Andfjord Salmon Group: Kvalnes build-out on schedule | First quarter 2024 financial results

"Our build-out is progressing well. During the first quarter, we identified an additional revenue stream that strengthens our business case. We also received another report confirming strong biological conditions in our first production cycle, which contributed to the success of last week's equity raise," said Martin Rasmussen, CEO of Andfjord Salmon.

KVALNES EXPANSION ON TRACK

In the first phase of the build-out, Andfjord Salmon is completing four new pools, increasing total production capacity to 8,000 tonnes HOG at Kvalnes by 2025. The company aims to achieve a total production capacity of 40,000 tonnes HOG at Kvalnes through gradual volume increases between 2025 and 2030. The initial phase includes developing shared infrastructure such as waterways and a harbor area to support future production.

In the first quarter, Andfjord Salmon announced the early completion of excavating the next 12 pool pits at Kvalnes. A facility to produce concrete elements for pool walls and floors is now operational and will use excavated materials as concrete ingredients, minimizing costs and environmental impact. The development of inlet and outlet waterways is also on track, with the bedrock quality meeting expectations. Harbor area development is progressing according to plan.

“POST-SMOLT” STRATEGY

During the first quarter, Andfjord Salmon revealed plans to utilise surplus pool capacity by releasing additional smolt in its land-based pools. These smolt will be sold to ocean-based fish farmers in the region after 5-7 months, once the fish reach approximately 1 kilogram. This strategy enhances production capacity and income potential without additional infrastructure costs.

According to Andfjord Salmon’s calculations, this strategy will enable a 10% higher biomass turnover, leading to an estimated 15-25% increase in EBIT. Cash flow will also improve as sales revenue can be generated after 5-7 months of production, in addition to income from harvesting human-grade salmon after a full 12-15 month production cycle. Releasing larger, more robust fish into ocean net pens shortens the ocean-based grow-out phase, providing biological and environmental benefits to ocean-based fish farmers. Andfjord Salmon has entered a strategic collaboration with Eidsfjord Sjøfarm/Holmøy Havbruk to supply post-smolt to nearby ocean-based farming locations.

SUCCESSFUL EQUITY RAISE

Last week, Andfjord Salmon capitalised on increased investor interest, raising NOK 350 million in equity to enhance financial flexibility for the ongoing Kvalnes build-out. Current shareholders, including the company's largest shareholder Jerónimo Martins Agro-Alimentar S.A and Eidsfjord Sjøfarm, invested their pro-rata shares in the private placement. High Liner Foods Incorporated, a leading seafood processor and marketer in the US and Canada, also invested USD 10 million, becoming a new shareholder in Andfjord Salmon.

"We are satisfied with our progress and pleased to see reputable industrial investors recognise this by investing in Andfjord Salmon," said Martin Rasmussen.

SCIENCE-BASED APPROACH

Andfjord Salmon adopts a science-based approach to land-based fish farming. Independent research body Nofima documented biological conditions and fish welfare in the first pool. Nofima's final report, covering the full production cycle from smolt release to harvest, highlights Andfjord Salmon's comprehensive welfare and health documentation plan. The report documents numerous operational welfare indicators, including environmental factors, fish behavior, growth, and health. Key findings are summarised in the enclosed first-quarter presentation.

"The fish farming industry is under pressure to improve biological conditions, fish health, and welfare. Although we are still a small player in a large global industry, this report shows that our land-based flow-through system enables fish-friendly salmon farming," said Martin Rasmussen.

FIRST QUARTER 2024 FINANCIAL RESULTS

Andfjord Salmon is expanding its Kvalnes facility and had no salmon production and minimal revenue in the first quarter of 2024. The company reported an operating loss of NOK 17 million for the first quarter, compared to a loss of NOK 13.9 million in the same period last year.

PRESENTATION IN OSLO AT 08:00 (CET) TODAY

Andfjord Salmon will provide an operational update and presentation of the company’s first quarter 2024 financial results at 08:00 (CET) today. The presentation will be held physically in Oslo as well as streamed live to online viewers.

Venue: Hotel Continental, Stortingsgata 24/26, 0117 Oslo

The webcast presentation can also be watched from this URL: https://channel.royalcast.com/landingpage/hegnarmedia/20240529_3/

The presentation will be held in English. The presentation materials are attached to this announcement.