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Good morning, and welcome to this update from Andfjord Salmon. My name is Martin Rasmussen, and I'm the CEO of Andfjord Salmon. Today's webcast presentation will be held in English only. Together with me here today is our CFO, Bjarne Martinsen. And we will have a Q&A session after the presentation. Please note that you can submit your questions through the webcast solution. For the benefit of new shareholders, I will start by giving a very brief introduction to Andfjord Salmon. We will then look at the highlights from the fourth quarter before giving a brief status of the current build-out at Kvalnes. Bjarne will then cover the financials before we dive into the main topic of today's presentation, our supplementary post-smolt strategy, which has the potential to unlock significant value for Andfjord Salmon ocean-based farmers and other stakeholders in the aquaculture industry. We'll then summarize at the end before moving to the Q&A. Our objective is to build the world's most fish-friendly and sustainable salmon farming facility of its kind, with a mission to serve salmon with a clear conscience. The results demonstrated in our first production cycle confirmed that this is possible. Our concept is based on taking the best of ocean-based net pen farming and combining this with the benefits of being on land. This combination gives a fish-friendly environment and sustainable aquaculture production. Here, you can see a cross-section of our flow-through solution. We saw seawater at approximately 40 meters water depth below the area where salmon lice live. We then push the seawater into the pool, and we use our own technology to create a laminar water flow. A laminar water flow is a parallel water current from one side of the pool to the other without creating turbulence in the water. The oxygen-rich seawater is then distributed evenly throughout the pool, so the organic waste can sink to the bottom of the pool, which is cleaned by cleaning robots. Other metabolic products such as CO2 will be returned to the ocean without harming the local environment. The first production cycle, which was concluded in July, has demonstrated that the solution is technically robust and delivers supreme biological results. It is not a coincidence that we are located at Andoya. In fact, Andoya is the land area in Norway that is closest to the Gulf Stream. And this allow us to source warmer water during the winter compared to the seawater available for traditional ocean-based fish farmers. Warmer water provides improved growth and better biological conditions, including lower risk of winter ulcer. We have, during the last year, experienced the positive effect the Gulf Stream have on our temperature profile. The first production cycle show that our concept delivered biological and environmental benefits as planned. Our survival rate was industry-leading. Feed conversion ratio and fish growth was strong, and our concept have a very low energy consumption. This is now what we are aiming to replicate at an even larger scale. So, over to the highlights of the fourth quarter. As announced in January, we completed the excavation of the next 12 pool pits at Kvalnes 1 quarter ahead of schedule. The next priority is to develop 4 complete pools, which will bring our total production capacity up to 8,000 tonnes HOG. Preparation for pool production has already been initiated as a result of finalizing the excavation work ahead of schedule. We are currently also developing 2 other workstreams; the shared area infrastructure of harbor and waterways, and they are also on track. Finally, we are today very excited to announce plans to implement a post-smolt production strategy as a supplement to our production of human grade salmon. And I will come back to the details later. Let's provide a quick status of the Kvalnes buildout. First step to 8,000 tonnes HOG consists of 4 new pools. These pools, including the shared infrastructure will be ready for production in the middle of 2025. After this step, the area infrastructure will be ready, and then we will be able to build 4 new pools each year to reach capacity of 19,000 tonnes HOG and secure full utilization of our salmon farming license during 2027. Production at Kvalnes will then increase gradually, and we will aim to reach the full potential of 40,000 tonnes in 2030. This drawing illustrates the current build-out phase at Kvalnes, and also show the next expansion phases. We have excavated the 12 pool pits that you can see in center of the picture. We are now on track towards our target to have the 4 next pool ready in operation in 2025. In parallel, we are developing inlet and outlet waterways and the harbor area, which will facilitate a future production capacity of 40,000 tonnes. I'm pleased to say that the workstreams are progressing according to and better than planned. Pool pits has been excavated 1 quarter ahead of schedule, while progress on waterways and harbor area is as expected. The success criteria here is our construction team that is capable of handling such project dimensions and suppliers that are able to support one of the biggest industry projects in the north of Norway ever. Here is an overall timeline that shows that all our workstreams are on track or completed earlier than expected. As you can see on this slide, rock pit excavation has been completed and we have now initiated preparation for pool production, including setting up the production unit that will produce the concrete section for the pools. The port area has reached 30% completion and waterways 10% completion. I should note that these are approximate figures, but based on a very detailed project execution plan. So, now over to Bjarne, who will cover the financial details.
Thank you, Martin. I will give a brief summary of financial results in fourth quarter 2023, and the financial status at the end of the year. Our Annual Report, including ESG Report, with all the details will be published at 17th of April. The income statement reflects operating costs in the current phase, with total operating expenses of NOK 19 million in fourth quarter. This includes depreciation of NOK 6 million. During the construction phase, the income statement will mainly consist of stable operating costs. And at the end of the year, we will start to prepare for smolt release and operations with 5 pools next year. Our financial income is relatively high in the fourth quarter, and this is a result of higher bank deposits following the capital increase last summer. This is also reflected in the year-to-date figures. When it comes to financial costs related to financing of construction, this is capitalized as part of the investment in the facility. At the end of 2023, the group had bank deposits of NOK 250 million in addition to current receivables of NOK 51 million. Note that the construction loan is still undrawn and not included in these figures. The same applies to credit facility of NOK 20 million related to working capital. Otherwise, the balance sheet reflects high investment activity in fourth quarter, in line with construction progress. There are no major changes in equity and long-term debt during the fourth quarter. As the previous reports, we have bank debt of just under NOK 70 million, and this is being refinanced in connection with the construction loan from SpareBank 1 Nord-Norge, SR-Bank and SpareBank 1 SMN. And the equity ratio will remain high until we start drawing on the construction loan. The cash flow statement reflects the high level of construction activity in fourth quarter, as guided in the previous report. This is, of course, the most important factor for the cash flow in the current phase. And cash flow from operations is linked to operating costs in fourth quarter, and this will be the case until next release as marked in 2025. We are in progress with our build-out plan at Kvalnes, where we have identified 5 stages to reach a capacity of 40,000 tonnes HOG of yearly production. The first step includes 4 new concrete pools ready for production in 2025, and a total production capacity of 8,000 tonnes of HOG. And this first step also includes infrastructure to support the entire site for 40,000 tonnes, including waterways, port area and rock pits for 12 new pools. With infrastructure in place during first step, investments in the following steps will be relatively lower as the table shows. At year-end 2023, total investments in first stage at Kvalnes amounted to NOK 397 million. The total budget for this stage is NOK 1.65 billion, including risk buffers. The top 10 shareholder list is more or less unchanged since our previous reporting. Andfjord Salmon has strong and supportive shareholders with Jeronimo Martins as the largest with 25% ownership share. We are currently working together with one of the other top 10 shareholders, Eidsfjord Sjofarm, to develop a collaboration that can produce positive effects for both parties. Martin is going to tell more about that. So, I will give the floor back to him.
Thank you, Bjarne. And let's move to the post-smolt strategy. Firstly, allow me to explain why we have spent time on developing our post-smolt strategy. In Norway, we have a well-established ocean-based salmon farming industry and the emergence of land-based salmon farmers. Cooperation between ocean and land-based farmers are, therefore, a unique opportunity for Norway and the Norwegian salmon farming industry. Firstly, there is a sustainable industry demand for post-smolt because the benefits associated with shortening the ocean-based grow-out pace. And secondly, releasing larger and more robust fish into ocean net pens offers multiple biological and environmental benefits, including a lower risk of diseases, reduced time of exposure to salmon lice and improved survival rate. Finally, we, at Andfjord Salmon has surplus capacity in our pool, which we can use for post-smolt production. And I will explain the details on the next slides. So combining the strength of land-based salmon farming with ocean-based farming, we can introduce a new optimized value chain collaboration that can provide highly energy efficient and sustainable salmon farming here in Norway. To be very clear, our post-smolt strategy is a supplement to our own production of human grade salmon. By implementing this supplementary post-smolt strategy, we estimate that we can increase our EBIT by 15% to 25%. And we already have agreed a strategic collaboration with leading North Norwegian fish farmer, Eidsfjord Sjofarm, to achieve this. So how can we achieve this? As you can see on the graph to the right, we have plenty of available space in our post after release of smolt for grow-out purpose. Our plan is to utilize some of this surplus pool capacity for post-smolt for ocean-based fish farmers. No additional infrastructure CapEx is required as the pool space is already there and available for use. The post-smolt production will be a supplement to our own production of human grade salmon. So how do we do it? On the screen, you can see a very simplified illustrative example. When we release smolt in our land-based pool, we typically release smolt with average weight of 100 grams to 150 grams. In addition to the smolt release for our own grow-out production, we will also release smolt that will be used for post-smolt purposes. After reaching a certain biomass density level, some of the fish will be taken out of the pool and sold as post-smolt to ocean-based fish farmer in our local region. The majority of the salmon will remain in the pool and can grow to harvest weight, as you can see to the right. In short, we are enhancing production capacity and income potential without adding additional infrastructure costs. This is just another way of illustrating the same picture as you saw on the previous slide. However, here we illustrated the biomass density, meaning how much of the total pool space is filled with salmon. As you can see, after reaching a certain biomass density level, typically after 5 months to 7 months, when the fish has reached our average weight around 1 kilogram, we can sell the fish as post-smolt to ocean-based fish farmers. Then the biomass density is produced, thereby creating available space in the pool for the remaining fish to grow from 1 kilo to slaughter weight at 4 kilograms to 6 kilograms. It is a simple, yet efficient way of securing even better utilization of the capacity we have available in our pools. The beauty of combining the strength of land-based post-smolt production with the ocean-based salmon farming is that there are multiple stakeholders that benefit from it. For the ocean-based fish farmers instead of releasing smolt, they can release a more robust fish to the sea. A more robust salmon is less vulnerable to diseases. And by releasing fish of 1 kilo, they can also reduce the production cycle in sea from, let us say, 17 months to 19 months to approximately 10 months. This means less time of exposure to salmon lice as the fish is only exposed to one lice season. It also means that fish farmers improve their utilization of their own MAB, similar to what we do on land. And, of course, releasing a more robust fish can potentially improve survival rates with the benefits that bring. The salmon also benefits as fish welfare improve when the fish is less vulnerable to diseases. Shorter exposure time to ocean-based biological challenges such as lice and jellyfish is also very good. The local marine environment benefits too, primarily because the fish can spend longer time in land-based controlled environments where, for example, can collect the biological waste. Equally important is that such collaboration allow us to strengthen the overall condition for continuous development of regional aquaculture cluster. And I have said many times that Andfjord Salmon will not be able to achieve the biological results we have done without learning from the ocean-based farmer and tapping into extensive competence of the North Norwegian fish farming industry. Through collaboration on this post-smolt strategy, we can further enhance the environmental, biological and economic development of the aquaculture industry in our region. And as you can see on the map, our location at Andoya is optimally suited to supply nearby conventional salmon farmers with post-smolt. I'm pleased to share today that Andfjord Salmon has entered a strategic collaboration with ocean-based fish farmer, Eidsfjord Sjofarm, part of the Holmoy Group, where we will provide post-smolt for selected nearby ocean-based farming location as part of upcoming production cycles. It's also important to mention that Eidsfjord Sjofarm and Andfjord Salmon initial production plan has been approved by relevant Norwegian authorities. We are also in ongoing discussions with other local conventional salmon farmers regarding entering into similar collaborations. Eidsfjord Sjofarm involvement underlies the benefits this collaboration can bring to both land-based and ocean-based farmer. I have explained how land-based post-smolt production for later use in the ocean can benefit ocean-based farmers, the salmon itself, the local marine environment and the local aquaculture industry. However, it will, of course, also benefit Andfjord Salmon in multiple ways. By enabling approximately 10% higher biomass turnover, we create both financial and industrial benefits for Andfjord Salmon. And our calculation shows that we can achieve a 15% to 25% increase in EBIT by utilizing this combined production strategy. Our cash flow will also improve as we can generate sales revenue from sales of post-smolt after typically 5 months to 7 months in production time, in addition to income from harvest of human grade salmon after a full 12 months to 15 months production cycle. From an industrial perspective, our corporation enables an even closer working relationship with conventional farming partners in the region and enhances our own access to smolt supply. So to summarize the supplementary post-smolt strategy, increase our production volume, EBIT and sustainability. The first production cycle demonstrates that we have the world's most cost and energy efficient production of post-smolt. We are, therefore, very proud of this alternative on behalf of Norwegian salmon farming industry, the salmon, Andfjord Salmon and the environment. Now, we will go over to the summary of today's presentation. The excavation of the next 12 pool pits is completed ahead of schedule. All other workstreams are on track to ensure that we have pools available for smolt release in the middle of 2025. We have also prepared a short film that summarize the benefits of the post-smolt strategy. And after the film, we will have a Q&A session where you can submit questions through our webcast solution. So over to the film. And then are we ready for the Q&A session? And you can submit questions to us through the webcast solution. So, Bjarne, is there some questions for us now?
Yes. We have received some questions already. How often do you plan to move Swordfish through the production cycle for your grow-out production?
During the production cycle, we are planning to have one splitting of the fish. It means one handling of the fix during each production cycle.
Yes. What was the total CapEx for the pool pit excavation? Yes. So far, we have had the CapEx of NOK 397 million as we showed in the presentation. This includes completion of the rock pits, extensive work with the harbor area and also the tunnels. So, we don't give specific amounts on each part project, but the pool pits was completed well below budget. Congratulations on the excavation being ahead of schedule. Has this had any benefit on the build-out CapEx? How is the overall build? Yes, the question stopped there. But how is the overall build progressing in relation to the budget? Yes. We're ahead of schedule. As we said, pool pits was ahead of schedule and we have also started preparation for concrete work, which was scheduled for startup in second quarter. So it's an advantage to be ahead of schedule in relation to timing. As I said, we are below budget on the pool pit excavation. But for the total budget, we maintain the same budget with NOK 1.3 million in target price and also some buffers as shown in the presentation. The post-smolt strategy represents great news with additional utilization of the capacity. Can you comment around timing? Will there be any smolt release in 2024? Or will this be implemented as part of the 2025 smolt release? What would be the target post-smolt production sales volume?
Yes. First, as I said many times, we'll not do anything in 2024 that will, I would say, not give us the same flexibility to the ramp up of the production from 2025. So the post-smolt production is now part of the ramp-up of production from 2025. And especially in 2025, this give us a very good cash flow early in the production ramp-up on the biomass increase. So, this is very beneficial for how we can have a very good and sustainable growth. No more questions?
Yes. More questions. Are you planning to start with post-smolt production also in 2025, or will it be phased in later?
I think we answered that on the previously question. So it's part of our production plan from 2025 and the rest of our existence.
When post-smolt production is at run rate, how many fish will initially be stocked in pools versus how many will be taken out as fully grow salmon?
What we have planned is that we have approximately, say, from 800,000 to 1 million smolt in each pools and it's divided into several pools after a certain size. And probably a large amount of this will be moved out to the sea. It's important to emphasize that this is a supplement to the existing human grade production of salmon.
Yes. We have several more questions about the volume. I think we have...
We have said it also in the presentation that it's around -- we've had 10% biomass increase in total and around 2,000 tonnes of post-smolt production on 5 pools.
I think we've answered the volume questions now. So, we'll move on to next question. Is the CapEx level in fourth quarter representative to the level in first quarter and second quarter? Yes, the CapEx level will vary a little bit. I think for first quarter, it will be a little bit lower. We're in between sequences. So before full speed on the concrete work, there might be a little bit lower CapEx. Then again it will be stable, high, I think from second quarter until we start to complete pools. Any plans for licensing your solution to other industrial partners? Canada or Alaska could potentially work well.
Yes. Of course, this method is, as we've said many times on behalf of the fish, the nature and the economy benefits, it's a very good method to produce salmon and there are very interesting location other parts of the world. But our main focus now is to develop Andoya as we consider this as the best location for ramping up the production. And with our ambition to produce 90,000 tonnes, I will say that the volume share is significantly high.
Do you have patents pending on your technical solutions? Very nice update today with optimizing pool capacity with smolt that you sell after it has grown. Yes. Our solution is patented in all relevant countries. That is the method to create the laminar water flow and the method that we use in the pools. So, that's not pending. That's more or less completed in all relevant countries. Will the test pool, which is currently unused be put into production prior to the new pools at Kvalnes?
Yes. I think we answered that earlier. As we said, we will involve the first pool into our production plan from 2025 because we have a very good ramp-up of the production volumes where we're also including the first pool.
What is the status of expanding your 19,000-tonne license? Yes, the current license is 10,000 tonnes MTB, and we expect a yearly production of 19,000 tonnes MTB.
Yes. MIB. The most important process we have completed is to prove the concept on behalf of Norwegian aquaculture farming. We have proven very good biological and environmentally numbers. So the license to operate is proven. And at the moment, the possibility to submit applications for further license is on hold. But we have ongoing process to increase our capacity on the license, both on Kvalnes and on the other locations at Andoya.
Will it be relevant for you to build a small facility hatchery at a later time?
Of course, with our plan to produce 90,000 tonnes, this also include a strategy with our own ownership on a small facility. But with the beauty -- the beauty with the post-smolt strategy is also that this is also securing the smolt supply because the benefit for the ocean farmers when they are selling a smolt to us and get it back, they want to sell the best smolt because they will have a production on the smolt earlier in their production. So, it's not only increasing the flexibility and the profitability for Andfjord Salmon, but it's also securing the smolt supply. And then we have different ongoing strategies to secure the smolt supply in different part of different timelines then.
Can you elaborate on the assumptions behind the post-smolt benefits, smolts per year, timing and price cost per smolt?
Yes. I think we had dived into the details in the presentation today. And the specific numbers and the prices, we will come back to that on a later stage. So, yes, I think we had answered that in the presentation today.
Will the post-smolt strategy offset the shortfall from the equity raise last year? Are we expecting further equity raises to fund the build-out or should we assume no significant increases to share count? Yes, the most important step in the financing is this first step to get the construction loan in place and to finance the first 4 pools and the infrastructure. And then we expect a high share of bank loans in the second step and further. So, when we now prove that we build on time and on budget, there is significant interest for taking part in the financing in the later stages. So, you should not expect increase in share counts, significant increase. Can you please comment on the need for change in planning as posted on the website of Andoy municipality? I'm not sure what this question refers to. Maybe about zoning plans?
Yes. I'm not sure what the question is referring to. So, maybe we can take contact with you after.
Just call us.
And just call and we can...
Clarify the question.
Yes. We can say that we have a very good local support, both from the municipality and on our process towards building up the other locations at Andoya.
Yes. While we are all waiting for the new regulations for land-based farming, what measures are being taken to stay ahead of any potential regulatory risk, for example, around pollution? Is there any concern that this will meaningfully impact CapEx for the buildout?
When it comes to the technical design, we have full flexibility to add on whatever we want to have, but I think it's important to emphasize that already now, we have a very, very good model for producing salmon. And once it comes to -- it's important to look at the map that we showed on the presentation today. We are far away from other salmon farmers, and we have an excellent recipient, which means that we can coexist together with the local industry in a very good way. And I think also we have proven for the authority that this production method is very, very beneficial for the Norwegian way of salmon farming.
Yes. I think we have some more questions about the handling of the fish. And as we said, we will handle the fish once during each cycle. So, I think we've answered that. Then the last question that we haven't answered. Which smolts do you plan to take out and how? The largest fish, how will the grading take place? Any additional equipment needed?
Yes. I think this is -- what we have now, it's a flexible opportunity, which means that we can do the splitting how we want it to be. And it's also important that this is coordinated together with the salmon farmer. Sometimes they want a small, small, sometimes they want a larger fish. And we have the flexibility to do so. So without going into the details, because what we can say is that we have the possibility to have a very good model for coexisting with the sea-based salmon farmers.
Yes. I think that was it. We've answered the questions that we have received.
Yes. And if some of you have any more question, please take contact with us directly. Our contact details are on the website. And then, I think we just want to say thank you for the attention. And I wish you all a good day.