Atlantic Sapphire As

Good morning and good afternoon, everyone, and welcome to the Investor Call, in conjunction with the release of Atlantic Staffers 2021 ESG and Annual Report. My name is Johan Andreaten, and with me today to present is Karl-Erik. As we are reporting monthly on the operational development in the company, we will keep this presentation short, and it focuses wholly on the annual and ESG reports. The next monthly update will be in the beginning of May. The report is in mind you have a great deal of work that our team has spent months on preparing, and I encourage everyone that loves Authentic Summary and is interested in mandate standpointing to read it.

Hello everyone, this is Carl Oihals. We will go through the highlights of the report and open up the Q&A at the end of the presentation in the same fashion as we do it with our monthly updates. You can ask your question in the Q&A tab. And as with monthly updates, we will also only take questions. If you have any questions, please add your name.

Tom? Yes, before our CFO takes you through the highlights of the numbers, report. An Atlantic SAS tracker receives sustainability as an integrated part of our business and also works to always improve our reporting and transparency. Following a material assessment, we have identified four key areas that we believe are the most important to Atlantic SAS and its stakeholders. Our ESG report is structured along these four categories. product responsibility, economic responsibility, environmental responsibility, and social responsibility. Looking at our updated materiality matrix on this slide, we have this year elevated fish health to the top right quadrant. This is because we believe that the events of 2021 have increased the importance and impact of fish health and fish safety on our own internal decision-making, and on our stakeholders' assessment of our company, and that, but not least, on the profitability of the business. First, we're focused on lowering our salmon feed impact on the ocean. To Atlantic Farmer, one of our most important sustainability challenges is that the industry today still relies on a limited resource, which is marine ingredients, to feed the fish. Our mission is to lead the traditional industry into the ocean, sorry, out of the ocean. Last year, 25% of the fish oil in our feeds were replaced with domestic land-produced algae oil, naturally rich in omega-3s. This has taken our marine derived ingredient factor, FSIS, down to under 0.75%, and makes us a net marine coffee producer, and also taking the FCR into account. Further, reducing freshwater consumption is important, as freshwater is becoming a scarce resource in many places, and the focus on preserving fresh drinking water is just going to increase in the years to come. In 2021, approximately 95% of water use was saline, We see room to reduce the freshwater consumption even further in the future by, amongst other things, to use fresh water for some of our current freshwater consumptions. The next point is recyclable packaging. a 50% reduction in the styrofoam thanks to composable and recyclable shipping losses being introduced. This is something that we have a good opportunity achieving, and suppliers that rely on air freight. In air freight, you have to use styrofoam. Then another very interesting bullet point is carbon sequestration identified. One very exciting piece is that thanks to our unique Blue House water chemistry, in combination with our injection route into the boulder zone, we have been able to quantify the large amount of CO2 that we are capturing in the water, and later disposing safely into the ground. On phase 1 and phase 2 are both in operation, we estimate that we will inject approximately 150 tons of CO2 per day, which, of course, comes on top of the significant reduction in carbon footprint of not having to fly the fish to airplanes to reach the customer. Circular economy. Last year, 100% of our bioproducts from tilleting was sold as essential ingredients. We have even greater ambitions for the future, and we hope to also be able to turn our bioproducts into value-added products for human consumption. Our fish is not only delicious, it's also a very healthy protein. In 2021, we were granted the American Heart Association's project certification. Last, local job creation. Finally, we are proud of all our employees. As of December 31 last year, the company had 166 full-time employees.

Thank you. Over to the financials.

Starting with the consolidated group P&L, Atlantic Casper had revenues of $16.9 million in 2021, up 170% from $16.3 million in 2020. The increase in revenue is naturally linked to the ramp-up of harvest volumes here in the U.S. The group harvest volumes increased by 140% year-over-year to 2,374 tons in 2021. At the year-end of 2021, we recognized an impairment of $34.8 million, linked to the loss of the Danish losses in the prior last year. Although we at December 21st believed that the insurance claim was very probable, we took the conservative account in advance because no settlement had yet been reached and the police report had not yet been concluded. However, we continue to expect to recover the book value of Danish utility, net value of the assets that were impairment target ignited in the P&L, with the insurance claim once that is concluded. If one adjusts for the Denmark impairment, the group ETA in 2021 would have been negative 82.4 million dollars. The group had a cost of materials in 2021 of 65.6 million. farming expenses in the U.S. Included in that figure is the 16.6 billion indirect production costs for underutilized traffic, rather than useful in the balance sheet. To explain the account behind this, direct production costs are allocated fully to production costs and capitalized on balance sheets. Indirect production costs, which includes self-personnel costs, depreciation, and other overhead costs, are allocated based on a ratio of actual percentage and key capacity percentages, which makes normal capacity under the IIS 2 accounting principle. Underutilized portions of indirect production costs due to underutilized Luhart production capacity are recognized as cost materials in the same period as they are incurred. After suspension census 2021, we're up from 11 million in 2020 to 24.6 million in 2021. The increase is mainly explained by the $11 million in temporary killer and generator rental costs in the U.S., following the breakdown of the killer plant in 2021. As we've discussed in the past, a $10 million insurance claim process is ongoing to cover the incremental costs due to the tiller compensation. Looking into 2022, we expect approximately $5 million in tiller rental costs, quite evenly distributed between the first and second half of 2022. Over to the balance sheets. The group ended 2021 with total assets of $312 million. The largest figure on the balance sheet is property plans and investments of $264.4 billion. Despite large investments in 2021, the GDP line was only up by $7 million, as the full impairment of $35.8 million for Denmark is reflected here in this line, as it was in the last slide. The total 2021 capital was $67.5 million, mostly tied to U.S. phase 2 construction. Other than the US-based group, we also invested $9 million in US-based contracts in the start of the year, and in total $2 million in Denmark. Then the Kappa ended the year with $17 million of checks on the books. With $50 million of grants earned at the end of the year, the net interest rate in debt to the group as of December 31st was $33 million. Also at the end, as expected, We did book a 1.1 million game on our COVID-19 related care loan, which was forgiven in September of 2021. On the working capital and liquidity side, a full $20 million RTF facility was undrawn as of year end. Coming to the next slide, here we'll split up the . uh you'll see that the gravity of the company's operations has completely shifted to the us if one excludes denmark reported a stand-alone EBITDA for 2021 of negative $71 million. This is also just both the one-off events that are in the first half of 2021, but ultimately the U.S. company was in ramp-up mode, ensuring all fixed costs by still building up BIMAC in the phase 1, phase 2 production in Q3 of this year. You also note that with the U.S. phase 1 in operation, The company started depreciating the U.S. infrastructure in 2001 by a total of $12 billion. The last slide on the financial side that we've included this time is what we call our fixed cost-based walk. On this slide, we will then look at more of the underlying costs in 2001. 2021 was a first year with close to full production, as more and more of our ongoing systems were brought in. Upon a drift for one-off cost a year, it allows us to identify an underlying cost at a distance, and also calculate what the production cost per kilo would have been at 26 production volumes. In a simplified world, we like to say that sanity is the main variable for creating a facility like this. The variable feed cost that comes on top of the fixed cost case is calculated by taking the biomass gain for the period in round living weight, multiplying that number with the feed conversion ratio, and lastly multiplying with the feed price. The table on the right side of the slide takes the total expenses we recorded in the U.S. in 2021 on an EBITDA level and adjusts out the extraordinary cost price of M2 to certain chillers, and the extraordinary mortality that occurred in the first half of the year. If we also remove the actual feed cost in 2021, 13.1 million, you're left with what we call our 2021 peak as-is rate. As an example, if we assume we have the exact same rate with no cost improvements and reduced energy volumes in the U.S. station facility of 9,500 tons, your total cost of production would be 63 million dollars plus the feed cost of 11 000 tons down living weight production multiplied by 1.2 in FCR and that multiplied by approximately two dollars a kilo in feed cost. For example, this leads to approximately 79 million dollars in total costs or what you can call a cost per kilo of around 7.2 $1.50 low round living weight, which is approximately $1.50 low head-on jacket. However, we see large room for improving on the fixed cost side. First, we see significant economies of scale with cases coming online. Overhead costs, excluding the current temporary chiller rental costs, only increase marginally with the additional 15,000 pounds. There will be economies of scale across the shared services and infrastructure, and that will stay strong and few will benefit from. For example, on the maintenance, fresh water and processing plants. The design of phase two includes some clever learning to ensure an easier to operate farm. This will reduce both labor and maintenance costs. Naturally, operational cost reductions are expected under favorable conditions. This is exactly what we saw in Denmark as well, where costs initially were verified, but then ceased to sell as the system was fine-tuned, and things started working reliably. Numerous cost-sharing opportunities have been identified, all across USA's long blue house. Some will take longer time than others to leverage, though I'd expect a gradual cost reduction over time. Finally, we expect lower processing costs. better yields and more consistent quality grading when our new in-house solution line is online. In conclusion, we are already seeing that even the cost base from a challenging 2021 supports profitability once we reach a stable production. With that, Johan, thank you.

Thanks, Mads. So, in summary, The key operational focus for 2021 was centered around keeping the fish safe and sound. Our risk for mortality events is now significantly reduced, both in size and frequency. In the year, all the broil systems in the farm was split in two, which is limiting the classification mortality risk from a pig tank to a tree tank size. and it's leading us with 12 independent source systems in the Blue House. Then all the sensor grains are modified throughout the facility, reducing the risk when we have initial smaller mortality that potentially could disrupt the flow of new water into the tank, and hence by doing that we avoid subsequent larger events, which the small mortality we had in March is a good example. Key water quality parameters were adjusted through a thorough vetting process, which is significant to reducing the H2S toxicity risk, and in addition to that, reducing the CO2 levels drastically in our water, which has also proven to be very beneficial for fish welfare. We have had a severe organization of restructuring with significantly higher amounts of staffing outside regular working hours, as well as having dedicated staff owning their own systems, which both drives feeling of ownership and it drives accountability. In 2021, we also established the Facilities Operations Advisory Board, which is evaluating and vetting activities that are outside standard operating protocols, reducing the risk of human error. We have had an advanced turnout and fine-tuning of our automation systems, including operational dashboards, giving us valuable data on both cash loss and spend, which we leverage to better decision-making, both to reduce risk as well as increase productivity. All in all, I want to summarize that we have done significant operational improvements, that in some have dramatically reduced the risk of large events, as well as put us in a place where we can more quickly react. The amount of learning in the company is ecophysic. That said, I want to emphasize that in biological production, you can never completely eliminate risk of fish loss and events. Our job is to get as close to elimination as possible. With that said, we will move over to the Q&A session.

Okay. Thank you. So, we have opened up the questions in the Q&A. And I can see that we already have two questions. So, we'll stop there, but feel free to add additional ones. The first question comes from John B. Aruna, who is asking, when do you anticipate breaking even? And I can answer that question. We have already communicated on this previously that once we reach our phase 1 steady state, that will also bring with it the breaking even production. And we expect to be at that steady state production level from planning Q3 of this year, so only months away. The next question comes from Nils Sommersen. This question is if we can provide an estimate on the risk of liquidity at the end of 2021 and the species of those now. I can also give that one a thought. The reason is that other than cash on the balance sheet, the Atlantic Ocean has a $200 million risk factor that's a concept of different parts. The first part is the $50 million that already is drawn and on the balance sheet. The second is the $20 million RTF that is fully submitted and available to the company. The third part is $32 million of ungrown available term debt that is submitted by D&D and credit. And the last part is an uncommitted $98 million term debt facility. When we say uncommitted, That means that the credit decision has not been taken into account. When we announced the $25 million of short-term services that was granted to us by V&D, we also said that we expected to have a long-term solution for the Facebook financing in place now by the end of 2022. So, speaking to the $98 million of uncountable debt, then... naturally a part of what we're working on. So we'll of course let the market know as soon as we have some traffic there on that topic. Next question comes from Alex Jones at Insight. He has two questions. The first is, can you please reconcile the $46.2 billion traffic that you put for Phase 2 in the presentation today with $34 million that you said has been invested in phase 2 as of December 31st when you gave the monthly update at the start of February. The second question is taking into account the cost numbers you walked through and the harvest volumes you have already discussed, can you give us any guidance on adjusted GDP law for 2022? To start with the question on sales, And we have probably looked at the figure for PACE. Maybe I can even show it here as well. Give me a second. You'll see that the figure for 2021 was 67.5. Out of that number, 11 was non-PACE-on-related, which is quite a lot of money. and the reason why there's a difference is probably due to a little bit of accounting and what is the case in what periods between the type of move from year end 2021 into 2021 2022 the audited figures or 60 to 1 on most listings in Catholics are, of course, the most accurate ones. While once you're giving a monthly update every month, they, of course, reflect that this is somewhat more work in progress and what I would call a very live animal in terms of the Catholics that this is being moved around. So, as we said, the 34 million, that counts lower. I believe that number is actually a little bit higher if you go back to The second question takes into account the cost numbers. And when, if we can give a guidance on, let's just say, 2022, we don't really have an exact guidance from our state. But I think if you use the six off-takes and make your own assumptions on what might look right in 2023 compared to 2021, and then you look at our guided expectation of around 1,000 tons of harvest in 2022, and then resetting steady-state on timing 2.3, with 2.14% being the first full set of steady-state harvest volumes, then that would give you enough idea. And the last piece of the puzzle, so to speak, to be able to get around with that calculation, is that you can assume probably a feed conversion ratio of anywhere close to 1.2, that's the pure estimate, and on the feed cost, using $2 per kilo as a round number is not going to be far away from the reality, even though, as we talked about before, we are seeing fluctuations in feed prices as we speak. So that should at least give an indication. The next question we have is from Carl-Emil. Has there been any additional elevated mortality in batch 2 in the last couple of weeks? I'll hand that question over to Johan if you want to come to that.

Sure. The answer to that question is no, and that goes for all the other batches in the farm as well.

They are very low and normalized mortality so far this month. Good.

The next question we have is from . 2021 cost of materials, salaries, and other objects add up to $100 million in 2021. Which items are excluded from the 8.7 figure on paper? The 8.7 figure is basically the US standalone EBITDA system. so what is not in there is the depreciation that's the delta yesterday before you can come to the slide in the footnotes or into the footnotes where you'll see the us broken up excluding the mark and simply take the data and add on the revenue for the us segment to get to the same number then i don't

see any more questions yet. So let's give it a minute to see if there are any more questions.

doesn't look like it so yes i'll of course encourage anyone who has any questions uh after this hope to contact you on our website directly we're always happy to help and i'll give the word back to you on if you have any closing remarks thank you cars um yeah i just want to wrap this up the thing that even if

2021 was a year with a lot of cash back for our company. It was also a year of growing up at the company. We had key information, restructuring, consolidation, and improvements across all aspects of our business. 2021 has created the foundation for a bright future, and we are looking forward to prove to the world that the second half of this year will do us harm and is profitable. In addition, I would say that we are better positioned than most companies to leverage historical strong outlook for omega-3 rich fish, such as salmon, in the years to come. And apart from that, stay tuned for our next operational update in a couple of weeks.

And until then, take care.