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Salmon Evolution ASA Interim / Quarterly Report 2024
3732_rns_2024-11-07_e9a9261d-6256-4383-b1d2-c8bf9623ae6b.pdf
Interim / Quarterly Report
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Extending the ocean potential
Q3 2024
jus
Extending the ocean potential 1
Q3 2024
Highlights in the quarter
- Strong biological KPIs supported by continued stable operations
- Group EBITDA of -7.3 NOKm Farming EBITDA of 2.2 NOKm and NOK 3.3 EBITDA/kg.
- Pushing harvest into Q4 to maximize price realization full year harvest guidance unchanged.
- Continued stable performance and strong results with supportive growth KPIs at Indre Harøy and low mortality.
- Standing biomass near record levels going into Q4 at ~2,600 tonnes LW. Restocking of grow-out facility completed during the quarter, record number of individuals as of date.
- Indre Harøy phase 2 construction started on track for targeted smolt release Q1-26 as planned.
- Strong financial position with 866 NOKm in available liquidity including committed undrawn credit facilities. Additionally, the Company has 1,450 NOKm in earmarked construction financing.
Key figures
| Operational | Q3 24 | Q3 23 | YTD 24 | YTD 23 | 2023 |
|---|---|---|---|---|---|
| Standing biomass (tonnes, LW) | 2 582 | 2 100 | 2 582 | 2 100 | 2 204 |
| Net growth (tonnes, LW) | 1 369 | 1 290 | 4 188 | 2 312 | 3 751 |
| Harvest volumes (tonnes, HOG) | 680 | 185 | 3 162 | 770 | 1 874 |
| All-in price realization/kg (NOK)1 | 71,6 | 72,2 | 99,0 | 90,6 | 82,0 |
| Farming EBITDA/kg | 3,3 | NA | 30,7 | NA | NA |
| Farming costs/kg (NOK) | 69,9 | NA | 66,2 | NA | NA |
| Financial (in thousand) | |||||
| Operating revenues | 51 309 | 15 856 | 322 037 | 79 574 | 168 424 |
| Operational EBITDA2 | -7 344 | -24 637 | 62 167 | -67 788 | -83 950 |
| Operational EBIT2 | -25 581 | -40 699 | 6 564 | -97 428 | -130 680 |
| Cash flow from operations | 6 623 | -74 691 | 42 365 | -131 548 | -124 445 |
| Operational EBITDA Farming Norway2 | 2 237 | -8 115 | 97 101 | -23 257 | -23 214 |
| Capital structure (in thousand) | |||||
| Cash flow from investment activities | -112 909 | -64 892 | -194 853 | -289 773 | -358 816 |
| Cash flow from financing activities | -13 886 | 23 773 | 329 343 | 588 427 | 590 897 |
| Cash and cash equivalents | 563 251 | 445 865 | 563 251 | 445 865 | 386 396 |
| Net Interest-bearing debt | 135 223 | 231 090 | 135 223 | 231 090 | 299 386 |
| Equity ratio (%) | 72 % | 71 % | 72 % | 71 % | 71 % |
| Profitability | |||||
| Earnings per share (NOK) | -0,06 | -0,09 | -0,05 | -0,25 | -0,37 |
1Calculated on a back to farm basis and adjusted for transport cost to Norway border (Nasdaq equivalent)
2Before fair value adjustment related to biological assets
Norway
Operations
Salmon Evolution is experiencing continued stable operations with strong biological KPIs both at smolt facility in Dale and at the grow-out facility on Indre Harøy.
In Q3-24 the Company prioritized biomass buildup. Standing biomass at the end of the quarter amounted to 2,582 tonnes LW, which is close to all-time high levels.
During the quarter there were steady improvement in the daily growth rates, with biomass production accelerating towards the end of the quarter. The Company has a wide range of initiatives ongoing to take out the full growth potential at Indre Harøy.
Following the challenges related to smolt quality for certain smolt groups in the first half of 2024, the Company has had high focus on restocking the Indre Harøy facility and this was completed during the quarter. Three new smolt batches was stocked in Q3, one in mid-July and two in August. All these had stocking weights on or above target (>130g). All three batches have shown good performance to date. For batch 12 which was stocked in May, where the Company had some initial challenges, the situation normalized during the quarter.
At the end of Q3-24 the number of individuals at Indre Harøy had never been higher.
At the smolt facility in Dale growth rates have been strong in 2024, with biomass growth to date 39 % above the same period last year. This is expected to result in good stocking weights on the remaining smolt insert in 2024 as well as for 2025. As previously mentioned, the Company during the quarter implemented enhanced vaccination protocols and changes to the smoltification process at the smolt facility. This is expected to result in a stronger and more adaptable smolt going forward. Additionally, several upgrades have been made to the Dale smolt facility during 2024, including installing additional heating capacity ensuring a better and more stable growth environment in the winter season.
During the quarter the Company harvested 680 tonnes HOG with a superior grade share of 98 % and an average weight of ~3.3 kg HOG. The average harvest weight increased 10 % from the previous quarter but were still impacted by low smolt stocking weights in 2023. Salmon Evolution expects a further increase in harvest weights in Q4-24. As previously mentioned, the Company in Q3-24 chose to utilize some short-term excess tank capacity at Indre Harøy to push harvest into Q4 to maximize price realization in the
second half of 2024. As highlighted, this will not impact the overall 2024 harvest guidance.
The Company continues to see strong key performance indicators at Indre Harøy. The feed conversion ratio, mortality and superior grade share has steadily improved through the year and is currently exceeding the already ambitions targets set by the Company. Overall, these results indicate consistently good fish health and a strong growth environment at the facility.
Harvest guidance
Harvest guidance for 2024 is unchanged at ~5,000 tonnes HOG, with the Company expecting Q4 harvest of ~1,800 tonnes HOG.
In 2025 the Company will prioritize biomass buildup and expects to increase production by ~40 % to a HOG equivalent of ~7,000 tonnes (~8,400 tonnes LW), planned to enable run-rate standing biomass during the first half of 2025.
The 2025 harvest volume is estimated at 6,000 – 6,500 tonnes HOG, reflecting the abovementioned planned biomass buildup. Current biomass composition following smolt quality issues in 1H 2024 will have a spillovereffects into the first quarter of 2025. This is expected to lead to lower harvest weights and volumes in Q1 2025, currently estimated at ~1,100 tonnes HOG.
Indre Harøy phase 2
Indre Harøy phase 1 and 2 represents a potent platform with strong expected cash flow generation, supporting a substantial organic investment capacity for Salmon Evolution.
Leading up to the investment decision taken in Q2-24, the Company had a thorough tender
process together with the contractors for all major components to have visibility on cost and reduce the risk in the cost estimates. The Company also builds on its extensive experience, after over two years in full operation as well as having successfully completed a project of this scale and magnitude before.
The phase 2 project is planned to add 10,100 tonnes HOG of annual harvest. This will take Salmon Evolution from its current production capacity of 7,900 tonnes to 18,000 tonnes HOG in full run-rate. This is enabled through optimizations where the Company release an additional 2,200 tonnes HOG, 1,100 tonnes HOG per phase, on top of the original plan of 7,900 tonnes HOG for phase 2. This is achieved through adding additional tank capacity, by introducing pre-grow-out tanks. This represents a highly capital efficient way to increase output at the facility, leveraging infrastructure that is already in place.
Under the new program, by adding the pregrow-out tanks, the Company can increase the stocking weight in the grow-out department from current ~130 grams to ~400 grams. At the same time the targeted harvest weight is reduced to 5.2 kg LW. I sum this will reduce the production cycle to ~8-9 months and enable an increase in the number of smolt stockings from 6 to 8 per year. Generally, this is a more conservative production plan with lower average harvest weights and peak densities, which also lowers the operational risk through increased robustness and added operational flexibility.
The phase 2 grow-out project is split in two parts, with Artec Aqua having responsibility for design, construction, and commissioning of the process facility and HENT for civil design and construction. Phase 2 is an improved copy of phase 1, incorporating key learnings after more than two years in operation. The project has a total estimated investment cost of up to 2.5 NOKbn including contingencies, buffers and the additional tank capacity. This figure also includes 200 NOKm in project contingencies and a project buffer of 100 NOKm.
Indre Harøy illustration
Illustration: Salmon Evolution
Project status – Indre Harøy phase 2
The project is developing according to plan, with targeted smolt release in Q1-26 and first harvest in Q4-26. In parallel Salmon Evolution is proceeding with the planning and engineering for the additional tank capacity with expected completion by 2026.
Groundworks for the grow-out section as well as intake station has previously been completed. The initial focus at the building site is centred around concrete works for the intake station and the first four tanks, including technical rooms. Activity at the building site is expected to gradually increase towards year end, increasing from the current 50-60 workers to 90-100 workers working on site. At the end of Q3-24 the accumulated investment in the project amounted to 245 NOKm, of which 128 NOKm was invested during the quarter.
Phase 2 concrete works for first four tanks in good progress (October 2024)
Salmon Evolution is also developing a plan to cover the smolt needs for phase 2 and beyond. One of the benefits of the new grow-out program, is that the Company will get better utilization of the smolt facility at Dale. Additionally, the Company is evaluating several options to increase smolt capacity, including temporary external sourcing, expansion opportunities at our existing smolt facility and other options.
North America
As part of Salmon Evolution's strategy towards a production capacity of 100kt HOG, the Company seeks to replicate its Norwegian success in the North American market.
As previously communicated, the Company is in advanced negotiations for a high-potential site in North America. The initial site verification processes are still ongoing, including fatal flaws analyses of both water, biological, technical, and regulatory aspects, points to this being an ideal site for a hybrid flow-through system.
When assessing possible sites, the Company focuses around areas with an established salmon farming industry, mirroring the Group's approach for Indre Harøy in Norway. Salmon Evolution sees a significant value in leveraging existing aquaculture infrastructure and value chains, enabling both scale and cost leadership, as well as reducing operational and biological risk.
It is expected that site verification and relevant regulatory approval processes will take two to three years, upon which the plan is to build a full scale 36kt HOG "Indre Harøy" facility drawing on the experiences learned from Norway.
To facilitate this expansion, the Company has established a dedicated team of both in-house and external resources.
The Company's strategy of pursuing accretive partnerships in overseas markets remains unchanged. As the project develops, Salmon Evolution aims to engage in partnership structures leveraging the human capital in our Company and maximizing shareholder value.
Korea
Project overview
The Company has a joint venture, K Smart Farming, with the South Korean seafood giant Dongwon Industries where the plan is to develop, construct and operate a 16,800 tonnes HOG land-based salmon farming facility in South Korea, using Salmon Evolution's technology approach and competence. This is planned completed in two stages, each phase aiming for an annual capacity of 8,400 tonnes HOG.
The project consists of a smolt facility at Jeongseon, a grow-out site at Yangyang and certain other infrastructure. At the site for the planned smolt facility at Jeongseon, there has been freshwater trout production for many years. The planned site for the grow-out facility at Yangyang, is located on the northeast coastline of South Korea.
Project status
The design and engineering activities for the grow-out facility at Yangyang has been completed. Permitting work is on track and not considered a material risk for the realization of the project.
The Company currently sees the overall project economics as challenging, primarily driven by site specific circumstances at the Yangyang grow-out site, in particular related to the intake and discharge water solution due to a relatively long and shallow shoreline at the grow-out site. Additionally, given that Korea has no existing salmon farming industry, certain other infrastructure items are impacting the project cost as well as operating cost.
The project is currently working with authorities in South Korea on governmental financial support, further clarifications expected to take within 6-9 months. Meanwhile project activities have been scaled down and cash burn has been reduced to a minimum.
Funding
Since its inception Salmon Evolution has actively been using the debt and capital markets to fund its growth roadmap. The Company is continually optimizing its capital structure through strategic financial management, carefully balancing debt and equity to maintain financial stability whilst also funding expansion projects. By regularly evaluating and adjusting its capital structure, the company aims to reduce costs and improve returns on capital employed.
In June 2024 the Group carried out a private placement, raising gross proceeds of approximately 365 NOKm through the allocation of 48,666,666 new shares in the Company, each at a subscription price of NOK 7.50 per share. This brings total raised equity to approximately 2.6 NOKbn.
Funding Indre Harøy Phase 1 and 2
In June 2024 the Company expanded its existing senior secured debt financing package related to Indre Harøy Phase 1 and 2, from 1,550 NOKm to 2,225 NOKm, an increase of 675 NOKm.
The new debt funding package consists of the following credit facilities:
- 525 NOKm non-amortizing term loan facility (the "Term loan").
- 250 NOKm RCF facility available for general corporate purposes including Indre Harøy phase 2 capex (the "RCF facility")
- 1,225 NOKm construction facility available for financing of capex relating to the phase 2 grow-out facility at Indre Harøy (the "Construction Facility grow-out").
Source: Group data
• 225 NOKm construction facility available for financing of capex relating to the phase 2 additional tank capacity (the "Construction facility additional tank capacity").
Additionally, there is added flexibility under the improved debt financing facility, in the form of added flexibility on other financial services and a 100 NOKm accordion facility. The entire facility non-amortizing until Q4-26 or completion of phase 2.
As per 30 September 2024, the Term Loan of 525 NOKm was fully drawn. Neither the RCF facility nor construction facilities were drawn as per 30 September 2024.
In addition, the Group has a 150 NOKm overdraft facility for biomass and receivables financing of which 100 NOKm was drawn at the end of Q3.
Funding Salmon Evolution Dale
The Group has a debt financing package of 60 NOKm in relation to Salmon Evolution Dale at favourable commercial terms reflecting the solid operational and financial track record of the facility.
The bank debt package is split across three separate facilities and will be used as follows:
- General corporate purposes, hereunder financing of working capital
- Investments relating to facility upgrades
• 25 NOKm in acquisition financing utilized for refinancing of seller's credit with previous owners
As part of the Indre Harøy phase 2 build out, the Group is evaluating expansion opportunities at Dale. In such scenario further debt financing of Salmon Evolution Dale is expected.
As per 30 September 2024 about 57 NOKm of the 60 NOKm debt financing package was drawn.
Extending the ocean potential
Our Technology – Hybrid flow through system (HFS)
Salmon Evolution is founded on the belief that good biology equals good economy. This belief has been essential when developing the production methods and technology that are to be applied in the Company's land-based salmon farming facilities.
Salmon Evolution's chosen hybrid flow-through system (HFS) technology ensures rich access of fresh filtered seawater while at the same time reducing energy consumption by reusing around 65% of the water.
A reusage level of around 65% is in the Company's view a "sweet spot" balancing cost and operational risk. Higher reusage levels require the introduction of more advanced filtration and water treatment and lead to an exponential increase in risk. On the other side, a low level of reusage leads to significantly higher energy costs in connection with pumping and heating of water.
At Indre Harøy the seawater intake is based on two inlet pipes at 25 meters and 95 meters, enabling the Company to tap into ideally tempered water and hence reducing energy costs relating to heating of seawater.
The water inlet is further filtered and treated with UV to eliminate parasites, sea lice, viruses, and particles. This ensures a rich flow of fresh and clean seawater into the fish tanks.
To ensure optimal biological and growth conditions in the fish tanks, oxygen and CO2 levels are constantly monitored and adjusted.
Each of Salmon Evolution fish tanks represents an individual biological zone, meaning that water in one tank never mixes with water in the other tanks. This again serves as a significant risk reducing measure in case of deceases etc. where a potential outbreak in one tank never can contaminate the fish swimming in the other tanks.
As part of Salmon Evolution commitment to a truly sustainable production and circular economy, waste is filtered and collected, before being transported to a recirculation plant where it is converted into fertilizer, biogas or similar.
Group financial review
Revenue and results for the third quarter 2024
| Summary of result | |||||
|---|---|---|---|---|---|
| (figures in NOK 1000) | Q3 24 | Q3 23 | YTD 24 | YTD 23 | 2023 |
| Total operating revenue | 51 309 | 15 856 | 322 037 | 79 574 | 168 424 |
| Operational EBITDA | -7 344 | -24 637 | 62 167 | -67 788 | -83 950 |
| Operational EBIT | -25 581 | -40 699 | 6 564 | -97 428 | -130 680 |
| Fair value adjustment of biomass | 11 347 | 14 843 | -5 | 22 755 | 20 149 |
| Operating profit (EBIT) | -14 234 | -25 857 | 6 559 | -74 673 | -110 532 |
| Net financials | -11 344 | -10 640 | -27 039 | -20 212 | -35 241 |
| Profit/loss before tax | -25 578 | -36 497 | -20 480 | -94 885 | -145 773 |
| Income tax expense | 0 | 0 | 0 | 0 | 0 |
| Profit/loss for the period | -25 578 | -36 497 | -20 480 | -94 885 | -145 773 |
Comparable figures for Q3-23 in brackets
Following harvest of 680 tonnes HOG Salmon Evolution in Q3-24 recorded operating revenues of 51.3 NOKm (15.9 NOKm). The Company harvested salmon in the first weeks of July and August, achieving an all-in price realization of NOK ~71.6/kg. The strong price realization was driven by an industry leading superior grade share of 98 %.
Operating expenses totalled 58.6 NOKm (40.5 NOKm). This consisted mainly of operating expenses at our facilities in Dale and Indre Harøy, primarily production costs in relation to harvest of 680 tonnes HOG, costs related to the growth projects and other administration expenses.
The Company recorded depreciations of 18.2 NOKm (16.0 NOKm), mostly related to the facility at Indre Harøy. The increase from the same period last year, is primarily driven by initiation of depreciations of the upgrades undertaken at the smolt facility in Dale.
The Company had a negative EBITDA of 7.3 NOKm (negative 24.6 NOKm) in the quarter, with EBIT ending at negative 25.6 NOKm (negative 40.7 NOKm). EBIT after fair value adjustment related to the biomass of 11.3 NOKm ended at 14.2 NOKm (negative 25.9 NOKm). In the quarter the Company recorded capacity adjustments for unutilized production capacity of 8.5 NOKm. Capacity adjustments are gradually decreasing alongside increased utilization of the facility.
Net financials for the quarter were negative at 11.3 NOKm (negative 10.6 NOKm), primarily driven by interest rate costs, partly offset by a positive change in value of the interest rate swap contract and interest rate income on the bank deposits.
The Group recorded no tax cost in Q3, and the loss for the period ended at 11.3 NOKm (negative 36.5 NOKm).
Salmon Evolution's share of K Smart's net income is recognized in the profit and loss statement. The investment in K Smart is accounted for using the equity method where K Smart is considered an associated company.
Farming Norway
| (in NOK thousand) | Q3 24 | Q3 23 | YTD 24 | YTD 23 | 2023 |
|---|---|---|---|---|---|
| Operating revenue (NOK 1000) | 51 071 | 13 349 | 317 688 | 69 731 | 158 248 |
| Operational EBITDA (NOK 1000)2 | 2 237 | -8 115 | 97 101 | -23 257 | -23 214 |
| Operational EBIT (NOK 1000)2 | -16 397 | -23 877 | 41 766 | -51 210 | -67 932 |
| All-in price realization/kg (NOK)1 | 71,6 | 72,2 | 99,0 | 90,6 | 82,0 |
| Harvest volumes (tonnes, HOG) | 680 | 185 | 3 162 | 770 | 1 874 |
| Operational EBITDA cost/kg | 69,9 | N/A | 66,2 | N/A | N/A |
| Operational EBITDA/kg (NOK) | 3,3 | N/A | 30,7 | N/A | N/A |
| Operational EBIT/kg (NOK) | -24,1 | N/A | 13,2 | N/A | N/A |
1Calculated on a back to farm basis and adjusted for transport cost to Norway border (Nasdaq equivalent)
2Before fair value adjustment related to biological assets
Farming Norway consists of the farming activities at the grow-out facility at Indre Harøy, smolt production at Salmon Evolution Dale and sales.
The segment had revenues of 51.0 NOKm (13.3 NOK) in the quarter after harvesting 680 tonnes HOG. Of this 1.4 NOKm was related to sale of frozen inventory. Planned harvest in the quarter was higher, but the Company decided to use current flexibility to push harvest into Q4-24 to maximize price realization on back of higher expected prices the next quarter. Harvest guidance of 2,500 tonnes HOG in the second half of 2024 remains unchanged.
In the quarter harvest took place the first weeks of July and August, resulting in an all-in price realization of NOK ~71.6/kg. The strong price realization was driven by an industry leading superior grade share of 98 %, with continued excellent feedback on product quality and taste. The all-in price realization is calculated on a back to farm basis and adjusted for transport cost to Norway border (Nasdaq equivalent) and includes all fish sold, including downgrades. The overall price achieved by Salmon Evolution on superior grade fish is strong and consistently above the reference price.
The farming EBITDA cost in the segment, including allocated G&A, ended at NOK 69.9 per kg. The farming EBITDA cost is the sum of all direct production and harvest cost and other operating expenses (G&A), divided by harvest volume. Incident based mortality, culling and exports costs are excluded. The farming EBITDA cost was slightly up from the previous quarter, driven by lower scaling of the fixed cost base as the harvest volume was also lower.
Sale of frozen inventory had a positive EBITDA/kg contribution of NOK ~1/kg in the quarter.
The strong development in the underlying biological KPIs and low mortality is having a positive impact on the farming EBITDA cost. Coupled with increased biomass production and increasing harvest volumes, the farming EBITDA cost is expected to continue trending downwards in future periods.
The farming segment had an EBITDA of 2.2 NOKm, with EBITDA per kg of 3.3 NOK.
The segment recorded capacity adjustments for unutilized production capacity of 8.5 NOKm.
Other
| (in NOK thousand) | Q3 24 | Q3 23 | YTD 24 | YTD 23 | 2023 |
|---|---|---|---|---|---|
| Operating revenue | 7 143 | 7 003 | 21 025 | 20 040 | 27 564 |
| Operational EBITDA | -9 569 | -16 522 | -34 921 | -44 532 | -60 737 |
In the Other segment all the resources related to projects and technology are employed, as well as general corporate functions. A significant portion of costs are related to future expansion.
In Q3-24 the Other segment had operating revenues of 7.2 NOKm (7.0 NOKm) related to sale of services to the Farming segment and growth projects. Operating expenses totalled 16.8 NOKm (23.5 NOKm), down a couple of millions from the previous quarter.
The cost base in the segment is primarily driven by salaries, representing ~75 % of operating costs in the segment in Q3-24. A portion of this is reinvoiced to the Farming segment for services rendered, as well as salaries relating to personnel taking part in the Indre Harøy phase 2 expansion project.
The Company had extraordinary activity in Q2- 24 related to conclusion of the Indre Harøy phase 2 pre-project, expanding the bank and raising equity. This resulted in higher than normal legal and consulting costs. In Q3-24 these costs returned to normal levels.
The operational EBITDA ended at negative 9.6 NOKm (negative 16.5 NOKm).
Cash flow
| (figures in NOK 1000) | Q3 24 | Q3 23 | YTD 24 | YTD 23 | 2023 |
|---|---|---|---|---|---|
| Net cash flow from operating activities | 6 623 | -74 691 | 42 365 -131 548 -124 445 | ||
| Net cash flow from investments activities | -112 909 | -64 892 -194 853 -289 773 -358 816 | |||
| Net cash flow from financing activities | -13 886 | 23 773 | 329 343 | 588 427 | 590 897 |
| Net change in cash and cash equivalents | -120 171 -115 810 | 176 855 | 167 105 | 107 636 | |
| Cash and cash equivalents at start of period | 683 422 | 561 675 | 386 396 | 278 759 | 278 759 |
| Cash and cash equivalents at end of period | 563 251 | 445 865 | 563 251 | 445 865 | 386 396 |
Despite a biomass buildup of ~500 tonnes LW during the quarter, the Company had a positive net cash flow from operating activities of 6.6 NOKm (negative 74.6 NOKm).
Having initiated the Indre Harøy phase 2 expansion project, there was a significant increase in investments compared to previous quarters. The net cash flow from investment activities ended at negative 112.9 NOKm (64.9 NOKm).
In the initial project phase investments are primarily funded by cash, thus despite significant
investments cash flow from financing activities was negative with 13.9 NOKm (23.8 NOKm)
Total net cash flow during the second quarter was negative 120.2 NOKm (115.8 NOKm). The liquidity position at the end of the period was strong, with cash and cash equivalents of 563.2 NOKm.
Total available liquidity ended at of 866.2 NOKm, this includes available committed undrawn credit facilities but excludes the construction facilities in relation to Indre Harøy Phase 2 of 1,450 NOKm.
Financial position
| (figures in NOK 1000) | 30 Sept 2024 | 30 June 2024 | 31 Dec 2023 | 30 Sept 2023 |
|---|---|---|---|---|
| Non-current assets | 2 247 238 | 2 108 566 | 2 076 513 | 2 039 203 |
| Current assets | 867 540 | 972 059 | 633 072 | 720 175 |
| Total assets | 3 114 778 | 3 080 625 | 2 709 585 | 2 759 378 |
| Equity | 2 250 426 | 2 276 565 | 1 920 693 | 1 971 054 |
| Non-current liabilities | 585 575 | 586 065 | 586 859 | 577 400 |
| Current liabilities | 278 777 | 217 995 | 202 032 | 210 923 |
| Total equity and liabilities | 3 114 778 | 3 080 625 | 2 709 585 | 2 759 378 |
On 30 September 2024 the book value of the Company's assets was 3,114.8 NOKm (2,759.4 NOKm). The main increase from previous periods is related to the ongoing Indre Harøy phase 2 expansion project.
The fixed assets in the Company mostly relate to the facility at Indre Harøy, comprising land, buildings, and production equipment, as well as the Dale smolt facility and other smaller items. There are no significant movements from the previous quarter.
The current assets in the Company are primarily biological assets, other current receivables, and cash & cash equivalents.
Total equity amounted to 2,250.4 NOKm (2,276.6 NOKm). This corresponds to an equity ratio of 72% (75%).
Consolidated net interest-bearing liabilities totalled 135.2 NOKm at the end of the quarter.
Summary for the first nine months of 2024
Comparable figures for the first nine months of 2023 in brackets
In the first nine months of 2024 the Company had operating revenues of 322.0 NOKm (79.6 NOKm), where 317.7 NOKm (69.7 NOKm) were related to the farming segment. The increase from the same period last year is linked to the increased harvest activities. Salmon Evolution harvested 3,162 tonnes HOG compared to 770 tonnes HOG in the same period last year. Additionally, the Company sold services, had revenues from government grants and revenues related to insurance settlement.
Operating expenses totalled 259.8 NOKm (147.4 NOKm). The increase from the same period last year is driven by much higher activity at the Company's grow-out facility at Indre Harøy.
Salmon Evolution had a positive EBITDA of 62.2 NOKm year-to-date 2024 compared to a negative EBITDA of 67.8 NOKm in the same period last year.
The Company recorded depreciations of 55.6 NOKm (29.6), mostly related to the facility at Indre Harøy. Depreciations for the Indre Harøy facility commenced in May 2023. Additionally, depreciations of the upgrades undertaken at the smolt facility in Dale commenced in Q1-24.
The fair value adjustment related to the biomass amounted to 0.0 NOKm, and the Company recorded an operating profit of 6.6 NOKm (negative 74.6 NOKm) during the first nine months of 2024.
Net financials amounted to negative 27.0 NOKm (negative 20.2 NOKm), primarily due to interest rate expenses. The Company recorded no tax cost, and the loss ended at 20.5 NOKm (loss of 94.9 NOKm).
Net cash flow from operating activities ended at 42.4 NOKm in the period (negative 131.6 NOKm), a significant improvement from the same period last year driven by the much higher harvest activity and strong financial results.
With the Indre Harøy phase 2 expansion project the investments are ramping up. Net cash flow from investing activities were negative at 194.9 NOKm (negative 290.8 NOKm).
Cash flow from financing activities in the first nine months of 2024 was driven by the successful equity raise that took place in June and ended at 329.3 NOKm (588.4 NOKm).
Net change in cash and cash equivalents for the first nine months of 2024 was 176.9 NOKm (167.1 NOKm), and as of 30 September 2024 cash and cash equivalents amounted to 563.2 NOKm and total available liquidity of 866.2 NOKm including committed undrawn credit facilities.
Salmon Evolution's share of K Smart's net income is recognized in the profit and loss statement. The investment in K Smart is accounted for using the equity method where K Smart is regarded as an associated company.
Subsequent events
No material subsequent events.
Transactions with related parties
During the ordinary course of business, the Compnay may engage in certain arm's length transactions with related parties.
There were no material transactions with related parties as per 30 September 2024
Share information
As per 30 September 2024 Ronja Capital AS was the Company's largest shareholder with 32,407,311 shares, corresponding to 7.0% of the total number of shares outstanding. The 20 largest shareholders held 53.1% of the shares in the Company.
During the quarter the average daily traded volume was about 650,000 shares and the average daily traded value was about NOK 4.5 million (Oslo Børs).
Salmon Evolution ASA was listed on Oslo Børs on 9 July 2021.
20 largest shareholders 30 September 2024
| Shareholder | # of shares | % share |
|---|---|---|
| Ronja Capital II AS | 32 407 311 | 7,0 % |
| The Bank of New York Mellon SA/NV | 24 569 080 | 5,3 % |
| Farvatn Private Equity AS | 21 168 366 | 4,6 % |
| Dongwon Industries Co. Ltd | 17 932 838 | 3,9 % |
| J.P. Morgan SE | 17 477 015 | 3,8 % |
| Verdipapirfondet Dnb Norge | 16 120 578 | 3,5 % |
| Rofisk AS | 15 204 563 | 3,3 % |
| Kjølås Stansekniver AS | 13 173 105 | 2,8 % |
| Stette Invest AS | 12 410 954 | 2,7 % |
| Jakob Hatteland Holding AS | 9 790 519 | 2,1 % |
| Ewos AS | 9 480 984 | 2,0 % |
| Mevold Invest AS | 9 074 474 | 2,0 % |
| Lyngheim Invest AS | 8 449 252 | 1,8 % |
| Bortebakken AS | 7 569 330 | 1,6 % |
| VPF DNB Norge Selektiv | 6 860 999 | 1,5 % |
| J.P. Morgan SE | 6 419 275 | 1,4 % |
| J.P. Morgan SE | 6 379 173 | 1,4 % |
| Verdipapirfondet DNB SMB | 5 887 586 | 1,3 % |
| Bondø Invest AS | 4 614 718 | 1,0 % |
| Salmoserve AS | 4 036 666 | 0,9 % |
| Total 20 largest shareholders | 249 026 786 | 53,8 % |
| Other shareholders | 213 576 520 | 46,2 % |
| Total number of shares | 462 603 306 | 100,0 % |
Source: VPS, Company
Risk and uncertainties
As described in the Annual Report for 2023, Salmon Evolution's business activities entail exposure to various types of risk, including risk related to project, market-, operational- and financial development. The Company's internal controls and risk exposure are subject to continuous monitoring and improvement, and efforts to reduce risk in different areas have a high priority. Below is a summary of some of the risks facing the Company.
Operational risk
The greatest operational risk relates to biological incidents within the Company's aquaculture operations. Although Salmon Evolution has been operating for over two years, land-based salmon farming is still a relatively young industry and is subject to inherent risk by being an industry in a development phase. The Company is vulnerable to errors in technology, production
Project risk
Successful project execution and construction are decisive for the Company's business and comes with numerous risks, including risk for delays or cost overruns.
Due to the size of these construction projects, any material delay or cost overrun could have
Market risk
The Company is exposed to the fluctuations and overall development of the salmon prices. Through 2023 and first half of 2024 salmon prices remained strong, supported by strong demand. As of 30 September 2024, the Company has not entered any hedging programs to reduce its exposure to the salmon price.
Interest Rate risk
The Company's interest rate risk relates primarily to borrowings from financial institutions with floating interest rates. Currently, the Company has entered into hedging programs to reduce this risk for parts of its planned borrowings. As of 30 September 2024, outstanding loans from credit institutions amounted to NOK 687.3 million (excluding financial leasing).
equipment and maintenance routines as well as diseases which may have a material adverse effect.
Further, challenges or incidents in connection with the ongoing production ramp up could also have adverse effects for the Company's ability to realize its business plan.
adverse effects for the Company's ability to realize its business plan.
In the current contract structure for phase 2 there are moderate risk sharing elements to incentivise realization of the project at target price and on-time.
Furthermore, the Company is exposed to changes in market prices for the input factors used in the production process, in particular feed prices and electricity prices. As to the latter, the Company has hedged about half of its expected electricity needs for 2024-2026, with a gradually declining hedging profile.
The Company's bank loans have an interest rate of NIBOR 3M plus an agreed margin. To reduce exposure to fluctuations in the interest rate the Company has entered interest rate swap contracts for a total amount of NOK 200 million.
Foreign Currency risk
The Company's foreign currency risk relates to the Company's operating, investing, and financing activities denominated in a foreign currency. This includes the Company's revenues, expenses, and capital expenditures. From time to time the Company utilizes financial instruments to hedge its currency exposure. As
Credit risk
With respect to credit risk arising from the financial assets of the Company, which comprise cash and cash equivalents, and other receivables, the Company's exposure to credit risk arises from default of the relevant counterparty, with a maximum exposure equal to the carrying amount of these instruments. The
Company has procedures in place to ensure that products are only sold to customers with satisfactory creditworthiness, and in all material respect use credit insurance. This risk is not considered to be material on 30 September
per 30 September 2024 the Company did not have material any exposure in foreign currency
The Company's presentation currency is
contracts.
2024.
Norwegian Kroner ("NOK").
Liquidity risk
A lack of liquidity will entail a risk that the Company will not be able to pay its obligations on maturity. Management monitors rolling forecasts of the Company's liquidity reserve (comprising cash and cash equivalents) based on expected cash flows. The Company's business plan and growth strategy is capital intensive, and the Company may be dependent upon future equity issues and/or debt financing to finance its current and longterm plans.
Outlook statement from the board of directors
When the Company was founded, the ambition was to produce salmon in a better and more sustainable way. Over the last few years, Salmon Evolution has made significant strides toward this objective. By employing a hybrid flow-through system, we produce salmon in a controlled environment, ensuring optimal growth conditions. This, paired with a strong operational team determined to improve every day, has put the Company on the forefront of the landbased salmon farming industry.
At the end of the second quarter the Company took the final decision to move ahead with the Indre Harøy phase 2 expansion project. Combined phase 1 and 2 is planned to yield 18,000 tonnes HOG of annual harvest, representing a strong platform with substantial cash generating abilities, and a solid foundation for further expansion. As of date the project is progressing according to plan and budget.
From Salmon Evolution's perspective, Norway is becoming increasingly attractive for landbased salmon farming. With its world leading aquaculture cluster, proposed framework for land-based aquaculture and commitment to sustainable aquaculture practices, Norway offers a unique environment that supports the growth of innovative land-based operations. The country's advanced infrastructure, plentiful access to clean water, and expertise in aquaculture make it an ideal location for expanding land-based salmon farming, aligning perfectly with our goals of sustainability and high-quality production.
As 2024 is nearing an end, Salmon Evolution reflects on a year of significant milestones. Over 3,000 tonnes HOG of high-quality salmon have been harvested, delivering excellent results. The strong performance in key metrics highlights the stability of our operations and the optimal growth environment created for the salmon. After just two years in operation, the company is surpassing its ambitious targets for feed conversion, mortality rates, and superior grade share, demonstrating the effectiveness of the hybrid flow-through system and the significant success in creating a good and sustainable growth environment for the salmon.
The board is pleased to note the strong market reception of our salmon, with customers praising its excellent taste and recognizing it as fully competitive with conventional salmon. The choice of technology, access to talent and location are key enablers to this.
In addition to achieving strong biological and harvest results, Salmon Evolution reached profitability and generated positive operational cash flow in the first half of 2024. This milestone highlights the robust operational and financial foundation the company has built in a relatively short amount of time.
In summary, these accomplishments underscore the company's commitment to innovation, sustainability, and growth, firmly positioning Salmon Evolution as a leader in the land-based salmon farming industry. They also demonstrate the value of leveraging an established value chain and talent pool, which helps to lower operational costs and reduce operational risks.
Overall salmon supply estimates for 2024 have been consistently revised downwards throughout the year. Despite a strong growing season driven by high sea temperatures in Norway, 2024 will likely see minimal growth in the global supply of Atlantic salmon. This is primarily due to biological challenges, particularly in Norway, where conventional sea-based farmers have faced significant issues with jellyfish and winter wounds during the first half of the year, leading to record-high volumes of downgraded fish.
The market for 2025 and beyond looks tight, supporting a scenario with high salmon prices going forward. Being in the process of ramping
up production and harvest volumes, Salmon Evolution is in a solid position to benefit from this over the coming quarters and years.
Salmon Evolution continues to see a significant demand growth potential for salmon and believes 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 phase 1 at Indre Harøy in full operation and phase 2 on the way, Salmon Evolution is in a unique position to continue to lead and shape the development of this industry.
Summary year to date
- Harvest of 3,162 tonnes HOG, with an industry leading superior grade share of 96 % and strong all-in price realization.
- Strong operating result and positive cash flow from operations.
- Moving ahead with Indre Harøy phase 2, creating an 18,000 tonnes HOG platform with substantial cash flow generating capabilities.
- Successfully completed private placement in June 2024 raising gross proceeds of approximately 365 NOKm as well as a credit approved increase of 675 NOKm on the debt package to fund Indre Harøy phase 2 expansion.
- Continued strong biological key performance metrics, targets on feed conversion, mortality and superior grade share met og exceeded.
- Strong financial position with available liquidity of 866.2 NOKm per 30 September 2024 including committed available undrawn credit facilities, excluding the construction facilities in relation to Indre Harøy phase 2.
Responsibility Statement
Responsibility statement in connection with interim management report by the Board of Directors and CEO of Salmon Evolution ASA.
We confirm, to the best of our knowledge, that the condensed set of financial statements for the period 1 January to 30 September 2024 has been prepared in accordance with IAS 34 – Interim Financial Reporting and gives a true and fair view of the Company's and Group's assets, liabilities, financial position and profit or loss as a whole. We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the period and their impact on the condensed set of financial statements, a description of the principal risks and uncertainties facing the group, and major related parties' transactions.
The Board of Directors of Salmon Evolution ASA Ålesund/Elnesvågen 6 November 2024
Peder Stette Director
Vibecke Bondø Director
Anne Breiby Director
Jan-Emil Johannessen Director
Trond Håkon Schaug-Pettersen CEO
Tore Tønseth Chair
Ingvild Vartdal Director
Eunhong Min Director
Interim financial statements
Statement of Profit and Loss
| (figures in NOK 1000) | Note | Q3 24 | Q3 23 | YTD 24 | YTD 23 | 2023 |
|---|---|---|---|---|---|---|
| Sales revenues | 2 | 51 071 | 13 349 | 317 688 | 69 731 | 153 325 |
| Other income | 238 | 2 508 | 4 349 | 9 843 | 15 099 | |
| Total operating revenue | 51 309 | 15 856 | 322 037 | 79 574 | 168 424 | |
| Change in inventory | 3,4 | 46 384 | 52 294 | 58 054 | 81 285 | 78 476 |
| Cost of materials | 3,4 | -50 249 | -38 024 | -145 432 | -81 293 | -126 180 |
| Personnel expenses | 5 | -19 056 | -21 708 | -55 194 | -54 900 | -76 052 |
| Other operating expenses | -35 732 | -33 056 | -117 297 | -92 456 | -128 619 | |
| Operational EBITDA | -7 344 | -24 637 | 62 167 | -67 788 | -83 950 | |
| Depreciations | 6 | -18 237 | -16 062 | -55 603 | -29 639 | -46 730 |
| Operational EBIT | -25 581 | -40 699 | 6 564 | -97 428 | -130 680 | |
| Fair value adjustment of biomass | 3 | 11 347 | 14 843 | -5 | 22 755 | 20 149 |
| Operating Profit (EBIT) | -14 234 | -25 857 | 6 559 | -74 673 | -110 532 | |
| Financial income | 7 | 3 904 | 5 700 | 17 426 | 21 751 | 21 481 |
| Financial expense | 7 | -13 317 | -14 394 | -39 419 | -37 172 | -49 624 |
| Share of net income from associated | ||||||
| companies | 8 | -1 930 | -1 946 | -5 046 | -4 792 | -7 098 |
| Financial expense - net | -11 344 | -10 640 | -27 039 | -20 212 | -35 241 | |
| Profit/loss before tax | -25 578 | -36 497 | -20 480 | -94 885 | -145 773 | |
| Income tax expense | 9 | 0 | 0 | 0 | 0 | 0 |
| Profit/loss for the period | 10 | -25 578 | -36 497 | -20 480 | -94 885 | -145 773 |
| Basic earnings per share (NOK) | 10 | -0,06 | -0,09 | -0,05 | -0,25 | -0,37 |
| Diluted earnings per share (NOK) | 10 | -0,06 | -0,09 | -0,05 | -0,25 | -0,37 |
| Statement of Comprehensive Income | ||||||
| Profit/(loss) for the period | -25 578 | -36 497 | -20 480 | -94 885 | -145 773 | |
| Currency translation differences | 8 | 514 | -717 | 301 | -805 | -861 |
| Total comprehensive income for the period | -25 065 | -37 214 | -20 179 | -95 690 | -146 634 |
Statements of financial position
| (figures in NOK 1000) | Note | 30 Sept 2024 | 30 June 2024 | 31 Dec 2023 | 30 Sept 2023 |
|---|---|---|---|---|---|
| Assets | |||||
| Intangible assets | 6 | 76 750 | 75 496 | 72 347 | 66 714 |
| Deferred tax assets | 9 | 415 | 415 | 415 | 0 |
| Assets under construction | 6 | 291 973 | 142 794 | 70 781 | 75 620 |
| Assets in use, not allocated | 6 | 15 986 | 9 785 | 54 019 | 6 211 |
| Property, plant & equipment | 6 | 1 836 692 | 1 852 866 | 1 848 190 | 1 856 540 |
| Right-of-use assets | 6 | 11 491 | 11 862 | 12 084 | 13 079 |
| Investment in associated companies | 8 | 13 930 | 15 347 | 18 676 | 21 038 |
| Total non-current assets | 2 247 238 | 2 108 566 | 2 076 513 | 2 039 203 | |
| Inventory | 3 | 11 739 | 10 574 | 8 369 | 5 609 |
| Biological assets | 3 | 210 696 | 153 899 | 153 790 | 161 185 |
| Trade receivables | 14 665 | 56 846 | 40 496 | 21 424 | |
| Other current receivables | 55 762 | 52 573 | 31 121 | 68 210 | |
| Financial derivatives | 7 | 11 427 | 14 744 | 12 900 | 17 883 |
| Cash and cash equivalents | 563 251 | 683 422 | 386 396 | 445 865 | |
| Total current assets | 867 540 | 972 059 | 633 072 | 720 175 | |
| Total assets | 3 114 778 | 3 080 625 | 2 709 585 | 2 759 378 | |
| Equity and liabilities | |||||
| Share capital | 11 | 23 130 | 23 130 | 20 697 | 20 697 |
| Share premium | 11 | 2 415 165 | 2 472 973 | 2 124 647 | 2 124 647 |
| Other reserves | 5 | 11 129 | 10 985 | 10 758 | 10 175 |
| Other equity | 0 | 0 | 0 | 0 | |
| Uncovered losses | -198 998 | -230 523 | -235 408 | -184 465 | |
| Total equity | 2 250 426 | 2 276 565 | 1 920 693 | 1 971 054 | |
| Long-term interest-bearing debt | 12 | 569 400 | 569 700 | 569 969 | 559 669 |
| Lease liabilities - long term | 12 | 7 473 | 7 663 | 8 189 | 9 182 |
| Other long-term liabilities | 12 | 8 702 | 8 702 | 8 702 | 8 549 |
| Total non-current liabilities | 585 575 | 586 065 | 586 859 | 577 400 | |
| Short-term interest-bearing debt | 12 | 117 945 | 118 667 | 103 275 | 103 766 |
| Trade payables | 141 424 | 77 416 | 71 499 | 86 512 | |
| Social security and other taxes | 4 658 | 7 231 | 8 273 | 3 863 | |
| Lease liabilities - short term | 12 | 3 657 | 4 743 | 4 350 | 4 338 |
| Other short-term liabilities | 11 094 | 9 939 | 14 635 | 12 444 | |
| Total current liabilities | 278 777 | 217 995 | 202 032 | 210 923 | |
| Total liabilities | 864 352 | 804 060 | 788 891 | 788 323 | |
| Total equity and liabilities | 3 114 778 | 3 080 625 | 2 709 585 | 2 759 378 |
Statement of cash flow
| (figures in NOK 1000) | Note | Q3 24 | Q3 23 | YTD 24 | YTD 23 | 2023 |
|---|---|---|---|---|---|---|
| Cash flow from operations | ||||||
| Profit/loss before tax | -25 578 | -36 497 | -20 480 | -94 885 | -145 773 | |
| Adjustments for: | ||||||
| Depreciation | 6 | 18 237 | 16 062 | 55 603 | 29 639 | 46 730 |
| Net financials | 11 344 | 10 640 | 27 039 | 20 212 | 35 241 | |
| Share based payment expenses | 143 | 671 | 371 | 1 856 | 2 438 | |
| Changes in working capital: | ||||||
| Change in trade receivables | 42 181 | -12 149 | 25 832 | 1 656 | -15 605 | |
| Change in other current receivables | 1 284 | 7 988 | -4 280 | -1 259 | 33 785 | |
| Change in inventory and biological assets | 3 | -46 614 | -54 181 | -60 281 | -83 171 | -81 143 |
| Change in fair value of biomass | 3 | -11 347 | -14 843 | 5 | -22 755 | -20 149 |
| Change in trade payables | 18 240 | 8 758 | 25 507 | 15 643 | 12 330 | |
| Change in social security and other taxes | -2 573 | -795 | -3 615 | -3 222 | 772 | |
| Change in other current liabilities | 1 307 | -345 | -3 335 | 4 737 | 6 928 | |
| Net cash flow from operations | 6 623 | -74 691 | 42 365 | -131 548 | -124 445 | |
| Cash flow from investment activities | ||||||
| Payments for fixed assets net of gov. grants | 6 | -157 415 | -52 837 | -234 853 | -223 979 | -275 686 |
| Payments for intangible assets | 6 | -1 262 | -120 | -4 419 | -1 565 | -7 201 |
| Change in trade payables investments | 45 768 | -11 935 | 44 418 | -64 229 | -75 929 | |
| Net cash flow from investment activities | -112 909 | -64 892 | -194 853 | -289 773 | -358 816 | |
| Cash flow from financing activities | ||||||
| Proceeds from issue of equity, net paid trans. costs | -1 218 | -999 | 349 541 | 500 982 | 500 982 | |
| Proceeds from new borrowings | 12 | -722 | 29 888 | 14 701 | 94 912 | 104 875 |
| Repayment of borrowings | -300 | 0 | -600 | 0 | 0 | |
| Net change in right of use assets and liabilities | -925 | 89 | -856 | 214 | 227 | |
| Financial expenses paid | -13 244 | -10 617 | -41 025 | -21 823 | -35 568 | |
| Financial income received | 2 524 | 5 412 | 7 582 | 14 141 | 20 381 | |
| Net cash flow from financing activities | -13 886 | 23 773 | 329 343 | 588 427 | 590 897 | |
| Net change in cash and cash equivalents | -120 171 | -115 810 | 176 855 | 167 105 | 107 636 | |
| Cash and cash equ. at the beginning of the period | 683 422 | 561 675 | 386 396 | 278 759 | 278 759 | |
| Cash and cash equ. at the end of the period | 563 251 | 445 865 | 563 251 | 445 865 | 386 396 |
Statement of Changes in Equity
| Share | Other | Other | Uncovered | ||||
|---|---|---|---|---|---|---|---|
| (figures in NOK 1000) | Note | Share capital | premium | reserves | equity | losses | Total equity |
| Balance at 1 January 2023 | 11 | 17 288 | 1 627 073 | 8 320 | 0 | -88 774 | 1 563 906 |
| Profit/loss for the period | 0 | 0 | 0 | 0 | -94 885 | -94 885 | |
| Other comprehensive income | 0 | 0 | 0 | 0 | -805 | -805 | |
| Total comprehensive income | 0 | 0 | 0 | 0 | -95 690 | -95 690 | |
| Private placement, April 2023 | 3 409 | 497 574 | 0 | 0 | 0 | 500 983 | |
| Share options issued | 0 | 0 | 0 | 0 | 0 | 0 | |
| Share based payment expensed | 0 | 0 | 1 856 | 0 | 0 | 1 856 | |
| Transactions with owners | 3 409 | 497 574 | 1 856 | 0 | 0 | 502 839 | |
| Balance at 30 Sept 2023 | 11 | 20 697 | 2 124 647 | 10 175 | 0 | -184 465 | 1 971 054 |
| Balance at 1 January 2024 | 11 | 20 697 | 2 124 647 | 10 758 | 0 | -235 408 | 1 920 693 |
| Profit/loss for the period | 0 | 0 | 0 | 0 | -20 480 | -20 480 | |
| Other comprehensive income | 0 | 0 | 0 | 0 | 301 | 301 | |
| Total comprehensive income | 0 | 0 | 0 | 0 | -20 179 | -20 179 | |
| Private placement June 2024 | 2 433 | 347 108 | 0 | 0 | 0 | 349 541 | |
| Reclassification uncovered losses | 0 | -56 590 | 0 | 0 | 56 590 | 0 | |
| Share options issued | 0 | 0 | 0 | 0 | 0 | 0 | |
| Share based payment expensed | 0 | 0 | 371 | 0 | 0 | 371 | |
| Transactions with owners | 2 433 | 290 518 | 371 | 0 | 56 590 | 349 912 | |
| Balance at 30 Sept 2024 | 11 | 23 130 | 2 415 165 | 11 129 | 0 | -198 998 | 2 250 426 |
Selected notes to the quarterly financial statements
Note 1 – Summary of significant accounting policies
General information
Salmon Evolution ASA and its subsidiaries, Salmon Evolution Norway AS, Salmon Evolution International AS, Salmon Evolution Dale AS and Salmon Evolution Sales AS (the "Company", "SE" or "the Company") is a Norwegian business headquartered in Hustadvika kommune in Møre og Romsdal.
Salmon Evolution operates a hybrid flow-through (HFS) system, utilizing fresh seawater from the Norwegian coast. The Company is building a land-based salmon farming facility at Indre Harøy, with a planned annual production of 36,000 tons HOG fully built. Phase 1 with a planned annual production of 7,900 tons HOG is in full operation, whilst construction of phase 2 planned to add an addition 10,100 tons HOG bringing total production up to 18,000 tons HOG was initiated in August 2024. Salmon Evolution has significant growth ambitions outside Indre Harøy.
These interim financial statements were approved by the Board of Directors for issue on 6 November 2024.
These interim financial statements have not been audited.
Consolidation
These condensed consolidated statements for the period ended 30 September 2024 include Salmon Evolution ASA together with its subsidiaries Salmon Evolution Norway AS, Salmon Evolution International AS, Salmon Evolution Dale AS and Salmon Evolution Sales AS (Established in July 2022).
In 2022 the Company established two new companies – Salmon Evolution North America Holdings LLC and Salmon Evolution North America LLC - that is not yet taken into operation. Both Companies is a subsidiary of Salmon Evolution International AS, owned 100%.
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 as the annual financial statement and should therefore be read in conjunction with the annual financial statements for the year ended 31 December 2023, which have been prepared in accordance with IFRS® Accounting Standards as adopted by the EU.
Going concern
The Company 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 contracts, debt service and obligations. After making such assessments, management has a reasonable expectation that the Company has adequate resources to continue its operational existence for the foreseeable future.
Accounting policies
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 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. The Company does not include net deferred tax benefits in its balance that exceeds the tax effect of group contributions in order to equalize tax payable in its subsidiaries.
Revenue
Revenue from contracts with customers as defined in IFRS 15 is recognised when control of the goods is transferred to the customer at an amount that reflects the consideration to which the group expects to be entitled in exchange for those goods.
Revenue for the Company derives from sale of whole and processed salmon in the spot marked. It has not been made any sales contracts. The Company recognised revenue at the point in time when control of the goods is transferred to the customer at an amount that reflects the expected amount that the group is entitled to have for the goods. The sales price is based on available market price where the price will vary with both quality and size.
Normal credit term of the sales transactions is 30 days. If the delivered products have discrepancies compared to the agreed sales contract, cash refunds are given to the customer. Up until now, refunds are not material.
Property, plant & equipment
Property, plant, and equipment is measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and costs include expenditures that are directly attributable to the acquisition and placement of fixed assets in service. Costs of major replacements and renewals that substantially extend the economic life and functionality of fixed asset are capitalized. Costs associated with normal maintenance and repairs are expensed as incurred.
Assets are normally considered property, plant, and equipment if the useful economic life exceeds one year. Straight-line depreciation is applied over the useful life of property, plant, and equipment based on the asset's historical cost. If a substantial part of an asset has an individual and different useful life, that portion is depreciated separately. The asset's residual value and useful life are evaluated annually. Gains or losses arising from the disposal or retirement of an asset are determined as the difference between the sales proceeds and the carrying amount of the asset and recognized as part of other income in the accompanying statements of other comprehensive income.
Depreciation is charged to expense when the property, plant or equipment is ready for intended use. In April 2023 the Company completed takeover of phase 1 at Indre Harøy, and the relevant assets have therefore commenced depreciation.
Biological assets
Biological assets are, in accordance with IAS 41, measured at fair value unless the fair value cannot be measured reliably. For salmon in the grow-out facility, a present value model is applied to estimate the fair value. For roe, fry and smolt, historical cost is deemed to provide the best estimate of fair value, and hence applied.
The Company is still in a ramp-up phase and not yet at steady state production volumes for the growout facility at Indre Harøy, and hence the facility's production capacity is not fully utilized. Cost of production is therefore adjusted for unutilized production capacity.
For further information, please refer to note 3.
Borrowing costs
In accordance with IAS 23, the Company's loan agreements are subject to the following principles relating to borrowing costs:
General and specific borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time 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 – Segment
The Group has implemented segment reporting which consists of production of farmed salmon in Norway (Farming Norway), other activities (Other), and eliminations. The segment performance is monitored to assess performance and profitability at a strategic level.
Farming Norway consists of Salmon Evolution Norway AS (grow-out facility), Salmon Evolution Dale AS (smolt facility) and Salmon Evolution Sales AS. Additionally a portion of the Group overhead costs is allocated to the segment. Other consist of both revenue and costs not attributable to the farming segment.
The same accounting principles as described for the Group financial statements have been applied for the segment reporting, where internal transactions are entered into under normal commercial terms and conditions.
Sales revenue from contracts with customers comes from both Continental Europe, UK, Asia and other markets.
| (In thousand NOK) | Farming Norway | Other | Eliminations | Group |
|---|---|---|---|---|
| Q3 2024 | ||||
| External revenue | 51 071 | 238 | 51 309 | |
| Internal revenue | 0 | 6 905 | -6 905 | 0 |
| Operating revenue | 51 071 | 7 143 | -6 905 | 51 309 |
| Operational EBITDA | 2 237 | -9 569 | -12 | -7 344 |
| Operational EBIT | -16 397 | -9 647 | 462 | -25 581 |
| Fair value adjustment of biomass | 11 347 | |||
| Net financial | -11 344 | |||
| Profit/loss before tax | -25 578 | |||
| Harvested volum (tonnes, HOG) | 680 | 680 | ||
| Operational EBITDA/kg (NOK) | 3,3 | -10,8 | ||
| Operational EBIT/kg (NOK) | -24,1 | -37,6 | ||
| Total PPE | 2 200 672 | 32 696 | -476 | 2 232 892 |
| (In thousand NOK) | Farming Norway | Other | Eliminations | Group |
| Q3 2023 | ||||
| External revenue | 13 349 | 2 508 | 0 | 15 857 |
| Internal revenue | 0 | 4 495 | -4 495 | 0 |
| Operating revenue | 13 349 | 7 003 | -4 495 | 15 857 |
| Operational EBITDA | -8 115 | -16 522 | 0 | -24 637 |
| Operational EBIT | -23 877 | -17 318 | 496 | -40 699 |
| Fair value adjustment of biomass | 14 843 | |||
| Net financial | -10 640 | |||
| Profit/loss before tax | -36 497 | |||
| Harvested volum (tonnes, HOG) | 185 | 185 | ||
| Operational EBITDA/kg (NOK) | N/A | N/A | ||
| Operational EBIT/kg (NOK) | N/A | N/A | ||
| Total PPE | 2 006 757 | 13 780 | -2 374 | 2 018 164 |
| (In thousand NOK) | Farming Norway | Other | Eliminations | Group |
|---|---|---|---|---|
| YTD 2024 | ||||
| External revenue | 317 688 | 4 349 | 0 | 322 037 |
| Internal revenue | 0 | 16 676 | -16 676 | 0 |
| Operating revenue | 317 688 | 21 025 | -16 676 | 322 037 |
| Operational EBITDA | 97 101 | -34 921 | -12 | 62 167 |
| Operational EBIT | 41 766 | -36 613 | 1 411 | 6 564 |
| Fair value adjustment of biomass | -5 | |||
| Net financial | -27 039 | |||
| Profit/loss before tax | -20 480 | |||
| Harvested volum (tonnes, HOG) | 3 162 | 3 162 | ||
| Operational EBITDA/kg (NOK) | 30,7 | 19,7 | ||
| Operational EBIT/kg (NOK) | 13,2 | 2,1 | ||
| Total PPE | 2 200 672 | 32 696 | -476 | 2 232 892 |
| (In thousand NOK) | Farming Norway | Other | Eliminations | Group |
| YTD 2023 | ||||
| External revenue | 69 731 | 9 844 | 0 | 79 575 |
| Internal revenue | 0 | 10 196 | -10 196 | 0 |
| Operating revenue | 69 731 | 20 040 | -10 196 | 79 575 |
| Operational EBITDA | -23 257 | -44 532 | 0 | -67 789 |
| Operational EBIT | -51 210 | -46 851 | 633 | -97 428 |
| Fair value adjustment of biomass | 22 755 | |||
| Net financial | -20 212 | |||
| Profit/loss before tax | -94 885 | |||
| Harvested volum (tonnes, HOG) | 770 | 770 | ||
| Operational EBITDA/kg (NOK) | N/A | N/A | ||
| Operational EBIT/kg (NOK) | N/A | N/A | ||
| Total PPE | 2 006 757 | 13 780 | -2 374 | 2 018 164 |
| (In thousand NOK) | Farming Norway | Other | Eliminations | Group |
| FY 2023 | ||||
| External revenue | 158 248 | 10 176 | 0 | 168 424 |
| Internal revenue | 0 | 17 388 | -17 388 | 0 |
| Operating revenue | 158 248 | 27 564 | -17 388 | 168 424 |
| Operational EBITDA | -23 214 | -60 737 | 0 | -83 950 |
| Operational EBIT | -67 932 | -63 855 | 1 107 | -130 680 |
| Fair value adjustment of biomass | 20 149 | |||
| Net financial | -35 241 | |||
| Profit/loss before tax | -145 773 | |||
| Harvested volum (tonnes, HOG) | 1 874 | 1 874 | ||
| Operational EBITDA/kg (NOK) | N/A | N/A | ||
| Operational EBIT/kg (NOK) | N/A | N/A | ||
| Total PPE | 2 044 341 | 14 980 | -1 899 | 2 057 422 |
| Extending the ocean potential | 31 |
Note 3 – Biological assets and inventory
Biological assets are, in accordance with IAS 41, measured at fair value unless the fair value cannot be measured reliably. For salmon in the grow-out facility, a present value model is applied to estimate the fair value. For roe, fry and smolt, historical cost is deemed to provide the best estimate of fair value, and hence applied.
The fair value of fish in the grow-out facility is calculated by multiplying the estimated biomass at the time of harvest with the estimated sales price at the same time and deducted for estimated costs to sell. For fish not ready for harvest, remaining production costs to grow the fish to harvest weight are deducted. The cash flow is further discounted by a discount rate considering both risk adjustment and time value.
The Group considers that fish greater than 4.6 kg is ready for harvest (about 3.8 kg gutted weight), and such fish is thus classified as harvestable fish. Fish that have not achieved this weight are classified as non-harvestable.
| NOK 1000 | |||||
|---|---|---|---|---|---|
| BOOK VALUE OF INVENTORY | Q3 2024 | Q3 2023 | FY 2023 | ||
| Equipment | 6 163 | 1 886 | 2 667 | ||
| Raw materials | 5 576 | 3 722 | 4 433 | ||
| Biological assets | 210 696 | 161 185 | 153 790 | ||
| Finished goods | 0 | 0 | 1 270 | ||
| Total | 222 435 | 166 794 | 162 159 |
| TONNES | |||
|---|---|---|---|
| BIOLOGICAL ASSETS | Q3 2024 | Q3 2023 | FY 2023 |
| Biological assets end of period | 2 582 | 2 100 | 2 204 |
| NOK 1000 | |||||
|---|---|---|---|---|---|
| Q3 2024 | YTD 2024 | Q3 2023 | YTD 2023 | FY 2023 | |
| Biological assets beginning of period | 153 899 | 153 790 | 94 704 | 58 927 | 58 927 |
| Increase due to production | 93 426 | 272 209 | 67 138 | 143 851 | 218 496 |
| Reduction due to harvest/sale | -46 476 | -207 631 | -15 499 | -51 446 | -130 880 |
| Reduction due to incident based mortality | -1 500 | -7 667 | 0 | -12 901 | -12 901 |
| Fair value adjustment beginning of period | -20 537 | -31 889 | -19 652 | -11 740 | -11 740 |
| Fair value adjustment end of period | 31 884 | 31 884 | 34 495 | 34 495 | 31 889 |
| Biological assets end of period | 210 696 | 210 696 | 161 185 | 161 185 | 153 790 |
The estimated biomass volume is based on the actual number of individuals in the grow-out departments on the balance sheet date, adjusted for projected mortality up to harvest time and multiplied with the estimated harvest weight per individual at harvest time.
Sales price for the fish in the grow-out facility is based on forward prices from Sitagri Salmon Spot Index with relevant adjustments. The net sales value is adjusted for expected quality differences and harvesting, logistics and sales expenses.
The Company is still in a ramp-up phase and not yet at steady state production volumes for the growout facility at Indre Harøy, and hence the facility's production capacity is not fully utilized. Cost of
production is therefore adjusted for unutilized production capacity. As per 30 September 2024 this adjustment amounted to 24.6 NOKm (8.5 NOKm in Q3-24) which has been expensed directly in the profit and loss statement.
Note 4 – Cost of materials and change in inventory
| (numbers in thousand NOK) | Q3 2024 | YTD 2024 | Q3 2023 | YTD 2023 | FY 2023 |
|---|---|---|---|---|---|
| Cost of materials and change in inventory | -3 865 | -87 354 | 14 271 | -7 | -47 704 |
| Composition COGS: | |||||
| Inventory change | 46 384 | 58 054 | 52 294 | 81 285 | 78 476 |
| Raw material purchase | -50 249 | -145 407 | -38 024 | -81 293 | -126 180 |
| Sum | -3 865 | -87 354 | 14 271 | -7 | -47 704 |
| Composition inventory change: | |||||
| Change due to production | 93 426 | 272 209 | 67 138 | 143 851 | 218 496 |
| Change due to harvest/sale | -46 476 | -207 631 | -15 499 | -51 446 | -130 880 |
| Change due to incident based mortality | -1 500 | -7 667 | 0 | -12 901 | -12 901 |
| Change inventory raw material | 934 | 1 143 | 655 | 1 782 | 3 762 |
| Sum | 46 384 | 58 054 | 52 294 | 81 285 | 78 476 |
| Composition - change due to production: | |||||
| Raw material cost | 49 315 | 144 265 | 37 368 | 79 511 | 122 419 |
| Salaries | 8 562 | 24 198 | 5 636 | 15 253 | 17 670 |
| Energy cost | 10 584 | 36 115 | 9 070 | 19 659 | 29 567 |
| Depreciations | 13 362 | 39 872 | 7 560 | 12 146 | 22 778 |
| Other operating expenses | 11 604 | 27 759 | 7 503 | 17 283 | 26 062 |
| Sum | 93 426 | 272 209 | 67 138 | 143 851 | 218 496 |
Note 5 – Share based payment expenses
| NOK thousands | 30.09.2024 |
|---|---|
| Other paid-in capital | 371 |
| Net BS | 371 |
| 30.09.2024 | |
| Option cost | 356 |
| Net PL | 356 |
| 30.09.2024 | |
| Capitalized option cost | 15 |
| Allocated to CAPEX | 15 |
Effects on financial statement:
In September 2024 the Board of Salmon Evolution ASA approved the award and allocation of 3,880,000 share options, at a strike price of NOK 7.50 per share, to members of the Company's management and key employees.
The options vest annually with 1/3 over the next 3 years. Subject to the vesting periods, the options may be exercised at any time, but no later than the fifth anniversary of the grant date.
Following the grant of these options, the total number of options outstanding is 10,940,000, including options granted under the Company's previous long-term incentive program for executive management and key employees.
Note 6 – Property, plant and equipment
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.
In April 2023 the Group completed takeover of phase 1 at Indre Harøy, subsequently the Indre Harøy facility has been reclassified from asset under construction. These assets have commenced depreciation from May 2023.
| (figures in NOK 1000) | Intangible assets |
Assets under construction |
Assets in use, not allocated |
Buildings and property |
Fixtures and fittings |
Right-of-use assets |
Total |
|---|---|---|---|---|---|---|---|
| Cost 1 January 2023 | 65 149 | 1 713 490 | 0 | 7 607 | 26 419 | 18 562 | 1 831 228 |
| Additions | 1 565 | 212 037 | 0 | 2 147 | 6 455 | 3 419 | 225 622 |
| Completed constructions | 0 | -1 849 906 | 6 211 | 1 573 252 | 270 443 | 0 | 0 |
| Cost 30 September 2023 | 66 714 | 75 621 | 6 211 | 1 583 006 | 303 317 | 21 981 | 2 056 850 |
| Acc. depreciation 1 January 2023 | 0 | 0 | 0 | -951 | -2 534 | -5 561 | -9 046 |
| Depreciation for the period | 0 | 0 | 0 | -16 861 | -9 438 | -3 340 | -29 639 |
| Net book value 30 September 2023 | 66 714 | 75 620 | 6 211 | 1 565 194 | 291 345 | 13 079 | 2 018 165 |
| Intangible | Assets under | Assets in use, | Buildings and | Fixtures and | Right-of-use | ||
|---|---|---|---|---|---|---|---|
| (figures in NOK 1000) | assets | construction | not allocated | property | fittings | assets | Total |
| Cost 1 January 2024 | 72 350 | 70 781 | 54 019 | 1 582 996 | 310 888 | 22 163 | 2 113 197 |
| Additions | 4 427 | 221 191 | -1 813 | 1 026 | 4 022 | 2 221 | 231 073 |
| Reclassification | 0 | 0 | 0 | -17 236 | 17 236 | 0 | 0 |
| Completed constructions | 0 | 0 | -36 220 | 36 220 | 0 | 0 | 0 |
| Cost 30 Sept 2024 | 76 775 | 291 973 | 15 986 | 1 603 006 | 332 146 | 24 384 | 2 344 271 |
| Acc. depreciation 1 January 2024 | -3 | 0 | 0 | -27 711 | -17 984 | -10 079 | -55 776 |
| Depreciation for the period | -24 | 0 | 0 | -30 191 | -22 575 | -2 814 | -55 603 |
| Net book value 30 Sept 2024 | 76 750 | 291 973 | 15 986 | 1 545 104 | 291 588 | 11 491 | 2 232 892 |
0 2 0
Note 7 – Finance income and finance cost
| (figures in NOK 1000) | |||||
|---|---|---|---|---|---|
| Finance income | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | FY 2023 |
| Interest income | 6 066 | 4 696 | 15 727 | 11 250 | 15 591 |
| Net change in value of financial derivatives | -3 317 | 288 | -1 239 | 7 610 | 947 |
| Foreign exchange gains | 1 154 | 716 | 2 920 | 2 877 | 4 937 |
| Other finance income | 0 | 0 | 18 | 14 | 6 |
| Financial income | 3 904 | 5 700 | 17 426 | 21 751 | 21 481 |
| Share of net income from associated companies | -1 930 | -1 946 | -5 046 | -4 792 | -7 098 |
| Total financial income | 1 973 | 3 754 | 12 380 | 16 959 | 14 384 |
| Finance expenses | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | FY 2023 |
| Interest on debts and borrowings | 13 010 | 10 198 | 39 660 | 18 890 | 33 914 |
| Realized loss/gain on interest derivative | -1 478 | 0 | -4 463 | 0 | -3 027 |
| Foreign exchange losses | 893 | 420 | 3 332 | 2 446 | 4 195 |
| Reduced value of contract related to power supply | 0 | 3 777 | 0 | 15 349 | 13 903 |
| Other finance expenses | 893 | 0 | 890 | 487 | 640 |
| Total financial expenses | 13 317 | 14 396 | 39 419 | 37 171 | 49 624 |
| Net financial income/- expenses | -11 344 | -10 642 | -27 039 | -20 212 | -35 241 |
Fair value adjustments - financial assets
| (N OK tho usand) | 30.09.2024 | 30.09.2023 | 31.12.2023 |
|---|---|---|---|
| Unrealised changes in the value of interest rate swap | -1 239 | 7 610 | 947 |
| Unrealised changes in the value of contract related to power supply | 0 | -15 349 | -13 903 |
| Fair value adjustments recognised in profit and loss | -1 239 | -7 739 | -12 956 |
The Group did not have any fair value adjustments of financial liabilities in 2024, nor in 2023.
Note 8 – Investment in associated companies
The group has the following investments in associated companies:
| (figures in NOK 1000) | Country | Ownership | Voting share | |
|---|---|---|---|---|
| K Smart Farming Co., Ltd | Korea | 49 % | 49 % | |
| Net book value 31 December 2022 | 26 635 | |||
| Share of net income YTD 2023 | -4 792 | |||
| Foreign currency translation gain/(loss) YTD 2023 | -805 | |||
| Net book value 30 Sept 2023 | 21 038 | |||
| Share of net income 2023 | -7 098 | |||
| Foreign currency translation gain/(loss) 2023 | -861 | |||
| Net book value 31 Dec 2023 | 18 676 | |||
| Share of net income YTD 2024 | -5 046 | |||
| Foreign currency translation gain/(loss) YTD 2024 | 301 | |||
| Net book value 30 Sept 2024 | 13 930 |
Investments in associated companies are recognized using the equity method.
Note 9 – Tax
| (figures in NOK 1000) | YTD 2024 | YTD 2023 |
|---|---|---|
| Profit/loss before tax | -20 480 | -94 885 |
| Calculated tax (22%) | -4 506 | -20 875 |
| Tax payable | 0 | 0 |
| Change in deferred tax (asset) | -4 506 | -20 875 |
| Change in deferred tax not recognised in the balance sheet | 4 506 | 20 875 |
| Tax expense | 0 | 0 |
Income tax expense is recognised based on management's estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the period ended 30 September 2024 is 22%, compared to 22% for the period ended 30 September 2023.
From 31.12.2023 there was a basis for payable tax in the subsidiary Salmon Evolution Sales AS. This was offset with a group contribution from Salmon Evolution ASA. The tax effect of the group contribution is recognized as a deferred tax asset.
Deferred tax benefit has not been recognised in the balance sheet as the Companies within the group are in their start-up phase and does not have any historical results to refer to when assessing whether future taxable profits will be sufficient to utilize the tax benefit.
Note 10 – Earnings per share
| (figures in NOK 1000) | YTD 2024 | YTD 2023 |
|---|---|---|
| Gain/loss attributable to the equity owners of the Company | -20 480 | -94 885 |
| Gain/loss for calculation of diluted earnings per share | -20 480 | -94 885 |
| Weighted average number of shares outstanding1) | 432 862 563 | 383 633 610 |
| Dilutive options | 0 | 0 |
| Average number om shares and options used in calculation for diluted EPS | 432 862 563 | 383 633 610 |
| Basic earnings per share (NOK) | -0,05 | -0,25 |
| Diluted earnings per share (NOK) | -0,05 | -0,25 |
Basic earnings per share are based on the weighted average number of common shares outstanding during the period.
YTD 2024: The Company had 413,936,640 until mid June 2024. In June the Company made an issue of 48,666,660 new shares in a capital raise. Therefor the weighted average number of shares outstanding YTD 2024 has been calculated by applying a weight of 5.5/9 of the number of shares before the capital raise, and 3.5/9 of the total number of shares after the capital raise (462,603,300 shares).
YTD 2023: The Company had 345,754,822 shares for the first four months of the year. In April the Company made an issue of 68,181,818 new shares in a capital raise. Therefor the weighted average number of shares outstanding YTD 2023 has been calculated by applying a weight of 4/9 of the number of shares before the capital raise, and 5/9 of the total number of shares after the capital raise (413,936,640 shares).
| Subscription | |||||||
|---|---|---|---|---|---|---|---|
| Capital | Share Capital | price | Total no. of | ||||
| (figures in NOK 1000) | Date | Increase | After Change | Par Value | per share | New shares | outstanding shares |
| Opening balance 1 July 2020 | 5 375 159 | 0,05 | 107 503 182 | ||||
| Share options exercised | 10 July 2020 | 30 000 | 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 |
| Private placement | 23 March 2021 | 4 166 667 | 15 153 221 | 0,05 | 6,00 | 83 333 333 | 303 064 421 |
| Acquisition Kraft Laks | 16 August 2021 | 109 535 | 15 262 756 | 0,05 | 7,58 | 2 190 694 | 305 255 115 |
| Private placement | 12 October 2021 | 277 068 | 15 539 824 | 0,05 | 7,71 | 5 541 374 | 310 796 489 |
| Share options exercised | 26 March 2022 | 81 250 | 15 621 074 | 0,05 | 4,80 | 1 625 000 | 312 421 489 |
| Private placement | 5 April 2022 | 1 666 667 | 17 287 741 | 0,05 | 9,00 | 33 333 333 | 345 754 822 |
| Private placement | 18 April 2023 | 3 409 091 | 20 696 832 | 0,05 | 7,70 | 68 181 818 | 413 936 640 |
| Private placement | 18 June 2024 | 2 433 333 | 23 130 165 | 0,05 | 7,50 | 48 666 660 | 462 603 300 |
Note 11- Share capital & capital history
The Company entered into an investment agreement with Dongwon Industries and completed a NOK 50 million in towards Dongwon Industries in July 2020.
The Group raised NOK 500 million in a private placement in connection with its initial public offering related to the admission on Merkur Market (now Oslo Børs) in September 2020. Further, the Group also raised another NOK 500 million in a private placement in March 2021.
In August 2021 the Group acquired 100% of the shares in Kraft Laks AS. As part of the settlement the Group issued 2,190,694 new shares of NOK 7.5775 per share, and thereby increased its equity by NOK 16.6 million. In October 2021 the Group carried out a private placement of USD 5m (NOK ~43m) towards Cargill.
Further, in April 2022 the Group carried out a private placement raising gross proceeds of NOK 300 million at a subscription price of NOK 9.00 per share.
In April 2023 the Group carried out a private placement raising gross proceed of NOK 525 million at a subscription price of NOK 7.7 per share.
In June 2024 the Group carried out a private placement raising gross proceed of NOK approximately 365 million at a subscription price of NOK 7.5 per share.
Note 12 – Interest bearing debt
| Long-term interest bearing debt | |||
|---|---|---|---|
| (NOK thousand) | 30.09.2024 | 30.09.2023 | 31.12.2023 |
| Debt to credit institutions | 569 400 | 559 669 | 569 969 |
| Leasing liabilities | 7 473 | 9 182 | 8 189 |
| Total long-term interest-bearing debt | 576 873 | 568 851 | 578 158 |
| Short-term interest bearing debt | |||
| (NOK thousand) | 30.09.2024 | 30.09.2023 | 31.12.2023 |
| Debt to credit institutions | 117 945 | 103 766 | 103 275 |
| Other short-term interest bearing debt | 0 | 0 | 0 |
| Leasing liabilitites | 3 657 | 4 338 | 4 350 |
| Total short-term interest-bearing debt | 121 601 | 108 104 | 107 625 |
| Total interest-bearing debt | 698 474 | 676 955 | 685 783 |
| Cash & cash equivalents | 563 251 | 445 865 | 386 396 |
| Net interest-bearing debt | 135 223 | 231 090 | 299 387 |
In Q1 2023 the Company signed a NOK 1,550 million green debt financing package with DNB and Nordea relating to phase 1 and 2 at Indre Harøy, thus refinancing the existing senior secured debt financing package. The package consisted of a NOK 525 million non-amortizing term loan facility to the existing NOK 525 million construction loan relating to phase 1, a NOK 250 million revolving credit facility available for general corporate purposes including Indre Harøy phase 2 capex and a NOK 775 million construction facility available for financing of capex relating to phase 2 at Indre Harøy. Additionally, the Company has a NOK 100 million Overdraft Facility with Nordea. The refinancing was completed in April 2023.
In June 2024 the Company expanded its existing senior secured debt financing package related to Indre Harøy Phase 1 and 2, from 1,550 NOKm to 2,225NOKm. Additionally, the Company has a NOK 150 million Overdraft Facility with Nordea.
As per 30 September 2024, NOK 525 million was drawn of the secured green debt financing package. In addition, the Company has drawn NOK 100 million of the Overdraft Facility.
The Company has also entered into loan agreements for a total of NOK 60 million relating to Salmon Evolution Dale AS of which around NOK 57 million was drawn as per 30 September 2024. This financing is for financing of working capital, investments in Salmon Evolution Dale as well as refinancing of the seller's credit from the acquisition of Salmon Evolution Dale AS.
The above table does not include other long-term liabilities of NOK 8.7 million related to property and water rights in Salmon Evolution Dale AS.
Financial covenants
The most important financial covenants for the long-term financing of the Company are, respectively, a solvency requirement that the borrower's (Salmon Evolution Norway AS) book equity ratio (including intra-group loans) shall be minimum 45%. Further, there is a profitability requirement linked to the borrower's EBITDA which shall be greater than NOK 250 million on a last 12-month basis from Q2 2027. Quarterly EBITDA figures shall be measured from Q2 2024 with set minimum EBITDA levels reflecting the company's gradual ramp up of production volumes and profitability.
Finally, there is a minimum cash requirement that stipulates that the obligors (Salmon Evolution Norway AS, Salmon Evolution Sales AS and Salmon Evolution ASA) cash balance shall be greater than NOK 100 million at any time. Any undrawn and available amounts under the revolving facility and the overdraft is included in the calculation of the cash balance.
As per 30 September 2024 the Company is in compliance with all financial covenants.
Security
The Company's bank debt facilities are fully guaranteed by Salmon Evolution ASA. The respective lenders also have a pledge over 100% of the shares in the borrower, Salmon Evolution Norway AS and Salmon Evolution Dale AS. Furthermore, the respective lenders have a pledge over all material operating assets of the Company, hereunder inter alia, land, plant and machinery, operating licenses, inventory and receivables.
| Interest bearing debt | ||
|---|---|---|
| Cash movements in financing activites (NOK thousand) | Short term | Long term |
| Balance at January 1, 2023 | 58 906 | 522 845 |
| Repayment of loans and borrowings | -12 841 | 0 |
| Proceeds from new bank loan | 61 254 | 46 500 |
| Change in obligations under leases | 785 | -493 |
| Balance at September 30, 2023 | 108 104 | 568 851 |
| Balance at January 1, 2024 | 107 625 | 578 157 |
| Repayment of loans and borrowings | 0 | -569 |
| Proceeds from new bank loan | 14 669 | 0 |
| Change in obligations under leases | -693 | -716 |
| Balance at September 30, 2024 | 121 601 | 576 873 |
Note 13 – Transactions with related parties
During the ordinary course of business, the Company may engage in certain arm's length transactions with related parties.
There were no material transactions with related parties in Q3 2024.
Note 14 – Significant and subsequent events
No material subsequent events.
ABOUT SALMON EVOLUTION
Salmon Evolution is the global leader within land-based salmon farming with a clear roadmap for 100,000 tonnes HOG annual production capacity. Pioneering the hybrid flow-through system (HFS), Salmon Evolution is Extending the Ocean Potential by creating optimal growth conditions in a controlled environment on land. This approach, capturing the benefits of both land-based and sea-based farming, puts biology first and limits operational and biological risk.
Salmon Evolution is strategically located the heart of the global aquaculture industry on the west coast of Norway, where the Company has its first facility and global centre of excellence fully operational at industrial scale. Enabled by the proof of concept in Norway, Salmon Evolution targets significant international expansion.
Salmon Evolution is listed on Oslo Børs under the ticker SALME. To learn more, please visit www.salmonevolution.no.
OFFICE ADDRESS Torget 5, 6440 Elnesvågen (HQ) Keiser Wilhelms gate 22, 6003 Ålesund
PRODUCTION SITES Grow-out: Indre Harøyvegen 88, 6430 Bud Smolt: Dalsfjordvegen 2805, 6120 Folkestad
ORG NUMBER NO 925 344 877 MVA
E-mail: [email protected] Web: salmonevolution.no
BOARD OF DIRECTORS
Tore Tønseth Chairman of the Board
Anne Breiby Board Member
Ingvild Vartdal Board Member
Peder Stette Board Member
Eunhong Min Board Member
Jan-Emil Johannessen Board Member
Vibecke Bondø Board Member
MANAGEMENT
Trond Håkon Schaug-Pettersen CEO
Trond Vadset Veibust CFO
Ingjarl Skarvøy COO
Odd Frode Roaldsnes CCO
Kamilla Mordal Holo Chief Project Officer
Henriette Nordstrand Technical Director
Tore-Jakob Reite Director Strategic Projects
