Salem Media Group, Inc. Price & Performance (SALM)

Ensuring good interaction with the environment we operate in to optimize in relation to fish, people and values. Have a fantastic starting point in Norway with Nature, the Gulf Stream and our coastline. The review will follow the same order as before. I will take you through some highlights for '24, and the fourth quarter as well as the operational results for various segments. Then CFO, Ulrik, will take you through the financial update. Finally, I will focus on how we are investing in the value chain to improve fish welfare and reduce costs. '24 has been a challenging year as mentioned. Environmental conditions and biological challenges have affected the operational choices we have to make and the biological performance. The cost, growth, volume, quality and share of downgraded fish have all been negatively impacted. However, the year has also provided us with important lessons and knowledge we will take With us The setup we have built over time at Sulmoyed has been very important. Our belief in large local harvesting and processing capacity near where we farm has been crucial. At the same time, we see that the foundation and philosophy of our operations remain just as relevant and strong.

The right location, the right smoth, the right technology, the right feed and the right handling by people who always want to do a little more and care. We know what has caused the challenges we experienced in 2024, and we take those lessons with us as we move forward and adapt to the challenges so that we can continue to produce salmon on the salmon terms. Although have not found a 100% solution to all challenges, such as jellyfish and lice. It strengthens our belief in the way forward and the volume potential we have in our value chain. While we have handled the challenges well, have also maintained a robust financial position. Which is why the Board proposed a dividend of NOK22 per share for the financial year 2024. Let's now move on to the results for the fourth quarter of twenty twenty four. In total, we harvested 67,300 tonnes in Norway with a margin on NOK 22.1 per kilo. For the Norwegian operations, we delivered an operational EBIT of NOK $1,485,000,000. Including Icelandic salmon and 73,800 tonnes in the quarter, with a total operational EBIT of NOK $1,489,000,000 and a margin of NOK 20.2 per kilo. Despite challenges at sea, early in the quarter, we see that biological performance improved throughout the quarter.

And the structure in sales and industry contributed well to handling volume variations during the period. Both production cycles in SalMar Arcad Oceans units are well underway. The result in Iceland is better than earlier in the year, but still high costs are dragging down the result. Once again, Scottish Shee Farms delivers relatively good results. In addition, we have taken steps to strengthen our value chain and structure. The sale of Usan Smolt was completed in [indiscernible] the purchase of a controlling stake in Knutsokfisk in Mid Norway was completed in the first quarter. Additionally, I will also provide some comments on our ownership interest in Vilskoy. [indiscernible] harvest volume for 25 remains unchanged in all regions. In summary, we are reasonably satisfied with the overall results for the quarter. And it is good that we have seen an improvement in the biological situation throughout the quarter. To give you more details, I would like to go through the operational update. Starting with Farming Central Norway. Where we harvested 39,700 tons in the quarter with an operational EBIT of NOK six twenty two million. Giving an EBIT per kilo 15.7. We mainly harvested the autumn twenty three generation during the period, We also started some harvesting of the spring 'twenty four generation.

As mentioned in the previous quarterly presentation, we have sporadic visits from Jellyfish around Smurla area in P06. This affected the average weight of the fish we harvested during the period. We choose to harvest some individual cages at a lower average rate than desired to ensure fish welfare. Additionally, we had to reduce the volume somewhat towards the end of the year due to very bad weather and to optimize both biology and handling towards the end of the year. Looking ahead, we will continue harvesting from the autumn 'twenty three and spring 'twenty four generation generations in the first Despite the challenges we experienced in the fourth quarter, the biological status of the fish at sea is satisfactory. The cost level in the first quarter is at expected to be at the same level as in the fourth We expect a significantly lower volume in the first quarter compared to the same time last year, which is a conscious choice to optimize the utilization of our MAB. Volume guidance for the year remains unchanged at 150 In Northern Norway, we harvested 27,700 tons in the quarter with an operational EBIT of NOK seven seventy three million. And an EBIT per kilo of 27.7.

It is gratifying to see significantly better results from Northern Norway in the fourth quarter compared to earlier quarters in 2024. We continue To harvest the autumn twenty three and had good biological development during the period. This led to reduced cost levels and improved price achievement. For the fish. As in Central Norway, some volume has was moved to €25,000,000 due to bad weather towards the end of the year, and optimization of biologic and handling in the last weeks of the year. Looking ahead, we will continue harvesting from the spring and autumn 'twenty three generations. The biological status in the North is good. And significantly improved compared to the same time last year. Expect a slightly lower cost level down in the fourth quarter. The volume is expected to be slightly lower [indiscernible] What we had at the same time last year as we choose to build MAB. Guidance for '25 remains unchanged at 100,000 tonnes. [indiscernible] 131,000,000. Dollars Once again, the flexible setup in sales and industry shows it strength. When we choose to harvest some individual cages at short notice in November in Central Norway, [indiscernible] when there are individual weeks with very high volumes, I am simply impressed by the strength of the value chain in Sulmarie.

All plants change in a short time, and the harvesting facility and sales assist farming in handling challenges by being able to handle large volumes in a short time. While further processing ensures that we utilize the fish in a good way. Higher volumes in the quarter have also provided good capacity utilization Spot prices were as expected higher in the fourth quarter and with a contract share of 30%. This still made a positive contribution. But lower than in the previous quarter. At the same time, the sales team managed to handle spot sales well, so the price we achieved for our fish in the market was good. In the first quarter, we expect significantly lower volumes through our facilities due to seasonal variations. The market for SalMar remains strong. And the dialogue we have with the customers shows that they want even more fish. Present their plans for further growth opportunities. For the first quarter of twenty twenty five, we have a contract share of 45%. Given the low harvesting volume. And for the whole of 2025, it is around 25%. The price points on the contracts are better than we had in 2024, which is for us a good signal of strong market also in 2025.

Moving to SalMar Okere Ocean, which had an operational EBIT of minus NOK 12,000,000. As you know, the segment now has two semi offshore units in operation. Arctic offshore farming started production in August and Oceanfarm one started in May, June. Especially Ocean Farm one, has good development so far in its cycle. Volume guidance for this year maintained at 9,000 tonnes, and we expect harvesting from both units in the first half of twenty twenty five. In the first quarter, we will harvest Arctic offshore farming, when weather windows allow. As mentioned earlier, we have experienced good biological performance on the fish have been harvested from our semi offshore units. With low mortality, high growth and fuelized treatments. This gave us increased confidence in the further potential in offshore farming. At the January, we were awarded a new location at [indiscernible] No investment decisions have been made beyond the two units currently in operation and producing SalMar. [indiscernible] But the location gives us strategic opportunities in Norway in addition to Moving to Westjords in Iceland. In Iceland, 6,500 tonnes were harvested in the quarter, with an operational EBIT of NOK 16,000,000 and an EBIT per kilo of 2.4 improved result compared to earlier in the year.

Due to higher volumes, capacity utilization has been better, but the cost base of the fish we harvested is still high due to the challenges we experienced earlier in 2024. The biological situation has been more stable in the fourth quarter and our focus going forward will be to optimize the utilization of the licenses we have in Iceland and build biomass in 2025. This also meant that harvesting volumes in the last couple of weeks of 2024 were postponed due to a combination of MIB building and Looking ahead, we expect a continued high level and very low volume in the first half of twenty twenty five. We expect the volume guidance for 2025 remains unchanged at 15,000 tons. Our associated company in Scotland, Scottish Sea Farm, which continues it could development. In the quarter, 9,000 tonnes were harvested with an operational EBIT of NOK 93,000,000 and an EBIT per kilo 10.3. For the year, the harvesting volume ended at 4,400 tonnes, which is a record high volume for Scottish. Very gratifying and congratulations. We like setting records. The trend of good results of harvested fish continues in the fourth quarter. High harvesting volume in the period with a very good average weight of the fish, over five kilo guested weight.

Has given good results both in terms of cost level and price achievement. The company also reports continued good biological status at sea, the next generations of fish to be harvested are doing well in all [indiscernible] lessons from the events experienced in 2022 and 2023 have led to better results in 2024. And in 2025, we will continue to optimize the site structure and smooth strategy so that we can realize the potential in the value chain we have in Scotland. The volume guidance for 2025 remains unchanged at 32,000 tonnes. With this, I have come to the end of the operational update. And we'll give the floor to Ulrik, who will take you through the financials.

Thank you, Fjorda, and good morning to all of you. As mentioned several times, throughout the last year and also commented by Thule, just now, 2024 has been a challenging year both in the areas where Solmar operates and for Solmar SalMar. Impacting both volume [indiscernible] and price achievement in 2024. However, the solid and cost effective setup in SalMar and the Salmoy culture demonstrates an ability to manage and mitigate the financial consequences of challenging situations but the need for increased resource use to address the challenges in 2024. We are currently experiencing positive developments in both production and key figures. I would like to remind you that in a business engaged in biological production a long production time this will not immediately reflected in the profit and loss statement. The financial position, however, remains [indiscernible] [indiscernible] enables the realization of the group's operational and growth This will help ensure organic growth in line with previously stated goals in addition to consistently demonstrating both [indiscernible] ability and willingness profitability growth through acquisitions. This was most recently demonstrated through the transaction with the owners of Gersurg Fisk. My review today will focus on changes throughout the year to a greater extent than before, where the focus has been on quarterly changes.

Towards the end, I will comment on changes in the financing carried out at the beginning of the first quarter twenty twenty five and then conclude with the proposal for dividend I will start with some comments related to the profit and loss statement. At the top right, we see that operational EBIT increased by NOK448 million compared to the third quarter. From NOK1041 million to NOK $1,489,000,000. We increase is driven driven by both higher volume and higher price achievement. Which increased operational EBIT by NOK217 million and NOK259 million Higher demand, increased the price level, and the price achievement is further positively affected by an increased share of superior quality. Reason for increased costs of NOK 73,000,000 is related to seven based mortality during the period. Beyond this, [indiscernible] [indiscernible] Iceland and Salmallakka Ocean contribute with a positive change of a total of NOK45 million. Mainly explained by increased harvest volume.

Moving to the profit and loss statement on the right. Will comment on the year over year changes. We start at the bottom of the slide. Harvest volume was reduced by 9% to two thirty one [indiscernible] and EBIT per kilo was 23.4 after a combination of increased cost and lower price achievement in 2024. Driven by biological development reduced growth lower harvest rates and reduced superior quality caused by jellyfish and increased sealized pressure in the areas we operate in. In total, this has contributed to an EBITDA of NOK7120 million which is a reduction of 26% from the previous year. Operational EBIT was NOK5429 million. Production tax in Norway and Resource Saks in Iceland amount to NOK241 million. An increase from 2023 by 33,000,000 due to increased tax rates. [indiscernible] Non recurring items which are limited to cost related to lawsuit, restructuring and write downs increased the result by NOK58 million in 2024 NOK128 million in the quarter. The most significant items were NOK $20.24 are gain from the sale of U. S. Sunset of €286,000,000 Cost related to decommissioning of the Cleaner Fish activity with $65,000,000 and a write down of nets at Arctic Offshore Farming in connection with planned replacement with 46,000,000 As a result of higher biomass and better prices On the contract, [indiscernible] Net fair value adjustments are positive.

The fair value adjustment increases the result by 1 NOK137 million. The higher biomass is positively affected by higher number of fish The result from associated companies was positive with NOK122 million in 2024. An increase of NOK149 million Very significant improvement in Scottish e farm is the main driver. Net financial cost amounts to NOK1214 million, and it's relatively stable from the previous year. In total, this gives a result before tax of NOK 201,004,000. [indiscernible] ordinary corporate tax together with the recognized resource rent tax cost for 2024, amounts to a total of NOK 1,100,000,000.0. The result of the tax cost is therefore NOK 105,003,000 for 2024, an increase of NOK359 million from NOK59 As you can see, this gives an adjusted earnings per share of RUB22.5 per share for 2024. Moving on to the balance sheet. We see that the total capital has been reduced by NOK $528,000,000 from the previous quarter NOK54.4 billion. The change is mainly due to the previously communicated sale of Ousan Satterfisk, which was completed in the fourth quarter and that reduced the total capital by NOK497 million. [indiscernible] fixed assets have increased by NOK174 million and current assets have decreased by NOK203 Investments during the period are mainly related to activities in the sea phase.

The reduction in current assets in the quarter is driven by a reduced value of biological assets due to seasonally high harvest volume and consequently reduced number and biomass in the sea from the previous quarter. Conversely, accounts receivable increased due to higher prices at the end of twenty twenty four. Compared to 2023, however, we have bought higher number and higher biomass industry. Which provides a good basis for higher volume and '25 and the beginning realization of the organic growth potential. Through the reduction in total capital and the net positive result during the period, the equity ratio has increased to 37%. NIM including leasing, has been reduced to 18,500,000,000.0, where the key figure For net further debt ratio, NIB, including leasing on EBITDA, has increased to 2.6 And as you can see, and unlike others, we installed Marches to comment on [indiscernible] Without leasing, the debt ratio is 2.4. This means that by the end of Q4 twenty twenty four, we have NOK6.8 billion in available liquidity the group, liquidity is also positively affected by the issuance of new bonds now in the first quarter of twenty twenty five. We informed at the previous quarterly presentation that we had entered into an agreement with the owners of Knutsertisk.

Securing us controlling influence in the company with settlement 80% in shares and 20% in cash. The transaction was completed in the first quarter and will be reserved in the issuance of 716,651 new shares and a change in debt including debt inclusive of Fisk Totaling NOK211 million. We are pleased to have completed the transaction and to start working on developing the company further for everyone's benefit. Further pleased to demonstrate both the ability and willingness to carry out acquisition that provide us with opportunities [indiscernible] profitability growth in the value chain. I will briefly explain the change in net interest bearing debt including leasing. In the quarter. We started with a net including leasing of 720,019,000. The sale of U. S. Unsighted at risk reduced net interest bearing debt by NOK648 million, So the new interest bearing debt became NOK 71,019,000. During the period, we had a good cash flow from operations where EBITDA was NOK1.9 million. Tax payment amounted to NOK260 million in the quarter, and the change in working capital was NOK37 million. [indiscernible] Total investments amounted to NOK $531,000,000 in the quarter. $43,000,000 is related to cash consideration for the buyout of minority interest. Investment in fixed assets amounted to a total of NOK488 million and are mainly related to activities in the CFS and in accordance with previously communicated prioritized measures.

Total investments in fixed assets for the year ended at NOK1790 million This in line with the original expected CapEx level for 2024 and support the strict CapEx discipline in SalMar. [indiscernible] The amount spent on interest and leasing payments during the period is higher than in previous quarters and is affected by interest Taking these payments into account, we end up with 18 NOK18453 million in NIIP including leasing at the end of twenty twenty four. This is an ordinary ordinary reduction of NOK578 million in a quarter which implies a total reduction including Usen Sertefisk of NOK1226 million. As a result of tax payments, and the building of working capital in the first quarter, an increase in NIB including leasing, is expected at the end of the first quarter of twenty twenty five compared to the fourth quarter. But this Just not affect our assessment of the financial situation. For the group. Sonmar's strategy is to be robustly financed at all times and to stay ahead of maturity dates. Therefore, in January, Sanmar issued new green bonds totaling 350,004,000 divided into the following two tranches. 2,250,003,000 in a five year unsecured green bond with a floating rate of three month LIBOR [indiscernible] NOK1100 million in a seven year unsecured green bond with a floating rate of three month LIBOR plus 1.35%.

Danske Bank, the end markets, Nordea and SAP, the global coordinators and joint lead managers AnerabuBank, was joint lien manager on the transaction. We have then established 100% green unsecured financing with us suitable maturity structure, the lowest capital cost from a seafood company on a seven year transaction. This gives us the flexibility to to carry out the investments we want in the value chain and the proceeds will be used in accordance with our green framework, which is available on our website. In summary, we now have a flexible financing with a long time to maturity and frameworks that ensure sufficient liquidity at all times. As the financial update shows, Salmoy has a robust financial position there despite the challenges, we have managed to create good financial results throughout 2024. At the same time, we are flexible financing that facilitates further sustainable The Board of Salmar therefore proposes a cash dividend of NOK22. Per share for the financial year '20 This will [indiscernible] the subject to approval at our ordinary general meeting in June with payment thereafter. The proposed dividend is in accordance with Salmarsh current dividend policy and previous practice. The dividend is weighed against the necessary liquidity reserve to handle future [indiscernible] Sufficient access to capital to make our growth investments And it is I'll come to the end of the financial update, and we'd like to hand the floor back fill that.

Thank you for the review. Ulrik, In the previous quarterly presentation, I gave you an insight sight into how we systematically facilitate the settlement's terms. At Salmoy SalMar the steps we take to strengthen the value chain to give our salmon the best opportunities to thrive ensure good quality and realize the harvesting volume potential in our licenses. The investments we plan for '20 reflect this with the majority of investments in 2025 related to fish welfare. I will not repeat everything, but we do it because we see that the investments provide reduced number of treatments, reduced mortality [indiscernible] quality, reduced Cost and increased volume. In sum, this strengthens our performance in both Biologic and finance. Have many projects ongoing at Salmoy, and we are probably the only one with all projects forms in operation along the coast of Norway. This gives us a lot of learning and new knowledge. Previously, when we have implemented preventive technology to avoid life treatments, we have done so at individual locations. But in 2025, we are changing our mindset to have more zone focus. We will deploy production forms in entire areas to reduce the total lives pressure We are investing investing in submerged technology in entire areas locations adapted to this technology.

We are doing the same with lasers, so the effect comes both at individual locations and as a top effect for a larger area.

Good luck to everyone at our newly established laser centers. Towards the end of twenty twenty four, 20% of our locations have preventive technology. Anthro '25 we will significantly increase this to 40% of our locations. Submerged laser closed and semi closed. This shows that Salmar is leading the industry with various tracks and facilitating that we continue to have the best biological results and thus also the best financial And for the group as a whole, we expect to invest NOK1.9 million in 2025. For Norway, we expect to invest NOK1.7 million. [indiscernible] Maintenance investments account for approximately NOK 700,000,000.0 or approximately NOK3 per kilo. In addition, we are making capacity increasing investments that will make us even more efficient. [indiscernible] The three largest individual investments are investments in lasers, submerged facilities and upgrading, harvesting and processing capacity. In Iceland, we will make investments mainly in the sea phase in 2025 to realize the potential in the licenses. Totaling NOK 130,000,000. For Salmairakkiroshan, investments are related to upgrading of the net at Arctic Offshore Farming and maintenance investments. Totaling NOK70 million. And Salmoire is a growth company and it's always looking for good opportunities for profitable growth in the areas we operate in.

Since the acquisition of NTS and RS in 2022, we at Salmoyed have held a 37.5% stake in Vilskoy AS. Vilskoy currently has a strong presence on Senya and is a company with which we have had a strong and good relationship for a long time. They have 5,854 tonnes MAB in production areas ten and eleven. Which are in the core areas for Salmai. And are among the best areas in the world for farming. In February, [indiscernible] [indiscernible] Who together owns 75% of the shares in Willskor AS have agreed to work together [indiscernible] to further develop their ownership interests in Vilskoy. This includes consolidation with company in our balance sheet to being a consolidated company and will provide opportunities for further growth in close approximately to This ensures synergies and further development of existing activities. SalMar, look forward to working even more closely with Wilskoy in the future. As we approach the end, we conclude today's presentation. The forward guidance has been reviewed and you see it summarized on the right side of the slide. For 2025, we expect low global supply growth, but somewhat higher than previous years. As mentioned, we still see strong demand for our products in the market.

At Salmael, we are optimists. We have strong faith in this industry and still believe that we are just in the beginning of an industrial adventure. That can help feed the growing world population. We will ensure that we do our part of the job so that we can utilize the strong platform we have at Solmaj. I know that we have an organization that is passionate about the work they do and the SalMar swimming in our cages. And every single day, strive to ensure that our salmon have the best conditions for success. With this, we have come to the end of the presentation. Thank you very much for your attention. Our next presentation is in May. And I hope everyone has a nice winter [indiscernible] [indiscernible] take a trip to the Ski World Championship in Trondheim. Where Salmoy is an official partner for seafood and sustainability. And where salmon of course, is on the menu every day in Groningen Stadium. Welcome to the ski World Championships and remember to eat a lot of SalMar. Wherever you are in the world. Thank you very much.