRODUCTION SITE Indre Harøyvegen 88, 6430 Bud, Norway

ORG NUMBER NO 919 384 603 MVA

E-mail: post@salmone.no Web: salmonevolution.no

BOARD OF DIRECTORS

Tore Tønseth Chairman of the Board

Kristofer Reiten Board Member

Anne Breiby Board Member

Frode Kjølås Board Member

Peder Stette Board Member

Glen Allan Bradley Board Member

Kiyun Yun Board Member

MANAGEMENT

Håkon Andre Berg CEO

Trond Håkon Schaug-Pettersen CFO

Ingjarl Skarvøy COO

Trond Valderhaug CCO

Kamilla Mordal Holo Project Director

Hans Petter Mortveit Finance Manager