Salmon Evolution ASA

Annual report 2023

Extending the ocean potential 1

Extending the ocean potential

Annual Report 2023

Annual report 2023

Extending the ocean potential 2

Table of Contents

01 THIS IS SALMON EVOLUTION

Letter from CEO ……………………………………………………………………………… 5

Company description ………………………………………………………………………. 7

Markets ………………………………………………………………………………………… 9

Business Plan and Strategy ………………………………………………………………… 11

02 ESG IN SALMON EVOLUTION

Environment ...…………………………………………………………………………………. 17

Social ....………………………………………………………………………………………… 26

Governance .……………….…………………………………………………………………. 31

03 GROUP RESULTS

Board of Directors Report …………………………………………………………………… 32

Salmon Evolution ASA Consolidated Financial Statements ………………………….. 58

Salmon Evolution ASA Financial Statements …………………………………………….. 105

Statement of Responsibility …………………………………………………………………. 129

Auditor’s Report ……………………………………………………………………………...... 130

Sustainability Indicators & GRI index ………………………………………………………. 134

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Extending the ocean potential 3

This is Salmon Evolution

A Norwegian salmon farming company targeting a global leading position in sustainable

production of high-quality salmon from land-based facilities.

• Global leader in land-based salmon farming

• Pioneering the hybrid flow-through system (HFS), reducing complexity and biological

risk and securing optimal growth conditions at low cost

• 7,900 tonnes HOG Indre Harøy Phase 1 facility operating at full industrial scale –

annual harvesting capacity of 31,500 tonnes HOG fully developed

• International expansion on back of proof of concept in Norway – clear roadmap for

100,000 tonnes

• Listed on Oslo Stock Exchange from July 2021

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Extending the ocean potential 4

Key figures

Operational

2023

2022

Standing biomass (tonnes, LW)

2 204

733

Net growth (tonnes, LW)

3 751

1 087

Harvest volumes (tonnes, HOG)

1 874

340

All-in price realization/kg (NOK)

82,0

75,9

Financial

Operating revenues (NOK 1000)

168 424

47 681

Operational EBITDA

(NOK 1000)

-83 950

-68 481

Operational EBIT

(NOK 1000)

-130 680

-74 671

Profit (loss) before tax (NOK 1000)

-145 773

-32 726

Cash flow from operations (NOK 1000)

-124 445

-76 124

Capital structure

Cash flow from investment activities (NOK 1000)

-358 816

-796 132

Cash flow from financing activities (NOK 1000)

590 897

645 471

Cash and cash equivalents (NOK 1000)

386 396

278 759

Net interest-bearing debt (NOK 1000)

299 386

302 990

Equity (NOK 1000)

1 920 693

1 563 906

Equity ratio

71 %

68 %

Profitability

Earnings per share (NOK)

-0,37

-0,10

Market value (NOK million, Oslo Stock Exchange)

2 806

2 859

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Extending the ocean potential 5

Letter from the CEO

In 2023 Salmon Evolution cemented its position

as the global leader within land-based salmon

farming. In total we harvested about 1,900

tonnes HOG of which 1,100 tonnes HOG in the

fourth quarter alone, placing the Company as

the world’s largest land-based salmon farmer.

Furthermore, 2023 also marked a new phase in

Salmon Evolution’s development as we have

now entered an industrial stage with stable

operations and regular harvest and sales after

years of development, construction and

gradual ramp up in production.

As the industry leader we have also

demonstrated that it is possible to produce

salmon on land all the way to harvest weight,

at an industrial scale and with strong

biological performance.

In Salmon Evolution we put biology first with

very ambitious goals when it comes to mortality

rates and product quality. In this context

it is therefore very satisfactory to see that we

are already operating within our targets.

Human capital is a key success factor in land-

based salmon farming, and we have invested

heavily in our organization which now totals

around 70 people across the Group. We have

been very fortunate in being able to recruit and

retain highly skilled employees with a strong

passion for their work. I am also very pleased to

see all the learning and accumulation of

competence and experiences, enabling us to

continuously improve in all aspects of our

business.

Looking ahead we have a positive view on the

long-term demand for salmon and think that the

need for resource efficient production of animal

proteins will only increase in the years to come.

This should ultimately benefit the salmon relative

to many other protein sources, given its low feed

conversion ratio, high nutrition content, short

production cycle and low environmental

footprint.

There are significant challenges growing the

supply side using conventional methods, from

both a biological and regulatory perspective.

Thus, the opportunity to sustainably produce

salmon on land at an industrial scale is greater

than ever.

Also, the rising production cost and other

challenges facing the conventional industry,

has significantly improved the relative

competitiveness of land-based, which we now

see at parity level with the conventional industry.

Looking forward we believe this trend will

continue, given the unique opportunities you

have in a land-based facility to control and

optimize the environment.

Going into 2024 Salmon Evolution is uniquely

positioned to continue to lead the development

in this industry. We are now at a fully operational

stage and with the strong salmon market

outlook, we are very well positioned to

capitalize on this and demonstrate the

profitability of our business case.

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Extending the ocean potential 6

We are also well underway with our growth

plans with the key priority being phase 2 at Indre

Harøy where we see substantial scaling effects

on our operations. Also, having a large and

successful operation at Indre Harøy will be a key

enabler in our international expansion.

Similar to last year we are also proud to include

an integrated ESG section in our annual report.

This is an area which is highly important to us and

as we move forward and obtain more and more

operational data, we will continuously work to

improve and expand our ESG reporting.

Being able to now supply our beautiful salmon

to customers worldwide on a regular basis show

that we have come a long way since our

foundation back in 2017. We are truly grateful

for all the support shown by our stakeholders

and all the positive feedback from our

customers on our salmon.

The Salmon Evolution journey has just begun and

we are confident that the best is ahead us as we

look forward lead the development of this very

exciting industry and define the future of

sustainable salmon farming.

Trond Håkon Schaug-Pettersen

CEO, Salmon Evolution

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Extending the ocean potential 7

Our Vision

Extending the ocean potential

We are responsible, competent, innovative and team players

Our vision is to extend the ocean potential and

be the global leader within land-based salmon

farming. We do this by transferring the best

preconditions offered by the sea to farm fish on

land through our chosen hybrid flow-through

system (HFS) technology. This secures a

sustainable production process with controlled

and optimal growth conditions and limiting

operational and biological risk

Our concept is based on preserving and reusing

marine resources and minimising our

environmental footprint. We put biology first and

farm fish on land using clean and fresh seawater

as the primary water treatment element. This is

combined with reuse of water to facilitate stable

and ideal temperatures, in an energy efficient

manner. Optimal water quality and stable

temperatures are key to ensure excellent fish

health and in turn capturing the full growth

potential of the salmon.

The creation of an optimal growth environment

for the salmon ensures we can maximise the

utilization and output of our farms, and thus

keep investments and costs on par with the

conventional industry.

We deliberately chose to start our journey in the

hearth of the global aquaculture cluster in

Norway. This ensures access to the best talent in

the aquaculture industry, as well as the world’s

foremost suppliers and infrastructure. Ultimately

it is all about the people, and in Salmon

Evolution we are team players on a mission to

produce salmon of the highest quality in an

even better and more sustainable way.

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Extending the ocean potential 8

Our Technology

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 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 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

sustainable production and circular economy,

wastewater is filtered and sludge collected,

before being transported to a recirculation

plant where it is converted into fertilizer, biogas

or similar.

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Extending the ocean potential 9

Markets

Overall description

Salmon Evolution is the global leader in land-

based salmon farming and targets an annual

production capacity of 100,000 tonnes. Salmon

Evolution aims to be a driving force in the

development of the salmon farming industry.

The salmon industry is backed by several major

global macro trends that have led to a

significant demand growth, hereunder

increased global population and a growing

middle class, increased focus on eating healthy

food, and resource efficient and climate friendly

food production. About 20 % of the consumed

protein in the world is fish, and the natural fish

resources have largely been exploited.

Global supply of Atlantic salmon has seen a

significant increase over the last decades. In

2011 global production was 1.6 million tonnes

WFE and this increased to 2.9 million tonnes WFE

in 2021, representing a yearly growth of ~6%.

However, the last two years global production

has gone down and ended at 2.8 million tonnes

WFE in 2023, a decrease of 3.5%. A primary

reason for this is that the conventional salmon

farming industry has reached a production level

where biological constraints put limit to further

growth, as well as a stricter regulatory

framework in key salmon farming regions.

Looking ahead for the next decade, a 3–7%

yearly growth in salmon demand implies a total

demand of around 3.8-5.5 million tonnes by 2033

which represents an increase of around 1.0-2.7

million tonnes WFE compared to current

production.

Source: Salmon Evolution

The strong demand outlook, combined with

challenges in the conventional salmon farming

industry growing the supply side, have resulted

in very strong salmon prices the last couple of

years. It has also paved the way for

development of new production methods such

as land-based, offshore and ocean based

closed systems. Conventional farming will play a

key role in the salmon farming industry for many

years to come, but new technology and other

production methods, such as land-based

farming, is necessary to close the supply gap

and address the steadily increasing demand for

Atlantic salmon.

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Extending the ocean potential 10

Competitive landscape and market opportunities

Norway is by far the largest producer of Atlantic

salmon today with a market share of about 50%

followed by Chile at around 25%. The two main

production regions share that most of the

production is exported, with a significant portion

of the volume being sold fresh to overseas

markets requiring airfreight.

Transportation of salmon via airfreight is

expensive and increases the climate impact of

the product. The rise of land-based salmon

farming enables production closer to or in end-

markets and thereby vastly reducing the need

for airfreight. This creates a foundation for

additional margins as pricing for in-market

produced fish will likely be benchmarked with

imported fish. Additionally, it reduces the

climate impact.

Salmon Evolution has significant international

ambitions, illustrated by our North America

expansion project as well as our joint venure

with Dongwon Industries in South Korea.

Building a land-based salmon farming facility is

a complex process, which is why Salmon

Evolutions first facility is being built in Norway in

the middle of the aquaculture cluster with

abundant access to the best people and

suppliers. This creates a strong operational

platform on which to scale, having achieved

technological and operational proof of

concept, as well as having established best

practices when expanding abroad. Finally,

when expanding internationally, Salmon

Evolution is confident that project execution

can both be fast-tracked and significantly de-

risked by having a facility operational in full

industrial scale, as well as teaming up with

strong local partners.

Illustration: Salmon Evolution

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Extending the ocean potential 11

Business plan and strategy

Goals and ambitions

Salmon Evolution’s goal is to be the global

leader within land-based salmon farming. The

company is focused on extending the ocean’s

potential by transferring the best preconditions

offered by the sea to farm fish on land through

its chosen hybrid flow-through system (HFS)

technology. This secures a sustainable

production process with controlled and optimal

growth conditions and limiting operational and

biological risk.

Strategic priorities and opportunities

The Company targets a production capacity of

100,000 tonnes and although this is an ambitious

target, Salmon Evolution already has an

identified pipeline of projects.

Over past years significant resources have been

devoted to growing the organization,

establishing quality and control systems as well

as establishing a digital infrastructure. In sum this

represents strong operational platform with

deep know-how and expertise in operating a

hybrid flow-through salmon farm. This again will

be the foundation in our expansion plans.

Our planned expansion is also strongly

supported by having achieved technological

proof of concept with our first farm at Indre

Harøy, now operational in full industrial scale.

The high degree of fresh seawater usage in our

production combined with optimal growth

conditions, have delivered strong results,

highlighted with good growth, minimal mortality,

and an industry leading superior grade share.

Salmon Evolution also has ambitions as to the

commercial aspect of fish farming, hereunder

sale and distribution. The strong results so far,

having a healthy and tasty fish with a firm texture

which provides a solid foundation for

establishing a good reputation in the market, all

of which have been confirmed in connection

with our first two years of operations.

The environmental aspect of our production

with a closed system production method,

collection and recirculation of waste, no sea lice

and minimal risk of escapes also have some very

attractive attributes supporting our commercial

operation.

Capital strategy/priorities and funding

The company is actively seeking to optimize its

capital structure and have a balanced mix of

equity and debt. Although land-based salmon

farming mainly has relied on equity financing in

the past, the company sees increasing appetite

amongst banks for more traditional bank debt

financing structures.

Going forward, as more land-based salmon

farming facilities commence operations and

reaches profitability, the Company believes this

positive trend will continue and eventually also

facilitate higher leverage facilitating further

growth.

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Extending the ocean potential 12

Salmon Evolution also sees interesting

opportunities for alternative financing structures,

for example through partnerships and/or project

financing structures. This and similar structures

represent a capital efficient way of growing

production while at the same time scaling and

leveraging the organization’s competence and

knowhow.

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Extending the ocean potential 13

Management

General comments on experience and competence

The company has a dedicated management team with extensive experience from the aquaculture

industry, and a well-developed organisation with the necessary competence and execution

capabilities.

Roles and CV’s

Trond Håkon Schaug-Pettersen, CEO

Trond Håkon Schaug-Pettersen took over

as our CEO in October 2022, after being

our CFO since 1 January 2021.

He brings extensive experience from

both the salmon industry and the capital

market. Prior to joining Salmon Evolution,

he served over 4 years as Senior Vice

President Finance and Business

Development at Hofseth International.

Before joining Hofseth International, Schaug-Pettersen worked for nine years

as an investment banker at Swedbank/First Securities advising Norwegian and

international companies on IPOs,

equity and debt capital raisings, M&A,

strategy, and restructurings.

Schaug-Pettersen has a BSc in

Economics and Business Administration

from the Norwegian School of

Economics (NHH).

Schaug-Pettersen owns 400,000 shares

and holds 2,600,000 options in Salmon

Evolution (directly or indirectly through

Troha Invest AS).

Trond Vadset Veibust, CFO

Trond Vadset Veibust joined Salmon

Evolution as CFO in April 2023.

He brings extensive industrial experience

from Ekornes, where he worked 8 years,

of which the last 3 years as a member of

the executive management. Veibust

has previously also worked 4 years at

Ernst & Young as an auditor, and is a

state authorized public accountant

with an MSc in Accounting and

Auditing from the Norwegian School of

Economics (NHH).

Vadset Veibust owns 55,000 shares and

holds 500,000 share options in Salmon

Evolution (directly or indirectly through

Trollkyrkja AS).

Ingjarl Skarvøy, COO

Ingjarl Skarvøy is one of our founders and

served as our first CEO. He has more than

30 years of experience from the

aquaculture sector, including regional

manager for Salmar Farming, CEO of

Salmar Rauma and regional manager

for Pan Fish Norway (now Mowi Norway).

Skarvøy owns 1,800,150 shares and

holds 750,000 share options in Salmon

Evolution (directly or indirectly through

Terra Mare AS).

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Extending the ocean potential 14

Kamilla Mordal Holo, Chief Project Officer

Kamilla Mordal Holo has 16 years of

experience from the construction sector,

including the post as project manager at

the Norwegian Public Roads

Administration, responsible for the

highway network in Møre og Romsdal

county. She has also been project and

construction manager at engineering and

consultancy company, 3S Project.

Mordal Holo has an MSc in civil and

environmental engineering from the

Norwegian University of Science and

Technology (NTNU).

Mordal Holo owns 160,060 shares and

holds 750,000 share options in Salmon

Evolution (directly or indirectly through

C10 Holding AS).

Odd Frode Roaldsnes, CCO

Odd Frode Roaldsnes joined Salmon

Evolution in 2021 and brings extensive

experience from the salmon industry.

Prior to joining Salmon Evolution, he held

the position as sales director and partner

at Ocean Supreme, a salmon exporter

based in Ålesund.

His background is within the areas of

management, business development

and downstream operations where he

has primarily been focusing on the

Asian markets the last 15 years.

Roaldsnes owns 250,000 shares and

holds 750,000 share options in Salmon

Evolution.

Henriette Nordstrand, Technical Director

Henriette Nordstrand joined Salmon

Evolution in August 2022. She holds

valuable management experience from

the fish farming industry, including

planning for, construction and running a

new large-scale hatchery plant.

Prior to joining Salmon Evolution, she

served five years as Hatchery Plant

Manager in Hofseth Aqua AS. Nordstrand

has an MSc in Aquamedicine from the

University of Bergen and holds the title

Aqua Medicine Biologist. She has also

studied recirculating aquaculture

systems (RAS) at the Norwegian

University of Science and Technology

(NTNU).

Nordstrand owns 32,849 shares and

holds 125,000 share options in Salmon

Evolution (directly or indirectly through

Heno Holding AS)

Tore-Jakob Reite, Director Strategic Projects

Tore-Jakob Reite joined Salmon Evolution

in 2023 and has over 25 years’ experience

from the aquaculture industry.

Prior to joining Salmon Evolution, he was

Managing Director of Entec Brimer, a

manufacturer of composite tanks to land

based fish farming and other industries.

He has also worked as Head of Business

Segment Fish Farming, Site Manager at

Linde and worked several years in

manager positions within sales and

marketing of salmon and salmon

products at Pan Fish (now Mowi).

Reite holds a bachelor’s degree in

business and marketing from University

of Strathclyde Business School,

Glasgow, Scotland.

Reite owns 1,250 shares and holds

125,000 share options in Salmon

Evolution.

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Extending the ocean potential 15

ESG IN SALMON EVOLUTION

Salmon Evolution is a salmon farming company

focused on transferring the best preconditions

offered by the sea to farm fish on land. Our

hybrid flow-through system (HFS) technology

secures a truly sustainable process with

controlled and optimal growth conditions while

limiting operational and biological risk.

We are committed to ensure that we are a

responsible business and that we are sustainable

in our operations and in everything we do. This is

enshrined in our vision:

“EXTENDING THE

OCEAN POTENTIAL”

We build sustainability and social responsibility

into the core of our business. Our commitment is

integrated into every part of Salmon Evolution’s

business model and implemented through our

ethical guidelines. It is our firm belief that

responsible and sustainable business behaviour

contributes to better environmental, social,

organisational, and financial results.

Salmon Evolution has a high potential to

produce what the market demands: a fresh,

healthy, and sustainable premium product. With

the use of the HFS technology, we farm our

salmon in a closed system with minimal impact

on the environment, whilst providing the best

conditions for optimal fish welfare.

We have created a truly sustainable approach

to producing the world’s best and healthiest

protein.

ESG Reporting

This is our fourth annual report published and the

third annual report with explicit Environmental,

Social, and Governance (ESG) factors included.

Our report is created with reference to the

Global Reporting Initiative (GRI) Standards.

We have committed to establish plans for ESG

monitoring to allow for comprehensive ESG

reporting. We are consistently striving to gather

and transparently present our information at the

highest level of quality possible, with principles

of:

▪ Accuracy

▪ Balance

▪ Comprehension

▪ Timing

▪ Reliability

For our 2023 report, we still have limited

comparative information from previous years or

reporting periods due to only having one full

calendar year with full operations.

Going forward, we will present our information in

a manner that is comparative on a year-by-year

basis for our operations, to track our progress

and ensure accountability to our goals.

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Extending the ocean potential 16

Stakeholders and Material Topics

The Company ran the process by conducting a

materiality assessment to map and determine

our sustainability priority areas. We began by

identifying our most important stakeholders (see

page 30) as well as their primary areas of interest

related to environmental, social, and

governance factors. These stakeholders and

sustainability priority areas has now been

verified.

We have examined these areas to learn where

our potential impacts are, and from this process,

we established benchmarks for how we should

identify and manage our sustainability risks and

opportunities. This also gave clarity on how we

should provide our stakeholders with material

disclosures through our ESG reporting.

The materiality assessment was conducted

through discussions with internal employees who

are in regular contact with our key stakeholders.

It was carried out in accordance with GRI

Standards and the Guidelines to Issuers for ESG

Reporting by Oslo Stock Exchange (Euronext).

To ensure the necessary independence and

integrity of the process, this assessment was

conducted by a third-party organisation.

Our materiality assessment resulted in the

following material topics being defined as

priority areas:

ENVIRONMENT AND TECHNOLOGY

• Greenhouse gas (GHG) emissions

• Energy usage

• Circular economy

• Biodiversity and nature

FISH AND WATER

• Fish health and welfare

• Sustainable food production

• Product certification and traceability*

*addressed in the Governance chapter

PEOPLE AND SOCIETY

• Employee health and safety

• Local jobs, cooperation, and value creation

• Regulatory compliance

• Responsible supply chain

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Extending the ocean potential 17

Governance and ESG

Corporate responsibility is an integrated part of

Salmon Evolution’s business practices. We

strongly believe that we have a responsibility for

the people, communities, and environment

affected by our business. This is woven into our

core values, responsible, competent, innovative

and team player.

It is the duty of the CEO to ensure that Salmon

Evolution always operates according to these

core values. The CEO must also ensure

compliance with legislation and follow up on

Salmon Evolution’s governing documents.

OUR CORE VALUES: RESPONSIBLE, COMPETENT, INNOVATIVE, TEAM PLAYER

The Board of Directors shall ensure that Salmon

Evolution has sound internal control and systems

for risk management. They shall also supervise

Salmon Evolution’s management and general

activities. This includes ensuring compliance to

company core values, ethical guidelines, and

guidelines for corporate social responsibility.

Our governing codes, policies, and procedures

ensure that all our employees carry out their

activities in an ethical manner, in accordance

with current legislation and Salmon Evolution

standards.

An overview of ESG topics covered by our

governance system is presented here:

• Fish health and fish welfare policy

• Waste management policy

• HSEQ policy

• Supplier code of conduct

• Code of conduct

• Corporate governance policy

• Corporate social responsibility policy

• Anti-corruption compliance procedure

Environment

There is a growing need for sustainably farmed

salmon. The Food and Agriculture Organization

(FAO) of the UN predicts that the world

population will reach 9.7 billion by 2050. The

demand for food is set to increase by 50% and

meeting this demand will require a significant

increase in protein production.

Seafood is quickly becoming an important

contributor to meeting this demand. However, a

growing demand for seafood will increase the

Protein

production facts

Carbon footprint

(kg CO

/40g

edible meat)

0.60

0.88

1.30

5.92

Feed conversion

ratio

1.2-1.5

1.7-2.0

2.7-5.0

6.0-10.0

Edible yield

68 %

46 %

52 %

No data

Water

consumption

(litres/kg)

2,000

4,300

6,000

15,400

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Extending the ocean potential 18

pressure on already over-exploited wild fish

stocks and ocean resources. To alleviate this

pressure, aquaculture, including salmon

farming, is required to efficiently manage and

maintain both wild fish stocks and the ocean’s

natural biodiversity.

Salmon are amongst the most efficient protein

sources to produce. The feed conversion ratio

(FCR) for salmon, or the amount of feed an

animal needs to gain one kilogram of body

weight, is well below other common protein

sources.

Salmon has a high harvest yield in percentage

(after inedible parts are removed) compared to

other farmed animals. This is shown in Table 1. In

the future when more data is available, Salmon

Evolution intends to measure the efficiency on

the production and believe that land-based

salmon should be even more competitive.

The global increase in food demand, combined

with stronger preferences for healthy and

sustainably produced proteins, has led to a high

growth in demand for salmon over the last few

decades.

This increase has mainly been met by a

continuous expansion within conventional

aquaculture. However, numerous challenges

inhibit sustainable future growth for fish farming:

▪ CLIMATE CHANGE: DUE TO THE LONG-HAUL TRANSPORT AND DISTRIBUTION OF FISH, THE CO

FOOTPRINT FOR SEA-

BASED SALMON FARMING IS HIGH.

OUR RESPONSE: EXPANDING OPERATIONS CLOSER TO MARKETS

▪ POLLUTION AND WASTE: THE NATURE OF CONVENTIONAL SALMON NET PENS CREATES ISSUES WITH THE DISCHARGE

OF UNTREATED WASTE AND POLLUTION, AS WELL AS DISEASES AND PARASITES INTO COASTAL WATERS.

OUR RESPONSE: MINIMIZING POLLUTION AND TREATING WATER AND WASTE

▪ BIODIVERSITY AND NATURE: ESCAPES IN SEA-BASED SALMON FARMING ARE EXPENSIVE AND POTENTIALLY

DAMAGING TO LOCAL WILDLIFE.

OUR RESPONSE: ELIMINATING THE RISK OF ESCAPE AND PROTECTING OCEAN BIODIVERSITY

▪ FISH HEALTH: DISEASES, PARASITES, AND SEA LICE ARE WIDESPREAD IN CONVENTIONAL SALMON

FARMING, CAUSING CONSIDERABLE DAMAGE COMMERCIALLY. IN ADDITION, MORTALITY AND LOSSES IN

PRODUCTION ARE A CHALLENGE FOR SEA-BASED SALMON FARMERS.

OUR RESPONSE: THROUGH OUR TECHNOLOGY, WATER INTAKE IS FILTERED AND UV-TREATED, AND SEPARATED

BIOLOGICAL ZONES REDUCE OPPORTUNITY FOR CROSS-CONTAMINATION

▪ FISH WELFARE: CLIMATE VARIABILITY AND INCREASING WATER TEMPERATURES CAN CAUSE STRESS AND REDUCE FISH

HEALTH AND WELFARE.

OUR RESPONSE: BY CONTROLLING WATER TEMPERATURE AND BY CONTINUOUS MONITORING, WE ENSURE GREATER

FISH WELFARE

New methods and technologies for addressing

biological and environmental challenges are

continually being developed, including a shift to

more land-based farming practices. Land-

based farming addresses a broad range of

these industry challenges and represents a

viable solution for sustainably expanding the

ocean’s essential resources.

Annual report 2023

Extending the ocean potential 19

Research and development are thus central to

our value chain and help create efficient

operations, drive innovation, and create

improvements that ensure future sustainability.

Our research is based on co-operation with

several research communities and promotes

knowledge transfer between internal and

external stakeholders.

Our Commitment

Our vision is to be the globally leading producer

of land-based Atlantic salmon by ensuring

sustainability and extending the ocean

potential. We aim to encourage the inclusive

and prosperous development of the

aquaculture industry, within a stable and

resilient earth system.

To achieve this, we commit to promoting a

culture where sustainability and profitability

reinforce each other. We build sustainability into

our core operations and through the use of the

HFS technology, we transfer the best

preconditions offered by the sea to the farming

of fish on land.

Through our business strategy, we are

committed to the external environment and to

setting a high standard for fish health and fish

welfare. Our objective is to monitor and reduce

the environmental impact of our business, to

ensure we produce a premium salmon product

with a low environmental footprint.

We therefore place an emphasis on three key

environmental areas:

1) climate change impacts

2) circular economy, pollution, and waste

3) biodiversity and nature

By reusing water, we optimise energy

consumption related to pumping and heating,

which reduces our CO

footprint. By filtering and

treating wastewater, we reuse more marine

resources. Fish sludge is also collected and

recycled, contributing to a circular economy. By

having a closed farming system, we also

minimize the risk of escapes and thus the

potential harm to local biodiversity and nature.

Photo: Salmon Evolution

Our environmental efforts should never

compromise the health of our fish or our product

quality. We therefore also focus on:

1) fish health and welfare

2) sustainable inputs and outputs

3) product certification and traceability*

*addressed in the Governance chapter

By using fresh seawater from the coast, we

create optimal farming and environmental

conditions for our fish, which result in better

growth and a shorter production time. This

enables a sustainable production process, with

controlled and optimal growth conditions while

limiting operational and biological risk.

Annual report 2023

Extending the ocean potential 20

Each of our choices is weighed against

alternatives to ensure that we carry out our

operations responsibly. Sustainability and fish

welfare are at the core of our vision as well as

our actions as a firm. They are essential to the

identity of Salmon Evolution, and we commit to

carry this forward as our operations grow and as

we expand globally.

Environment and Technology

Climate Change Impact

Salmon Evolution’s hybrid flow-through system

(HFS) technology ensures rich access to fresh

filtered seawater. At Indre Harøy, the seawater

intake is based on two intake pipes at 25 meters

and 95 meters, respectively, enabling us to tap

into water at ideal temperatures.

By combining supplies of clean and fresh

seawater with reuse, we minimise overall energy

consumption for pumping and heating of

seawater in the facility.

Our energy plant has a very high output in

relation to the energy used.

Estimated data for Phase 1- full run rate:

• Electricity usage (MWh): ~60,000

• Electricity usage (kWh/kg biomass (LW)):

~6.3-6.8

• Renewable energy, Norwegian energy mix

The HFS technology reuses ~65% of the water,

while the remaining ~35% is fresh seawater. This

ratio is our “sweet spot”, balancing cost and

operational risk while ensuring maximum

production output.

Higher reusage levels require more filtration and

water treatment which again implies higher

complexity and risk. On the other hand, a lower

level of reusage will lead to significantly higher

energy costs in connection with pumping and

heating of water. The Company has a green

power supply agreement with Statkraft, Europe's

largest generator of renewable energy. Statkraft

is fully owned by the Norwegian government

and is Norway's largest supplier of electricity to

power-intensive industries.

The partnership with Statkraft and location in the

heart of Norwegian hydropower production,

ensures sustainable electric power with low

environmental impact. The CEO of Salmon

Evolution, Mr. Trond Håkon Schaug-Pettersen,

sees this as a very positive step forward:

“In Norway 88 percent of electricity production

is hydropower. Our customers can be certain

that our salmon is produced with the lowest

possible environmental footprint, setting a new

benchmark for sustainably produced salmon.”

In addition to this, Salmon Evolution is pursuing

international expansion closer to markets,

serving as a lower-CO

alternative to long-haul

transport and distribution.

Annual report 2023

Extending the ocean potential 21

Key Points – Climate Change Impacts

▪ Salmon is already a lower environmental impact protein, but through the HFS technology, we further

reduce our climate impacts.

▪ We have a high performance and high output in relation to our energy consumption.

▪ Located in Norway, most of the electricity consumed will be made of hydropower.

▪ Through international expansion, we put land-based facility operations closer to the market, allowing

us to reduce our CO

footprint for long-haul transport and distribution.

The energy efficient system at Indre Harøy was

given a grant of up to NOK 96.8 million from

Enova. Enova is owned by the Norwegian

Ministry of Climate and Environment and

functions to promote the environmentally

friendly production and consumption of energy.

This grant has allowed us to use even more

resources to reduce greenhouse gas emissions,

to develop energy-saving and climate-friendly

technology, and to strengthen the security of

the Norwegian food supply.

Circular Economy, Pollution, and Waste

The HFS technology is built to take in and reuse

large quantities of clean and fresh seawater

from the ocean. We are able to create an ideal

balance, where we use water with the same

high quality as traditional Norwegian cage-

based farming, but where we also have

sufficient space and access to the necessary

resources for large-scale production on land.

This provides us the opportunity to commit to a

truly sustainable production as well as to

promote a circular economy.

We plan to achieve this through collecting,

treating, and filtering feed residue and

wastewater. These are then transported to a

recirculation plant where they are converted

into short-travelled fertilizer, biogas, or similar.

In addition to the ~65% of water being reused

through the HFS technology, we also reuse the

fish sludge as input for biogas or natural fertilizers.

We are also conducting research for future

usage areas.

Our wastewater from Indre Harøy, is processed

through a drum filter and dried up to 20-25 % TS

using a dryer from Blue Ocean Technology. The

dried sludge is then delivered to local farmers,

which convert the sludge into electricity and

fertilizer.

Annual report 2023

Extending the ocean potential 22

Key Points - Circular Economy, Pollution, & Waste

▪ ~65% of water is reused.

▪ Wastewater and feed residue are collected, treated, and filtered.

▪ We are continuing research and development to ensure the responsible reuse and recirculation of

wastewater, residues, and sludge.

By reusing and treating wastewater, and

reusing water and sludge, we minimise our

environmental footprint. Through our research,

we aim to contribute to a circular economy by

making these reuse solutions into feasible

practices in the future.

Biodiversity and Nature

Our core business is about preserving and

reusing marine resources and minimizing our

environmental impact. The HFS technology

operates in a land-based and enclosed system,

which means that through greater production

control, there is a close to zero risk of the salmon

escaping from the farm.

As a significant achievement towards

responsible and sustainable salmon production

we achieved the prestigious Aquaculture

Stewardship Council («ASC») certification after

only 18 months in operation. ASC is globally

renowned for its stringent aquaculture

standards focused on environmental

sustainability and social responsibility.

Further, we are committed to minimize negative

impact to the local environment. To make sure

that we reach this important goal we have

established a plan for monitoring local

biodiversity and nature. This is done by

collaborating with an external advisor.

Key Points – Biodiversity & Nature

▪ Our closed system ensures minimal escape risk.

▪ Achieved ASC certification in 2023.

▪ Continuously monitoring local biodiversity and nature.

Annual report 2023

Extending the ocean potential 23

Fish and Water

Fish Health and Welfare

At Salmon Evolution, we believe that biology is

key to ensure responsible practices in the

aquaculture industry and ensuring fish health

and welfare. We understand fish welfare as:

▪ freedom from hunger, thirst, and malnutrition

▪ freedom from extreme cold and heat

▪ freedom from injuries and illnesses

▪ freedom from anxiety, stress, and fear

▪ freedom to practice normal behaviour

To ensure fish welfare, we focus on the following:

▪ access to fresh seawater and good nutrition

▪ access to optimal conditions, including

space for protection and rest

▪ preventing and/or quickly diagnosing and

treating injuries and illnesses

▪ providing sufficient area and excellent

facilities aimed at recreating a living space

for fish that is similar to their natural

environment

▪ ensuring good conditions and treatment so

that fish avoid mental or physical suffering

The HFS technology and the arrangement of our

facility enable us to define each tank as an

isolated biological zone. This means that water

in one tank never mixes with water in another

tank. Such an arrangement gives us full control

of water parameters and the production

environment and allows us to ensure biosecurity.

A potential biological outbreak in one tank will

not impact or contaminate the fish swimming in

another tank.

To ensure excellent biosecurity in our operations,

we have implemented a quality assurance

system with dedicated personnel responsible for

compliance and the training of staff. Our

training program includes promoting general

biosecurity knowledge and awareness,

including the development of skills and the use

of measures specifically relevant for Salmon

Evolution’s facility.

To ensure optimal biological and growth

conditions in the fish tanks, oxygen and CO

levels are constantly monitored and adjusted.

The HFS technology engages in CO

stripping

and oxygenation to guarantee ideal

environmental conditions for our fish.

By drawing seawater from depths of 25 and 95

meters, the HFS water intake is further filtered and

treated with ultraviolet (UV) rays to eliminate

parasites, sea lice, viruses, infection, and additional particles. Filtering and disinfecting intake water

creates a controlled environment, reducing the risk of illness, and ensuring a rich flow of fresh and

clean seawater into the tanks.

By optimizing water quality parameters with ideal and stable temperatures, we can reduce the time

to harvesting for each batch from approximately 16 to 11 months with a 130g smolt insert weight. This

increased growth creates the basis for greater production efficiency and optimal utilization of our

licensed volume.

Annual report 2023

Extending the ocean potential 24

Finally, our operations reduce the handling of fish, which create better growth conditions. Finally, our

operations reduce the handling of fish, which provide better opportunities for optimal feeding and

reduces loss and stress during the production cycle.

Key Points – Fish Health & Welfare

▪ The HFS technology creates an optimal and stable growth environment, which is less stressful for our

fish.

▪ We ensure biosecurity through separate tanks and distinct biological zones.

▪ Filtered seawater further minimises the risk of bacterial and viral pathogens; minimises risk of parasites;

and limits threats of infection.

▪ We engage in minimal handling of our fish

By maintaining control over the production

environment and stable water parameters, we

generate conditions for increased growth and a

shorter time to harvest. Our approach ensures

better fish health and well-being, including

reduced mortality and losses in production.

Annual report 2023

Extending the ocean potential 25

Sustainable Inputs and Outputs

At full run rate in phase 1, we estimate a harvest

volume of approximately 7,900 tonnes (HOG, or

head on gutted), with a strong focus on

optimising our sustainable inputs while reducing

negative impacts for our outputs for this volume.

Our most dominating inputs consist of seawater,

power, feed, smolt, and oxygen.

Since 2021 Salmon Evolution has had a strategic

feed partnership with Cargill. Salmon Evolution is

Cargills global flagship customer for land-based

full grow out production.

Cargill has further committed to allocate

significant resources and R&D capacity with the

ambition to develop sustainable feed solutions

tailored to our operational targets: securing high

biological performance and premium product

quality.

Cargill also owns 2.3% of Salmon Evolution.

When asked about the importance of the

partnership with Cargill, the CEO of Salmon

Evolution stated:

“Having the best possible feed is essential for every salmon farmer. Particularly, in our HFS system

where we create optimal and stable living conditions for the salmon, we see a strong and untapped

potential in tailoring a feed focused on maximizing biological performance and product quality.”

Estimated data for Phase 1- full run rate:

• 100 % local seawater intake

• 9,300 tonnes of feed, corresponding to

GHG emissions of 14,500 tons CO2 eq.

excluding land use change (GW_E_LUC)

and 18,100 tons CO

eq. including land use

change (GW_I_LUC).

Another important input is smolt. Salmon

Evolution has its own smolt production at Salmon

Evolution Dale AS in Dalsfjorden in Volda

municipality, Norway. The location has a

documented track record as a high quality

smolt producer and has been producing smolt

since 1995.

One of the major advantages with Salmon

Evolution Dale is its excellent freshwater supply.

Salmon Evolution Dale has access to clean

freshwater from the surrounding mountains and

is guaranteed a consistent supply of freshwater

from the local power station.

This freshwater access enables Salmon Evolution

Dale to utilize a similar production technology as

Salmon Evolution uses at its grow-out facility, a

hybrid flow-through system (HFS) with reuse of

water, CO

stripping and oxygenation- making it

a perfect fit for Salmon Evolution.

Having an inhouse smolt production gives

Salmon Evolution operational control over a

critical part of the value chain.

In addition to feed and smolt, another essential

input is oxygen, which is supplied by Nippon

Gases. We share many of the same values,

making this an ideal partnership. During our

selection process, one of the most important

factors was the focus Nippon Gases has on

sustainability. Their efforts have led EcoVadis to

awarding them a Gold Medal, and they are

ranked in the top 5% for their sector.

By prioritizing responsible suppliers, we can

ensure that we use sustainable inputs, leading us

to create a truly healthy and sustainable final

product.

Annual report 2023

Extending the ocean potential 26

Social

Salmon Evolution is committed to responsible

business practices. We take seriously our duty to

promote human rights and ensure labour

standards, equality, and non-discrimination in

our workforce.

We are determined to be a safe and stimulating

place to work. We also aim to limit any negative

impacts our operations may have on society as

much as possible. Through our concentrated

investments, we have seen an important ripple

effect that has led to positive impacts in local

communities.

To ensure we track our efforts and impacts, and

act responsibly, we have several policies and

plans in place regarding health and safety,

working environment, stakeholder

engagement, and the respectful use of local

areas. As we move forward, we will continue to

monitor and improve these efforts in a holistic

way.

Employee Well-Being,

Health & Safety

Safe and Secure Workplaces

We strive for the highest levels of safety in

working conditions. Our suppliers and partners

must all operate according to responsible

labour standards. Going forward, we

encourage contractors and other partners with

operational activities to be certified according

to the ISO 45001, the standard for a safe and

healthy working environment.

In 2023, there were one lost time injurie (LTI), one

total recordable injurie (TRI), zero accidents, and

zero fatal accidents reported amongst Salmon

Evolution employees. In total, there were 45

cases of sick leave under 16 days, and 5 cases

over 16 days. Four male employees took their

entitled parental leave and returned. In

addition, one male and two female started their

entitled parental leave and have not returned

by the end the year.

Amongst contract workers, there were 2 LTI, 2

TRI, and zero fatal accidents. There were zero

fatal accidents amongst third parties.

In 2023 the workload at the site at Indre Harøy

has been high, and naturally it has been many

workers at site. Along with high activity and

many workers, the complexity is also at a level

that requires a lot from both the contractors and

the workers. To ensure safe working conditions

and reduce the risk of accidents, we have

established a close dialogue with contractors

and workers, as well as developed safety

routines. We maintain a strong focus on security

and sense of responsibility for our employees.

We strive to consistently provide a controlled

and safe project progression regardless of the

complexity or difficulty of the task.

To ensure this, we have a Health, Safety &

Environment (HSE) manager on site to train our

workers, conduct preventive HSE tasks, and to

investigate any instances of potential violations

or incidents. An introduction to HSE and training

are provided to everyone new to the workplace

and Salmon Evolution offers HSE and first aid

courses to all its employees.

In addition to the HSE manager, Salmon

Evolution has appointed a safety representative

and chief safety representative. All HSE work is

documented in our third-party systems, TQM &

Interaxo, through the filing of non-conformance

Annual report 2023

Extending the ocean potential 27

reports, the documentation of investigations,

and any additional follow-ups necessary.

The quality manager prepares procedures for

work tasks that everyone is obliged to familiarize

themselves with. Procedures for operations are

assessed for risk and hazards prior to initiation.

Salmon Evolution has an Occupation Safety

Agreement with Medi3.

In 2021, we established a process for our

employees to receive regular performance and

career development reviews which have been

extended and improved throughout 2023.

In October 2023 we conducted an employee

engagement survey across the entire

organization. The survey measures how the

employees score the organization on seven

main drivers related to engagement. These are

well-being, alignment, collaboration,

development, leadership, pride, and

recognition. Moving forward we are planning on

conducting these surveys on a quarterly basis to

gain valuable insights on the “pulse” of the

organization. This data will be important when

making strategic decisions in connection with

organisational change.

Salmon Evolution has high ambitions for employee development in the company.

Target and development interviews are conducted semi-annually in Q1 and Q3, respectively. We

have invested in a separate module in the HRM system, which simplifies the implementation and

follow-up of the interviews. The module is implemented throughout 2022 and the first talks was

conducted in 2023.

Salmon Evolution aims to be an excellent and

stimulating place to work, where employees are

given the opportunity to use their skills and

abilities to contribute both to the company’s

and their own progress. Employees receive

systematic training focusing on developing skills

tailored to individual needs and capabilities.

We are also committed to the employee well-

being outside of working hours. That is why we

have established a corporate sports team for

promoting activities and health after hours. In

2024, we will look for new initiatives to promote

worker health and well-being both during and

after work hours.

Diversity and Equal Opportunity

Salmon Evolution shall be an inclusive working

environment, and we believe that ensuring this

is key to attract future talent and maintaining

our attractiveness as an employer. We

continuously work to ensure that we create a

workplace that is free from discrimination or

harassment based on race, sex, nationality,

religion, age, colour sexual orientation, disability,

political opinion or otherwise. Any recruitment,

promotion, training, reward or other

advancement, is based on skills, qualifications,

experience and performance. We have zero-

tolerance for harassment or discrimination, both

of which are addressed in our Code of Conduct

and Personnel Handbook.

Discrimination based on ethnic background,

nationality, language, gender, sexual identity, or

religious faith shall not occur. We are committed

to promoting equal opportunities and fair

treatment of all employees.

In 2023, there were one case reported relating

to a personnel matter. This case was processed

and resolved in accordance with our

procedures.

Global GAP certification received in October 2023

Photo: Salmon Evolution

Our Employees

At the end of 2023, Salmon Evolution had 69

employees excl. apprentices, all 100%

employed. We had a turnover rate of 0%.

We support the principles of freedom of

association and collective bargaining

agreements. All employees at Salmon Evolution

may freely join any labour union of their choice

and we strive to sustain a good relationship with

employees and unions.

In 2023, all employees, except for one Russian

and one Islandic employee, in Salmon Evolution

were Norwegian. We had 13 employees over 50

years old, 39 employees between the ages of

30-49, and 17 employees under 30 years old.

There were 6 women and 7 men employed in

2023. Our management team consisted of five

men and two women.

We are continuously focusing on diversity and

gender balance. The gender balance in Salmon

Evolution as of 31.12.2023 was 70% men and 30%

women. This is better than the average for the

industry in Norway, which in 2022 was 82% men

and 18% women according to Directorate of

Fisheries.

Annual report 2023

Extending the ocean potential 29

Compensation

Our ambition is to offer competitive

compensation aligned with the local market

and industry. No employee in Salmon Evolution

is paid less than the official national living wage.

We map gender pay on a regular basis, and our

overall our analysis shows no significant gender

pay difference across functions. For

compensation based on collective bargaining

agreements we have equal pay.

We have a wage gender ratio of 90% (89% in

2022), excluding management and

apprentices. The average base salary in 2023

was NOK 732,099 for our female employees

compared to NOK 817,060 for our male

employees. The ratio for management was 75 %

(62% in 2022) and the average base salary was

NOK 1,799,125.

Responsible Supply Chain

Our suppliers are important contributors to the

success of our business. We believe that

transparent and frequent communication with

both our customers and suppliers is vital for our

success. We work closely with our suppliers and

customers to minimise negative impact from our

supply chain and we will continue to develop

partnerships focusing on sustainability.

Suppliers that are in breach of our basic

standards for ethics and corporate social

responsibilities can be disqualified for new

tenders. However, if they do not comply with our

standards, we first aim to work with the supplier

to bring about improvements. If the supplier still

does not comply, Salmon Evolution will seek to

terminate the supplier relationship.

Salmon Evolution suppliers shall have standards for ethics and corporate social responsibility that

follow the UN Global Compact principles. This shall apply to all suppliers as well as partnerships and

employees.

Stakeholder and Local Engagement

Local Value Creation

Given that our land-based facility is located on

Indre Harøy in Hustadvika municipality, Norway,

we decided in 2019 to move our head office

from Molde municipality to Elnesvågen,

Hustadvika. The physical relocation was done

during the first two months of 2022.

For the first phase of construction, our total

investment on Indre Harøy was approx. NOK 1.7

billion. From this, we have seen a major ripple

effect for both the Møre og Romsdal region and

Hustadvika municipality, in the form of large

contracts to local suppliers. This has led to

comprehensive investments in their own

companies.

For example, food services are provided by

local companies, many of whom have seen

record growth, which has led to further

investments in the municipality. Other

investments our local suppliers have made

include office premises and associated

infrastructure, which have directly contributed

to further local contracts and increased

employment opportunities.

Annual report 2023

Extending the ocean potential 30

In total, Indre Harøy has employed around 200

workers daily through these contracts. Many of

the contractors are also temporarily housed at

local hotels while working at the construction

site. The communities we impact, from the

municipality to local inhabitants, have reacted

positively to these developments.

Stakeholder Engagement

Dialogue and engagement with our

stakeholders help us understand what is

expected of us, what is most important to our

stakeholders, how they are impacted by our

operations, and how we can work together in

solving common challenges.

In 2021, we reviewed our stakeholders and

identified seven groups that we have the

possibility to impact or be impacted by. These

are listed below:

Throughout 2023 we have been in regular

contact with our employees, the local

community and municipality, our customers,

and our suppliers and service providers as part

of our daily operations. Quarterly reports and

presentations, and the latest relevant news from

our company, are presented on our website.

Over the next year, we commit to have a

continued focus on creating arenas for

systematic and open dialogue with these

groups to understand our impacts. We are

committed to being a responsible business

through interacting with our stakeholders in both

an ethical and transparent manner.

Respectful Use of Land

The site of our land-based facility was originally

a disused quarry. After over 30 years of

operation, the quarry was emptied, and

remained vacant. Because the land was left in

this state, there was very limited need for

intrusive activities in the nature to complete the

construction of our facility for farming salmon.

Converting the disused quarry has provided an

opportunity for us to engage in value-creating

activities in an area where there were limited

opportunities for this. We made great efforts to

create an optimal balance between

generating value for local people and

communities, while severely limiting land-

conversion and our impact on the environment.

Going Forward

Salmon Evolution will continue to prioritise local

suppliers for our contracts. We will develop good

relationships with local communities through

creating an open dialogue and expanding our

engagement efforts. We believe that our

operations should have as little negative impact

as possible, and as we grow, we will develop

new ways to monitor and assess our efforts.

Annual report 2023

Extending the ocean potential 31

Governance

At Salmon Evolution, we believe that the

foundation of good governance is built through

strong and transparent relationships with our

internal and external stakeholders. Our current

governing principles and procedures help

establish the basis of these relationships.

Our principles include rules of procedure for the

Board of Directors (the Board), instructions for

the chief executive officer, regulations on the

division of roles and responsibilities between the

Board and the CEO, our investor relations policy,

and manuals for the handling and disclosure of

insider information.

As a Norwegian public limited liability company

listed on Oslo Stock Exchange, Salmon Evolution

bases its corporate governance structure on

Norwegian legislation and recommended

guidelines.

Our Code of Conduct includes the main

principles for ethical business conduct at

Salmon Evolution, and detailed guidelines for

anti-corruption, conflicts of interests, and

whistleblowing routines. Our Code of Conduct

applies to all employees, contract workers,

Board members, and all other persons acting on

behalf of the company.

Our governance documents and practices are

subject to regular review by the Board to ensure

compliance and effectiveness.

Our approach to corporate governance places

a high priority on building and maintaining trust

and confidence in the company to ensure long-

term value creation in the best interest of both

our shareholders and stakeholders.

Organisation and Governing Systems

Organisation and Ownership

Salmon Evolution ASA is a Norwegian public

limited liability company and has four

subsidiaries.

Salmon Evolution Norway AS is the owner and

operator of our facility at Indre Harøy and where

most of our employees are employed. Salmon

Evolution International AS is the holding

company for our interests in North America and

our South Korean joint venture and K Smart

Farming is the joint venture between Salmon

Evolution and the South Korean seafood firm

Dongwon Industries. Salmon Evolution Dale AS is

producing smolt and will be the main supplier of

smolt to our facility at Indre Harøy. Salmon

Evolution Sales AS is our sales company.

Salmon

Evolution ASA

Salmon Evolution

Norway AS (100%)

Salmon Evolution

International AS (100%)

K Smart Farming

49%

Salmon Evolution North

America (100%)

Salmon Evolution Dale

AS (100%)

Salmon Evolution Sales

AS (100%)

Annual report 2023

Extending the ocean potential 32

Board of Directors report

Introduction/summary

The Board of Directors is responsible for the

overall management of Salmon Evolution and

may exercise all the powers on our behalf. In

accordance with Norwegian law (Norwegian

Public Limited Liability Act), the Board of

Directors is responsible for, among other things,

supervising the general and day-to-day

management of our business; ensuring proper

organisation, preparing plans and budgets for

our activities; ensuring that our activities,

accounts, and asset management are subject

to adequate controls. They also undertake

investigations necessary to ensure compliance

with these duties.

The Board of Directors may delegate such

matters to the Executive Management of

Salmon Evolution. The Executive Management is

responsible for ensuring that day-to-day

operations are in accordance with instructions

set out by the Board of Directors.

Among other responsibilities, our CEO is

responsible for keeping the accounts at Salmon

Evolution in accordance with existing

Norwegian legislation and regulations, and for

managing the Salmon Evolution’s assets in a

responsible manner.

At least once a month, our CEO must brief the

Board of Directors about Salmon Evolution’s

activities, financial position, and financial results.

This board of directors’ report outlines the main

framework regarding the Group’s corporate

social responsibility and corporate governance.

For further information please refer to the ESG

section of this report (page 15-31).

Board of directors – roles and CV’s

Regional and international entrenchment and industry-based expertise characterise our directors.

Their common denominator and driving force are a belief in farming salmon sustainably on land,

based on the board’s overall expertise and the choice of the right technology.

Tore Tønseth, Chairman of the board

Investment director at Ronja Capital and

has worked in the financial market for

more than 15 years. Earlier appointments

include equity analyst in both Sparebank 1

Markets and Pareto Securities, with

seafood, technology and industry as

special fields.

He was responsible for seafood analyses

at SpareBank 1 Markets from 2013 to 2019. At

the same time, he was in frequent

demand as a speaker in Norway on

seafood, finance and sustainability. Tønseth also has a background from

various technology start-ups, where he has been both product manager and

system developer.

Tønseth has an MSc in economics and

administration from the Norwegian

School of Economics (NHH),

specialising in finance and

econometrics.

Ronja Capital II AS, a close associate

of Tore Tønseth, owns 30,140,645

shares in Salmon Evolution.

Annual report 2023

Extending the ocean potential 33

Peder Stette, Board Member

Peder Stette has been in the fishing and

aquaculture industry for the last 25 years.

From 1994 he developed Peter Stette AS to

be an important supplier of technical

solutions to the industry before merging

with Optimar in 2014. Optimar was later

sold to Haniel in 2017, and Peder had the

position as CTO and later CCO in Optimar

until 2021. He is now the CEO of Stette

Holding, a family investment company.

Peder Stette holds the position as

director of Ably Medical, Invisible

Connections, Biaton, NSP Aid and

others. For the coming years he will use

his knowledge and experience to build

values in the companies the Stette

family is invested in.

Stette Invest AS, a close associate of

Peder Stette, owns 11,744,288 shares in

Salmon Evolution.

Anne Breiby, Board Member

Anne Breiby holds a Cans scient degree in

fisheries biology from the University of

Tromsø and experience as aquaculture

coordinator for the director of fisheries in

Nordland county, organisation secretary for

the Norwegian Fish Farmers Association,

political adviser in the Ministry of Fisheries

and state secretary (junior minister) in the

Ministry of Trade and Industry.

Over the past 20 years, Breiby has

been self-employed with boardroom

work as her main activity.

She has board experience from inter

alia Ulstein Group ASA, Rem Offshore

ASA, Folketrygdfondet, Norges

Sjømatråd AS, Åkerblå AS and

Sparebanken Møre. She is currently

chair of Tafjord Kraft As.

Breiby owns 168,935 shares in Salmon

Evolution.

Ingvild Vartdal, Board Member

Ingvild Vartdal has a law degree and long

experience as a corporate lawyer, and is

currently a lawyer and partner in Adviso

Advokatfirma AS. She specializes in

corporate and international tax and has

extensive experience from these areas in

industries like fishing, shipping and finance.

She has previously worked as a lawyer and

partner in Advokatfirmaet Schjødt AS, in

KPMG Law, and as a legal consultant

at Bærum tax office. Vartdal has also

been a member of the law committee

for tax law.

Vartdal holds several directorships and

has experience from business

management in both private and

listed companies.

Annual report 2023

Extending the ocean potential 34

Vibecke Bondø, Board Member

Vibecke Bondø has broad management

and business experience, primarily from the

aquaculture industry.

She joined the family business Vikna Sjøfarm

as CFO in 2004, a position she held until the

merger with Lund Fiskeoppdrett in 2010 to

create SalmoNor, and she then stepped up

to become CEO.

SalmoNor was developed into a top tier performer within the industry and

merged with NTS owned Midt-Norsk Havbruk in 2021.Vibecke subsequently

served as Chair of the board for NTS ASA until acquired by SalMar in 2022.

She has held several other

directorships including Seaborn,

Salmon Group, the Norwegian

Seafood Federation and the

Norwegian Confederation of Business.

Vibecke is currently focusing on own

investments along with select

directorships.

Bondø Invest AS, a close associate of

Vibecke Bondø, owns 1,948,052 shares

in Salmon Evolution.

Eunhong Min, Board Member

Eunhong Min is the CEO of Dongwon

Industries, one of Korea’s leading seafood

companies. He is bringing a broad

international experience to the Board.

Prior to joining Dongwon, Mr. Min worked 27

years for Proctor & Gamble and held various

leading positions within the fields of strategy,

business development and sales.

Dongwon Industries Co. Ltd, a close

associate of Eunhong Min, owns

16,044,572 shares in Salmon Evolution.

Janne-Grethe Strand Aasnæs, Board Member

Janne-Grethe Strand Aasnæs is the CEO and

majority owner of Strand Havfiske AS, an

Ålesund based fishing vessel company

mainly engaged in whitefish and pelagic

business.

She has prior to that been engaged in the

financial industry as a financial

analyst/portfolio manager and manager of

client relations within asset management.

She holds an MBA and is a Certified financial analyst (AFA).

Janne-Grethe holds several

directorships in both the private and

public sector and has a long

experience in managing and

developing companies.

Nikaro AS, a close associate of Janne-

Grethe Strand Aasnæs, owns 480,000

shares in Salmon Evolution.

Annual report 2023

Extending the ocean potential 35

Jan-Emil Johannessen, Board Member

Jan-Emil Johannessen has over 30 years of

experience in the aquaculture industry.

For the past 10 years he served as Head of

Benchmark Genetics, building the company

into a leading global supplier of aquaculture

genetics for the salmon, shrimp and tilapia

industry.

In his long and distinguished career, he

has held many directorships in the

aquaculture industry.

He currently holds several, including

one as chairman of the board in

Sulefisk and Seagems Group AS.

Johannessen owns 40,000 shares in

Salmon Evolution.

Important events in 2023

Annual report 2023

Extending the ocean potential 36

Corporate social responsibility

Salmon Evolution is committed to responsible

business practices with respect to human rights,

labour standards, equality and non-

discrimination, social matters, the external

environment, and anti-corruption. The Group

shall comply with the UN Global Compact

principles and OECD guidelines for multinational

companies.

The Group has developed a Code of Conduct

including guidelines for ethical behaviour, anti-

corruption, integrity and conflicts of interest,

corporate responsibility, and whistleblowing. The

Code of Conduct applies to all employees,

contract workers, board members and other

persons acting on behalf of the company. The

Code of Conduct is available from the

company’s website www.salmonevolution.no.

For further information about our corporate

social responsibility activities, please see the ESG

section of this report.

In addition, the Group reports to cover the

requirements of the Transparency act

(Åpenhetsloven), first in June 2023. The report is

available on the company web page and will

be updated by June 2024.

Environment

Salmon Evolution’s ambition and aim are an

inclusive and prosperous development of the

aquaculture industry within a stable and resilient

earth system. The company’s business strategy

and objective are to be a leader in producing

and selling salmon with lower environmental

footprint.

Salmon Evolution strives to reduce the

environmental impact of its business. By having

a closed system, the company eliminates the risk

of escapes. Further, energy consumption

relating to pumping and heating of water is

reduced through reusage of water while at the

same time not compromising on fish welfare.

Also, the wastewater is filtered, sludge collected

and recycled and hence contributing to a

circular economy.

The company’s sustainability strategy is further

described in separate section under Company

description.

Working environment

Salmon Evolution aims to be a good, stimulating

place to work, where employees are given the

opportunity to use their skills and abilities to

contribute both the company’s and their own

progress. Employees shall receive systematic

training and Salmon Evolution can contribute to

develop skills on individual basis.

All employees in Salmon Evolution shall enjoy a

high level of safety in their work. Salmon

Evolution aim for all suppliers and partners to

operate to responsible labour standards, and

the company encourage contractors and other

partners with operational activities to be

certified according to the ISO standard for the

working environment and safety. The company

continuously collaborate with suppliers to make

improvements.

There were one injury and zero accidents

reported or investigated amongst Salmon

Evolution employees in 2023.

Total sick leave for the group in 2023 was 2%,

compared to 0.8% in 2022.

Annual report 2023

Extending the ocean potential 37

Diversity and equal opportunity

Salmon Evolution shall have an inclusive working

environment. Discrimination or harassment

based on ethnic background, nationality,

language, gender, sexual identity or religious

faith shall not occur.

The group shall promote equal opportunities

and fair treatment of all employees.

At the end of 2023, Salmon Evolution had 69

employees excl. apprentices, of whom 21

women. This is better than gender balance in

The Industry Sector in Norway, which in 2022 was

82% men and 18% women according to the

Directorate of Fisheries. The executive

management group consists of 5 men and 2

women. The board consists of 4 men and 4

women.

Employees of Salmon Evolution may freely join

any labour union of their choice. Salmon

Evolution shall work to sustain a good

relationship with employees and unions.

Anti-corruption and anti-bribery

Salmon Evolution’s anti-corruption policy and

anti-bribery policy are developed in

compliance with the U.S. Foreign Corrupt

Practices Act, the U.K Bribery Act and other

applicable anti-corruption laws, and states that

Salmon Evolution will not engage in, or otherwise

tolerate, any form of bribery or corruption in the

business dealings of any member of the Salmon

Evolution group. No corruption or bribery cases

were reported or investigated in 2023.

Whistleblowing

Salmon Evolution wishes to sustain open

communication about responsible and ethical

conduct at Salmon Evolution. We have set out

guidelines for giving notice of breaches of the

law, rules, ethical guidelines, and other

unacceptable circumstances. Employees are

encouraged to follow the procedures

contained in the whistle-blowing guidelines.

In 2023, there were one case reported relating

to a personnel matter. This case was processed

and resolved in accordance with our

procedures.

Product Certifications and Traceability

With stable growth conditions and high

biological input from roe to harvest-ready fish,

we meet the highest quality standards- as well

as the market’s requirements for high and

uniform harvest weight. We aim to always have

full control of the biomass. Modern monitoring

systems track the fish and their welfare indicators

at individual level, which allows us to sort and

A land-based farm is protected from many of

the challenges faced in the sea. This is

combined with the best possible fish health,

optimal water quality, and high-quality

sustainable feed to give our customers first-class

salmon. To make sure we deliver on our

promises, we focus on two programs to be

certified within.

First, we are certified according to the Global

G.A.P. Aquaculture standard. The standard

covers the entire production chain from brood

stock, seedlings and feed suppliers to farming,

harvesting and processing. The program ensures

Good Agricultural Practices.

Second, we are certified according to the

Aquaculture Stewardship Council (ASC), an

Annual report 2023

Extending the ocean potential 38

organisation that establishes strict protocols for

labelling farmed seafood through sustainable

aquaculture, to get the certifications.

Our aim is to have;

A sustainable food chain with traceability from roe to plate

These programs set strict requirements for

responsible farming, which encourage seafood

producers to track and minimise the

environmental and social impacts of their

business. The standards addressed in these

schemes cover the production process from roe

stage to fish slaughter.

Through these two certifications, we commit

ourselves to transparency in our operations and

to safeguarding and documenting traceability

and food safety.

Annual report 2023

Extending the ocean potential 39

Corporate governance at Salmon Evolution ASA

Salmon Evolution depends upon good relations with its stakeholders to succeed. Good corporate

governance is important to build and maintain trust and confidence in the company and to ensure

long-term value creation in the best interest of the Company’s shareholders.

Corporate governance principles and practices

Current principles and procedures include rules

of procedure for the board of directors,

instruction for the chief executive officer,

regulating the division of roles and

responsibilities between the board and the CEO,

investor relations policy and manuals for

handling and disclosing insider information.

The Board has also adopted a Code of Conduct

including guidelines for anti-corruption, conflicts

of interests and whistleblowing routines,

stipulating the main principles for ethical

business conduct applying to all employees,

contract workers, board members and other

persons acting on behalf of the company.

The company’s governance documents and

practices will be subject to annual reviews and

discussions by the board of directors.

Risk management and internal control are given

high priority by the board of directors ensuring

that adequate systems for risk management

and internal control are in place. The control

system consists of independent areas which

include risk management, control environment,

control activities, information and

communication and monitoring. The board of

directors shall conduct an annual organisational

risk review in order to identify real and potential

risk that have and/or can occurred.

Shares and Negotiability, Equal Treatment of Shareholders, and Transactions with Close

Associates

Salmon Evolution has one class of shares,

carrying equal voting rights. There are no

restrictions on owning, trading, or voting for

shares in Salmon Evolution’s Articles of

Association.

Any transactions in own shares will be carried

out either through Oslo Stock Exchange or

otherwise at prevailing market prices. If there is

limited liquidity in our shares, we will consider

other ways to ensure equal treatment of all

shareholders.

For major transactions between Salmon

Evolution, our shareholders, subsidiaries,

members of the board, leading employees or

other close related parties, an evaluation will be

performed by an independent third party and

treated by the general meeting.

Transactions with Related Parties

During the ordinary course of business, the

Group engages in certain transactions with

related parties. The following is a summary of

related party transactions carried out in the

period:

The Group has a consultancy agreement with

Peder Stette (board member) and Frode Kjølås

(chair nomination committee) relating to

assistance in certain projects on an ad-hoc

basis.

The Group has during 2023 purchased legal

services from Adviso Advokatfirma AS in the

amount of NOK 77,000 in its ordinary course of

business. Board member Ingvild Vartdal is a

Annual report 2023

Extending the ocean potential 40

partner at Adviso Advokatfirma AS but has not

had any role in the services rendered to Salmon

Evolution.

In Addition, the Group have purchased well

boat services from Rostein AS in the amount of

NOK 1.7 million. Rofisk AS owns Rostein AS (100%),

and former board member (until 2023) Glen

Allan Bradley is the chair of the Board in Rofisk

AS.

There were no other material transactions with

related parties during 2023.

For information on transaction with close

associates, see Note 24 in the annual accounts.

Board of Directors, Nominations and Committee, and Board Authorisations

On 18 March 2021, Salmon Evolution was

converted into a public limited liability

company.

The Articles of Association for the Company

stipulate that the Board of Directors shall include

five to nine directors. They also stipulate that the

Company shall have a nomination committee

consisting of minimum three members.

The Board of Directors and the chair are elected

by the general meeting. As of 31 December

2023, the following directors were represented

on the Board:

Name

Role

Elected

until

Independent of

management

and material

business

associates?

(yes/no)

Independent

of major

shareholder?

(yes/no)

Board

meeting

attendance

2023

Comment

Tore Tønseth

Chair

2024

Yes

14/14

Closely

associated with

Ronja Capital II

Anne Breiby

Director

2025

Yes

14/14

Peder Stette

Director

2025

Yes

13/14

Closely

Associated with

Stette Invest AS

Janne-Grethe

Strand Aasnæs

Director

2024

Yes

13/14

Ingvild Vartdal

Director

2024

Yes

13/14

Vibecke Bondø

(from June 2023)

Director

2025

Yes

5/5

Jan-Emil

Johannessen (from

June 2023)

Director

2025

Yes

5/5

Eunhong Min

Director

2024

Yes

6/14

Closely

associated with

Dongwon

Industries

Håkon Andre Berg

(until June 2023)

Director

2023

Yes

8/9

Glen Allan Bradley

(until June 2023)

Director

2023

Yes

9/9

Closely

associated with

Rofisk AS

The composition of the Board is based on

representation of Salmon Evolution’s

shareholders, as well as the company’s need for

competence, experience, capacity, and ability

to form balanced decisions.

The Nomination Committee are elected for a

period of two years and is responsible for

proposing candidates to the Board and the

Nomination Committee, and remuneration to

the members of these bodies.

The Nomination Committee operate with the

following Instruction for the Nomination

Committee.

The Group has a board of directors’ and

officers’ liability insurance policy, covering

covers defence costs, legal representation

expenses and losses arising from claims for the

group’s board of directors and officers. The

insurance policy has an aggregate limit of

liability of NOK 100 million.

Compensation approach

Salmon Evolution does not have a remuneration

committee as this is not considered necessary in

the light of the composition of the Board of

Directors.

Remuneration of the board is decided by

Salmon Evolution’s general meeting, and

reflects the board’s responsibility, expertise, time

commitment and the complexity of Salmon

Evolution’s activities. Note 4 of the financial

statement provides details of all elements of the

remuneration and benefits for each member of

the board. The remuneration for the board is not

linked to the Group’s performance.

Remuneration of the Executive Management is

decided by the board in accordance with the

Norwegian Public Limited Liability Companies

Act. The board has the responsibility to ensure

convergence of the financial interest of the

Executive Management and the stakeholders.

The board aims to ensure that performance-

related remuneration of the Executive

Management in the form of share options,

annual bonus programs or the like, if used, are

linked to value creation for shareholders or

Salmon Evolution’s earnings performance over

time. Note 4 of the financial statement provide

details of all elements of the remuneration and

benefits for each member of the Executive

Management.

Compliance

As a Norwegian public limited liability company

listed on Oslo Stock exchange, Salmon Evolution

bases its corporate governance structure on

Norwegian legislation and recommended

guidelines.

The Company is subject to The Norwegian

Corporate Governance Board’s (NUES)

recommendation on corporate governance.

Salmon Evolution complies with the current

Code of Practice for Corporate Governance,

published 14 October 2021, with the following

exceptions:

General Meeting:

• The general meeting is chaired by the

chairman of the board of directors or an

individual appointed by the chairman of the

board of directors. Having the chairman of

the board of directors or a person appointed

by him chairing the general meetings

simplifies the preparations for the general

Annual report 2023

Extending the ocean potential 42

meetings significantly. In the Company’s

experience, its procedures for the

chairmanship and execution of general

meetings have proven satisfactory.

• The shareholders are invited to vote on the

composition of the board of directors

proposed by the nomination committee as a

group, and not on each board member

separately, as it is important to the Group that

the board of directors of the Company works

in the best possible manner as a team and

that the background and competence of

the board members complement each

other.

• The Company encourages shareholders to

attend the general meeting. It is also the

intention to have representatives of the

board of directors and the chairman of the

nomination committee to attend the general

meeting. The Company will, however,

normally not have the entire board attend

the meeting as this is considered

unnecessary. This represents a deviation from

the Code of Practice which states that

arrangements shall be made to ensure

participation by all directors.

The work of the Board of Directors:

• The Company does not currently have a

remuneration committee as this is not

considered necessary in the light of the

composition of the board of directors. The

Company will however consider establishing

a remuneration committee going forward.

Takeovers:

• The Company does not have separate

guidelines on how to respond in the event of

a takeover bid. The Norwegian Code of

Practice recommends the adoption of such

guidelines.

In addition, the Group has focus on risk management and internal control systems and have

implemented routines to track which risks the organization is exposed to and what consequences

this could have.

Investor Relations Policy

Salmon Evolution’s Investor Relations Policy sets

the basic principles for our communication and

dialogue with capital markets participants,

including guidelines for contact with

shareholders outside general meetings. We are

committed to providing our shareholders with

accurate, clear, relevant, and complete

information on our performance and market

position.

Communication with stakeholders shall be

based on the principles of equal treatment and

transparency, and we aim to continually ensure

trust and stakeholder confidence. The

responsibility for Salmon Evolution’s investor

relations activities lies with our CFO. Salmon

Evolution provides quarterly reports in line with

Oslo Stock Exchange’s recommendations.

Presentations are given in connection with the

disclosure of the interim results to provide an

overview of operational and financial

developments. The presentations are open to

the public and made available through a

webcast. All information is provided in English

and distributed to our shareholders through Oslo

Stock Exchange’s news channel

www.newsweb.no and our website at:

https://salmonevolution.no/investor/reports/.

Annual report 2023

Extending the ocean potential 43

Inside a fish tank (December 2023)

Photo: Salmon Evolution

Annual report 2023

Extending the ocean potential 44

Shareholder Information

Salmon Evolution was successfully listed on

Merkur Market (now Euronext Growth) on 18

September 2020. Further, the Company was

listed on Oslo Stock Exchange (Oslo Børs) 9 July

2021, the last day of trading of the shares on

Euronext Growth (Oslo) was 8 July 2021.

As per 31 December 2023 Ronja Capital II AS

was the Group’s largest shareholder with

30,140,645 shares, corresponding to 7.3% of the

total number of shares outstanding. The 20

largest shareholders held 55.0% of the shares in

the Group.

The Group carried out NOK 525 million private

placement on 18th April 2023 as part of the Indre

Harøy phase 2 financing.

The closing price for the Company’s share was

NOK 6.78 per share as per 31 December, which

corresponded to a market capitalization of NOK

~2.8 billion.

20 largest shareholders 31 December 2023

Source: VPS, Company

Shareholder # of shares % share

Ronja Capital II AS 30 140 645 7,3 %

The Bank of New York Mellon SA/NV 26 128 070 6,3 %

Farvatn Private Equity AS 18 939 433 4,6 %

Dongwon Industries Co. Ltd 16 044 572 3,9 %

Rofisk AS 14 537 897 3,5 %

Kjølås Stansekniver AS 12 506 439 3,0 %

J.P. Morgan SE 11 761 639 2,8 %

Stette Invest AS 11 744 288 2,8 %

Verdipapirfondet Dnb Norge 11 113 276 2,7 %

Ewos AS 9 480 984 2,3 %

Verdipapirfondet DNB SMB 9 302 408 2,2 %

Jakob Hatteland Holding AS 8 758 786 2,1 %

Mevold Invest AS 8 141 141 2,0 %

Lyngheim Invest AS 8 049 252 1,9 %

Bortebakken AS 7 856 330 1,9 %

VPF DNB Norge Selektiv 7 424 509 1,8 %

J.P. Morgan SE 4 652 771 1,1 %

Salmoserve AS 4 000 000 1,0 %

Verdipapirfondet Nordea Avkastning 3 578 295 0,9 %

Clearstream Banking S.A. 3 377 732 0,8 %

Total 20 largest shareholders 227 538 467 55,0 %

Other shareholders 186 398 173 45,0 %

Total number of shares 413 936 640 100,0 %

Operational development

In 2023, being the first full year in operation, the

Company stocked six batches of smolt, had a

net biomass growth of 3,751 tonnes and

harvested 1,874 tonnes (HOG). Throughout the

year Salmon Evolution was steady approaching

full run-rate in production.

In 2023 Salmon Evolution has steadily been

building the biomass at Indre Harøy. Entering

2023 the Company had three batches

containing approximately 0.7 million individuals

and representing 637 tonnes of biomass. Exiting

2023 Salmon Evolution had about 1.4 million

individuals at Indre Harøy. In 2023 the Company

harvested 1,874 tonnes (HOG).

Overall, in 2023 the Company has had good

biological performance, ending the year with

more than 2,200 tonnes of standing biomass.

Salmon Evolution experienced increased

mortality in selected fish groups in Q2. It has

been determined that this was triggered by

AGD, causing problems with gill health. Several

actions were taken to remedy the situation,

including instalment of on-site freshwater

production capabilities enabling freshwater

treatment as an integrated part of the fish

grading operation when fish is transferred to

new tanks, implemented as a standard

operating procedure since June 2023.

Since then, Salmon Evolution has had minimal

mortality, and in the last four months of 2023 had

an average mortality within the targeted 3-5 %

p.a. range.

Biomass growth increased steadily quarter by

quarter in 2023, with Q2 being impacted by the

abovementioned AGD incident. Steadily

increasing biomass production will set the stage

for a substantial increase in harvest volumes

from Q2 and onwards.

In 2023 Salmon Evolution had 22 harvest days

yielding a total of 1,874 tonnes (HOG) with an

average weight around 4.0 kg (LW). The

accumulated superior grade share was 92 % in

2023. The average superior grade share and

average harvest weights in 2023, was impacted

by the harvest of batch 3 and 4 in Q4. These two

groups were affected by the AGD event in Q2.

Overall, in 2023 the harvest results where strong,

with good feedback on the quality and an

industry leading superior grade share with

significant positive price implications.

300

600

900

1 200

1 500

1 800

2 100

2 400

200

400

600

800

1 000

1 200

1 400

1 600

Q1-23 Q2-23 Q3-23 Q4-23

Total biomass (tonnes, LW)

Net biomass growth (tonnes, LW)

Net biomass growth (l.a.) Total biomass (r.a.)

Indre Harøy phase 1

Phase 1 of Indre Harøy was finalized in April

2023 with the last two remaining tanks of a total

of twelve tanks handed over from the

contractor. The facility has an expected yearly

production volume of 7,900 tonnes HOG.

Indre Harøy Phase 1 (January 2024)

Photo: Salmon Evolution

Indre Harøy phase 2

In Q2 of 2023 the Group announced contracts

with Artec Aqua and HENT. Indre Harøy phase 2

is split in two parts, with HENT taking responsibility

for civil design and construction, and Artec

Aqua for design, construction, and

commissioning of the process facility.

Phase 2 represents a major milestone in the

roadmap to 100,000 tonnes, by adding another

7.9kt HOG of annual production volume at Indre

Harøy and bringing the total up to 15.8 kt HOG

per annum.

During in the second half of 2023 the Company

has completed the initial groundworks for the

grow-out section as well as preparations for the

intake station.

Design and engineering activities for phase 2

kicked off following the contracts with Artec

Aqua and Hent, and in the second half of 2023

these activities proceeded according to plan.

Throughout 2023, the Company has been

working with the contractors to identify cost

savings and efficiency gains compared to

phase 1, this work also includes relevant

functional improvements.

Although phase 2 will benefit from the

substantial infrastructure investments taken in

phase 1, the Company is seeing inflationary

pressure on capex. Hence, the Company has a

strong focus on cost optimization and reducing

uncertainty as part of the work to establish the

final project target price.

Annual report 2023

Extending the ocean potential 47

The project is subject to final investment decision

upon completion of the initial project phase,

expected in Q2 2024. This is planned followed by

construction start shortly thereafter. Capex the

first 6-9 months is expected to be relatively

moderate.

Indre Harøy phase 2 illustration

Illustration: Salmon Evolution

As part of the project, Salmon Evolution is also

developing a plan to cover the smolt needs for

phase 2. This could potentially include an

expansion of our current smolt facility, where we

hold a license to produce up to 5 million smolt.

This project is ongoing but as it is interlinked with

our Indre Harøy phase 2 project, no investment

decision has been taken.

Annual report 2023

Extending the ocean potential 48

North America

Project overview and status

The North America expansion is an integral part

of Salmon Evolution’s strategy towards a

production capacity of 100,000 tonnes.

Salmon Evolution is currently advanced

negotiations on a high-potential site in North

America. The initial site verification processes,

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.

As previously communicated the focus with

respect to sites is centred 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 about

two to three years, allowing for construction start

during 2026, upon which the plan is to build a full

scale 31.5 tonnes HOG “Indre Harøy” facility

drawing on the experiences learned from

Norway.

To facilitate this expansion, the Group has

established a dedicated team of both in-house

and external resources and is currently in the

process of ramping this team up.

The Group’s strategy of pursuing accretive

project financing structures in overseas markets

remains unchanged. As the project develops,

Salmon Evolution seeks to engage in such

discussions, leveraging the human capital in our

Company and maximizing shareholder value.

Annual report 2023

Extending the ocean potential 49

Korea

Project overview

The Group 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

As previously communicated the primary focus

towards the end of 2023 was centred around

cost optimization Completion of design and

engineering activities for the grow-out facility at

Yangyang and permitting work had good

progress in the last quarter of 2023.

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. Additionally, given

that Korea has no existing salmon farming

industry, certain other infrastructure items and

regulatory framework are impacting the project

cost as well as operating cost.

The project is currently engaging with relevant

authorities in South Korea to shore up

government financial support, to improve

project economics. Clarification around this is

expected during Q2 2024.

Annual report 2023

Extending the ocean potential 50

Events after balance sheet date

No material subsequent events.

Annual report 2023

Extending the ocean potential 51

Financial performance

Going concern

The consolidated financial statement is prepared in accordance with International Financial

Reporting Standards (IFRS). The Board confirms that it is appropriate to prepare the Annual Report

based on a going concern assumption. The Group believes it is adequately funded and has access

to additional capital if required.

Income statement

Total revenues for 2023 accumulates to NOK

168.4 million for the Group. Apart from revenues

linked to harvest, the Group have some

revenues from sale of services and related to

insurance settlement following the mortality

incident during the second quarter.

Personnel expenses and other operating

expenses amounted to NOK 204.7 million. This is

an increase from last year which reflects the

higher activity level in the Group, continued

operating expenses at Indre Harøy and South

Korea, the establishment in North America and

other administration expenses.

After fair value adjustment related to the

biomass of NOK 20.1 million, the Group recorded

an operating loss of NOK 110.5 million in 2023

The Group recorded depreciations of NOK 46.7

million, mostly related to the facility at Indre

Harøy. Depreciations for the Indre Harøy facility

commenced in May 2023.

The Group recorded no tax cost in 2023, and the

loss ended at NOK 145.7 million compared to

NOK 32.7 million in 2022.

Cash flow

The net cash flow from operating activities in

2023 was negative NOK 124.4 million.

Having completed the grow-out facility at Indre

Harøy in April 2023, the net cash flow from

investing activities was significantly reduced in

2023 and ended at negative NOK 358.8 million.

Cash flow from financing activities came in

relatively similar in 2023 compared to 2022 at

NOK 590.9 million (NOK 645.5 million in 2022). In

2023 the cash flow from financing activities is

primarily related to the private placement of

NOK 525 million done in April.

The net change in cash and cash equivalents for

2023 was NOK 107.6 million, and at year end

2023 cash and cash equivalents amounted to

NOK 386.4 million and total available liquidity of

NOK 645 million including available committed

undrawn credit facilities. This excludes the

construction facility of NOK 775 million for phase

Annual report 2023

Extending the ocean potential 52

Financial position

On 31 December the book value of the Group’s

assets was NOK 2,709.6 million.

The fixed assets in the Group 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.

The current assets in the Group are primarily

biological assets, other current receivables, and

cash & cash equivalents.

Total equity amounted to NOK 1,920.7 million.

This corresponds to an equity ratio of 71%.

Consolidated interest-bearing liabilities totalled

NOK 685.8 million which mainly relates to the

financing of Indre Harøy phase 1.

Received grants are recognized in the financial

accounts as a reduction of fixed assets. As of

end 2023 the Group has recognized NOK 14.3

million in Skattefunn grants and NOK 96.8 million

in Enova grants of which NOK 14.3 million is not

received and NOK 96.8 million have been

received by 31 December 2023, respectively.

In relation to its long-term financing the Group

have financial covenants. These are described

in detail in note 22.

Annual report 2023

Extending the ocean potential 53

Risk exposure and risk management

Salmon Evolution’s business activities entail exposure to various types of risks and uncertainty, that

may prevent us from reaching our goals and deliver our strategy. Through our risk management

process we identify, quantify, and define actions to manage the risks we face. We split our defined

risks into relevant subcategories, and efforts to reduce risk are addressed by our most capable

people within each business area.

Operational risk

The greatest operational risk relates to biological

incidents within the Group’s aquaculture

operations. Although Salmon Evolution has

been in operations for more than 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 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 Group’s ability

to realize its business plan.

Project risk

Successful project execution and construction

are decisive for the Group’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

adverse effects for the Group’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.

Market risk

The Company is exposed to the fluctuations and

overall development of the salmon prices.

Through 2023 salmon prices have remained

strong, supported by strong demand. As of 31

December 2023, the Group has not entered any

hedging programs to reduce its exposure to the

salmon price.

Furthermore, the Group 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 Group

has hedged about half of its expected

electricity needs for 2024-2026, with a gradually

declining hedging profile.

Interest Rate risk

The Group's interest rate risk relates primarily to

borrowings from financial institutions with

floating interest rates. Currently, the Group has

entered into hedging programs to reduce this

risk for parts of its planned borrowings. As of 31

December 2023, outstanding loans from credit

institutions amounted to NOK 673.2 million

(excluding financial leasing).

The term loan, which represents the vast majority

of the Groups loan with financial institutions, has

an interest rate of NIBOR 3M plus an agreed

margin. In order to reduce exposure to

fluctuations in the interest rate the Group has

entered interest rate swap contracts with

Nordea and Sparebanken Vest, of respectively

NOK 150 million and NOK 50 million. For further

information see note 22.

Foreign Currency risk

The Group's foreign currency risk relates to the

Group's operating, investing, and financing

activities denominated in a foreign currency.

This includes the Group's revenues, expenses,

and capital expenditures. From time to time the

group utilizes financial instruments to hedge its

currency exposure.

The Group are hedging for fluctuations in

currency by doing forward contracts on most of

its currency sales contracts. The Group did not

have any material exposure in foreign currency

contracts at the end of the year.

The Group's presentation currency is Norwegian

Kroner ("NOK").

Credit risk

With respect to credit risk arising from the

financial assets of the Group, which comprise

cash and cash equivalents, and other

receivables, the Group's exposure to credit risk

arises from default of the relevant counterparty,

with a maximum exposure equal to the carrying

amount of these instruments.

In 2023 all produced fish was sold through

Salmon Evolution Sales AS. The Group has

procedures in place to ensure that products are

only sold to customers with satisfactory

creditworthiness, and in all material respect use

credit insurance. The credit risk is not considered

to be material on 31 December 2023.

Liquidity risk

A lack of liquidity will entail a risk that the Group

will not be able to pay its obligations on maturity.

Management monitors rolling forecasts of the

Group's liquidity reserve (comprising cash and

cash equivalents) based on expected cash

flows. The Group's business plan and growth

strategy is capital intensive, and the Group may

be dependent upon future equity issues and/or

debt financing to finance its current and long-

term plans.

Annual report 2023

Extending the ocean potential 55

Summary and outlook

2023 marked a significant step towards

achieving the goal of profitable farming of

salmon on land with excellent biological

results.

In 2023 Salmon Evolution ended with over

2,200 tonnes of standing biomass and over 1.4

million individuals at Indre Harøy. The stocking

of the last part of batch 10, completed in early

January, set the conditions for steady state

production, and streamlined operations.

We have gradually been ramping up

production in 2023. A total of six batches was

stocked, and batch 2, 3 and 4 was harvested

in full.

The strong operational track record builds on

impressive biological results. In the second half

of 2023 the mortality rate was 2.6%, equalling

a yearly run-rate of 5.2%, and in the fourth

quarter 1.2 % equalling a yearly run-rate of

4.8%. This highlights that a running average

annual mortality rate of between 3-5 % is within

reach. This just after a mere two years in

operation, of which the last six months of 2023

at full industrial scale. The target of 3-5 % on an

annual basis is ambitious, and depend on a

number of factors, but primarily stocking

quality of smolt and maintaining excellent

conditions at Indre Harøy. Salmon Evolution will

not rest on this topic, biology comes first.

Salmon Evolution harvested a total of 1,874

tonnes (HOG) in 2023, of which 1,104 tonnes

(HOG) in the fourth quarter. The superior share

on harvested fish in 2023 was 92%. This

compares to our target of 95% which we deem

fully realistic based on historical performance

where for several quarters have achieved this

goal. Additionally, we have seen that the

spread in weight distribution on the harvested

fish is very tight, underlining that grading the

salmon when it is split is yielding the expected

results. Going forward gradually increasing

harvest weights are expected, which together

with further biomass build-up will set the stage

for a substantial increase in harvest volumes

from Q2 and onwards.

Overall, we are very satisfied with the

biological results seen in 2023 and see the

achieved results as a clear proof of concept

to our approach to land-based salmon

farming. In the fourth quarter another

milestone was reached as well, with the

farming segment reaching EBITDA breakeven,

underlining that farming costs are decreasing

on back of higher biomass production. It also

underlines the value of being able to tap into

a highly efficient value chain.

Access to an existing value chain is a key

reason why Salmon Evolution is targeting areas

with an established salmon farming industry for

its North America expansion. Mirroring the

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.

Over the last three years global production of

Atlantic salmon has been decreasing. New

technology and production methods are

required to bridge the supply gap. According

to Kontali Analyse global supply growth in 2024

is forecasted to be a moderate 2 %. This in turn

indicates a tight market, supporting a scenario

with strong salmon prices going forward. This is

evidenced with the Fishpool forward price at

around NOK 100/kg on average for 2024.

Going into 2024 with a full farm, and on the

verge significantly increasing harvest volumes,

Salmon Evolution is in a solid position to benefit

on this over the coming quarters and years.

Salmon Evolution continues to see a significant

demand growth potential for salmon and

Annual report 2023

Extending the ocean potential 56

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 having a

strong financial platform, Salmon Evolution is in

a unique position to continue to lead and

shape the development of this industry.

Photo: Salmon Evolution

Annual report 2023

Extending the ocean potential 57

Statement from the Board of Directors and the CEO

Today, the Board of Directors and the Chief Executive Officer reviewed and approved the Board of

Director’s report and the consolidated and separate financial statements for Salmon Evolution ASA

for the year ended 31 December 2023 (“Annual report 2023”).

Salmon Evolution ASA’s consolidated financial statements have been prepared in accordance with

IFRSs and IFRICs as adopted by the EU and applicable additional disclosure requirements in the

Norwegian Accounting Act. The separate financial statements for Salmon Evolution ASA have been

prepared in accordance with the Norwegian Accounting Act and Norwegian accounting standards

as of December 31, 2023. The Board of Directors’ report for the Group and the parent company is in

accordance with the requirements in the Norwegian Accounting Act and Norwegian accounting

standard no 16, as of December 31, 2023.

To the best of our knowledge:

1. The annual financial statements for 2023 have been prepared in accordance with

applicable financial reporting standards

2. The annual financial statements give a true and fair view of the assets, liabilities, financial

position and profit as a whole as of 31 December 2023 for the Group

3. The Board of Directors’ report for the Group includes a fair review of:

a. the development and performance of the business and the position of the Group,

and

b. the principal risks and uncertainties the Group face

The Board of Directors of Salmon Evolution ASA

Elnesvågen/Ålesund 16 April 2024

Tore Tønseth

Chair

Janne-Grethe Strand Aasnæs

Director

Anne Breiby

Director

Peder Stette

Director

Vibecke Bondø

Director

Eunhong Min

Director

Ingvild Vartdal

Director

Jan-Emil Johannessen

Director

Trond Håkon Schaug-Pettersen

CEO

Annual report 2023

Extending the ocean potential 58

Group consolidated financial statements (IFRS)

Consolidated statement of income

(NOK thousands)

Note

2023

Consolidated

2022

Consolidated

Sales revenues from farming

4,5

153 325

46 107

Other revenue

4,5

15 099

1 574

Total operating revenue

168 424

47 681

Change in inventory

6,7

78 476

34 077

Cost of materials

-126 180

-34 706

Personnel Expenses

8,9

-76 052

-49 996

Other Operating expenses

8,10

-128 619

-65 538

Operational EBITDA

-83 950

-68 481

Depreciations

-46 730

-6 190

Operational EBIT

-130 680

-74 671

Fair value adjustment of biomass

20 149

11 740

Operating Profit (EBIT)

-110 532

-62 931

Financial income

21 481

35 322

Financial expense

-49 624

-4 170

Share of net income from associated companies

-7 098

-947

Net financial

-35 241

30 205

Profit/loss before tax

-145 773

-32 726

Income tax expense

Profit/loss for the period

-145 773

-32 726

Basic earnings per share (NOK)

-0.37

-0.10

Diluted earnings per share (NOK)

-0.37

-0.10

Consolidated statement of comprehensive income

NOK thousands

Note

2023

Consolidated

2022

Consolidated

Profit/loss for the period

-145 773

-32 726

Items that are or may be reclassified to profit or loss:

Currency translation differences

-861

1 363

Total comprehensive income for the period, net of tax

-146 634

-31 362

Annual report 2023

Extending the ocean potential 59

Consolidated statement of financial position

(NOK thousands)

Note

31 Dec 2023

Consolidated

31 Dec 2022

Consolidated

Assets

Intangible assets

11,16

72 347

65 149

Deferred tax asset

415

2 077

Assets under construction

70 781

1 713 490

Assets in use, not allocated

54 019

Property, plant & equipment

1 848 190

30 541

Right-of-use assets

12 084

13 001

Investments in associated companies

18 676

26 635

Total non-current assets

2 076 513

1 850 894

Inventory

8 369

1 941

Biological assets

153 790

58 927

Trade receivables

40 496

23 080

Other current receivables

31 121

66 951

Financial derivatives

3,19

12 900

25 622

Cash and cash equivalents

3,20

386 396

278 759

Total current assets

633 072

455 281

Total assets

2 709 585

2 306 174

Equity and liabilities

Share capital

20 697

17 288

Share premium

2 124 647

1 627 073

Other reserves

9,21

10 758

8 320

Other equity

Uncovered losses

-235 408

-88 774

Total equity

1 920 693

1 563 906

Long-term interest-bearing debt

3,22

569 969

513 169

Lease liabilities - long term

3,17,22

8 189

9 676

Other long-term liabilities

8 702

8 549

Total non-current liabilities

586 859

531 393

Short-term interest-bearing debt

3,22

103 275

55 353

Trade payables

3,23,24

71 499

135 098

Social security and other taxes

8 273

7 086

Lease liabilities - short term

3,17,22

4 350

3 553

Other short-term liabilities

14 635

9 783

Total current liabilities

202 032

210 873

Total liabilities

788 892

742 267

Total equity and liabilities

2 709 585

2 306 174

Annual report 2023

Extending the ocean potential 60

The Board of Directors of Salmon Evolution ASA

Elnesvågen/Ålesund 16 April 2024

Tore Tønseth

Chair

Janne-Grethe Strand Aasnæs

Director

Anne Breiby

Director

Peder Stette

Director

Vibecke Bondø

Director

Eunhong Min

Director

Ingvild Vartdal

Director

Jan-Emil Johannessen

Director

Trond Håkon Schaug-Pettersen

CEO

Annual report 2023

Extending the ocean potential 61

Consolidated statement of cash flow

(NOK thousands)

Note

2023

Consolidated

2022

Consolidated

Cash flows from operating activities

Profit/loss for the period

-145 773

-32 726

Adjustments for:

Depreciation, amortisation, and impairment loss

46 730

6 190

Net financials

35 241

-30 205

Share based payment expenses

2 438

3 201

Changes in working capital:

Change in trade receivables

-15 605

-22 698

Change in other current receivables

33 785

37 774

Change in inventory and biological assets

-81 143

-34 077

Change in fair value of biomass

-20 149

-11 740

Change in trade payables

12 330

2 047

Change in social security and other taxes

772

2 139

Change in other current liabilities

6 928

3 971

Cash (outflow) from operating activities

-124 445

-76 124

Cash flow from investment activities

Payments for fixed assets net of government grants

10,15

-275 686

-763 498

Payments for intangible assets

-7 201

-3 614

Change in trade payables investments

-75 929

-29 020

Net cash (outflow) from investment activities

-358 816

-796 132

Cash flow from financing activities

Proceeds from issue of equity, net of paid transaction costs

500 982

294 538

Proceeds from new borrowings

3,22

104 875

356 253

Repayment of borrowings

3,22

-13 337

Net change in right of use assets and liabilities

227

210

Financial expenses paid

-35 568

-15 079

Financial income received

20 381

22 886

Net cash (outflow) from financing activities

590 897

645 471

Net change in cash and cash equivalents

107 636

-226 785

Cash and cash equivalents at the beginning of the period

278 759

505 545

Cash and cash equivalents at the end of the period

386 396

278 759

Annual report 2023

Extending the ocean potential 62

Consolidated statement of changes in equity

(NOK thousands)

capital

premium

Other

reserves

Other

equity

Uncovered

losses

Total equity

Balance at 1 January 2022 20 15 540 1 334 282 5 118 0 -57 411 1 297 530

Profit/loss for the period 0 0 0 0 -32 726 -32 726

Currency translation differences 0 0 0 0 1 363 1 363

Total comprehensive income 0 0 0 0 -31 362 -31 362

Private placement, 5 April 2022 1 129 202 041 0 0 0 203 170

Private placement, 2 May 2022 538 96 293 0 0 0 96 831

Private placement, transaction cost 0 -13 267 0 0 0 -13 267

Share options issued 21 0 0 3 201 0 0 3 201

Share options exercised 21 81 7 724 0 0 0 7 805

Transactions with owners 20 1 748 292 790 3 201 0 0 297 739

Balance at 31 December 2022 20 17 288 1 627 073 8 320 0 -88 774 1 563 906

Profit/loss for the period 0 0 0 0 -145 773 -145 773

Currency translation differences 0 0 0 0 -861 -861

Total comprehensive income 0 0 0 0 -146 634 -146 634

Private placement, April 2023 3 409 521 591 0 0 0 525 000

Private placement, transaction cost 0 -24 017 0 0 0 -24 017

Share options issued 21 0 0 2 438 0 0 2 438

Share options exercised 0 0 0 0 0 0

Transactions with owners 20 3 409 497 574 2 438 0 0 503 421

Balance at 31 December 2023 20 20 697 2 124 647 10 758 0 -235 408 1 920 693

Annual report 2023

Extending the ocean potential 63

Notes to the Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES…………………………….…… 64

NOTE 2 - CRITICAL ESTIMATES AND JUDGMENTS ………………………………………………. 73

NOTE 3 - FINANCIAL RISK AND CAPITAL MANAGEMENT …………………………….………… 75

NOTE 4 - OPERATING INCOME ………………….…………………………………………… 78

NOTE 5 – SEGMENT ……………………………………………….…………………….……. 79

NOTE 6 – BIOLOGICAL ASSETS AND INVENTORY ………………….…………………….………80

NOTE 7 – COST OF GOODS SOLD …………………………………………………………… 83

NOTE 8 – PERSONNEL EXPENSES, REMUNERATION TO THE BOARD AND AUDITOR'S FEE …………. 83

NOTE 9 - SHARE BASED PAYMENTS…… ………………………………………………………. 86

NOTE 10 - OTHER OPERATING EXPENSES …………………………………………….….…….. 87

NOTE 11 - PROPERTY, PLANT & EQUIPMENT …………………………………………………… 88

NOTE 12 - FINANCE INCOME & FINANCE COST .……………………………………………… 90

NOTE 13 - INVESTMENT IN ASSOCIATED COMPANIES .………………………………………….. 91

NOTE 14 – TAX ……...……………………………………………………………………….. 92

NOTE 15 - EARNINGS PER SHARE ……………..………………………………………………. 93

NOTE 16 - GOVERNMENT GRANTS …………………………………………………………… 93

NOTE 17 - LEASES …………………………………………………………………………….. 94

NOTE 18 - OTHER CURRENT RECEIVABLES ……….……………………………………………. 96

NOTE 19 – DERIVATIVE FINANCIAL INSTRUMENTS……………………………………………… 97

NOTE 20 – CASH AND RESTRICTED CASH……………………………………………………… 98

NOTE 21 – SHARE CAPITAL & CAPITAL HISTORY………………………………………………. 98

NOTE 22 – INTEREST BEARING DEBT ..……………………..…………………………………. 100

NOTE 23 – TRADE AND OTHER CURRENT LIABILITIES…………………………………………… 102

NOTE 24 – RELATED PARTY BALANCES AND TRANSACTIONS…..……………………………… 103

NOTE 25 - EVENTS AFTER THE REPORTING DATE ………………………………………………. 104

Annual report 2023

Extending the ocean potential 64

Note 1 Summary of significant accounting principles

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 Group") is a Norwegian business headquartered in Hustadvika kommune in Møre

og Romsdal. SE is building a land-based salmon farming facility at Indre Harøy, with a planned

annual production of 31,500 tons HOG fully developed of which phase 1 has a planned annual

production of 7,900 tons HOG.

The build-out consists of three phases, with the first phase consisting of 12 large grow out tanks

with corresponding infrastructure. SE will operate a hybrid flow-through (HFS) system, utilizing

fresh seawater from the Norwegian coast. Construction start of phase 1 was in Q2 2020 and

was completed mid April 2023. The first smolt batch was released at Indre Harøy late March

2022 as per original timeline, and the Group completed its first harvest in November 2022.

Consolidation

These consolidated statements for the period ended 31 December 2023 include Salmon

Evolution ASA together with its subsidiaries Salmon Evolution Norway AS, Salmon Evolution

International AS, Salmon Evolution Sales AS and Salmon Evolution Dale AS.

In 2022 the Group established two new companies – Salmon Evolution North America Holdings

LLC and Salmon Evolution North America LLC. Both companies are wholly owned by Salmon

Evolution, but the legal entities had no activity during 2022 nor in 2023.

Consolidation principles

Subsidiaries are all entities over which the Group has control. The Group controls an investee if

all three of the following elements are present: power over the investee, exposure to variable

returns from the investee, and the ability of the investor to use its power to affect those variable

returns. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary

and ceases when the Group loses control of the subsidiary. The accompanying consolidated

financial statements include the accounts of the subsidiaries mentioned above. When

necessary, adjustments are made to the local financial statements of the Group subsidiaries to

conform with the consolidated Group’s accounting policies presented under IFRS. All

intercompany balances, transactions, and unrealized gains from intercompany transactions

are eliminated upon consolidation. Unrealized losses from intercompany transactions are also

eliminated upon consolidation unless the transaction provides evidence of an impairment of

the transferred asset. The assets, liabilities, income, and expenses of a subsidiary acquired or

disposed of during the year are included in the consolidated financial statements from the

date in which the Group gains control until the date in which the Group ceases to control the

subsidiary.

Basis of preparation

The consolidated financial statements of the Group for the year ended 31 December 2023 is

prepared in accordance with IFRS® Accounting Standards as adopted by the EU. The

consolidated financial statements ended 31 December 2023 comprise the income statement,

statement of comprehensive income, statement of financial position, statement of cash flow,

statement of changes in equity and note disclosures.

Annual report 2023

Extending the ocean potential 65

Going concern

The Group has prepared the consolidated financial statement on a going concern basis. When

assessing this assumption, management has assessed all available information about the

future. After making such assessments, management has a reasonable expectation that the

Group has adequate resources to continue its operational existence for the foreseeable future.

Accounting policies

Adoption of new and revised standards

The following standards and amendments was mandatory application for the first time for the

reporting period commencing 01.01.2023

- Disclosure of Accounting Policies (Amendment to IAS 1 and IFRS Practice Statement 2)

- Deferred Tax related to Assets and Liabilities arising from a Single Transaction

(Amendments to IAS 12)

- IFRS 17 Insurance Contracts

- Definition of Accounting Estimates (Amendment to IAS 8)

None of the amendments listed above have had any material impact on the financial

statements.

Standards and amendments issued but not yet effective

The following standards and amendments was mandatory application for the first time for the

reporting period commencing after 01.01.2023:

- Lease Liability in a Sale and Leaseback (Amendment to IFRS 16)

- IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as

Current or Non-Current

None of the amendments listed above is expected to have any material any impact on

financial statements.

Basis of measurement

The financial statements have been prepared under the historical cost basis, except for the

following items:

- Financial derivatives, measured at fair value through profit or loss.

- Biological assets, measured at fair value through profit or loss.

Use of estimates

Critical accounting judgments and estimates are disclosed in note 2.

Annual report 2023

Extending the ocean potential 66

Functional and presentation currency

Items included in the financial statements are presented in the currency of the primary

economic environment in which the entity operates (‘the functional currency’). The financial

statements are presented in Norwegian kroner (NOK), which is the Parent company, and

material subsidiaries, functional and presentation currency.

Transactions and balances

Transactions in currencies other than the entity's functional currency (foreign currency) are

translated into the functional currency using the exchange rates at the dates of the

transactions.

Foreign exchange gains and losses resulting from the settlement of such transactions and from

the translation of monetary assets and liabilities denominated in foreign currencies at year end

exchange rates are generally recognized in profit or loss. Foreign exchange gains and losses

that relate to borrowings are presented in the statement of profit or loss, within finance costs.

All other foreign exchange gains and losses are presented in the statement of profit or loss on

a net basis within other financial items. Translation differences on assets and liabilities carried at

fair value are reported as part of the fair value gain or loss. Non-monetary items that are

measured in terms of historical cost in a foreign currency are not subsequently revaluated.

Revenue

Revenue from contracts with customers as defined in IFRS 15 is recognised when control of the

goods are 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 Group derives both from the sale of smolt from contract with customer and

sale of whole and processed salmon in the spot marked. It has not been made any sales

contracts. The Group 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 has

discrepancies compared to the agreed sales contract, cash refunds are given to the customer.

Up until now, refunds are not material.

Government grants

Government grants are recognized when there is reasonable assurance that the grant will be

received and when the Company is compliant with all conditions attached. When the grant

relates to an expense item, it is recognized as income over the period that the costs it is

intended to compensate are expensed. When the grant relates to an asset, it is deducted from

the carrying amount of the asset - the grant is then recognized in profit or loss over the useful

life of a depreciable asset by way of a reduced depreciation charge. Government grants are

presented in the accompanying statements of profit and loss as other income.

Annual report 2023

Extending the ocean potential 67

Employee benefits

Liabilities for wages and salaries, including equity settled share based payments, non-monetary

benefits, annual leave and accumulating sick leave that are expected to be settled wholly

within 12 months after the end of the period in which the employees render the related service

are recognised in respect of employees’ services up to the end of the reporting period and

are measured at the amounts expected to be paid when the liabilities are settled. The liabilities

are presented as current employee benefit obligations in the balance sheet.

Share based payments

Information relating to the Company's employee stock option scheme is set out in note 9. The

fair value of options granted under the scheme is recognised as an employee benefits expense

with a corresponding increase in equity. The total amount to be expensed is determined by

reference to the fair value of the options granted:

- including any market performance conditions (eg the entity’s share price)

- excluding the impact of any service and non-market performance vesting conditions (eg

profitability, sales growth targets and remaining an employee of the entity over a specified

time period), and

- including the impact of any non-vesting conditions (eg the requirement for employees to save

or holdings shares for a specific period of time).

Total fair value is expensed over the vesting period, which is the period over which all of the

specified vesting conditions are to be satisfied. At the end of each period, the entity revises its

estimates of the number of options that are expected to vest based on the non-market vesting

and service conditions. It recognizes the impact of the revision to original estimates, if any, in

profit or loss, with a corresponding adjustment to equity.

Current and change in deferred tax for the year

Income Tax

The tax expense represents the sum of the tax currently payable and change in deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net

profit as reported in the income statement because it excludes items of income or expense

that are taxable or deductible in other years and it further excludes items that are never

taxable or deductible. The Company’s liability for current tax is calculated using tax rates that

have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the

carrying amounts of assets and liabilities in the financial statements and the corresponding tax

bases used in the computation of taxable profit and is accounted for using the balance sheet

liability method. Deferred tax liabilities are generally recognized for all taxable temporary

differences and deferred tax assets are recognized to the extent that it is probable that taxable

profits will be available against which deductible temporary differences can be utilized. Such

assets and liabilities are not recognized if the temporary difference arises from the initial

recognition of goodwill or from the initial recognition (other than in a business combination) of

other assets and liabilities in a transaction that affects neither the taxable profit nor the

accounting profit. Deferred tax liabilities are recognized for taxable temporary differences

Annual report 2023

Extending the ocean potential 68

arising on investments in subsidiaries and associates, and interests in joint ventures, except

where the Group is able to control the reversal of the temporary difference and it is probable

that the temporary difference will not reverse in the foreseeable future. Deferred tax assets

arising from deductible temporary differences associated with such investments and interests

are only recognized to the extent that it is probable that there will be sufficient taxable profits

against which to utilize the benefits of the temporary differences and they are expected to

reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and

reduced to the extent that it is no longer probable that sufficient taxable profits will be available

to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that

are expected to apply in the period when the liability is settled, or the asset is realized based

on tax laws and rates that have been enacted or substantively enacted at the balance sheet

date. Deferred tax is charged or credited in the income statement, except when it relates to

items charged or credited in other comprehensive income, in which case the deferred tax is

also dealt with in other comprehensive income. The measurement of deferred tax liabilities and

assets reflects the tax consequences that would follow from the manner in which the Group

expects, at the end of the reporting period, to recover or settle the carrying amount of its assets

and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable

right to set off current tax assets against current tax liabilities and when they relate to income

taxes levied by the same taxation authority and the Group intends to settle its current tax assets

and liabilities on a net basis.

Current tax and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that

are recognized in other comprehensive income or directly in equity, in which case, the current

and deferred tax are also recognized in other comprehensive income or directly in equity

respectively.

Deferred tax benefit has not been recognized in the balance sheet as the Group is in its 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.

Leases

All leasing agreements with a duration exceeding 12 months are capitalized. The Group

assesses whether a legally enforceable contract is or contains a lease at the inception date of

the contract. The assessment includes several criteria to be determined based on judgment

that includes whether there is an identifiable asset in connection to the lease, whether the

Group has the right to control the use of the identifiable asset, and whether the Group can

obtain substantially all economic benefits from the identifiable asset.

The Group recognizes a right-of-use (“ROU”) asset and a lease liability at the lease

commencement date. The lease liability is calculated based on the present value of the

contractual minimum lease payments using the incremental interest rate of the lease. The

contractual minimum lease payments consist of fixed payments based on contractual amount

at the time of conclusion of the agreement. The lease liability is subsequently measured at

amortized cost under the effective interest rate during the lease term and may also be adjusted

to management’s reassessment of future lease payments based on options exercised,

Annual report 2023

Extending the ocean potential 69

renegotiations, or changes of an index rate.

The ROU asset is calculated based on the lease liability, plus initial direct costs towards the

lease, and less any incentives granted by the lessor. The ROU asset is subsequently amortized

under the straight-line method under the shorter of the lease term or the useful life of the

underlying asset and is included as part of depreciation and amortization in the

accompanying statements of other comprehensive income.

Leases that fall under the IFRS 16 short-term exception are recognized on a straight-line basis

over the lease term.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset for one entity and a

financial liability or equity instrument for another entity.

Interest rate swap

The Group has entered into interest rate swap to hedge its risk exposure to interest-bearing

debt. Changes in fair value of those derivates is recognized as unrealized profit/loss under

financial income/loss and allocated to, an unrealized profit/loss as other current receivables in

the balance sheet.

Currency hedging

Salmon Evolution Sales AS make use of forward currency contracts to hedge against

fluctuations in exchange rates that arises during the period between when Salmon Evolution

Sales enters into a sales contract and when the product is paid for. Changes in fair value of

those contracts is recognized as unrealized profit/loss under financial income/loss and to other

current receivables in the balance sheet.

Power contracts

The Group has entered into power supply contract with Statkraft in order to secure stabile and

predictable fluctuations in the power prices. The Group only secures power that is intended for

own use.

Due to changes in the construction and production plan, a significant part of the power

contract made for 2023 has not been used for internal purposes. Hence, the contract was not

considered as own use, and therefore measured at fair value. Changes in fair value in these

derivates is recognized as unrealized profit/loss under financial income/loss and allocated to,

an unrealized profit/loss as other current receivables in the balance sheet. The contract period

for this contract ended 31.12.2023.

Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents

includes cash on hand and deposits held at call with financial institutions.

Trade receivables, loans and other receivables

Trade receivables, loans and other receivables are recognized at invoiced amount and

subsequently measured at amortized cost using the effective interest method, less provision for

impairment. See note 3, 17 and 18 for further information about the Group’s accounting for

trade receivables, loans, other receivables and credit risk.

Annual report 2023

Extending the ocean potential 70

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 ready for intended use.

This includes capitalized costs such as personnel expenses, rent of premises and equipment

and other project related costs to be part of the production facility expenditures. 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. The group considered the test- and verification phase for first phase of its Indre

Harøy facility ready for intended use from April 2023, and started depreciations from that time.

Intangible assets

Expenses related to research activities are expensed as incurred. Expenses related to

development activities are capitalized if the product or process is technically and

commercially feasible, and the Group has adequate resources to complete the development.

Patents are capitalized and measured at cost less accumulated amortization and any

accumulated impairment losses, if any.

Goodwill

When the Group assumes control over a separate business entity for a consideration that

exceeds the fair value of the individual assets and liabilities assumed, the difference is entered

as goodwill in the statement of financial position. Goodwill is not depreciated but is tested for

impairment annually if there are indications that its value is lower than the carrying amount.

See note 11 for further information.

Impairment

Management reviews long-lived assets for impairment annually, or more frequently, whenever

events or changes in circumstances indicate that the carrying value may not be recoverable.

The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in

use. When such assets are identified, with certain indicators, an impairment test will be carried

out.

If an evaluation is required, the estimated future undiscounted cash flows associated with the

asset are compared to the asset’s carrying value to determine if an adjustment for impairment

to such asset is necessary. The effect of any impairment would be to expense the difference

between the fair value of such asset and it’s carrying value. Non-financial assets that suffered

Annual report 2023

Extending the ocean potential 71

an impairment are reviewed for possible reversal of the impairment at the end of each

reporting period.

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. For further information, please refer to note

Classification of current and non-current items

Assets are classified as current when it expected to be realized or sold, or to be used in the

Group's normal operating cycle, or falls due or is expected to be realized within 12 months after

the end of the reporting date. Assets that do not fall under this definition is classified as non-

current. Liabilities are classified as current when they are expected to be settled in the normal

operating cycle of the Group or are expected to be settled within 12 months after the reporting

date, or if the Group does not have an unconditional right to postpone settlement for at least

12 months after the reporting date. Liabilities that do not fall under this definition are classified

as non-current.

Trade and Other Receivables

Trade receivables are initially recognized at amortized cost, less a provision for expected credit

losses. Credit loss provisions are based on individual customer assessments over each reporting

period and not on a 12-month period.

The Group has procedures to ensure that products are only sold to customers with satisfactory

creditworthiness, where credit insurance is used when deemed necessary. This risk is, per

31.12.2023, not considered to be material.

In 2023 all produced fish was sold to Salmon Evolution Sales AS, which in turn sold it to external

customers. The sales company secures the bulk of its sales through credit insurance.

Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings

are subsequently measured at amortized cost. Any difference between the proceeds (net of

transaction costs) and the redemption amount is recognized in profit or loss over the period of

the borrowings using the effective interest method. Borrowings derecognized when the

obligation specified in the contract is discharged, cancelled, or expired. The difference

between the carrying amount of a financial liability that has been extinguished or transferred

to another party and the consideration paid, including any non-cash assets transferred or

liabilities assumed, is recognized in consolidated statement of profit or loss within the line other

financial items, net.

Borrowings are classified as current liabilities unless the Group has an unconditional right to

defer settlement of the liability for at least 12 months after the reporting period.

Borrowings cost

Annual report 2023

Extending the ocean potential 72

In accordance with IAS 23, the Group’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.

Trade and Other Payables

Trade and other payables represent unpaid liabilities for goods and services provided to the

Group prior to the end of the financial year and are presented as current liabilities unless

payment is not due within 12 months after the reporting period. Trade and other payables are

recognized initially at their fair value and are subsequently measured at amortized cost using

the effective interest method.

Pensions

The Group offers a defined contribution plan to its employees and pays contributions to

privately administered pension insurance plans on a contractual basis. The Group has no

further payment obligations once the contributions have been paid. Contributions are

recognized as employee benefit expense when they are incurred and are included as part of

salary and personnel costs in the statement of profit and loss. Prepaid contributions are

recognized as an asset to the extent in which a cash refund or a reduction in the future

payments is available.

Statement of cash flows

The accompanying statements of cash flows are prepared in accordance with the indirect

method.

Annual report 2023

Extending the ocean potential 73

Note 2 Critical estimates and judgements

The preparation of financial statements requires the use of accounting estimates which, by

definition, will seldom equal the actual results. Management also needs to exercise judgement

in applying the Group’s accounting policies.

In the process of applying the Group's accounting policies, management has made the

following judgements, which have the most significant effect on the amounts recognized in

the Group's financial statements:

1) Capitalised costs as assets under construction

As part of the construction of the Group's production facilities, the Group has capitalized

certain costs (such as personnel expenses, rent of premises and equipment and other project

related costs), as "assets under construction" in accordance with IAS 16 based on an allocation

key. The allocation key is employee-based and has been calculated based on the employees

that are directly involved in the assets under construction's share of the total salary in the Group.

Reference is made to note 11 for details of additions to "assets under construction".

2) Biological assets

Biological assets comprise of eggs, smolt and live fish in each tank at the grow-out facility at

Indre Harøy. These assets are accounted for in accordance with IAS 41, and me measured at

fair value unless the fair value cannot be measured reliably. The estimation of the fair value

relies on a series of uncertain assumptions, e.g., biomass volume, quality, size, market prices,

expected future costs, remaining time to harvest.

All deviations in biomass volume compared to estimates, is measured when a tank is harvested

out. The deviations are normally relatively minor. Similarly, the quality if the fish can normally be

estimated with a relatively high degree of certainty, based on historic data and regular

controls, given that the fish is kept in a controlled environment in each tank. Categorization of

quality is set at facility level. Given that Salmon Evolution split and grade each batch two times

in each production cycle, the size distribution in each batch harvested out is normally minor.

The accumulated production cost of is based on an allocation of cost to each batch at tank

level. The accumulated production cost per kg will normally only deviate from the estimate if

the biomass volume is different from the estimate. For estimation of future production costs,

there is uncertainty with regards to feed prices, other input costs and biological development.

Salmon Evolution tracks and measures cost development vs. expectation for all batches as

part of the normal monthly financial closing process. The estimation of future production costs

influences the biomass value through the fair value adjustment.

A key estimate in the estimation of fair value is the assumed market price, which is the price

that Salmon Evolution expect to receive at a future date when the live fish is harvested. Given

that Salmon Evolution harvest salmon in Norway, Fish Pool is used with relevant adjustments

(see note 6 for more information).

For further information, please refer to note 6.

Annual report 2023

Extending the ocean potential 74

3) Financial derivatives

The purpose of the Group's risk management activities is to establish an overview of financial

risks that exists at any given time. As of this date the Group has chosen to employ both interest

rate swap agreements to create interest rate stability and power hedging contracts to create

stable power supply prices.

The derivative financial assets relate to hedging contracts for the Company’s interest rate

exposure and consist of an interest rate swap contract of NOK 50 million in Sparebanken Vest

and a similar contract of NOK 150 million in Nordea. Both contracts are due January 2028, and

has to a swap fixed interest of 1.79 %. Changes in Market Value is registered as unrealized

profit/loss under financial income and allocated to, an unrealized profit/loss as other current

receivables in the balance sheet.

Salmon Evolution Norway AS had a power supply contract with Statkraft AS. In 2022, due to

changes in construction timeline and production plan, resulting in secured volume under the

contract not being used for own use and hence sold in the spot market, the contract was no

longer considered as for own use, and therefore measured at fair value.

In 2023 the Group made a new power supply contract with Statkraft AS, securing parts of the

estimated power need for 2024, 2025 and 2026. This volume is defined as own use, and

therefore not measured at fair value.

See note 3 and 19 for more information on classes of financial instruments measured at fair

value.

Annual report 2023

Extending the ocean potential 75

Note 3 Financial risk and capital management

The Group's financial assets and liabilities include trade and other receivables, trade and other

payables, cash, and borrowings necessary for its operations. The Group's risk management is

carried out by the Group's finance department. The Group is exposed to market risk, credit risk,

and liquidity risk.

Market risk

Market risk is linked to both interest rate- and currency fluctuations.

Interest Rate

The Group's interest rate risk relates primarily to borrowings from financial institutions with

variable interest rates. Currently, the Group has made two interest rate swap contracts of NOK

50 million in Sparebanken Vest and NOK 150 million in Nordea. The Group does not have any

fixed-interest rates loans. As of 31 December 2023, outstanding long-term loans from credit

institutions amounted to NOK 525.0 million and is subject to an interest rate of NIBOR 3M plus an

agreed margin. The Group also have drawn NOK 90.1 million of the overdraft facility.

This loan is part of a financing package consisting of the following:

- NOK 525 million non-amortizing Term Loan Facility which will refinance the Company’s

existing NOK 525 million construction loan relating to phase 1 (the “Term Loan”)

- NOK 250 million RCF Capex Facility available for general corporate purposes including Indre

Harøy phase 2 capex (the “RCF Facility”)

- NOK 775 million Construction Facility available for financing of capex relating to phase 2 at

Indre Harøy (the “Construction Facility”)

The loans are floating interest rate loans denominated in NOK with an interest charge based

on NIBOR 3M plus an agreed margin.

Incurred interest expenses and establishing fees during construction period are capitalized as

part of assets under construction, see note 11 for further details.

In addition, the Group has a debt financing package of NOK 60 million in relation to Salmon

Evolution Dale. As per 31 December 2023 NOK 58 million of the NOK 60 million debt financing

package was drawn.

Foreign Currency

The Group's foreign currency risk relates to the Group's operating, investing, and financing

activities denominated in a foreign currency. This includes the Group's revenues, expenses and

capital expenditures. As 31 December 2023 the Group had made some currency forward

contracts to hedge the effect of fluctuations in currency from the sales contracts. Value

changes in forward contracts affect profit and loss.

The Group's presentation currency is Norwegian Kroner ("NOK").

Interest rate sensitivity

(NOK thousands) 2023 2022

Interest expense effect of a 1% increase on floating interest rate 6 730 5 560

Annual report 2023

Extending the ocean potential 76

Credit risk

With respect to credit risk arising from the financial assets of the Group, which comprise cash

and cash equivalents, and other receivables, the Group's exposure to credit risk arises from

default of the counterparty, with a maximum exposure equal to the carrying amount of these

instruments. The Group has procedures to ensure that products are only sold to customers with

satisfactory creditworthiness, where credit insurance is used when deemed necessary. This risk

is, per 31.12.2023, not considered to be material.

In 2023 all produced fish was sold to Salmon Evolution Sales AS, which in turn sold it to external

customers. The sales company secures the bulk of its sales through credit insurance.

Credit-insured share of trade receivables as of 31.12.2023 was NOK 28.2 million.

Liquidity risk

A lack of liquidity will entail a risk that the Group will not be able to pay its obligations on

maturity. Management monitors rolling forecasts of the Group's liquidity reserve (comprising

cash and cash equivalents) on the basis of expected cash flows. The Group's business plan and

growth strategy is capital intensive, and the Group may be dependent upon future equity

issues and/or debt financing in order to finance its current long-term plans.

The table below presents the maturities on the Group's financial liabilities. The amounts

disclosed in the table are the contractual undiscounted cash flows.

Trade receivables(NOK thousands) 2023 2022Trade receivables 40 763 23 080Provision for loss on claims -267 0Total financial liabilities 40 496 23 080

31 December 2023(NOK thousands) Less than 3 months 3-12 months 1-5 yearsBorrowings 0 103 275 569 969Interest (Long term debt) 13 005 40 017 213 426Lease liabilities 1 088 3 263 8 189Trade payables 71 499 0 0Total financial liabilities 85 592 146 554 791 58431 December 2022(NOK thousands) Less than 3 months 3-12 months 1-5 yearsBorrowings 0 55 353 513 169Interest 10 451 26 351 147 208Lease liabilities 935 2 618 9 676Trade payables 135 098 0 0Total financial liabilities 146 483 84 323 670 053

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Extending the ocean potential 77

Financial instruments – assessment of fair value

The table below shows financial instruments at fair value according to valuation method. The

different levels are defined as follows:

Level 1: Price listed in an active market for identical assets or liabilities.

Level 2: Valuation is based on other observable inputs either directly or indirectly than listed

price (used in level 1) for the asset or liability.

Level 3: Valuation based on inputs not derived from observable markets (non-observable

assumptions)

31 December 2023 FVPL*(NOK thousands) Level 1 Level 2 Level 3 Amortized cost Fair value Carrying amount Financial assets:Trade receivables - - - 40 496 40 496 40 496Financial derivatives - 12 900 - - 12 900 12 900Energy contract - - - - 0 0Other current receivables - - - 31 121 31 121 31 121Cash and cash equivalents - - - 386 396 386 396 386 396Total financial assets - 12 900 - 458 013 470 913 470 913 Financial liabilities:Deferred tax - - - - - - Long-term interets bearing debt - - - 569 969 569 969 569 969 Other long term liabilites - - - 8 702 8 702 8 702 Short-term interest bearing debt - - - 103 275 103 275 103 275 Trade payables - - - 71 499 71 499 71 499 Social security and other taxes - - - 8 273 8 273 8 273 Other current liabilities - - - 14 635 14 635 14 635 Total financial liabilities - - - 776 353 776 353 776 353 *FVPL: Fair value through profit or loss31 December 2022 FVPL*(NOK thousands) Level 1 Level 2 Level 3 Amortized cost Fair value Carrying amount Financial assets:Trade receivables - - - 23 080 23 080 23 080Financial derivatives - 11 719 - - 11 719 11 719Energy contract - 13 903 - - 13 903 13 903Other current receivables - - - 66 951 66 951 66 951Cash and cash equivalents - - - 278 759 278 759 278 759Total financial assets - 25 622 - 368 790 394 412 394 412 Financial liabilities:Deferred tax - - - - - - Long-term interets bearing debt - - - 513 169 513 169 513 169 Other long term liabilites - - - 8 549 8 549 8 549 Short-term interest bearing debt - - - 55 353 55 353 55 353 Trade payables - - - 135 098 135 098 135 098 Social security and other taxes - - - 7 086 7 086 7 086 Other current liabilities - - - 9 783 9 783 9 783 Total financial liabilities - - - 729 038 729 038 729 038 *FVPL: Fair value through profit or loss

Annual report 2023

Extending the ocean potential 78

Note 4 Operating Income

Operating income in the Group for 2023 derives from sales of farmed salmon from Salmon

Evolution Sales AS (who bought the salmon from Salmon Evolution Norway AS). Salmon

Evolution Sales AS has in 2023 sold 1,865 tonnes Atlantic Salmon, and the distribution is as

illustrated below.

Other income in 2023 was mostly related services to K Smart Farming Co., Ltd. in South Korea.

Our land-based salmon have been distributed through Salmon Evolution Sales to a vast number

of customers, across different segments and channels. The initial batch has been launched

locally, nationally in Norway and internationally, in close collaboration with our partners, and

has proven to be meet the highest standards, for both raw, heated and smoked products.

(NOK thousands) 2023 2022Sales revenues 153 325 46 107 Smolt 0 19 293 Atlantic Salmon (hog) 152 767 26 073 Atlantic Salmon (trimmed) 558 741 Other income 15 099 1 574 Total operating revenue 168 424 47 681

20232022Sales quantity Sales quantity Destination (tonnes)% (tonnes)% Norway 1 306 70 %220 65 %EU ex. Norway 557 30 %115 34 %Asia 2 0 %6 2 %Total 1 865 100 %340 100 %Sales renevue atlantic salmon 2023 2022Norway 105 743 16 538EU ex. Norway 47 379 9 527Asia 203 749Total 153 325 26 814

Annual report 2023

Extending the ocean potential 79

Note 5 Segment

Operating segments are reported in a manner consistent with internal reporting to the chief

operating decision-maker, which is responsible for allocating resources and assessing

performance. The chief operating decision-maker has been identified as the Group

management. 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 in Note 1 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, USA,

Asia and other markets.

(In thousand NOK)Farming Norway Other Eliminations Group FY 2023External revenue 158 248 10 176 0 168 424Internal revenue 0 17 388 -17 388 0Operating revenue 158 248 27 564 -17 388 168 424Operational EBITDA -23 214 -60 737 0 -83 950Operational EBIT -67 932 -63 855 1 107 -130 680Fair value adjustment of biomass 20 149Net financial -35 241Profit/loss before tax -145 773Harvested volum (tonnes, HOG) 1 874 1 874Operational EBITDA/kg (NOK) N/A N/AOperational EBIT/kg (NOK) N/A N/ATotal assets 2 044 341 14 980 -1 899 2 057 422

Annual report 2023

Extending the ocean potential 80

Note 6 Biological assets and inventory

Biological assets and inventory

Biological assets comprise of live fish at Indre Harøy (grow-out facility) and smolt and the Dale

smolt facility. Live fish is recognized at fair value.

Other inventory primarily comprises of feed, packaging materials, spare parts and finished

goods. Inventories are measured at the lowest of cost and net realizable value.

Biological assets

Live fish are accounted for in accordance with IAS 41 Agriculture, and IFRS 13, Fair value

measurement. Live fish is measured at fair value unless the fair value cannot be measures

reliably. For live fish in the grow-out facility, a present value model is applied to estimate the

fair value. Changes in fair value are recognized and classified under fair value adjustments in

the Consolidated statement of profit and loss.

For roe, fry and smolt are valued at historic cost. Historic costs are deemed to provide the best

estimate of fair value for these assets.

The fair value of live fish held at the Group's grow-out facility is calculated using a present value

model based on estimated future cash flow. The present value is calculated based on

estimates revenues, less estimated remaining production cost until the fish is ready for harvest.

The Company 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.

Estimated revenues are calculated as the estimated harvestable biomass at expected harvest

dates, multiplied by the price expected to be achieved at the same time. The price is

calculated using the Fish Pool forward price at reporting date, less adjustments for expected

differences in quality and size, as well as market specific adjustments. For 2024 the Group have

FY 2022External revenue 46 054 1 627 0 47 681Internal revenue 0 13 665 -13 665 0Operating revenue 46 054 15 292 -13 665 47 681Operational EBITDA N/A N/A -68 481 -68 481Operational EBIT N/A N/A -74 671 -74 671Fair value adjustment of biomass 11 740Net financial 30 205Profit/loss before tax -32 726Harvested volum (tonnes, HOG) 340Operational EBITDA/kg (NOK) N/AOperational EBIT/kg (NOK) N/ATotal assets 1 820 004 13 495 -11 318 1 822 182

Annual report 2023

Extending the ocean potential 81

applied a forward price of 88.3 per kg, where the applicable Fish Pool price is adjusted to

reflect the discrepancy between Fish Pool and relevant market expectations.

Estimated harvestable biomass at harvest date is calculated based on the standard growth

model, production plan and expected number of harvestable individuals at harvest dates on

batch level. The growth model details the expected growth per month, and is a standard

model given that the hybrid flow-through concept delivers the same growth environment year-

round and between batches. The production plan details the expected harvest dates for each

batch. The expected number of harvestable individuals at harvest dates is based on the

number of individuals at reporting date, less expected mortality until harvest.

Estimated remaining production cost are estimated as the necessary costs for the farming of

fish up until harvest date, including harvest and sales cost. The estimated remaining production

cost is adjusted for unutilized production capacity for indirect production cost, which consists

of personnel costs at the grow-out facility, depreciations, and other indirect production costs.

directly attributable to the fish. In determining the applicable capacity adjustment, the

Company considers several factors including number of tanks in operation, amount of standing

biomass and biomass production.

The fair value of the biomass is calculated using a present value model, applying a monthly

discount rate of 5.9% on the expected cash flow generated. The discount rate is intended to

reflect the risk of incidents that affects the cash flow, cost of capital and the time value of

money. The discount rate is based on standard model and thus identical between batches at

the grow-out facility. The risk adjustment takes into account the biological risks of farming. The

number of months left until harvesting will affect the risk and cash flow. Biological risk, the risk of

increased costs and price risk will be the most important elements to be recognized.

Incident based mortality

Incident based mortality is recognized when the smolt or grow-out facility experiences

elevated or substantial mortality. In such cases, mortality expense is included as part of cost of

materials in the consolidated financial statements, and the fair value associated with the

affected biomass is adjusted under fair value adjustments. Incident based mortality is

calculated at tank level, and an assessment is made as to whether there is basis from a write-

down, in the event of an incidents exceeding 3 % mortality in a period based on a single event.

NOK 1000BOOK VALUE OF INVENTORY FY 2023 FY 2022Equipment 2 667 0Raw materials 4 433 1 941Biological assets 153 790 58 927Finished goods 1 270 0Total 162 159 60 867TONNESBIOLOGICAL ASSETS FY 2023 FY 2022Biological assets beginning of period 733 0Biological assets end of period 2 204 733

Annual report 2023

Extending the ocean potential 82

The Group is still in a ramp-up phase for the grow-out 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. Year-to-date 2023 this adjustment amounted to NOK 41.3

million (compared to NOK 13.6 million in 2022) which has been expensed directly in the profit

and loss statement.

NOK 1000BIOLOGICAL ASSETS FY 2023 FY 2022Biological assets beginning of period 58 927 14 939Increase due to production 218 496 70 238Reduction due to harvest/sale -130 880 -37 990Reduction due to incident based mortality -12 901 0Fair value adjustment beginning of period -11 740 0Fair value adjustment end of period 31 889 11 740Biological assets end of period 153 790 58 927

Specification of biological assetsCost of Fair value Carrying Number of fish Biomass production adjustment amount (NOK Biological assets per 31.12.2023(1000)(tonnes)(NOK 1000)(NOK 1000)1000)Smolt 2 311 133 16 018 0 16 018Non-harvestable fish (<4.6 kg) 1 367 2 092 105 883 31 889 137 772Harvestable fish (>4.6 kg) 0 0 0 0 0Total 3 678 2 225 121 901 31 889 153 790Cost of Fair value Carrying Number of fish Biomass production adjustment amount (NOK Biological assets per 31.12.2022(1000)(tonnes)(NOK 1000)(NOK 1000)1000)Smolt 2 305 96 12 681 0 12 681Non-harvestable fish (<4.6 kg) 695 637 34 506 11 740 46 246Harvestable fish (>4.6 kg) 0 0 0 0 0Total 3 000 733 47 187 11 740 58 927

Annual report 2023

Extending the ocean potential 83

Note 7 Cost of Goods Sold

Note 8 Personnel expenses, remuneration to the board and auditor's

fee

During the ordinary course of business, the Group capitalizes portions of total salary and

personnel costs towards assets under construction. In addition, a portion of the salaries related

to the production are recognised as part of the biomass value in the balance sheet. Salary

allocated to biomass in 2023 was NOK 17.7 million (NOK 10.3 million in 2022).

Norwegian entities are obligated to establish a mandatory company pension. This obligation is

fulfilled under the current pension plan. No loans or guarantees have been given to the

members of the board of directors or executive management.

Composition inventory change: 2023 2022Change due to production 218 496 70 238Change due to harvest/sale -130 880 -37 990Change due to incident based mortality -12 901 0Change inventory raw material 3 762 1 829Sum 78 476 34 077Composition - change due to production: 2023 2022Raw material cost 122 419 32 877Salaries 17 670 10 260Depreciations 22 778 1 592Other operating expenses 55 629 25 509Sum 218 496 70 238

Frozen Fair value Inventory Feed Smolt Salmon productsTotal at costadjustment Value 01.01.2023 1 941 12 681 34 506 0 49 127 11 740Change 2 492 3 338 71 377 1 270 78 476 20 149Value 31.12.2023 4 433 16 018 105 882 1 270 127 603 31 889

(NOK thousands) 2023 2022Salaries 67 102 50 969Social security 11 054 8 682Pensions 3 458 2 529Other benefits 5 507 9 363Share-based payments 2 441 3 328Gross personnel expenses 89 562 74 871- Capitalized costs -13 511 -18 496Total personnel expenses recognized in P&L 76 052 56 375Number of full-time employment equivalents 69 49

Annual report 2023

Extending the ocean potential 84

Remuneration and compensation to members of the board(NOK thousands) 2023 2022Tore Tønseth (Chairman of the Board) 500 500Janne-Grethe A. Strand (Member of the board) - From March 2021 500 500Glen Bradley (Member of the Board) 375 375Peder Stette (Member of the Board) 250 250Anne Breiby (Member of the Board) 250 250Eunhong Min (Member of the board) 250 0Ingvild Vartdal (Member of the Board) - from March 2021 250 250Håkon Andrè Berg (Member of the Board) 146 0Kristofer Reiten (Member of the Board) 0 250Yun Ki Yun (Member of the board) 0 250Frode Kjølås (Nomination committee) 75 75Berit Rogne (Nomination committee) 50 50Trond Svinø (Nomination committee) 50 0Total board of Directors 2 696 2 750

Remuneration and compensation to executive management 2023(NOK thousands) Salary Bonus Pension Other TotalTrond Håkon Schaug-Pettersen (CEO) 2 740 500 71 272 3 583Trond Vadset Veibust (CFO from 01.04.2023) 1 243 0 71 120 1 434Ingjarl Skarvøy (COO) 1 946 0 71 206 2 223Kamilla Holo Mordal (Project Director) 1 623 0 71 15 1 709Odd Frode Roaldsnes (CCO) 1 729 0 71 168 1 968Henriette Nordstrand (Technical Director) 1 108 0 64 23 1 194Tore-Jakob Reite (Director Strategic Projects from 17.04.2023)807 0 67 29 903Total executive management 11 196 500 486 833 13 014Remuneration and compensation to executive management 2022(NOK thousands) Salary Bonus Pension Other TotalHåkon Andrè Berg (CEO until oct 2022) 2 722 0 67 208 2 997Trond Håkon Schaug-Pettersen (CEO from oct 2022, CFO) 2 228 0 67 246 2 541Ingjarl Skarvøy (COO) 1 844 0 67 162 2 073Kamilla Holo Mordal (CPO) 1 482 100 67 8 1 657Odd Frode Roaldsnes (CCO) 1 533 0 67 17 1 617Henriette Nordstrand (Technical Director from sept-22) 380 0 29 22 431Total executive management 10 190 100 364 663 11 316

Compensation to executive management related to options 2023(NOK thousands) OptionsTrond Håkon Schaug-Pettersen (CEO) 871Trond Vadset Veibust (CFO from 01.04.2023) 197Ingjarl Skarvøy (COO) 351Kamilla Holo Mordal (Project Director) 328Odd Frode Roaldsnes (CCO) 363Henriette Nordstrand (Technical Director) 50Tore-Jakob Reite (Director Strategic Projects from 17.04.2023)50Total executive management 2 210Compensation to executive management related to options 2022(NOK thousands) OptionsTrond Håkon Schaug-Pettersen (CEO from oct 2022, CFO) 1 399Ingjarl Skarvøy (COO) 600Kamilla Holo Mordal (CPO) 567Odd Frode Roaldsnes (CCO)615Henriette Nordstrand (Technical Director from sept-22) 0Håkon Andrè Berg (CEO until oct 2022) 20Total executive management 3 201

Annual report 2023

Extending the ocean potential 85

Trond Håkon Schaug-Pettersen (CEO) is entitled to 6 months’ severance pay if the employment

agreement is terminated by the Company. Selected key employees also have a non-compete

clause in their employment agreement giving them right to 3-6 months’ pay if such clause is

triggered by the Company.

The CEO received a bonus of NOK 500 thousand as compensation for holding both the CEO

and CFO position until a new CFO was appointed in April 2024.

Auditor's remuneration(NOK thousands) 2023 2022Statutory audit 1052 943Service in relation to tax return 17 36Service inrelation to annual accounts 0 27Other services 87 6Total 1 156 1 011

Annual report 2023

Extending the ocean potential 86

Note 9 Share based payments

In August 2021 the Board of the directors established a share option program for members of

the Company's executive management where total of 6,900,000 share options were granted,

in November 2021 this was updated to 7,650,000 share options. These options were issued on

an annual basis with 1/3 each year, with issue dates being 31 August 2021, 1 June 2022 and 1

June 2023. Issued options vest 50% after year one and 50% after year two, with a strike price

equal to the closing price of the Company's shares on Oslo Børs on the last trading day prior to

the respective to the issue date + 15%.

In 2023, 700,000 share options were granted to executive management in January, 250,000 in

June as well as 960,000 to key employees in June. These options were issued with issue date 1

June 2023. Issued options vest 50% after year one and 50% after year two, with a strike price

equal to the closing price of the Company's shares on Oslo Børs on the last trading day prior to

the respective to the issue date + 15%.

The strike price for the share options issued 31 August 2021 was NOK 9,00 per share, 1 June 2022

NOK 10,06 per share and 1 June 2023 NOK 8,30 per share.

To account for the issued share options, an adjusted Black & Scholes option-pricing model is

used by applying a weighted expected average life of 18 months.

The fair value of the options is set on the grant date and is expensed over its lifetime. The fair

value of the options has been calculated using the adjusted Black & Scholes option-pricing

model, which considers the exercise price, the term of the option, the share price at the grant

date, expected price volatility of the underlying share, expected dividend and risk-free rates.

Given the recent listing and lack of historical price and volatility data, the expected volatility is

based on historical volatility for a selection of comparable companies listed on Oslo Stock

Exchange ("Oslo Børs"). The risk-free interest rate is set to equal the interest on Norwegian

government bonds with the same maturity as the option. Average key assumptions are listed

below.

Outstanding options (in thousands) 2023 2022Outstanding options 1 January 5 150 9 275Options granted 1 910 0Options exercised 0 1 625Options forfeited 0 2 500Outstanding options at end of period 7 060 5 150

Annual report 2023

Extending the ocean potential 87

Note 10 Other operating expenses

(NOK thousands) 2023 2022Håkon André Berg (CEO until oct 22) 0 20Trond Håkon Schaug-Pettersen (CEO) 871 1 399Ingjarl Skarvøy (COO) 351 600Kamilla Mordal Holo (Project Director) 328 567Odd Frode Roaldsnes (CCO) 363 615Trond Vadset Veibust (CFO) 197 0Henriette Nordstrand (Technical Director) 50 0Tore-Jacob Reite (Director Strategic Projects) 50 0Salmon Evolution ASA -Other Key Personel 137 0Salmon Evolution Norway AS - Other Key Personel 73 0Salmon Evolution Dale AS - Other Key Personel 18 0Total charges 2 438 3 201Charges to income statement 2 438 2 259Charges to Asset under Construction 0 942Key assumptions 2023 2022Average fair value (NOK) 0,83 1,47Average exercise price (NOK) 8,30 10,35Weighted expected average life (in years) 3,21 2,33Estimated dividend per share (NOK) 0,00 0,00Expected average volatility 19,6 % 29,2 %Risk-free rate 3,31 % 0,86 %Group management have the following holdings Holding 01.01 Awarded Exercised Forfeitet Holding 31.12Håkon André Berg (CEO until oct 22) 500 0 0 0 500Trond Håkon Schaug-Pettersen (CEO from oct 22 & CFO) 2 400 200 0 0 2 600Ingjarl Skarvøy (COO) 750 0 0 0 750Kamilla Mordal Holo (Project Director)750 0 0 0 750Odd Frode Roaldsnes (CCO) 750 0 0 0 750Trond Vadset Veibust (CFO)0 500 0 0 500Henriette Nordstrand (Technical Director)0 125 0 0 125Tore-Jacob Reite (Director Strategic Projects)0 125 0 0 125Total 5 150 950 0 0 6 100*Numbers in thousand

(NOK thousands) 2023 2022Cost of premises (not defined as RoU) 3 506 2 647Rented equipment 5 565 633Insurance 5 425 1 775Consultancy fees 24 859 21 012Other operating expenses 55 629 25 509Other administrative expenses 33 635 13 963Total other operating expenses 128 619 65 538

Annual report 2023

Extending the ocean potential 88

Note 11 Property, plant & equipment

Straight-line depreciation is applied over the useful life of property, plant, and equipment (PPE)

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. From April 2023 the Group considered the main test- and verification phase for its Indre

Harøy facility over and started depreciation of the facility. There are some projects going on

improving the facility and some cost regarding phase 2. These are not deemed ready for

intended use. As such, assets under construction are not depreciated.

Earned grants that goes in the balance sheets is included in new additions and is netted against

the related asset’s acquisition. See note 16 for further information.

Most intangible asset is ongoing development cost related to FOU and Skattefunn projects and

are not amortized.

Capitalization of costs as asset under construction:

Costs incurred recognised as part of "Other operating expenses" in the "Statement of Profit or

Loss" during 2023 has been capitalized as of 31 December 2023 as these costs are deemed to

be part of the ongoing assets under construction and qualify for capitalization in accordance

with IAS 16. As a result, the reported "Other operating expenses" in 2023 reflects the incurred

costs during this period, net of such capitalized costs related to the entire 12 months period

ending 31 December 2023 which amounted to approximately NOK 39 million.

Intangible Assets under Assets in use, Fixtures and Right-of-use (figures in NOK 1000)assetsconstructionnot allocatedBuildingsfittings assetsTotalCost 1 January 2022 62 586 971 122 0 7 607 8 966 3 997 1 054 277Additions 2 564 742 368 0 0 17 453 14 566 776 951DisposalsCost 31 December 2022 65 149 1 713 490 0 7 607 26 419 18 562 1 831 228Accumulated depreciation 1 January 2022 0 0 0 -302 -670 -1 885 -2 857Depreciation for the period 0 0 0 -649 -1 864 -3 676 -6 189Net book value 31 December 2022 65 149 1 713 490 0 6 656 23 885 13 001 1 822 182Estimated lifetime n/a n/a n/a 10-50 years 3-50 years 3-5 yearsDepreciation method n/a n/a n/a Linear Linear LinearIntangible Assets under Assets in use, Fixtures and Right-of-use (figures in NOK 1000)assetsconstructionnot allocatedBuildingsfittings assetsTotalCost 1 January 2023 65 149 1 713 491 0 7 607 26 419 18 562 1 831 228Additions 7 201 269 490 0 2 157 438 3 601 282 887Completed constructions 0 -1 912 199 54 019 1 573 232 284 031 0 -917Cost 31 December 2023 72 350 70 781 54 019 1 582 996 310 888 22 163 2 113 198Accumulated depreciation 1 January 2023 0 0 0 -951 -2 534 -5 561 -9 046Depreciation for the period -3 0 0 -26 760 -15 450 -4 518 -46 731Net book value 31 December 2023 72 347 70 781 54 019 1 555 286 292 904 12 084 2 057 422Estimated lifetime n/a n/a n/a 10-75 years 3-50 years 3-5 yearsDepreciation method n/a n/a n/a Linear Linear Linear

Intangible Assets

01.01.2023 Additions Grants

Depreciations

31.12.2023

"Skattefunn"-projects* 0 5 929 -764 0 5 165

Other research and development projects 1 250 1 752 0 0 3 002

Trademark 3 068 283 0 -3 3 349

Water rights 16 597 0 0 0 16 597

Goodwill 44 235 0 0 0 44 235

Total 65 149 7 965 -764 -3 72 347

*See note 16 for more information

Impairmenttesting ofgoodwill

Annual report 2023

Extending the ocean potential 89

Contractual and financial commitments

Construction of phase 1 was completed medio April 2023 and remaining capital expenditures

for phase 1 as per 31 December 2023 was moderate, consisting of improvements and

adaptations. At year-end the Group is working to reach an agreement on the final settlement

for the construction of phase 1 at Indre Harøy. Negotiations are still ongoing, and consequently

the Group have adjusted the balance to reflect this.

As to phase 2 at Indre Harøy, the Group has started engineering and development work and

expect the construction process to start in 2024. As per 31 December there are no financial

commitments made in relation to phase 2 at Indre Harøy.

Impairment testing of goodwill

Goodwill with undefined economic lives is subject to an annual impairment test. The Group did

not recognize any impairment of goodwill in 2023. In 2023 the Group has one asset that need

to be impairment tested. The Group has defined the smolt production as a cash generating

unit.

The impairment is done using the Groups rolling projections which is based on financial budgets

where cash generating activities forms the basis of the valuation. This is done over a five-year

period. Budgeted EBITDA margin is set to be stable in the future as well as production of smolt,

only adjusted for expected inflation. Further, the annual reinvestment is assumed to be equal

to annual depreciations. Cash flow forecasts are estimated after tax, and weighted average

cost of capital is set to be 9%.

Capitalized internal cost01.01.2023Additions31.12.2023Salary 51 127 13 511 64 638 Rental/equipment 7 618 266 7 618 Interest 30 561 25 219 55 780 Total 89 306 38 997 128 036

Annual report 2023

Extending the ocean potential 90

Note 12 Finance income & finance cost

Interest income is mainly related to interest on cash deposits held with Norwegian financial

institutions. TNOK 25 219 in Incurred interest expenses and establishing fees are capitalized as

part of assets under construction in accordance with IAS 23.

The negative impact from share of net income from associated companies are related to a

loss at K Smart Farming.

(figures in NOK 1000)Finance income 2023 2022Interest income 15 591 8 730Net change in value of financial derivatives947 25 547Foreign exchange gains4 937 1 035Other finance income6 10Financial income21 481 35 322Share of net income from associated companies -7 098-947Total financial income14 383 34 375

Finance expenses 2023 2022Interest on debts and borrowings 33 914 3 012Realized loss/-gain on interest derivative-3 027 0Foreign exchange losses4 195 554Reduced value of contract related to power supply13 9030Other finance expenses640 604Total financial expenses49 624 4 170Net financial income/- expenses-35 241 30 205

Fair value adjustments - financial assets (N OK thousand) 2023 2022Unrealised changes in the value of interest rate swap 947 10 455Unrealised changes in the value of contract related to power supply -13 903 13 629Realised profit (loss) related to power supply contract 0 1 463Fair value adjustments recognised in profit and loss -12 956 25 547

Annual report 2023

Extending the ocean potential 91

Note 13 Investment in associated companies

The Group has the following investments in associated companies:

Investments in associated companies are recognized using the equity method.

The primary focus on the project towards the end of 2023 was centred around cost

optimization. The Company currently sees the overall project economics as challenging,

primarily driven by site specific circumstances at the Yangyang grow-out site, related to the

intake and discharge water solution due to a relatively long and shallow shoreline Additionally,

given that Korea has no existing salmon farming industry, certain other infrastructure items and

regulatory framework are impacting the project cost as well as operating cost. The project is

currently engaging with relevant authorities in South Korea to shore up government financial

support, to improve project economics. Clarification around this is expected during Q2 2024.

(figures in NOK 1000)

Location and place of business

Ownership Voting share

K Smart Farming Co., Ltd 49 % 49 %

27 413

Share of net income 2021 -634

Foreign currency translation gain/(loss) 2021 -560

Net book value 31 December 2021

26 219

Share of net income YTD 2022 -947

Foreign currency translation gain/(loss) YTD 2022 1 363

Net book value 31 December 2022

26 635

Share of net income YTD 2023 -7 098

Foreign currency translation gain/(loss) YTD 2023 -861

Net book value 31 December 2023

18 676

Investment cost 31.05.21

Gangwangnak-ro, South Korea

Annual report 2023

Extending the ocean potential 92

Note 14 Tax

Calculation of current and deferred tax/deferred tax benefit(NOK thousands) 2023 2022Intangible assets 13 487 13 487Fixed assets 145 389 19 712Accounts receivable -267 0Inventories 153 790 58 927Right-of-use assets 19 886 20 803Lease liabilities -21 240 -21 777Other current liabilities 0 14Net temporary differences 311 045 91 165Tax losses carried forward -642 780 -281 632Change due to unrealized financial instruments 12 900 25 623Basis for deferred tax (deferred tax asset) -318 835 -164 845Deferred tax (22%) -70 144 -36 266Deferred tax benefit not recognized in the balance sheet* 69 728 34 189Deferred tax in the balance sheet -415 -2 077

*Deferred tax benefit has historically not been recognized in the balance sheet as the Group is in its 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. As of 31.12.2023 there is a basis for payable tax in the subsidiary Salmon Evolution Sales AS. This will be offset

with a group contribution from Salmon Evolution ASA. The tax effect of the group contribution is recognized as a deferred

tax asset.

Basis for income tax expense, changes in deferred tax and tax payable(NOK thousands) 2023 2022Result before taxes -145 773 -32 727Permanent differences in relation to skattefunn -2 037 -4 750Other permanent differences 23 008 -7 383Basis for the tax expense -124 802 -44 860Change in temporary differences -219 880 -64 211Change due to equity transactions -24 018 0Result Kraft Laks AS to payable tax 0 0Result Kraft Laks AS before acquisition 0 0Change in tax losses carried forward -368 700 -109 071Basis for payable taxes in the income statement 1 887 9 439Components of the tax expense(NOK thousands) 2023 2022Payable tax on this year's result 415 2 077Total payable tax 415 2 077Change in deferred tax -33 878 -10 919Change in deferred tax due to previous year group contribution -2 077 -1 027Change in deferred tax not capitalized in the balance sheet 35 539 9 869Tax expense 0 0Reconciliation of the tax expense with the nominal tax rate(NOK thousands) 2023 2022Result before taxes -145 773 -32 727Calculated tax (22%) -32 070 -7 200Tax expense 0 0Difference 32 070 7 200

Annual report 2023

Extending the ocean potential 93

Note 15 Earnings per share

Basic earnings per share are based on the weighted average number of common shares

outstanding during the period.

FY 2023: The Group had 345,754,822 shares for the first four months of the year. In April the Group

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 4/12 of

the number of shares before the capital raise, and 8/12 of the total number of shares after the

capital raise (413,936,640 shares).

FY 2022: The Group started the year with 310,796,489 shares. In the end of March shares options

to the employees were exercised increasing the total number of shares with 1,625,000, followed

by an issue of 33,333,333 new shares in a capital raise in April. Therefor the weighted average

number of shares outstanding YTD 2022 has been calculated by applying a weight of 1/4 of

the number of shares before the capital raise in Q1 2022 (310,796,489 shares), and 3/4 of the

total number of shares after the capital raise (345,754,822 shares).

Note 16 Government grants

The Group has received a commitment from The Norwegian Research Council (Norsk

Forskningsråd) for two projects started in 2023. The grant is given for one period of three years

and is related to the tax incentive scheme "SkatteFUNN" which is a government program

designed to stimulate research and development (R&D) in Norwegian trade and industry. The

receivable is accounted for as a short-term receivable from the tax authorities. In the financial

accounts, the receivable related to the grant is netted partly against the related asset's

acquisition cost and partly against expenses recognized in the income statement. Grants for

2023 amounted to NOK 2,037.

The difference consists of:Tax on permanent differences -670 -2 669Change in deferred tax not shown in the balance sheet 35 539 9 869Change due to unrealized financial instruments -2 799 0Sum explained differences 32 070 7 200

(NOK thousands)2023 2022Loss atributable to the equity owners of the Parent company -145 773 -32 726Loss for calculation of diluted earnings per share -145 773 -32 726Weighted average number of shares outstanding 391 209 367 337 015 239Dilutive options 0 0Average number of shares and options used in calculation for diluted EPS 391 209 367 337 015 239Basic earnings per share (NOK) -0,37 -0,10Diluted earnings per share (NOK) -0,37 -0,10

Annual report 2023

Extending the ocean potential 94

Further, the Group has received a commitment from Regional Research Councils (RFF) for the

project "Analysis and strategy for management of microbiological environment in land-based

farming", and from Fisheries and Aquaculture Industry Research Funding (FHF) for the project

"Realization of the potential sensor data for improved efficiency and fish welfare”. In the

financial accounts, these grants are recognized as income in the P&L. Total grants for 2023

amounted to NOK 2,255 thousand.

Note 17 Leases

(NOK thousands)P&L Balance sheet 2023Systems for data input, handling and analytics 2 514 4 378 6 892 Grants -768 -542 -1 310 Landbased Salmon 2 278 1 551 3 829 Grants-505 -222 -727 Total "SkatteFUNN" project costs 3 519 5 165 8 684

(NOK thousands)2023RFF 500 FHF 1 755 Total grants received 2 255

Amounts recognised in the balance sheet(NOK thousands) 31 Dec 2023 31 Dec 2022Right-of-use assetsRent of premises 6 153 8 211Car 2 639 1 079Office supply 3 292 3 711Total right-of-use assets 12 084 13 001Lease liabilitiesCurrent 4 350 3 553Non-current 8 189 9 676Total lease liabilities 12 539 13 228

Amounts recognised in the statement of profit or loss(NOK thousands) 31 Dec 2023 31 Dec 2022Depreciation right-of-use assetsRent of premises 2 058 2 082Car 988 619Office supply 1 472 975Gross depreciation 4 518 3 676- Capitalized as assets under construction 0 0Net depreciation 4 518 3 676Interest expense lease liability 633 577

The total cash outflow for leases in 2023 was NOK 5,092 thousand.

Annual report 2023

Extending the ocean potential 95

Assets and liabilities arising from a lease are initially measured on a present value basis. The

lease payments are discounted using the interest rate implicit in the lease. If that rate cannot

be readily determined, which is generally the case for leases in the Group, the lessee’s

incremental borrowing rate is used, being the rate that the individual lessee would have to pay

to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a

similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Group:

• where possible, uses recent third-party financing received by the individual lessee as a

starting point, adjusted to reflect changes in financing conditions since third party financing

was received

• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for

leases held by the Company, which does not have recent third-party financing, and

• makes adjustments specific to the lease, e.g term, country, currency and security.

The Group is exposed to potential future increases in variable lease payments based on an

index or rate, which are not included in the lease liability until they take effect. When

adjustments to lease payments based on an index or rate take effect, the lease liability is

reassessed and adjusted against the right-of-use asset. Lease payments are allocated

between principal and finance cost. The finance cost is charged to profit or loss over the lease

period in order to produce a constant periodic rate of interest on the remaining balance of

the liability for each period.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date less any lease incentive

received

• any initial direct costs, and - restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the

lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase

option, the right-of-use asset is depreciated over the underlying asset’s useful life.

The Group has entered into several lease agreements that are considered to qualify as short-

term and/or low value in accordance with IFRS 16. Payments associated with such short-term

and low-value leases are recognised on a straight-line basis as an expense in profit or loss. Short-

Rent of premises Vechicles EquipmentRight-of-use assets 01.01.2023 8 211 1 079 3 711Additions 0 2 548 1 053Depreciations -2 058 -988 -1 472Right-of-use assets 31.12.2023 6 153 2 639 3 292Lease liabilities 01.01.2023 8 175 1 119 3 934Additions 0 2 548 1 053Repayments -1 782 -1 674 -835Lease liabilities 31.12.2023 6 393 1 993 4 152Leasing period 3-5 years 3-5 years 3-5 years

Annual report 2023

Extending the ocean potential 96

term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-

equipment and small items of office furniture.

Note 18 Other current receivables

As of 31 December 2023, and 2022, the Group’s other current receivables were due within one

year and considered fully collectible. Accordingly, the fair value of the Group’s other current

receivables was equal to nominal value, no bad debt was recognized for the years then

ended, and management did not consider a provision for uncollectible accounts necessary.

Receivables denominated in foreign currencies are valued at the daily rate. Due to the short-

term nature of current receivables, their carrying amount is considered equal to their fair value.

As of 31 December 2023, and 2022, the Group's other current receivables, specified by

currencies, consisted of the following:

(NOK thousands) 31 Dec 2023 31 Dec 2022Prepaid expenses 24 684 9 022VAT receivable 0 17 475Other receivables 4 400 16 332Government grant ("Enova") 0 19 373Tax incentive scheme ("Skattefunn") 2 037 4 750Total other current receivables 31 121 66 9510 0Current receivables pr 31.12.23 0-3 months 4-12 months TotalPrepaid expenses 17 235 7 449 24 684Other receivables 2 912 1 488 4 400Tax incentive scheme ("Skattefunn") 0 2 037 2 037Total other current receivables 20 147 10 974 31 121

(NOK thousands) 31 Dec 2023 31 Dec 2022NOK 31 121 66 951Other 0 0Total other current receivables 31 121 66 951

Annual report 2023

Extending the ocean potential 97

Note 19 Derivative financial instruments

The derivative financial assets relate to hedging contracts for the Group’s interest rate exposure

and consist of an interest rate swap contract of NOK 50 million in Sparebanken Vest and a

similar contract of NOK 150 million in Nordea. Both contracts are due January 2028, and has a

swap fixed interest of 1.79 %. Changes in Market Value is registered as unrealized profit/loss

under financial income and allocated to, an unrealized profit/loss as other current receivables

in the balance sheet.

Due to changes in construction and production plan a significant part of the energy contract

originally was done to hedge the energy usage, the contract was not considered as own use,

and therefor measured at fair value. The power hedging contract with Statkraft was valued to

NOK 13.9 million at end of 2022. The fair value was calculated by using contracted volumes to

until 31.12.2023, and calculating net present value of these volumes by using relevant forward

prices in the energy market (adjusted for EURNOK forward prices). The agreement period

expired on 31.12.2023 and the value is zero at the end of the year.

See note 3 for further description and more details on valuation method.

Note 20 Cash and restricted cash

Restricted cash are related to tax withholdings for employees (NOK 3,570 thousand).

(NOK thousands) 31 Dec 2023 31 Dec 2022Derivative financial assetsDerivatives not designated as hedging instruments Interest rate swaps 12 666 11 719 Currency hedging 234 0Total financial assets 12 900 11 719Derivatives designated as hedging instruments Power hedging contract 0 13 903Total derivatives not designated as hedging instruments 0 13 903Total derivative financial assets 12 900 25 622

(NOK thousands) 31 Dec 2023 31 Dec 2022Cash in bank382 826 275 944Restricted bank deposits3 570 2 815Total cash and cash equivalents386 396 278 759

Annual report 2023

Extending the ocean potential 98

Note 21 Share Capital & Capital history

The number of shares issued in the Group on 31 December 2023 was 413,936,640 with a nominal

value of NOK 0.05 each. All shares carry equal voting rights.

Nominal value 31 Dec 2023 31 Dec 2022Ordinary shares 0,05 413 936 640 345 754 822 Average number of shares 0,05 395 531 302 337 015 239 (NOK thousands) 31 Dec 2023 31 Dec 2022Share capital 20 697 17 288Share premium 2 124 647 1 627 073Total 2 145 344 1 644 361

20 largest shareholders as of 31.12.23 No of shares Percentage shareRonja Capital II AS 30 140 645 7,3 %The Bank of New York Mellon SA/NV 26 128 070 6,3 %Farvatn Private Equity AS 18 939 433 4,6 %Hongkong and Shanghai Banking Corp 16 044 572 3,9 %Rofisk AS 14 537 897 3,5 %Kjølås Stansekniver AS 12 506 439 3,0 %J.P. Morgan SE 11 761 639 2,8 %Stette Invest AS 11 744 288 2,8 %Verdipapirfondet DNB Norge 11 113 276 2,7 %Ewos AS 9 480 984 2,3 %Verdipapirfondet DNB SMB 9 302 408 2,2 %Jakob Hatteland Holding AS 8 758 786 2,1 %Mevold Invest AS 8 141 141 2,0 %Lyngheim Invest AS 8 049 252 1,9 %Bortebakken AS 7 856 330 1,9 %VPF DNB Norge Selektiv 7 424 509 1,8 %J.P. Morgan SE 4 652 771 1,1 %Salmoserve AS 4 000 000 1,0 %Verdipapirfondet Nordea Avkastning 3 578 295 0,9 %Clearstream Banking S.A. 3 377 732 0,8 %Total 20 largest shareholders 227 538 467 54,9 %Other shareholders 186 398 173 45,1 %Total number of shares 413 936 640 100,0 %

Annual report 2023

Extending the ocean potential 99

As of 31 December 2023, shares held directly or indirectly by members of the Board of Directors,

Chief Executive officer, and Executive Management consisted of the following:

Capital history

The Group entered into an investment agreement with Dongwon Industries and completed a

NOK 50 million private placement 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, bringing total raised equity to more

than NOK 1.7 billion.

In April 2023 the Group carried out a private placement raising gross proceeds of NOK 525

million at a subscription price of NOK 7.7 per share, bringing total raised equity to more than

NOK 2.2 billion.

No of shares Percentage sharePeder Stette, Member of the board - Stette Invest AS 11 744 288 2,8 %Vibecke Bondø, Member of the board - Bondø Invest AS 1 948 052 0,5 %Ingjarl Skarvøy, COO - Terra Mare AS and private 1 800 150 0,4 %Janne-Grethe Strand Aasnæs, Member of the board - Nikaro AS 480 000 0,1 %Trond Håkon Schaug-Pettersen, CEO - Troha Invest AS 400 000 0,1 %Odd Frode Roaldsnes, CCO - Anno Invest AS 250 000 0,1 %Anne Breiby, Member of the board 168 935 0,0 %Kamilla Mordal Holo, Project Director - C10 Holding AS & private 160 060 0,0 %Trond Vadset Veibust, CFO - Trollkyrkja AS 55 000 0,0 %Jan-Emil Johannessen, Member of the board - Jawendel AS 40 000 0,0 %Henriette Nordstrand, Technical Director - Heno Holding AS 32 849 0,0 %Tore-Jakob Reite, Director Strategic Projects 1 250 0,0 %Total 17 080 584 4,1 %

Subscription CapitalShare CapitalpriceTotal no. of (figures in NOK 1000)DateIncreaseAfter ChangePar Valueper shareNew sharesoutstanding sharesOpening balance 1 July 2020 5 375 159 0,05 107 503 182Share options exercised 10 July 2020 30 000 5 405 159 0,05 3,33 600 000 108 103 182Private placement 23 July 2020 581 395 5 986 554 0,05 4,30 11 627 906 119 731 088Private placement 11 September 2020 5 000 000 10 986 554 0,05 5,00 100 000 000 219 731 088Private placement 23 March 2021 4 166 667 15 153 221 0,05 6,00 83 333 333 303 064 421Acquisition Kraft Laks 16 August 2021 109 535 15 262 756 0,05 7,58 2 190 694 305 255 115Private placement 12 October 2021 277 068 15 539 824 0,05 7,71 5 541 374 310 796 489Share options exercised 26 March 2022 81 250 15 621 074 0,05 4,80 1 625 000 312 421 489Private placement 5 April 2022 1 666 667 17 287 741 0,05 9,00 33 333 333 345 754 822Private placement 18 April 2023 3 409 091 20 696 832 0,05 7,70 68 181 818 413 936 640

Annual report 2023

Extending the ocean potential 100

Note 22 Interest bearing debt

In Q1 2023 the Group 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 new 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 Group has a NOK 100 million Overdraft

Facility with Nordea. The refinancing was completed in April 2023.

As per 31 December 2023, NOK 525 million was drawn of the secured green debt financing

package. In addition, the Group has drawn NOK 90 million of the Overdraft Facility.

The Group has also entered into loan agreements for a total of NOK 60 million relating to Salmon

Evolution Dale AS of which around NOK 58 million was drawn as per 31 December 2023. 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 Group 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 150 million on a

last 12-month basis from Q4 2025. Quarterly EBITDA figures shall be measured from Q4 2023 with

set minimum EBITDA levels reflecting the company’s gradual ramp up of production volumes

Long-term interest bearing debt (NOK thousand) 31.12.2023 31.12.2022Debt to credit institutions 569 969 513 169Other long-term interest bearing debt 0 0Leasing liabilities 8 189 9 676Total long-term interest-bearing debt 578 158 522 845Short-term interest bearing debt (NOK thousand) 31.12.2023 31.12.2022Debt to credit institutions 103 275 42 512Other short-term interest bearing debt 0 12 841Leasing liabilitites 4 350 3 553Total short-term interest-bearing debt 107 625 58 906Total interest-bearing debt 685 783 581 750 Cash & cash equivalents 386 396 278 759 Net interest-bearing debt 299 387 302 991

Annual report 2023

Extending the ocean potential 101

and profitability. In anticipation of not being able to meet its minimum EBITDA requirement for

Q4 2023, the loan agreement was amended from lender dated 19 December 2023. First test of

EBITDA requirement will be Q1 2024.

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.

Security

The Group’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 Group, hereunder inter alia, land, plant and machinery,

operating licenses, inventory and receivables.

Information supporting the cash flows Interest bearing debt(NOK thousand) Short term Long termBalance at January 1, 2022 14 322 221 221Repayment of loans and borrowings -13 086 0Proceeds from new bank loan 42 512 313 169Seller credit Kraft Laks 12 841 -12 352Obligations due to land and water rights 0 573Change in obligations under leases 2 316 8 784Balance at Dec 31, 2022 58 906 531 394Repayment of loans and borrowings -12 841 0Proceeds from new bank loan 60 763 56 800Obligations due to land and water rights 0 153Change in obligations under leases 797 -1 487Balance at Dec 31, 2023 107 625 586 859

Annual report 2023

Extending the ocean potential 102

Note 23 Trade and other current liabilities

(NOK thousands) 31 Dec 2023 31 Dec 2022Accrued employer's social security contribution 0 0Shareholder loan 0 0Accrued salaries, holiday pay and bonus provisions 10 410 6 869Severance pay accrual 0 0Accrued interest expense 4 225 2 915Other current liabilities 0 0Total other current liabilities 14 635 9 783

(NOK thousands) 31 Dec 2023 31 Dec 2022Trade payables operation 33 812 21 483Trade payable constructions 37 687 113 616Total trade payables 71 499 135 098(NOK thousands) 31 Dec 2023 31 Dec 2022Tax payable 415 2 077Payroll withholding tax 3 563 2 810Employer's national insurance contributions 3 329 2 199VAT payable 966 0Total social security and other taxes 8 273 7 086

Annual report 2023

Extending the ocean potential 103

Note 24 Related party balances and transactions

During the ordinary course of business, the Group engages in certain transactions with related

parties. The following is a summary of related party transactions carried out in the period:

The Group has a consultancy agreement with Peder Stette (board member) and Frode Kjølås

(chair nomination committee) relating to assistance in certain projects on an ad-hoc basis.

The Group has during 2023 purchased legal services from Adviso Advokatfirma AS in the

amount of NOK 77,000 in its ordinary course of business. Board member Ingvild Vartdal is a

partner at Adviso Advokatfirma AS but has not had any role in the services rendered to Salmon

Evolution.

In Addition, the Group have purchased well boat services from Rostein AS in the amount of

NOK 1.7 million. Rofisk AS owns Rostein AS (100%), and former board member (until June 2023)

Glen Allan Bradley is the chair of the Board in Rofisk AS.

There were no non-current liabilities to related parties as of 31.12.2023.

Income from related parties:(NOK thousands) 2023 2022K Smart Co Ltd 9 765 1 560Total income from related parties (incl.VAT) 9 765 1 560Expenses to related parties:(NOK thousands) 2023 2022Rofisk AS (100% owner of Rostein AS) 4 291 1 686Adviso Advokatfirma AS 77 206Kjølås Stansekniver AS 1 081 936Stette Eiendom AS 15 479Total expenses to related parties (Incl. VAT)5 464 3 308Current liabilities to related parties(NOK thousands) 2023 2022Rofisk AS (100% owner of Rostein AS) 890 150Kjølås Stansekniver AS 40 93Total current liabilities to related parties 930 243Current receivables from related parties(NOK thousands) 2023 2022K Smart Farming Co., Ltd 11 326 1 560Total current liabilities to related parties 11 326 1 560

Annual report 2023

Extending the ocean potential 104

Note 25 Events after the reporting date

No material subsequent events.

Annual report 2023

Extending the ocean potential 105

Parent company Financial Statement

Income Statement

(NOK thousands)

Note

2023

2022

Other revenue

29 376

15 215

Total operating revenue

29 376

15 215

Personnel expenses

4,5

-49 403

-21 973

Depreciation

6,7

-3 119

-1 938

Other operating expenses

4,8

-38 838

-27 603

Operating profit (EBIT)

-61 984

-36 300

Financial income

76 850

58 436

Financial expenses

3,9

-11 497

-4 332

Net financials

65 353

54 104

Profit/loss before tax

3 369

17 804

Income tax expense

763

486

Profit/loss for the period

4 132

18 290

Statement of Comprehensive Income

(NOK thousands)

Note

2023

2022

Profit/loss for the period

4 132

18 290

Annual report 2023

Extending the ocean potential 106

Statement of Financial Position

(NOK thousands)

Note

31 Dec 2023

31 Dec 2022

Assets

Intangible assets

5 835

2 564

Deferred tax asset

3 891

5 205

Property, plant & equipment

835

1 091

Right-of-use assets

6,7

8 309

9 841

Group non-current receivables

1 429 342

1 057 808

Investment in subsidiaries

359 288

359 197

Total non-current assets

1 807 501

1 435 705

Other current receivables

120 512

43 711

Cash and cash equivalents

377 427

254 610

Total current assets

497 940

298 321

Total assets

2 305 440

1 734 026

Equity and liabilities

Share capital

20 697

17 288

Share premium

2 103 467

1 605 894

Other reserves

9 978

7 540

Other equity

Retained earnings

30 335

26 202

Total equity

2 164 476

1 656 923

Long-term interest bearing debt

25 000

12 500

Lease liabilities - long term

5 790

7 602

Total non-current liabilities

30 790

20 102

Short-term interest bearing debt

90 069

43 174

Trade payables

2 836

5 415

Current liabilities to Group Companies

3 476

Lease liabilities - short term

2 797

2 390

Other current liabilities

10 995

5 984

Total current liabilities

110 174

57 001

Total liabilities

140 964

77 103

Total equity and liabilities

2 305 440

1 734 026

Annual report 2023

Extending the ocean potential 107

The Board of Directors of Salmon Evolution ASA

Elnesvågen/Ålesund 16 April 2024

Tore Tønseth

Chair

Janne-Grethe Strand Aasnæs

Director

Anne Breiby

Director

Peder Stette

Director

Vibecke Bondø

Director

Eunhong Min

Director

Ingvild Vartdal

Director

Jan-Emil Johannessen

Director

Trond Håkon Schaug-Pettersen

CEO

Annual report 2023

Extending the ocean potential 108

Statement of Cash Flow

(NOK thousands)

Note

2023

2022

Cash flow from operations

Profit before income taxes

3 369

17 804

Adjustments for:

Depreciation

3 119

1 938

Net financials

-65 353

-53 078

Share based payment expenses

2 438

3 201

Changes in working capital:

Change in trade receivables

-13 439

-2 797

Change in other current receivables

-64 262

-38 533

Change in trade payables

-2 579

4 846

Change in current liabilities to Group companies

3 440

Change in other current liabilities

-5 753

3 602

Cash generated from operations

-139 020

-62 980

Cash flow from investment activities

Investment in Group Companies

-1 156

-2 419

Payments for intangible assets

-3 271

-2 564

Payments for fixed assets and other capitalizations

-41

-1 193

Dividend income from group companies

12 000

Net cash flow from investment activities

-4 467

5 823

Cash flow from financing activities

Proceeds from issue of equity, net of paid transaction costs

500 982

294 538

Change in intercompany borrowings

-309 638

-409 968

Proceeds from new borrowings

72 236

42 833

Repayment of borrowings

-12 841

Net change in right of use assets and liabilities

-2 697

-1 685

Interest paid

-11 497

-1 924

Interest received

16 918

45 410

Net cash flow from financing activities

269 713

-41 888

Net change in cash and cash equivalents

122 817

-100 792

Cash and cash equivalents at the beginning of the period

254 610

355 403

Cash and cash equivalents at the end of the period

377 427

254 610

Annual report 2023

Extending the ocean potential 109

Statement of Changes in Equity

Balance at 1 January 2022 15 540 1 313 104 7 912 4 338 1 340 894

Profit/loss for the period 0 0 18 290 0 18 290

Other comprehensive income 0 0 0 0 0

Total comprehensive income 0 0 18 290 0 18 290

Share options exercised 81 7 724 0 0 7 805

Private placement 5. April 2022 1 129 202 041 0 0 203 169

Private placement, 2. May 2022 538 96 293 0 0 96 831

Private placements, transaction costs 0 -13 267 0 0 -13 267

Share options issued 0 0 0 3 201 3 201

Transactions w ith ow ners 1 748 292 790 0 3 201 297 740

Balance at 31 December 2022 13 17 288 1 605 894 26 202 7 540 1 656 923

Balance at 1 January 2023 17 288 1 605 894 26 202 7 540 1 656 923

Profit/loss for the period 0 0 4 132 0 4 132

Other comprehensive income 0 0 0 0 0

Total comprehensive income 0 0 4 132 0 4 132

Share options exercised 0 0 0 0 0

Private placement, April 2023 3 409 521 591 0 0 525 000

Private placements, transaction costs 0 -24 018 0 0 -24 018

Share options issued 0 0 0 2 438 2 438

Transactions w ith ow ners 13 3 409 497 573 0 2 438 503 420

Balance at 31 December 2023 13 20 697 2 103 467 30 335 9 978 2 164 476

Total equity

(NOK thousands)

capital

premium

Retained

Earnings

Other

Reserves

Note

Annual report 2023

Extending the ocean potential 110

Note 1 Summary of significant accounting policies

General information

Salmon Evolution ASA is a Norwegian business headquartered in Hustadvika, Møre og Romsdal and

listed on the Oslo Børs with the ticker symbol "SALME". Salmon Evolution ASA owns the following

subsidiaries (collectively "the Group" or "SE");

- Salmon Evolution Norway AS, headquartered and located in Elnesvågen, Norway

- Salmon Evolution International AS,

- Salmon Evolution Dale AS,

- Salmon Evolution Sales AS

SE is in the process of constructing a land-based salmon farming facility with a planned annual

harvesting capacity of 31,500 tonnes HOG. The build-out is expected to be in three phases, with the

first phase expected to consist of build out of land acquisition, building of foundation, water pumps

supporting all three phases and build out of 12 grow out tanks and hatchery. SE operates a hybrid

flow-through system ("HFS"), replacing the water every four hours with clear and fresh water from the

Norwegian coast. Construction start of phase I was in Q1 2020 with completion in Q2 2023. Production

started in the end of Q1 2022 when the first smolt was entered the first tank with first harvest late Q4

2022. Phase II consists of build out of an additional 12 grow out tanks with first smolt expected entered

in H2 2024. The last construction phase, phase III, consists of build-out of an additional 24 grow out

tanks.

Basis of preparation and accounting principles

The financial statements of the Company have been prepared in accordance with the Norwegian

Accounting Act § 3-9 and Finance Ministry’s prescribed regulations from 21 January 2008 on simplified

IFRS. Principally this means that recognition and measurement comply with IFRS® International

Accounting Standards and presentation and note disclosures are in accordance with the Norwegian

Accounting Act and generally accepted accounting principles. Any exceptions from measurement

and recognition according to IFRS is disclosed below.

Accounting period

The company was incorporated on 3 July 2020. The accounting period for the financial statements

are 1 January 2022 - 31 December 2023.

Going concern

The Company has adopted the going concern basis in preparing its 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.

Basis of measurement

The financial statements have been prepared under the historical cost basis.

Annual report 2023

Extending the ocean potential 111

Investments in subsidiaries

Investments in subsidiaries are valued at cost in the company accounts. The investment is valued as

cost of acquiring shares, providing they are not impaired. An impairment loss is recognised for the

amount by which the carrying amount of the subsidiary exceeds its recoverable amount. The

recoverable amount is the higher of fair value less cost to sell and value in use. The recoverable

amount of an investment in a subsidiary would normally be based on the present value of the

subsidiary's future cash flow.

Dividends and group contributions

The Company has applied simplifications in regard to the Directives specified by the Norwegian

Ministry of Finance on 21. of January 2008, related to accounting treatment of dividends and group

contributions: Dividends and group contributions will be treated in accordance with the Norwegian

Accounting Act and deviates from IAS 10 no. 12 and 13.

Classification of current and non-current items

Assets are classified as current when it is expected to be realized or sold, or to be used in the

Company's normal operating cycle, or falls due or is expected to be realized within 12 months after

the end of the reporting date. Assets that do not fall under this definition is classified as non-current.

Liabilities are classified as current when they are expected to be settled in the normal operating

cycle of the Company or are expected to be settled within 12 months after the reporting date, or if

the Company does not have an unconditional right to postpone settlement for at least 12 months

after the reporting date. Liabilities that do not fall under this definition are classified as non-current.

Employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating

sick leave that are expected to be settled wholly within 12 months after the end of the period in

which the employees render the related service are recognised in respect of employees’ services up

to the end of the reporting period and are measured at the amounts expected to be paid when the

liabilities are settled. The liabilities are presented as current employee benefit obligations in the

balance sheet.

Share based payments

Information relating to the Company's employee option scheme is set out in note 5. The fair value of

options granted under the scheme is recognised as an employee benefits expense with a

corresponding increase in equity. The total amount to be expensed is determined by reference to

the fair value of the options granted:

- including any market performance conditions (eg the entity’s share price)

- excluding the impact of any service and non-market performance vesting conditions (eg

profitability, sales growth targets and remaining an employee of the entity over a specified time

period), and

- including the impact of any non-vesting conditions (eg the requirement for employees to save or

holdings shares for a specific period of time).

The total expense is recognised over the vesting period, which is the period over which all of the

specified vesting conditions are to be satisfied. At the end of each period, the entity revises its

estimates of the number of options that are expected to vest based on the non-market vesting and

Annual report 2023

Extending the ocean potential 112

service conditions. It recognizes the impact of the revision to original estimates, if any, in profit or loss,

with a corresponding adjustment to equity.

Pensions

The Group offers a defined contribution plan to its employees and pays contributions to publicly or

privately administered pension insurance plans on a mandatory, contractual, or voluntary basis. The

Group has no further payment obligations once the contributions have been paid. Contributions are

recognized as employee benefit expense when they are due and are included as part of salary and

personnel costs in the statement of profit and loss. Prepaid contributions are recognized as an asset

to the extent in which a cash refund or a reduction in the future payments is available.

Current and change in deferred tax for the year

Income Tax

The tax expense represents the sum of the tax currently payable and change in deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit

as reported in the income statement because it excludes items of income or expense that are

taxable or deductible in other years and it further excludes items that are never taxable or

deductible. The Company’s liability for current tax is calculated using tax rates that have been

enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying

amounts of assets and liabilities in the financial statements and the corresponding tax bases used in

the computation of taxable profit and is accounted for using the balance sheet liability method.

Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred

tax assets are recognized to the extent that it is probable that taxable profits will be available against

which deductible temporary differences can be utilized. Such assets and liabilities are not recognized

if the temporary difference arises from the initial recognition of goodwill or from the initial recognition

(other than in a business combination) of other assets and liabilities in a transaction that affects

neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognized for taxable

temporary differences arising on investments in subsidiaries and associates, and interests in joint

ventures, except where the Company is able to control the reversal of the temporary difference and

it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax

assets arising from deductible temporary differences associated with such investments and interests

are only recognized to the extent that it is probable that there will be sufficient taxable profits against

which to utilize the benefits of the temporary differences and they are expected to reverse in the

foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to

the extent that it is no longer probable that sufficient taxable profits will be available to allow all or

part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to

apply in the period when the liability is settled, or the asset is realized based on tax laws and rates

that have been enacted or substantively enacted at the balance sheet date. Deferred tax is

charged or credited in the income statement, except when it relates to items charged or credited

in other comprehensive income, in which case the deferred tax is also dealt with in other

comprehensive income. The measurement of deferred tax liabilities and assets reflects the tax

Annual report 2023

Extending the ocean potential 113

consequences that would follow from the manner in which the Company expects, at the end of the

reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax

assets and liabilities are offset when there is a legally enforceable right to set off current tax assets

against current tax liabilities and when they relate to income taxes levied by the same taxation

authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Current tax and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are

recognized in other comprehensive income or directly in equity, in which case, the current and

deferred tax are also recognized in other comprehensive income or directly in equity respectively.

Leases

All leasing agreements with a duration exceeding 12 months are capitalized. The Group assesses

whether a legally enforceable contract is or contains a lease at the inception date of the contract.

The assessment includes several criteria to be determined based on judgment that includes whether

there is an identifiable asset in connection to the lease, whether the Group has the right to control

the use of the identifiable asset, and whether the Group can obtain substantially all economic

benefits from the identifiable asset.

The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease

commencement date. The lease liability is calculated based on the present value of the contractual

minimum lease payments using the incremental interest rate of the lease. The contractual minimum

lease payments consist of fixed payments based on contractual amount at the time of conclusion

of the agreement. The lease liability is subsequently measured at amortized cost under the effective

interest rate during the lease term and may also be adjusted to management’s reassessment of

future lease payments based on options exercised, renegotiations, or changes of an index rate.

The ROU asset is calculated based on the lease liability, plus initial direct costs towards the lease, and

less any incentives granted by the lessor. The ROU asset is subsequently amortized under the straight-

line method under the shorter of the lease term or the useful life of the underlying asset and is included

as part of depreciation and amortization in the accompanying statements of other comprehensive

income.

Leases that fall under the IFRS 16 short-term exception are recognized on a straight-line basis over

the lease term.

Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes

cash on hand and deposits held at call with financial institutions.

Trade and Other Receivables

Trade receivables are initially recognized at amortized cost, less a provision for expected credit losses.

Credit loss provisions are based on individual customer assessments over each reporting period and

not on a 12-month period.

Annual report 2023

Extending the ocean potential 114

Trade and other payables

Trade and other payables represent unpaid liabilities for goods and services provided to the

Company prior to the end of the financial year and are presented as current liabilities unless payment

is not due within 12 months after the reporting period. Trade and other payables are recognized

initially at their fair value and are subsequently measured at amortized cost using the effective

interest method.

Statement of cash flows

The accompanying statements of cash flows are prepared in accordance with the indirect

method.

Note 2 Financial risk and capital management

The Company's financial assets and liabilities include trade and other receivables, trade and other

payables, cash, and borrowings necessary for its operations. The Company's risk management is

carried out by the Company's finance department. The Company is exposed to market risk, credit

risk, and liquidity risk.

Market risk

Market risk is linked to both Interest Rate- and Currency fluctuations.

Interest Rate

The Company's interest rate risk relates primarily to borrowings from financial institutions with variable

interest rates. As of 31 December 2023 Salmon Evolution Norway AS, a subsidiary of Salmon Evolution

ASA, has outstanding loans from credit institutions amounted to NOK 615 million (excluding financial

leasing). The Construction Facility which represents the vast majority of the Company’s loan with

financial institutions has an interest rate of NIBOR 3M plus an agreed margin of 3.75%. In order to

reduce exposure to fluctuations in the interest rate Salmon Evolution Norway AS has entered interest

rate swap contracts with Nordea and Sparebanken Vest, of respectively NOK 150 million and NOK

50 million. Salmon Evolution ASA is guarantor for the loan.

Foreign Currency

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. As of 31 December 2023 the Company had not made any contracts.

The Company's presentation currency is Norwegian Kroner ("NOK").

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 counterparty, with a maximum exposure equal to the carrying amount of these instruments. This

risk is not considered to be material.

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

Annual report 2023

Extending the ocean potential 115

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 in order to finance its current long-term plans.

Note 3 Intercompany balances and intercompany transactions

Investments in Salmon Evolution Norway AS and Salmon Evolution International AS is partly financed

with loan from Salmon Evolution ASA. The interest rate on these loans is set at an interest rate of 4 %.

Intercompany receivables to Salmon Evolution Norway AS are unsecured. The bank loans have

security in all material assets of Salmon Evolution Norway AS, including but not limited to land and

plant and machinery. Salmon Evolution ASA as parent company of the Group has also fully

guaranteed the Group's bank loans.

Carrying value of the investment property pledged as security is NOK 1,981 million.

Salmon Evolution ASA also requires an administration fee from Salmon Evolution Norway AS. This fee

covers administration, advice, and development of the company, and is invoiced based on time

spent by the employees of the parent company in the various areas. Total amount in 2023 was NOK

19.3 million.

In addition, the company has required refund of costs from K Smart Farming Co., Ltd to expats

posted in Korea, and apprentices from Korea who have had residency in Norway.

There were no other transactions with group companies and related parties in 2023.

(NOK thousands)

Non-current

receivables

Current

receivables

Non-current

liabilities

Current

liabilities

Salmon Evolution Norway AS 1 395 187 89 736 0 3 310

Salmon Evolution International AS 31 190 0 0 0

Salmon Evolution Dale AS 0 3 075 0 166

Salmon Evolution Sales AS 1 000 27 0 0

Salmon Evolution North America 1 964 0 0 0

K Smart Farming Co., Ltd 0 11 326 0 0

Total intercompany balances 1 429 342 104 164 0 3 476

Intercompany and related party transactions:

(NOK thousands)

Revenue Interest

Salmon Evolution Norway AS 19 286 48 783

Salmon Evolution International AS 0 1 234

Salmon Evolution Dale AS 0 0

Salmon Evolution Sales AS 0 0

K Smart Farming Co., Ltd 10 054 0

Total intercompany transactions 29 340 50 017

Annual report 2023

Extending the ocean potential 116

Note 4 Personnel expenses, remuneration to the board and auditor's fee

Norwegian entities are obligated to establish a mandatory company pension. This obligation is

fulfilled under the current pension plan. No loans or guarantees have been given to the members of

the board of directors or executive management.

Personnel expenses, remuneration to executives and accrued liabilities to be paid in 2023

(NOK thousands) 2023 2022

Salaries 35 240 12 880

Social security 6 074 2 184

Pensions 1 859 512

Other benefits 695 1 894

Share-based payments 2 347 1 782

Director's fee (both paid in 2023 and liabilities to be paid 2024) 3 188 2 721

Gross personnel expenses 49 403 21 973

Number of full-time employment equivalents 30 9

Remuneration and compensation to members of the board

(NOK thousands) 2023 2022

Tore Tønseth (Chairman of the Board) 500 500

Janne-Grethe A. Strand (Member of the board and leader of audit committee) 500 500

Glen Bradley (Member of the Board and audit committee) 375 375

Peder Stette (Member of the Board) 250 250

Anne Breiby (Member of the Board) 250 250

Eunhong Min (Member of the board) 250 0

Ingvild Vartdal (Member of the Board) 250 250

Håkon Andre Berg (Member of the Board) 146 0

Kristofer Reiten (Member of the Board) 0 250

Yun Ki Yun (Member of the board) 0 250

Frode Kjølås (Nomination committee) 75 75

Berit Rogne (Nomination committee) 50 50

Trond Svinø (Nomination committee) 50 0

Total board of Directors 2 696 2 750

Remuneration and compensation to executive management 2023

(NOK thousands)

Salary

Bonus Pension

Other Total

Trond Håkon Schaug-Pettersen (CEO) 2 740 500 71 272 3 583

Trond Vadset Veibust (CFO from 01.04.2023) 1 243 71 120 1 434

Ingjarl Skarvøy (COO) 1 946 71 206 2 223

Kamilla Holo Mordal (Project Director) 1 623 71 15 1 709

Odd Frode Roaldsnes (CCO) 1 729 71 168 1 968

Henriette Nordstrand (Technical Director) 1 108 64 23 1 194

Tore-Jakob Reite (Director Strategic Projects from 17.02.2023) 807 67 29 903

Total executive management

11 196 500 486 833 13 014

Annual report 2023

Extending the ocean potential 117

Remuneration and compensation to executive management 2022

(NOK thousands) Salary

Bonus Pension

Other Total

Trond Håkon Schaug-Pettersen (CFO/CEO/Chairman) 2 228 67 246 2 541

Håkon Andrè Berg (CEO until Oct 22) 2 722 67 208 2 997

Ingjarl Skarvøy (COO) 1 844 67 162 2 073

Kamilla Holo Mordal (Project Director) 1 482 100 67 8 1 658

Odd Frode Roaldsnes (CCO) 1 533 67 17 1 617

Henriette Nordstrand (Technical Director, from 15.08.22) 380 29 22 431

Total executive management 10 190 100 363 663 11 316

Compensation to executive management related to options 2023

(NOK thousands) Options

Trond Håkon Schaug-Pettersen (CEO) 871

Trond Vadset Veibust (CFO from 01.04.2023) 197

Ingjarl Skarvøy (COO) 351

Kamilla Holo Mordal (Project Director) 328

Odd Frode Roaldsnes (CCO) 363

Henriette Nordstrand (Technical Director) 50

Tore-Jakob Reite (Director Strategic Projects from 17.04.2023)

Total executive management 2 210

Compensation to executive management related to options 2022

(NOK thousands) Options

Trond Håkon Schaug-Pettersen (CEO from oct 2022, CFO) 1 399

Ingjarl Skarvøy (COO) 600

Kamilla Holo Mordal (CPO) 567

Odd Frode Roaldsnes (CCO)

615

Henriette Nordstrand (Technical Director from sept-22) 0

Håkon Andrè Berg (CEO until oct 2022) 20

Total executive management 3 201

Auditor's remuneration

(NOK thousands)

2023 2022

Statutory audit 568 440

Service inrelation to tax return 6 8

Other services 19 0

Total 593 448

Annual report 2023

Extending the ocean potential 118

Note 5 Share based payments

In August 2021 the Board of the directors established a share option program for members of the

Company's executive management where total of 6,900,000 share options were granted, in

November 2021 this was updated to 7,650,000 share options. These options were issued on an annual

basis with 1/3 each year, with issue dates being 31 August 2021, 1 June 2022 and 1 June 2023. Issued

options vest 50% after year one and 50% after year two, with a strike price equal to the closing price

of the Company's shares on Oslo Børs on the last trading day prior to the respective to the issue date

+ 15%.

In 2023, 700,000 share options were granted to executive management in January, 250,000 in June

as well as 960,000 to key employees in June. These options were issued with issue date 1 June 2023.

Issued options vest 50% after year one and 50% after year two, with a strike price equal to the closing

price of the Company's shares on Oslo Børs on the last trading day prior to the respective to the issue

date + 15%.

The strike price for the share options issued 31 August 2021 was NOK 9,00 per share, 1 June 2022 NOK

10,06 per share and 1 June 2023 NOK 8,30 per share.

To account for the issued share options, an adjusted Black & Scholes option-pricing model is used by

applying a weighted expected average life of 18 months.

The fair value of the options is set on the grant date and is expensed over its lifetime. The fair value

of the options has been calculated using the adjusted Black & Scholes option-pricing model, which

considers the exercise price, the term of the option, the share price at the grant date, expected

price volatility of the underlying share, expected dividend and risk-free rates. Given the recent listing

and lack of historical price and volatility data, the expected volatility is based on historical volatility

for a selection of comparable companies listed on Oslo Stock Exchange ("Oslo Børs"). The risk-free

interest rate is set to equal the interest on Norwegian government bonds with the same maturity as

the option. Average key assumptions are listed below.

Outstanding options (in thousands)

2023 2022

Outstanding options 1 January 5 150 9 275

Options granted 1 910 0

Options exercised 0 1 625

Options forfeited 0 2 500

Outstanding options at end of period 7 060 5 150

Annual report 2023

Extending the ocean potential 119

(NOK thousands)

2023 2022

Håkon André Berg (CEO until oct 22) 0 20

Trond Håkon Schaug-Pettersen (CEO) 871 1 399

Ingjarl Skarvøy (COO) 351 600

Kamilla Mordal Holo (Project Director) 328 567

Odd Frode Roaldsnes (CCO) 363 615

Trond Vadseth Veibust (CFO) 197 0

Henriette Nordstrand (Technical Director) 50 0

Tore-Jacob Reite (Director Strategic Projects) 50 0

Salmon Evolution ASA -Other Key Personel 137 0

Salmon Evolution Norway AS - Other Key Personel 73 0

Salmon Evolution Dale AS - Other Key Personel 18 0

Total

2 438 3 201

Charges to income statement, Salmon Evolution ASA 2 347 1 782

Charges to the shares in Salmon Evolution Norway AS 73 1 419

Charges to the shares in Salmon Evolution Dale AS 18 0

Key assumptions

2023 2022

Average fair value (NOK) 0,83 1,47

Average exercise price (NOK) 8,30 10,35

Weighted expected average life (in years) 3,21 2,33

Estimated dividend per share (NOK) 0 0

Expected average volatility 19,6 % 29,2 %

Risk-free rate 3,31 % 0,86 %

Group management have the following holdings

Holding 01.01

Awarded Exercised Forfeitet

Holding 31.12

Håkon André Berg (CEO until oct 22) 500 - - - 500

Trond Håkon Schaug-Pettersen (CEO from oct 22 & CFO) 2 400 200 - - 2 600

Ingjarl Skarvøy (COO) 750 - - - 750

Kamilla Mordal Holo (Project Director) 750 - - - 750

Odd Frode Roaldsnes (CCO) 750 - - - 750

Trond Vadseth Veibust (CFO) - 500 - - 500

Henriette Nordstrand (Technical Director) - 125 - - 125

Tore-Jacob Reite (Director Strategic Projects) - 125 - - 125

Total 5 150 950 - - 6 100

*Numbers in thousand

Annual report 2023

Extending the ocean potential 120

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.

Capitalised development costs are related to building strategy and purchase of rights for sale and

development of own branding.

The company has also activated costs for a research project with grants (Skattefunn) from The

Research Council of Norway to improve the quality of landbased salmon. Total cost for this project

in 2023 was NOK 3,829 thousand. The receivable is accounted for as a short-term receivable from

the tax authorities. In the financial accounts the receivable related to the grant is netted partly

against the related asset's acquisition cost and partly against expenses recognised in the income

statement. Grants for 2023 amounted to NOK 728 thousand.

(figures in NOK 1000)

Intangible

assets

Fixtures

and fittings

Right-of-

use assets

Total

Cost 1 January 2023 2 564 1 193 11 682 15 439

Additions 6 059 41 1 291 7 391

Disposals -2 788 0 0 -2 788

Cost 31 December 2023 5 835 1 234 12 973 20 042

Accumulated depreciation 1 January 2023

0 103 1 841 1 944

Depreciation for the period 0 296 2 823 3 119

Net book value 31 December 2023 5 835 835 8 309 14 980

Estimated lifetime n/a 3-5 years 3-5 years

Depreciation method n/a Linear Linear

Intangible Assets

01.01.2023 Additions Grants Disposals 31.12.2023

"Skattefunn"-project 0 1 551 -222 0 1 329

Other research and development projects 1 250 2 788 0 -2 788 1 250

Protection rights 1 314 1 942 0 0 3 256

Total 2 564 6 281 -222 -2 788 5 835

Annual report 2023

Extending the ocean potential 121

Note 7 Leases

The total cash outflow for leases in 2023 was NOK 3,148 thousand.

Assets and liabilities arising from a lease are initially measured on a present value basis. The lease

payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily

determined, which is generally the case for leases in the Company, the lessee’s incremental

borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the

funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic

environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Company:

• where possible, uses recent third-party financing received by the individual lessee as a starting

point, adjusted to reflect changes in financing conditions since third party financing was received

• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases

held by the Company, which does not have recent third-party financing, and

• makes adjustments specific to the lease, eg term, country, currency and security.

Amounts recognised in the balance sheet

(NOK thousands) 31 Dec 2023 31 Dec 2022

Right-of-use assets

Rent of premises 6 153 8 101

Car 938 427

Office supply 1 218 1 313

Total right-of-use assets 8 309 9 841

Lease liabilities

Current 2 797 2 390

Non-current 5 790 7 602

Total lease liabilities 8 587 9 993

Amounts recognised in the statement of profit or loss

(NOK thousands) 31 Dec 2023 31 Dec 2022

Depreciation right-of-use assets

Rent of premises -1 948 -1 417

Car -473 -187

Office supply -395 -231

Gross depreciation -2 816 -1 836

- Capitalized as assets under construction

Net depreciation -2 816 -1 836

Leasing period 3-5 years 3-5 years

Interest expense lease liability 434 409

Annual report 2023

Extending the ocean potential 122

The Company is exposed to potential future increases in variable lease payments based on an index

or rate, which are not included in the lease liability until they take effect. When adjustments to lease

payments based on an index or rate take effect, the lease liability is reassessed and adjusted against

the right-of-use asset. Lease payments are allocated between principal and finance cost. The

finance cost is charged to profit or loss over the lease period in order to produce a constant periodic

rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date less any lease incentive received

• any initial direct costs, and - restoration costs.

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease

term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the

right-of-use asset is depreciated over the underlying asset’s useful life.

The Company has entered into several lease agreements that are considered to qualify as short-

term and/or low-value in accordance with IFRS 16. Payments associated with such short-term and

low-value leases are recognised on a straight-line basis as an expense in profit or loss. Short-term

leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and

small items of office furniture.

Note 8 Other operating expenses

(NOK thousands) 2023 2022

Cost of premises (not defined as RoU) 781 568

Other operating and administrative expenses 14 820 7 723

Insurance 699 151

Consultancy fees 21 305 17 991

Other fees (Oslo Børs, VPS) 1 233 1 170

Total other operating expenses 38 838 27 603

Annual report 2023

Extending the ocean potential 123

Note 9 Interest bearing debt

The Group has entered into a senior secured NOK 1,550 million debt financing package relating to

its phase 1 and 2 build out at Indre Harøy.

The new debt financing package consists of the following facilities:

- NOK 525 million non-amortizing Term Loan Facility which will refinance the Company’s existing

NOK 525 million construction loan relating to phase 1 (the “Term Loan”)

- NOK 250 million RCF Capex Facility available for general corporate purposes including Indre Harøy

phase 2 capex (the “RCF Facility”)

- NOK 775 million Construction Facility available for financing of capex relating to phase 2 at Indre

Harøy (the “Construction Facility”)

Per 31.12.23 the Group had made drawdowns of NOK 525 million under the Construction Facility. In

addition, the Company has drawn NOK 90 million on the Overdraft Facility.

The loans are floating interest rate loans denominated in NOK with an interest charge based on

NIBOR 3M plus an agreed margin.

Incurred interest expenses and establishing fees during construction period are capitalized as part

of assets under construction in accordance with IAS 23.

Financial covenants

The most important financial covenants for the long-term financing of the Group 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 150 million on a last 12-month basis from Q4 2025.

Quarterly EBITDA figures shall be measured from Q4 2023 with set minimum EBITDA levels reflecting

the company’s gradual ramp up of production volumes and profitability. In anticipation of not being

able to meet its minimum EBITDA requirement for Q4 2023, the loan agreement was amended from

lender dated 19 December 2023. First test of EBITDA requirement will be Q1 2024.

Long-term interest bearing debt

(NOK thousand) 31.12.2023 31.12.2022

Debt to credit institutions 25 000 12 500

Other long-term interest bearing debt 0 0

Leasing liabilities 5 790 7 602

Total long-term interest-bearing debt 30 790 20 102

Short-term interest bearing debt

(NOK thousand) 31.12.2023 31.12.2022

Debt to credit institutions 90 069 30 333

Other short-term interest bearing debt 0 12 841

Leasing liabilitites 2 797 2 390

Total short-term interest-bearing debt 92 866 45 565

Total interest-bearing debt 123 656 65 667

Cash & cash equivalents 377 427 254 610

Net interest-bearing debt -253 771 -188 943

Annual report 2023

Extending the ocean potential 124

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.

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 Salmon Evolution Norway AS and Salmon

Evolution Dale AS. Furthermore, the respective lenders have a pledge over all material operating

assets of the Group, hereunder inter alia, land, plant and machinery, operating licenses, inventory

and receivables.

Note 10 Taxes

Calculation of deferred tax/deferred tax benefit

(NOK thousands)

2023 2022

Fixed assets -38 206

Right-of-use assets 8 309 9 841

Lease liabilities -8 587 -9 993

Net temporary differences -315 54

Tax losses carried forward 62 453 53 995

Basis for deferred tax 62 769 53 941

Deferred tax (22%) 13 809 11 867

Deferred tax benefit not recognised in the balance sheet* -9 918 -6 662

Deferred tax in the balance sheet 3 891 5 205

Basis for income tax expense, changes in deferred tax and tax payable

(NOK thousands)

2023 2022

Result before taxes 3 369 17 804

Permanent differences* -21 635 -23 610

Basis for the tax expense -18 266 -5 806

Change in temporary differences 370 -55

Basis for payable taxes in the income statement -17 897 -5 861

*Deferred tax benefit has not been recognised in the balance sheet as the Company is in its 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. However, there is payable tax in the

subsidiary Salmon Evolution Sales AS and deferred tax liability in the subsidiary Salmon Evolution

Dale AS. The group assumes to utilize tax losses carried forward against tax positions in its

Components of the tax expense

(NOK thousands)

2023 2022

Payable tax on this year's result 0 0

Change in deferred tax -1 942 -251

Change in deferred tax due to previous year group contribution -2 077 0

Change in deferred tax not capitalized in the balance sheet 3 255 -234

Tax expense -764 -486

Annual report 2023

Extending the ocean potential 125

Note 11 Investments in subsidiaries

Investments in subsidiaries are valued at cost in the company accounts. The investment is valued as

cost of acquiring shares, providing they are not impaired. An impairment loss is recognised for the

amount by which the carrying amount of the subsidiary exceeds its recoverable amount. The

recoverable amount is the higher of fair value less cost to sell and value in use. The recoverable

amount of an investment in a subsidiary would normally be based on the present value of the

subsidiary's future cash flow. As of 31.12.2023 no impairment indicators was assessed to be present

for the Company’s investments.

Reconciliation of the tax expense with the nominal tax rate

(NOK thousands)

2023 2022

Result before taxes 3 369 17 804

Calculated tax (22%) 741 3 917

Tax expense -764 -486

Difference -1 505 -4 403

The difference consists of:

Tax on permanent differences -4 761 -5 194

Change in deferred tax not shown in the balance sheet 3 255 -234

Change due to group contribution from previous year (tax wise) 0 1 025

Sum explained differences -1 505 -4 403

(NOK thousands)

Location and place of

business

Ownership/

voting right

Equity

31.12.23

(100%)

Result 2023

(100%)

Balance

sheet value

Salmon Evolution Norway AS Molde, Norway 100 % 105 374

-131 025

281 212

Salmon Evolution International AS

Molde, Norway 100 %

-10 959 -9 189

1 000

Salmon Evolution Dale AS Folkestad, Norway 100 % 20 120

1 224

76 077

Salmon Evolution Sales AS Ålesund, Norway 100 % 2 535

1 855

1 000

K Smart Farming Co., Ltd*

Gangwangnak-ro, South Korea

49 % 32 988

-14 485

Balance sheet value as of 31 December 2023 359 288

*K Smart Farming Co., Ltd is owned through Salmon Evolution International AS

Movement in investment in subsidiaries during 2023 is analysed in the following way:

(NOK thousands)

Opening balance 01 January 2023 359 197

Share options issued (Salmon Evolution Norway) 73

Share options issued (Salmon Evolution Dale) 18

Closing balance 31 December 2023 359 288

Annual report 2023

Extending the ocean potential 126

Note 12 Cash and restricted cash

Restricted cash are related to tax withholdings for employees (NOK 2,050 thousand).

Note 13 Share capital

The number of shares issued in the company at 31 December 2023 was 413,936,640 with a nominal

value of NOK 0.05 each. All shares carry equal voting rights.

(NOK thousands) 31 Dec 2023 31 Dec 2022

Cash in bank 375 377 355 126

Restricted bank deposits 2 050 2 229

Total cash and cash equivalents 377 427 254 610

Nominal value 31 Dec 2023 31 Dec 2022

Ordinary shares 0,05 413 936 640 345 754 822

Average number of shares 0,05 395 531 302 337 015 239

(NOK thousands)

31 Dec 2023 31 Dec 2022

Share capital 20 697 17 288

Share premium 2 103 467 1 605 894

Total 2 124 164 1 623 182

20 largest shareholders as of 31.12.23 No of shares Percentage share

Ronja Capital II AS 30 140 645 7,3 %

The Bank of New York Mellon SA/NV 26 128 070 6,3 %

Farvatn Private Equity AS 18 939 433 4,6 %

Hongkong and Shanghai Banking Corp 16 044 572 3,9 %

Rofisk AS 14 537 897 3,5 %

Kjølås Stansekniver AS 12 506 439 3,0 %

J.P. Morgan SE 11 761 639 2,8 %

Stette Invest AS 11 744 288 2,8 %

Verdipapirfondet DNB Norge 11 113 276 2,7 %

Ewos AS 9 480 984 2,3 %

Verdipapirfondet DNB SMB 9 302 408 2,2 %

Jakob Hatteland Holding AS 8 758 786 2,1 %

Mevold Invest AS 8 141 141 2,0 %

Lyngheim Invest AS 8 049 252 1,9 %

Bortebakken AS 7 856 330 1,9 %

VPF DNB Norge Selektiv 7 424 509 1,8 %

J.P. Morgan SE 4 652 771 1,1 %

Salmoserve AS 4 000 000 1,0 %

Verdipapirfondet Nordea Avkastning 3 578 295 0,9 %

Clearstream Banking S.A. 3 377 732 0,8 %

Total 20 largest shareholders 227 538 467 54,9 %

Other shareholders 186 398 173 45,1 %

Total number of shares 413 936 640 100,0 %

Annual report 2023

Extending the ocean potential 127

As of 31 December 2023, shares directly or indirectly held by members of the Board of Directors, Chief

Executive officer, and Executive Management consisted of the following:

Capital History

The Company entered into an investment agreement with Dongwon Industries and completed a

NOK 50 million private placement towards Dongwon Industries in July 2020.

The Company 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

Company also raised another NOK 500 million in a private placement in March 2021.

In August 2021 the Company acquired 100% of the shares in Kraft Laks AS (now Salmon Evolution

Dale AS). As part of the settlement the Company 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 Company carried

out a private placement of USD 5m (NOK ~43m) towards Cargill.

Further, in April 2022 the Company carried out a private placement raising gross proceeds of NOK

300 million at a subscription price of NOK 9.00 per share, bringing total raised equity to more than

NOK 1.7 billion.

No of shares Percentage share

Peder Stette, Member of the board - Stette Invest AS 11 744 288 2,8 %

Vibecke Bondø, Member of the board - Bondø Invest AS 1 948 052 0,5 %

Ingjarl Skarvøy, COO - Terra Mare AS and private 1 800 150 0,4 %

Janne-Grethe Strand Aasnæs, Member of the board - Nikaro AS 480 000 0,1 %

Trond Håkon Schaug-Pettersen, CEO - Troha Invest AS 400 000 0,1 %

Odd Frode Roaldsnes, CCO - Anno Invest AS 250 000 0,1 %

Anne Breiby, Member of the board 168 935 0,0 %

Kamilla Mordal Holo, Project Director - C10 Holding AS & private 160 060 0,0 %

Trond Vadset Veibust, CFO - Trollkyrkja AS 55 000 0,0 %

Jan-Emil Johannessen, Member of the board - Jawendel AS 40 000 0,0 %

Henriette Nordstrand, Technical Director - Heno Holding AS 32 849 0,0 %

Tore-Jakob Reite, Director Strategic Projects 1 250 0,0 %

Total 17 080 584 4,1 %

(NOK thousands)

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

Date

Capital

Increase

Share Capital

After Change

Par

Value

Subscription

price

per share

New shares

Total no. of

outstanding

Annual report 2023

Extending the ocean potential 128

In April 2023 the Company carried out a private placement raising gross proceeds of NOK 525 million

at a subscription price of NOK 7,7 per share, bringing total raised equity to more than NOK 2.2 billion.

Note 14 Trade and other current liabilities

Note 15 Events after the reporting date

No material subsequent events.

(NOK thousands) 31 Dec 2023 31 Dec 2022

Trade payables 2 836 5 415

Total trade payables 2 836 5 415

(NOK thousands) 31 Dec 2023 31 Dec 2022

Payroll withholding tax, VAT and other taxes 2 049 109

Employer's national insurance contributions 1 822 605

Accrued salaries, holiday pay and bonus provisions 7 084 2 373

Total other current liabilities 10 995 5 984

Annual report 2023

Extending the ocean potential 129

Directors responsibility statement

Today, the Board of Directors and the Chief Executive Officer reviewed and approved the Board of

Director’s report and the consolidated and separate financial statements for Salmon Evolution ASA

for the year ended 31 December 2023 (“Annual report 2023”).

Salmon Evolution ASA’s consolidated financial statements have been prepared in accordance with

IFRSs and IFRICs as adopted by the EU and applicable additional disclosure requirements in the

Norwegian Accounting Act. The separate financial statements for Salmon Evolution ASA have been

prepared in accordance with the Norwegian Accounting Act and Norwegian accounting standards

as of December 31, 2023. The Board of Directors’ report for the Group and the parent company is in

accordance with the requirements in the Norwegian Accounting Act and Norwegian accounting

standard no 16, as of December 31, 2023.

To the best of our knowledge:

4. The annual financial statements for 2023 have been prepared in accordance with

applicable financial reporting standards

5. The annual financial statements give a true and fair view of the assets, liabilities, financial

position, and profit as a whole as of 31 December 2023 for the Group

6. The Board of Directors’ report for the Group includes a fair review of:

c. the development and performance of the business and the position of the Group,

and

d. the principal risks and uncertainties the Group face

The Board of Directors of Salmon Evolution ASA

Elnesvågen/Ålesund 16 April 2024

Tore Tønseth

Chair

Janne-Grethe Strand Aasnæs

Director

Anne Breiby

Director

Peder Stette

Director

Vibecke Bondø

Director

Eunhong Min

Director

Ingvild Vartdal

Director

Jan-Emil Johannessen

Director

Trond Håkon Schaug-Pettersen

CEO

BDO AS

Nøisomhed

Serviceboks 15

6405 Molde

BDO AS, et norsk aksjeselskap, er deltaker i BDO International Limited, et engelsk selskap med begrenset ansvar, og er en del av

det internasjonale nettverket BDO, som består av uavhengige selskaper i de enkelte land. Foretaksregisteret: NO 993 606 650 MVA. side 1 av 4

Independent Auditor's Report

To the General meeting of Salmon Evolution ASA

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Salmon Evolution ASA.

The financial statements comprise:

• The financial statements of the parent

Company, which comprise the balance

sheet as at 31 December 2023, income

statement, statement of comprehensive

income, statement of changes in equity

and cash flows for the year then ended,

and notes to the financial statements,

including material accounting policy

information, and

• The financial statements of the Group,

which comprise the balance sheet as at

31 December 2023, and income

statement, statement of comprehensive

income, statement of changes in equity

and cash flows for the year then ended,

and notes to the financial statements,

including material accounting policy

information.

In our opinion:

• The financial statements comply

with applicable statutory

requirements,

• The accompanying financial

statements give a true and fair view

of the financial position of the

Company as at 31 December 2023,

and its financial performance and its

cash flows for the year then ended in

accordance with IFRS Accounting

Standards as adopted by the EU.

• The accompanying financial

statements give a true and fair view

of the financial position of the Group

as at 31 December 2023, and its

financial performance and its cash

flows for the year then ended in

accordance with IFRS Accounting

Standards as adopted by the EU.

Our opinion is consistent with our additional report to the Audit Committee.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under those standards are further described in the Auditor’s Responsibilities for the

Audit of the Financial Statements section of our report. We are independent of the Company and

the Group as required by relevant laws and regulations in Norway and the International Ethics

Standards Board for Accountants’ International Code of Ethics for Professional Accountants

(including International Independence Standards) (IESBA Code), and we have fulfilled our other

ethical responsibilities in accordance with these requirements. We believe that the audit evidence

we have obtained is sufficient and appropriate to provide a basis for our opinion.

To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit

Regulation (537/2014) Article 5.1 have been provided.

We have been the auditor of Salmon Evolution ASA for 4 years from the election by the general

meeting of the shareholders on 3 July 2020 for the accounting year 2020 (with a renewed election

on the 7 June 2023).

BDO AS, et norsk aksjeselskap, er deltaker i BDO International Limited, et engelsk selskap med begrenset ansvar, og er en del av

det internasjonale nettverket BDO, som består av uavhengige selskaper i de enkelte land. Foretaksregisteret: NO 993 606 650 MVA. side 2 av 4

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in

our audit of the financial statements of the current period. These matters were addressed in the

context of our audit of the financial statements as a whole, and in forming our opinion thereon, and

we do not provide a separate opinion on these matters.

Description of the key audit matter

How the key audit matter was addressed in

the audit

Valuation of biological assets

The biological assets are valued at fair value

in accordance with IAS 41 and IFRS 13. The

fair value adjustment included in the

carrying amount was NOK 31,9m as of 31

December.

The estimation of fair value is complex and

requires significant judgement from

management such as:

- Market price

- Quality

- Biomass volume (for instance dependent

on mortality)

- Time the fish uses to be ready for

harvest (for instance based on growth

and the feed conversion rate)

- Remaining expenses including both direct

and indirect cost

See further information on valuation of

biological assets in note 6.

Given that this is a key figure to evaluate the

business going forward and the degree of

judgement involved in the estimation, we

consider valuation of biological assets to be a

key audit matter.

We reviewed the Group`s calculation model for

valuation of biological assets by comparing it

against the criteria in IAS 41 and IFRS 13.

Further, we performed the following

procedures:

- We tested the model for mathematical

accuracy

- We examined the biomass and number of

fish used in the Group`s model for

calculation of fair value to the Group`s

biomass system

- We compared the estimated future market

price with available observable market

prices and reviewed the arguments for

adjustments

- We reviewed quality assumptions to

historically achieved quality

- We reconciled harvested volume to

theoretical volume

- We compared the Feed Conversion rate to

the industry handbook and considered its

reasonableness

- We compared estimated future direct and

indirect cost to historical cost

- We reviewed the historical accuracy of prior

period`s forecast and evaluated

explanations related to deviations

- We performed a sensitivity analysis of the

critical assumptions in the model

In addition, we assessed whether the disclosures

in the notes appropriately explained the

methods applied for valuation of biological

assets and if the information was in accordance

with the requirements in the accounting

standards.

BDO AS, et norsk aksjeselskap, er deltaker i BDO International Limited, et engelsk selskap med begrenset ansvar, og er en del av

det internasjonale nettverket BDO, som består av uavhengige selskaper i de enkelte land. Foretaksregisteret: NO 993 606 650 MVA. side 3 av 4

Other information

The Board of Directors and the Managing Director (management) are responsible for the other

information. The other information comprises the Board of Directors’ report and other information

in the Annual Report, but does not include the financial statements and our auditor’s report

thereon. Our opinion on the financial statements does not cover the other information.

In connection with our audit of the financial statements, our responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with

the consolidated financial statements or our knowledge obtained in the audit or otherwise appears

to be materially misstated. If, based on the work we have performed, we conclude that there is a

material misstatement of this other information, we are required to report that fact. We have

nothing to report in this regard.

Opinion on the Board of Directors' report

Based on our knowledge obtained in the audit, in our opinion the Board of Directors’ report

• is consistent with the financial statements and

• contains the information required by applicable statutory requirements.

Our opinion on the Board of Director’s report applies correspondingly for the statements on

Corporate Governance and Corporate Social Responsibility.

Responsibilities of the Board of Directors and the Managing Director for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view

in accordance with IFRS Accounting Standards as adopted by the EU, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s and

the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless management either intends to

liquidate the Company or Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a

whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s

report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a

guarantee that an audit conducted in accordance with ISAs will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

For further description of Auditor’s Responsibilities for the Audit of the Financial Statements

reference is made to:

https://revisorforeningen.no/revisjonsberetninger

BDO AS, et norsk aksjeselskap, er deltaker i BDO International Limited, et engelsk selskap med begrenset ansvar, og er en del av

det internasjonale nettverket BDO, som består av uavhengige selskaper i de enkelte land. Foretaksregisteret: NO 993 606 650 MVA. side 4 av 4

Report on compliance with requirement on European Single Electronic Format

(ESEF)

Opinion

As part of the audit of the financial statements of Salmon Evolution ASA we have performed an

assurance engagement to obtain reasonable assurance about whether the financial statements

included in the annual report, with the file name salme-2023-12-31-en, have been prepared, in all

material respects, in compliance with the requirements of the Commission Delegated Regulation

(EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant

to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the

preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial

statements.

In our opinion, the financial statements, included in the annual report, have been prepared, in all

material respects, in compliance with the ESEF Regulation.

Management’s responsibilities

Management is responsible for the preparation of the annual report in compliance with the ESEF

Regulation. This responsibility comprises an adequate process and such internal control as

management determines is necessary.

Auditor’s responsibilities

For a description of the auditor’s responsibilities when performing an assurance engagement of the

ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger.

Molde, 16 April 2024

BDO AS

Roald Viken

State Authorized Public Accountant

Annual report 2023

Extending the ocean potential 134

Sustainability Indicators and GRI Index

Being transparent in our reporting and operation have been important factors for us from the start.

Therefore, we have chosen to report on our environmental, social, and governance factors in 2022.

Due to the fact that we are still growing and there is still a lot of uncertainty on actual impact, we

have chosen to report with reference to the Global Reporting Initiative (GRI) Standards (2021) in the

2022 reporting. We have ambitions for reporting in accordance with from next year and have plans

in place to extend and enhance our reporting process going forward.

GRI DISCLOSURE

LOCATION

GRI 2: General Disclosures 2021

2-1 Organizational details

p. 5-8, 11-14

2-2 Entities included in the organization’s sustainability reporting

Salmon Evolution ASA with subsidiaries,

p. 110

2-3 Reporting period, frequency and contact point

01.01.2023-31.12.2023

Annual reports from 2023

Contact point: CFO

2-4 Restatements of information

p. 15

2-5 External assurance

N/A – no external assurance of ESG

reporting for the 2023 report

2-6 Activities, value chain and other business relationships

p. 5-7, 24, 25

2-7 Employees

p. 26-29

2-8 Workers who are not employees

N/A – only employees or

subcontractors

2-9 Governance structure and composition

p. 31

2-10 Nomination and selection of the highest governance body

p. 40-41

2-11 Chair of the highest governance body

p. 41

2-12 Role of the highest governance body in overseeing the

management of impacts

p. 41

2-13 Delegation of responsibility for managing impacts

p. 30

2-15 Conflicts of interest

p. 29, 39

2-16 Communication of critical concerns

p. 39

2-17 Collective knowledge of the highest governance body

p. 33-36

2-19 Remuneration policies

p. 41

2-20 Process to determine remuneration

p. 41

2-22 Statement on sustainable development strategy

p. 19-20

Annual report 2023

Extending the ocean potential 135

2-23 Policy commitments

p. 19-20

2-24 Embedding policy commitments

p. 19-20

2-27 Compliance with laws and regulations

p. 32

2-28 Membership associations

p. 40

2-29 Approach to stakeholder engagement

p. 30

2-30 Collective bargaining agreements

p. 28-29

GRI 3: Material Topics

3-1 Process to determine material topics

p. 16

3-2 List of material topics

p. 16

3-3 Management of material topics

p. 16

GRI 201: Economic Performance

201-1 Direct economic value generated and distributed

See financial statements and notes p.

58-104

201-2 Financial implications and other risks and opportunities due to

climate change

p. 19-21

201-3 Defined benefit plan obligations and other retirement plans

See financial statements and notes p.

58-104

201-4 Financial assistance received from government

See financial statements and notes p.

58-104

GRI 205: Anti-corruption

205-2 Communication and training about anti-corruption policies and

procedures

p. 37

205-3 Confirmed incidents of corruption and actions taken

Zero (0) incidents

GRI 301: Materials

301-1 Materials used by weight or volume

p. 25

301-2 Recycled input materials used

p. 19

GRI 302: Energy

302-1 Energy consumption within the organization

pp. 19-20

302-2 Energy consumption outside of the organization

pp. 19-20

GRI 303: Water and Effluents

303-1 Interactions with water as a shared resource

pp. 19-24

303-2 Management of water discharge-related impacts

pp. 19-24

Annual report 2023

Extending the ocean potential 136

303-3 Water withdrawal

pp. 19-24

303-4 Water discharge

pp. 19-24

303-5 Water consumption

pp. 19-24

GRI 304: Biodiversity

304-2 Significant impacts of activities, products and services on

biodiversity

p. 22

GRI 305: Emissions

305-1 Direct (Scope 1) GHG emissions

p. 25

305-2 Energy indirect (Scope 2) GHG emissions

p. 20 – 100% renewable energy

305-5 Reduction of GHG emissions

p. 25

GRI 306: Waste

306-1 Waste generation and significant waste-related impacts

pp. 21-22

GRI 401: Employment

401-1 New employee hires and employee turnover

p. 28

401-3 Parental leave

p. 26

GRI 403: Occupational Health and Safety

403-1 Occupational health and safety management system

pp. 26-27

403-2 Hazard identification, risk assessment, and incident investigation

pp. 26-27

403-3 Occupational health services

pp. 26-27

403-4 Worker participation, consultation, and communication on

occupational health and safety

pp. 26-27

403-5 Worker training on occupational health and safety

Health and safety training for all

employees

403-6 Promotion of worker health

pp. 26-27

403-9 Work-related injuries

pp. 26-27

403-10 Work-related ill health

Zero (0) incidents

GRI 404: Training and Education

404-1 Average hours of training per year per employee

p. 26

404-2 Programs for upgrading employee skills and transition assistance

programs

p. 26

404-3 Percentage of employees receiving regular performance and

career development reviews

p. 26

Annual report 2023

Extending the ocean potential 137

GRI 405: Diversity and Equal Opportunity

405-1 Diversity of governance bodies and employees

pp. 13-14, 27, 32-35 (BoD)

405-2 Ratio of basic salary and remuneration of women to men

p. 27

GRI 406: Non-discrimination

406-1 Incidents of discrimination and corrective actions taken

Zero (0) incidents reported

GRI 413: Local Communities

413-1 Operations with local community engagement, impact

assessments, and development programs

pp. 30

Annual report 2023

Extending the ocean potential 138

Important of abbreviations used in this report

LW: Live weight

HOG: Head on gutted

HFS: Hybrid flow-through system

ESG: Environmental, Social and Governance

CAGR: Compounded Annual Growth Rate

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, Norway

PRODUCTION SITE

Indre Harøyvegen 88,

6430 Bud, Norway

BUSINESS REGISTRATION NUMBER

NO 925 344 877 MVA

E-mail: post@salmone.no

Web: salmonevolution.no