Salmon Evolution ASA — Investor Presentation 2020

Nov 19, 2020

Q3 2020 PRESENTATION

19 November 2020

• Introduction and highlights
• Operational review
• Financial review
• Summary and outlook

SALMON EVOLUTION – EXTENDING THE OCEAN POTENTIAL

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

• First production facility under construction, with annual harvesting capacity of approx. 31,500 tonnes HOG. Clear roadmap to 70,000 tonnes by 2030
• Utilizing hybrid flow-through system with 30%- 35% freshwater intake, reducing complexity and biological risk and securing optimal growth at low cost
• Targeting a position as a global leading landbased farmer, enabled by a strong ESG profile
• Preparations for listing at Oslo Stock Exchange (main list) has started, and is expected to be materialized in 2021

Q3 2020 HIGHLIGHTS

• Construction of Phase 1 at Indre Harøy progressing according to plan. Contractual target price formalized at NOK 1.3 billion
• Secured financing through pre-listing placement of NOK 500 million, direct equity investment of NOK 50 million and debt financing of NOK 40 million for land acquisition at Indre Harøy
• Available cash of NOK 709 million on 30 September
• Signed term sheet with Dongwon Industries in South Korea for a potential joint venture for international expansion and sales & marketing collaboration
• Appointed Trond Håkon Schaug-Pettersen as CFO
• Listed on Merkur Market in September 2020 under the ticker SALME-ME

Salmon Evolution's shares successfully listed on Merkur Market, September 2020

• Introduction and highlights
• Operational review
• Financial review
• Summary and outlook

BIOLOGY THE MOST IMPORTANT CONSIDERATION

• Known technology
• HFS with fresh sea water being replaced every 4th hour
• Optimal production environment
• Minimal handling of the fish

HYBRID FLOW-THROUGH TECHNOLOGY ADVANTAGES

• Separate production tanks secure bio-control
• Maintenance flexibility, separate cleaning and disinfecting between biomass transfers
• Low complexity easy to operate and reduced risk of technical accidents
• No biofilters
• Area efficient

A STEPWISE DEVELOPMENT OF STAND ALONE UNITS

	Description	2020	2021	2022	2023	2024	2025	2026	2027	2028	Capacity	CAPEX	Cost/kg
Phase 1	• Land acquisition Building of foundations • • Construction of 12 grow-out tanks	–	Construction Production start smolt release	Production							~7,900t HOG	NOK 1.2 bn*	NOK 40.8
Phase 2	• Construction of additional 12 grow-out tanks • Construction of smolt & hatchery facility			Construction	Construction of smolt facility	Production					~7,900t HOG	NOK 1.2 bn**	NOK 38.6
Phase 3	• Construction of additional 24 grow-out tanks Construction of 4 holding tanks • • Construction of intake station							Construction	Production		~15,700t HOG	NOK 2.1 bn	NOK 36.1

Total ~31,500t HOG NOK 4.5 bn NOK 36.1

• * Phase 1 related CAPEX only
• ** Smolt facility not included
• First sales

PHASE 1 ACCORDING TO PLAN

• Development on time on budget
• Investments gradually increasing with higher workload and increased complexity on site
• Total CAPEX of NOK 43.5 million in Q3
  • NOK 41.2 million related to turnkey project with Artec Aqua
  • NOK 2.3 million capitalized personnel and shared cost
• Accumulated capex of NOK 148.5 million from project initiation in 2019

Accumulated CAPEX YTD 2020

(NOK million)

FINANCING RESERVATIONS SECURE PROJECT CONTROL

• Project turnkey-agreement includes clause for financing reservations until financing is secured
• In Q3 2020 the company committed contracts and deliveries of NOK 66 million
  • Precast concrete elements
  • Concrete work
  • Fish-tanks
• Payments will peak in Q4 2021

SUPPORT FROM SOLID AND COMMITTED OWNERS

• Raised NOK 550 million in new equity through private placement in connection with Merkur listing and direct investment from Dongwon Industries
• Secured debt financing of NOK 40 million for land acquisition
• Continuously monitoring opportunities to apply for public funding and grants
  • Granted funding commitments from Enova of NOK 96.8 million
  • Received NOK 14 million in SkatteFUNN tax incentive scheme
• Plans to strengthen balance sheet in H1 2021 as part of overall financing strategy

Paid-in equity

EXPANSION OPPORTUNITIES

Salmon Evolution plans to expand internationally with a medium to longterm target of ~20,000 tonnes HOG

• Agreement with South Korean Dongwon Industries
  • Commercial collaboration for sales & marketing in Asian markets
  • JV for construction of land-based fish farm in South Korea based on SE technology and competence
  • Scaling of projects in other Asian as the North American market
• Potential for projects utilizing Salmon Evolution's technology and concepts
• Focus on projects with
  • Clear financial differentiators
  • Strong ESG arguments

ROADMAP TO 70,000 TONNES

Total +70kt HOG annual harvest

• Introduction and highlights
• Operational review
• Financial review
• Summary and outlook

PROFIT & LOSS

Summary of result

(figures in NOK 1000)	Q3 2020	Q3 2019	YTD 2020	YTD 2019
Total operating income	674	-175	704	-175
Personnel expenses	-4 365	-956	-6 843	-1 489
Depreciations	-64	-63	-212	-90
Other operating expenses	-5 392	-2 276	-9 167	-6 181
Operating profit (EBIT)	-9 147	-3 470	-15 518	-7 936
Financial income	0	0	1	0
Financial expenses	-101	-10	-117	-21
Financial expense - net	-101	-10	-116	-21
Profit/loss before tax	-9 248	-3 480	-15 634	-7 957
Income tax expense	0	0	0	0
Profit/loss for the period	-9 248	-3 480	-15 634	-7 957

• Personnel expenses include NOK 2.3 million in provision for incentive program
• Other OPEX include costs related to reorganisation and preparations for listing of NOK 2.0 million

CASH FLOW

Cash flow summary

(figures in NOK 1000)	Q3 2020	Q3 2019	YTD 2020	YTD 2019
Profit before taxes	-9 248	-3 480	-15 634	-7 957
Net cash flow from operating activites	22 067	-2 981	14 711	-7 299
Net cash flow from investments activities	-26 306	-5 216	-94 551	-10 290
Net cash flow from financing activites	522 886	-49	767 495	49 807
Net change in cash and cash equivaltents	518 647	-8 246	687 654	32 218
Cash and cash equivalents at start of period	190 131	40 834	21 124	370
Cash and cash equivalents at end of period	708 778	32 588	708 778	32 588

• Positive cash flow from operations due to increase in trade payables
• Cash flow from investments negative due to increased activity at project site
• Cash flow from financing driven by
  • Proceeds from pre-listing offering of NOK 500 million
  • Dongwon investment of NOK 50 million

FINANCIAL POSITION

• Carrying amount of total fixed assets NOK 148.9 on 30 September. Increase related to purchase of land and construction work
• Total equity of NOK 792.5 million, corresponding to an equity ratio of 90%.
• Consolidated non-interest-bearing liabilities totaled NOK 53.7 million
• Available cash and cash equivalents totalling NOK 708.8 million on 30 September

Financial position as per 30.09.2020

1,000

• Introduction and highlights
• Operational review
• Financial review
• Summary and outlook

SUMMARY & OUTLOOK

• Global demand growth for salmon expected to continue. Land-based solutions addressing industry growth challenges
• State of the art production facility under construction. Annual capacity of 31,500 tonnes HOG targeting the European market
• Solid funding supported by committed owners. Raised new equity of NOK 550 million
• Received grants from Enova and SkatteFUNN totalling NOK 110 million
• International ambitions. Entered agreement for collaboration with Dongwon industries

NEXT EVENT Q4 2020 24 FEBRUARY 2021

www.salmonevolution.no

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