P/F Bakkafrost (BAKKA) Earnings Call Transcript & Summary

Good morning. My name is Runi Hansen, and I am the Chairman of the Board of Bakkafrost. It is with great pleasure we welcome you all to Bakkafrost 2023 Capital Market Day here in Inverness in Scotland. We take great pride in our biannual Capital Market Days. It gives us an opportunity to provide you with a deep dive into our business, expose a broader group of our leadership team and to update you on our rolling 5-year plan. It is no coincidence that Scotland has been chosen as a venue this year. When we welcomed our new colleagues to the Bakkafrost family in January 2020, we took over a value chain, which was highly dependent on third parties. Bakkafrost's success in the Faroe Islands is built on an integrated value chain where an unbroken chain of high-quality human and physical resources secure optimal mitigation of the risks inherent in biological production in open water. During the presentation, you will hear how this cornerstone in the Bakkafrost model has been instrumental in developing a controlled environment in the Faroe Islands, most recently in the turnaround process of the acquired business in Suðuroy. We are in the middle of introducing the same structural interventions in Scotland. During the presentation, you will be provided with details and status of our transformational investment program. You will be encouraged by the improvements we can already demonstrate on generation and see, but also noticed that we might still see high biological risk during the next couple of autumns. We are proud of our strong sustainable profile which we are confident will continue to drive global demand for salmon. This, together with unexpected tight supply situation over the coming years, bodes well for our business environment. For us, sustainability and business goals are aligned. Our commitment is to develop and maintain an environment where survivability is kept high, and our salmon is allowed to grow to optimal harvest weight, resource efficiency is kept high, and the produced -- and the product is valued with a high premium in the market, so simple and so difficult. Enjoy your day. Thank you. [Presentation]

Good morning and a warm welcome to Scotland. My name is Hogni Jakobsen, and we're going to begin in a place 500 kilometers here -- from here in the Faroe Islands. So as we saw in the movie, we are Faroese company by origin, but we have grown out of the Faroe Islands, especially in 2019 where we acquired the Scottish Salmon Company. We also have a significant operation now in the U.S. with a processing facility and also in Denmark. And recently, we have established a sales office in France. In the Faroes, we are 1 of 3 salmon farmers. We account for approximately 70% of the production in the Faroes. And in Scotland, we are also among the biggest companies, quite widespread here in Scotland, having our farming operation in the outer Hebrides, stretching all the way down to Aran. This morning, we are in Inverness. And later this afternoon, we will head on to Applecross, where our first modern hatchery is starting to take shape. Sustainability is fundamental to Bakkafrost and our healthy living sustainability framework is deeply embedded in our strategy and in all the decision-making processes as our value is the same, provenance, passion and respect which we share in the entire group. Salmon farming, as we also saw in the video clip here earlier is far from easy. You need to find the perfect balance between the health of the salmon, the boundaries that the environment and nature sets for your operation and also to tackle the biological threats that are thrown at you. It's a truly challenging operation and the success that the industry has today is a result of all the learnings from the many failures in the past. One thing that we have learned at Bakkafrost is the importance of being in control, to have sufficient resources, the right people, skill set, best practices and the proper equipment to do the job, but also the importance of having robust genetics, healthy eggs to start with and that can develop into strong, robust smolts that grows into healthy salmon. And not to forget, also being prepared for all the curveballs that the volatile salmon market can throw at you, where you really need to have a flexible and other adaptive operation. So it's this kind of flexibility and resilience that we have been very much focused on building in the Faroes. And we have great pride in our value chain, a state-of-the-art and fully integrated value chain, which we have built over many years. It has proven its strength several times and is 1 of the keys to the success of Bakkafrost today. With our value chain, we are able to triple the edible output of low-value marine raw material and increased value of that significantly, both in the nutritional area and also in respect to the financial value. So if we look closer at our value chain, starting with our fishmeal, -oil and feed production, we are uniquely positioned in the middle of the North Atlantic Ocean, that provides us rich access to marine raw material, either low-value material that is a catch just outside our doorstep in the Faroes or the offcuts from the rich Faroese pelagic fishing industry, and we can convert that into fishmeal, -oil and then later to feed. And it allows us to have the luxury of including more than 2.5x more marine content in the feed compared to the industry standard. And this strategy is sustainable. It's good for the environment. It is reducing our carbon footprint as well as being positive for the quality of the salmon that we produce, having a higher omega-3, higher vitamin D, higher protein contents. It's not just something that we say. This is something that we have been -- that we have proven through side-by-side trials where we have tried our own feed and compared to, you could say, more industry standard feed, and our feed wins. It wins when it comes to the environment and it wins when it comes to the biological performance of the fish. It's more costly. However, we earn that back because of the improved fish welfare and improved biology, but also because our customers appreciate taste, the quality of the fish and are willing to pay the extra premium. Not only are we the only salmon farmer with own production of fishmeal and -oil. We also have exclusive ownership of 2 strains of salmon, the Faroese strain and also the Native Hebridean strain here in Scotland, which we developed in our Broodstock program. Our strain in the Faroes, we have developed -- it has developed over decades. We now have 400 to 500 families from which we choose the parents for the next generation. In recent years, we have made significant discoveries and improvements in our Broodstock program. I found genetic variations for a range of diseases and properties, including pancreatic disease, HSMI, early maturation, et cetera. Going forward, we also expect to make progress in finding genetic variations that can lead to improved resistance to sea lice, which is 1 of the challenges in the industry. This program helps us make each generation of fish more strong and robust than the previous generation. One of our key strategic priorities have been to reduce the cycle time at sea using large smolts, and therefore, we have increased our production capacity for large smolt considerably in Faroes, especially since 2019, where our large hatchery, Strond was finalized, we were able to ramp up the average weight of the smolts that we produced quite significantly. And since then, we have expanded the capacity even more with the expansions of the Norðtoftir and Glyvradal hatcheries. And soon our expansion at Viðareiði will also be completed. We also have plans for 1 additional hatchery in the Faroes. Currently, we are able to produce around 18 million smolt of 500-gram in the Faroes, and that will increase to more than 24 million smolt of 500-gram in 2028. And it is in our hatcheries, where we just might have made the biggest and most important improvements since our last Capital Markets Day, growing large smolt is very complicated, and we have learned a lot during the past years. We have fine-tuned and revised our large smolt production regime according to the observed performance of the fish that have been released into the seawater. And as a result, we have been able to reduce the mortality rate by 54% of the fish that would go to sea according or following the new revised production regime. And other benefits are as well. We have seen increased growth rates of 26% in the second half of the year, where the smolt number grows -- the fish grows -- the previous generations have had poor performance, and this difference in growth rates actually equals around 2 months shorter production cycle. So to sum up some of the benefits from our large smolt strategy or the revised production of large smolt includes 30% higher growth, 54% fewer fish are lost due to mortality, 4% lower feed conversion ratio, biological feed conversion ratio. And if you include mortality, the economical feed conversion ratio is 16% lower. So great achievements in our freshwater departments. In the Faroese farming segment, we have also pushed the KPIs in the right direction. We have continued to increase the growth rates, lowering our biological feed conversion ratio. In the first quarter this year, we were as low as 1.03 in the Faroes, so 1.03 kilo of feed to produce 1 kilo of salmon. Survival rates are continuously increasing. We surpassed 95% survivability. This is calculated according to the GSI standard, which is a rolling 12 months calculation, but it means that each month, 99.6% of the salmon survives. Sea lice levels have also been reducing. In 2022, we were as low as 0.28 compared to 0.45 the year before. And also here, our value chain has been significantly reinforced with our new 10,000 cubic meter well boat, Bakkafossur, which is equipped with the dual treatment system that has proven so successful here in Scotland, and we will hear more about that later this afternoon. In general, in the Faroese, we have come a long way with our large smolt strategy, which reduces the biological risks, increases efficiency and also provide sustainable growth, all by reducing the time at sea and reducing the exposure to the hazards in the seawater phase to around 1 year. The target is 500-gram for every small size and to have around 12 months in the water. In the first quarter of this year, we were at 424-gram on the average smolt and production cycles in the seawaters are now down to around 13 months. When our new well boat Bakkafossur joined the fleet of larger vessels in the Faroes consisting of Hans á Bakka, Martin and Róland, all named after the 3 brothers that founded Bakkafrost more than 50 years ago, we are now better equipped than ever before to mitigate biological risks, improve fish welfare and to support growth. Bakkafossur brings a new set of capabilities like the dual treatment system that I mentioned, which can treat both for gill health issues and sea lice with very, very low mortality, and it's very, very gentle to the fish and extremely efficient to remove sea lice, for instance. In the Faroes, we also have an advanced and fully integrated processing facility, which can produce a range of retail products, a capacity that equates to around 40,000 tonnes of harvest, head-on-gutted weight. We sell around 40% retail and 60% to food service, and the plan is in the coming year to establish similar capabilities here in Scotland. Over the years, we have strengthened our market reach both in terms of geographies but also in terms of segments. We have -- we built upon the differentiators that we have, such as superior quality, origin, sustainability and gain around EUR 1 on average in extra price premium across all volumes that we sell. Europe is our biggest market. In '22, 67% of the volumes that we sold went to the European market, 51% if you only take the fresh volumes. Asia and North America are important markets to us. They take a larger portion of the fresh salmon that we sell. The U.S. market in '22 was 27% of our fresh salmon. So this value chain has been built up over many years. Since we first announced our 5-year investment plan in 2013, that was the first year. We have invested DKK 5.6 billion in the Faroes alone. That corresponds to an investment level of approximately DKK 12 per kilo since 2016, where we really ramped up the investment levels, which is unusually high for the industry, but it's also a key explanation to the strong performance of Bakkafrost. And that has resulted in a truly magnificent value chain with state-of-the-art assets. And generally speaking, we feel that we are in good control in the Faroe Islands. Well, Odd, you have a story to tell us how was this in the past?

My name is Odd Eliasen, and I'm director for the FOF segment, fishmeal, -oil and feed. So how did we get here? If we go 40 years back in time, we can see the first boat that we've had our salmon with, a pioneer, a small plastic boat with an outpour engine. The next boat was this 18 feet plastic build as well. In the '90s, then the Chief Veterinary in the Faroes said that -- he compared fish farming in Faroes with poker, was just poker. And unfortunately, [ he had it right ]. We were hit by the ISA in April 2000. It took us actually 5 years to understand and learn how critical, the ISA situation was for Faroe Islands. And the production went from 60,000 tonnes down to 50,000 tonnes in Faroes, so the whole industry was almost wiped out in the Faroes. But this is also -- this gave us also an opportunity in the Faroes to organize the industry again. We needed a new veterinary model for the Faroe Islands for farming in Faroe Islands. And it also gave us, Bakkafrost, the opportunity to build a new state-of-the-art company. In 2006, we emerged with the northerly part of Faroe Islands. And again, in 2009 with the westerly part of the Faroe Islands. In 2011, we bought the feed company Havsbrún, that was '11, yes. And then we started to invest here in harvest station and VAP in 2015 and '16. And as you can see here, we have been investing heavily in hatcheries for smolt for the last -- past 5 years. We think that we have done quite a lot of things that have been positive for us, not moving at all. But when we look at the EBIT per kilo for Bakkafrost, I mean compared it with our listed peers, we can see that we have performed quite well. And this is actually the same when we compare the numbers with the companies in Faroe Islands that we have strong performance, and we have had approximately $1 higher in EBIT per kilo. I will now tell a little story and to -- the question is, can this transformation be replicated? I will go down to Suðuroy. We took over Bakkafrost to go Suðuroy in 2016. And then it has been an ongoing investment and changes. We have invested a lot in farming equipment, vessel, feed. And Suðuroy immediately could take part of the high-quality smolt as well. And we have implemented the best practice in -- for Bakkafrost in Suðuroy also. We have educated our people and try to motivate that -- them in order to feed and to do the best practice. When we look at some of the numbers that we have achieved in Suðuroy, we can see that the production time has decreased from 600 days down to 400 days within a 5 years' period, which is dramatically, it is actually very good. We are extremely proud of it. And we have increased our production tonne per day from 6, doubled it up to more than 12. It was mentioned that the Suðuroy was not a very well performing area. And when we look at the TGC, how fast the fish was growing, it was lower than the average of Bakkafrost. But we can see here that the last year, it was actually over, so it was performing extremely good. Not only was the fish growing quite good, but the conversion -- feed conversion ratio was also quite low, which means that they have learned the lesson, so it is extremely good number from Suðuroy. We have just finished 1 of the areas here in Viðareiði with an FCR of 1.00. And if we look at the TGC here in Suðuroy, we have fish that are now 1.5 kilo. They have -- they are on TGC of 4.3, so it's very good and high numbers. So we are very much looking forward to see the outcome of this. Comparing the numbers in Faroes with, for instance, Norway, we can see that we have big smolt in Faroes, double as big as in Norway. The feed FCRs in Faroes are quite low, 1.6 compared with 1.18 in Faroes. And we also see very low economic feed conversion ratio in Faroes. We have the yield per smolt is higher. The harvest weight is higher, and we have also a quite high survival rate. These are the numbers from Faroe Islands. But when we look at Scotland, which we acquired in late 2019, we can see that we have some challenges here in Scotland. We still have small smolt prints in Scotland, approximately around 100 gram. So we need to take that up. That was the case 10 years ago in Faroe Islands. So all the KPIs here in Scotland are higher here, and we can see that yield per smolt is lower and the average harvest weight also is lower. So there is -- so Scotland is -- there is a big potential for improvement going forward. And then you could say why did Bakkafrost buy and take over SSC in Scotland? We thought and we still believe that this will be a good case. It will take some time. But of course, we need to do a turnaround. And probably the only good thing is that a poor performance is a good starting point for a turnaround. But we had 11 hatcheries. They were of this quality, and it is impossible to have a high quality smolt with all these smolt facilities. So that's 1 of the reasons that we are investing quite a lot in hatcheries in Scotland as well, which we'll see later on today. We will need to take -- to have a higher survivability in Scotland, that will be our main focus. As we can see here, we are quite low. And when we get this survivability at a higher number, 70, 80 or maybe 85, then we will also see other KPIs increasing in the future. So there is an upside in Scotland. We strongly believe that, but it requires good control of the biological threats and challenges. We have invested quite a lot in the farming equipment and surveillance equipment as well. We have freshwater treatment and service vessels in place, transport vessels as well. But we need to prove that we can farm and we can have a better survivability in the future, and we strongly believe that we can replicate the story that I told from Suðuroy, to do the same in Scotland, but of course, it will take some time, but we are on this journey. Thank you.

Thank you, Odd. Now Ian and Dave from our Scottish organization will tell you a bit about the achievements and progress.

Good morning. Welcome to Scotland. I'm Ian Laister, Managing Director of our Scottish operation. I'm joined by Dave Cockerill. Dave Cockerill our Chief Vet and also Director of Biology. So we'll run through a bit of an update of what's moved in the last 2 years since we met at the last Capital Markets and also run through our journey, where we are on our journey and some of the signs of improvements that we're now starting to see from our investments and our improvements in practice. Just some metrics and some visuals here. In terms of where we're located, almost the entirety of the West Coast of Scotland. You're here and in Inverness and as we said, we'll shortly be heading to Applecross. So metrics over the last 2 years, we're concentrating on freshwater capacity. We've looked at our sites. We still have some of the older type sites in production. We'll be visiting 1 this afternoon, but we are moving forward. We're increasing capacity, and we're also increasing our capacity to produce smolt, both internally, larger weights and robust, healthy smolt. We looked at our sites. We've consolidated and removed some of our uneconomic sites. We remain and retain the consent. Processing. We are improving productivity and processing, but the reality is we are limited in the locations that -- where our processing is based. And as we talked about 2 years ago, we are looking in our plans to build a new facility. In terms of our marine capacity, in particular, well boats and freshwater treatment, we have made vast strides in particular in the last 6 months. In particular, you can see our capacity on freshwater treatment, which is now dual treatment, we now have 2 boats of 6,500 cubic capacity. They are the most advanced in Scotland, and they are both dual treatment and they're both in operational and the impact has been transformational. We've also looked at our people. We've scaled our people to the size of our business, and we'll continue to do that moving forward. So the last 2 years has been challenging. It's been challenging for survivability and it's been challenging on harvest weights, both of which have impacted our financial results. So if you look back over the last 2 years, in particular the third quarter, our harvesting value recovery has been led by biology. Why? It's been driven by challenges in particular to gill health, which is fundamental fish welfare and survivability and Dave will talk about gill health shortly. We've also been restricted in recovery of value being linked into fixed-price contracts, which meant that as price in markets demand outstripped supply and prices increased, we were linked into fixed-price contracts. So we were having to effectively fulfill contracts with our large fish rather than recover high value. So we've changed that strategy. So as we sit here today, we brought in -- we're now on a sales-led strategy. Why? Because our biology is fundamentally changed. We brought in dual treatment in September last year with 1 of our large boats, a 4,000 capacity deal treatment boat. We upgraded our second freshwater boat in March this year. So they are now both dual treatment. And we're also leveraging One Company from a sales channel, which Simun will talk about shortly. We also look at ourselves against our peers in Scotland and say, why? Why is their performance being different to ours, in particular, in Q3. So we can look back. We talked about underinvestment. We've been under-resourced and underinvested for decades. Our peers haven't. We had insufficient freshwater. We use third-party mechanical treatment vessels. We increased that in 2022, but it was still insufficient. And it's only broadly in the last 6 months that we've been able to take control with sufficient resources in the marine environment. But there are also some differences in terms of our organizations. Our peers have economy of scale, production capacity. Obviously, that aids on recovery of fixed cost, et cetera. They have geographic concentration, and we're quite geographically spread. They historically had significantly more marine resources than what we did. In the Northern Islands, there is a reduced biological challenge, historical investment we touched on, and then this is the key. And we've heard about this from the Faroese journey. Our peers produce high-quality, healthy, robust smolt. How do we know that? Because we bought them, we farmed them and our best performance ever has come from those smolt. And that's the journey that we are on. So how do we turn the Faroese journey into Scotland? So in terms of our prioritization, where we invest and what we're looking at, we're prioritizing large smolt. Obviously, there's a planning stage to create large-scale facilities, obtain licensing, et cetera, and we're now in build phase. We started upgrading our marine assets immediately. Boats, in particular, well boats, as you know, they're not available on the market readily and capacity was already pulled by our peers, so boats has been a challenge. Our journey into FSVs within the group is in our long-term plan, and we've upgraded marine across the piece. There was a word used in the first slides, everything was changed. There is not a single aspect of the Scottish operation that we have not looked at and not changed. And then in the future, as our productivity increases and our production increases, we will invest in a modern state-of-the-art processing facility. So that's the journey that we're on. I'll come back to a bit more detail, but I'll hand over to Dave to talk us through our biological challenges and in particular, gill health and why it's so important.

Thank you, Ian. It goes about saying that good growth and good survivability are key elements of salmon farming. In Scotland, gill health is by far the most significant factor that affects survivability. The graph on the right illustrates the significant cost that is driven into our business by extraordinary mortality, and the largest proportion of that is related to gill health. If we break down the categories of mortality in our operations, we can see that gill health, both direct and indirect group together account for more than 50% of our mortality. What do we mean by that? By direct gill health issues, I'm referring to pathogens and Plankton or jellyfish blooms, which together affect -- the biological effect on gill health. And in fact, those 2 are interrelated -- those 3 are interrelated. The damage often that is caused by blooms is exacerbated by the secondary infection of AGD, of amoebic gill disease on top of that. What is harder to quantify is the indirect effect of poor gill health on growth -- on actual growth and performance. We know the mortality it causes, but there is also an underlying deterioration of growth and performance, which comes as a result of poor gill health. But the effect of gill health also extends beyond these direct and indirect categories into, for example, viral disease categories where viral diseases like CMS and pancreas disease affect heart performance. Gill health exacerbates this because, again, we have the interaction of 2 factors, which caused a significant deterioration in the fish's ability to survive and perform. It's therefore no surprise that gill health is our main focus for investment and developing best practice. What this slide illustrates is the different proportions of our mortality causes here on the left-hand side. And each of our strategic developments and the time line over which we have implemented the strategic developments since acquisition in 2020. At the beginning of the time line, the principle of ownership of the full value chain starts with feed. This allows us to build a base of general robustness in our stock, through a healthy diet, which will result in general improvement across various mortality categories. Our program to upgrade marine equipment, especially nets, aeration systems and our first freshwater resource, Ronja Fisk helped us further along this journey. And it's worth noting that 90% reduction in predation mortality was achieved through our investment in more robust nets. We reached a further milestone, as Ian referred to, in September '23 with the arrival of the Ronja Star, which was the first vessel, which had combination freshwater treatment as well as an FLS system on discharge. This has allowed fish to benefit not only from the freshwater treatment, which eliminates the AGD component, but also as a single handling event, which removes sea lice. The true step change will, however, only occur when we're able to reduce the marine cycle to enable our One Summer strategy, which by means of large smolt, which is made possible by our investment in the high-capacity RAS systems and you'll see the significant progress that's been made on this front at Applecross later today. We have slides later in the presentation that Ian will show, which illustrate the significant risk that the second summer brings to our stock and the increased negative effect that this has on survivability. Lastly, we aim to make further inroads into all mortality categories through our Broodstock program, where general robustness and resilience against -- where general robustness and specific resilience against gill health and viral challenges will be particular focus areas. We can see significant evidence that stock and hatchery origin influence the robustness of fish in the face of challenge, and we wish to take ownership and control of that element of our production. And our efforts are starting to bear fruit, and we have selected a few metrics here to illustrate the progress that we are making. The first of these is if we look at 1 of our metrics of gill health, the 2 graphs, the 2 lines which we show here are amoebic gill disease measured as relative parasite load. We can see that in 2022, we had significant spikes into the danger zone. And in fact, in Q1 and 2 of 2022, we were still suffering with the residual effects of the previous Q3 and 4, which didn't stand us in good stead moving into the risk period of Q3 of '22. It's interesting to see that from September onwards, and the arrival of our second vessel, which significantly increased our capacity and ability to deal with amoeba, that we have a steady decline in mortality -- sorry, a steady decline in RPL as -- the measurement of AGD. And we have entered this year with an extremely low level, historically low, which has been maintained year-to-date, which stands us in good stead to enter Q3 this year in the lowest risk that we have been for some time. If we look at our mortality, as reported year-to-date, we are significantly -- have significantly lower gill health mortality relative to peers. If we look at our sea lice performance, we are tracking at 50% lower sea lice levels than our peers. If we look at the fish that are currently in the sea, and this is -- this metric has been put together, looking at our Q1 and Q2 inputs of last year relative to the same inputs for the previous generation, we have -- they are currently tracking below the previous generation in terms of cumulative mortality. Interesting to see the flection point is again in September of last year when our capacity increased significantly. And as Ian referred to, we showed this graph on a previous slide, there are -- we can see that our Bakkafrost Scotland's contribution to the overall industry mortality figures, which are reported to the Fish Health Inspectorate is reducing over time and for -- and year-to-date, it is the lowest it's been. This all allows us to harvest fish at a larger mean weight. The fish are able to stay in the water longer. They're not -- we are not forced to pull them out because of poor gill health. And they also grow better because the hills -- their gills are in better health, and therefore, they are able to deliver oxygen to their tissues and have a better ability to grow. The risk remains elevated, though pending the arrival of large healthy smolt. This slide is just to illustrate the journey we have been on. And as Ian said, we were extremely underinvested. Before acquisition, we were reliant on 1 and laterally 2 mechanical sea lice treatment vessels. And our first freshwater vessel only arrived in July 2020, and prior to that, we were relying on periodic use, very seldom, in fact, use of freshwater, but mostly on hydrogen peroxide to control amoebic gill disease, which in itself is quite risky. In September '21, we had the arrival of Bakkanes, which significantly increased our ability to treat for sea lice. We had already commissioned the arrival of the Star, the 4,500 cubic vessel, which you will see later today. But we realized that it would not arrive in time for the risk period of 2022. So we brought in an additional third-party vessel which gave us some additional capacity during the summer of '22. Not enough we felt with the level of challenge which we had, but it was enough to suppress what would have been a worse situation. Again, when we look at the effect this has had -- actually, I will then continue this time line where we were so pleased with the outcome from our dual treatments for amoebic gill disease and sea lice at the same time that we installed the same dual treatment facility on the Ronja Fisk, which was our first freshwater vessel. What is the effect of this? We can see that our exceptional mortality levels are particularly challenging in Q3 and Q4. Again, it's interesting to see a flection point here when the arrival of the second vessel in late Q3 and a steady decline in exceptional mortality, which was better than previous years, allowing us to start this year on a low level of exceptional mortality, which has remained low. We have, in recent weeks seen some elevation of mortality, which, however, was not caused by gill health. In this case, we had CMS, which was affecting the back end of some of our production cycles. These fish have been removed from the water, thereby reducing the risk, and we do not carry that risk into Q3 this year. I'll now hand back to Ian. Thank you.

Sorry, I'll just click back for a second. A critical point here, and we'll come on to it shortly, is also these fish. So the fish from which we're experiencing this [indiscernible] mortality are in the same farm, where 2 strains from 2 different sources, 1 of the sources being 1 of our peers, high-quality smolt. Those fish were in the water for just over 370 days, and they were harvested in excess of 6 kilos. The fish we're experiencing in this from our hatcheries. The point of harvest of our peers' smolt, our fish were 1.5 kilos smaller in the same conditions, same feed, same practice. It's all about the health of the smolt. They weren't bigger, but they were healthy. They were reared in RAS and they weren't reared in some of the conditions that you've seen. It makes a fundamental difference. These fish should not have been in the water if they were healthy smolt, so we would not be experiencing this, which is fundamental to our forward journey. So where are we overall? We showed a version of this when we last met, which represented our resources versus risk on a scale. And you remember that we said we were risks far, far outweighed our resources. Today, we would say we're probably in balance. We're missing a key element, large smolt. But here are some of the things that were -- so 92% improvement in the measure of gill health from AGD. We've introduced significant measures in terms of detection and other measures to mitigate against plankton and other risks. Sea lice is 45% down. We're also looking at trials for vaccines, et cetera. But again, a critical point that Dave mentioned is an unhealthy fish is prone to other disease, and we've seen that in reality in the water and predation is a startling number, 99% reduction in predation by introducing anti-seal nets across all sites. A visual representation using our rearing cycle. So this is where -- this is our assessment of where our business was at acquisition. Poor freshwater facilities, meaning poor smolt, a challenge in even year 1 of marine and an extreme challenge in year 2. We have, as we talked about, not left anything untouched. We've started investment. We've improved resources. We've changed and used the group's knowledge to create a One Company approach to best practice, and our assessment of where we are now is we're still amber. We still got smolt produced from flow-through facilities. We're probably still amber even in year 1 because of that, but a lower risk and we're under here. And then this is our journey to come driven by large healthy smolt, but Broodstock and various other measures, and this is what we believe our future looks like, large healthy smolt at 500 grams, 5-kilo plus harvest in just over 12 months. And yes, the period in the marine environment in Scotland will always be a risk, but we will have the resources to manage it. And this is a pretty critical slide. This is real data. This represents our mortality. 2/3 of our mortality is in the second year, second summer, that in our future strategy, our fish will not be in the sea. And we've got proof of that happening now at our site just north of here, where we can see second summer fish being challenged. The first summer fish are harvested 6 kilo, there in our Q1 value. So this is our journey to large smolt. We'll be visiting Applecross shortly. Applecross has a capacity of around 7 million at 500 grams. It's 29,000 cube, but I'll talk a lot more about up Applecross this afternoon. We are at the planning stage on a new facility, Fairlie, it's larger than Applecross, 8 million at 500 grams. We still need to go through planning and get the licenses, but we would expect to start construction on this within the next 6 months. What would our journey look like? We are here. We're still on small smolt. We're starting to produce some large smolt from Applecross. You'll see those this afternoon, you'll see some 300-gram fish, but it's a small batch. The new capacity in post smolt is being commissioned. Again, you'll see that facility. And then you'll also see the final phases. When we have completed Applecross, which should be next year, we will broadly move all production of smolts to Applecross at around 250 grams. And then our second facility will come online in the future, moving our production to around 15 million, but it's only when we get our second facility, we will be able to produce all our smolts at 500 grams. So we probably talked about this, but a bit of a visual representation of what that represents. This is our current cycle. First year, represents a challenge first summer, second summer represents an extreme challenge. This is real mortality data. You can see the impact of that second summer. Our fish will be coming out here, but our fish will go in here much healthier. So this is also a representation of a cycle length. The cycle reduces to just over 12 months, which also means more cycles in the same period, which means higher production from utilization of assets, shorter cycles, therefore, more cycles, higher survivability. The impact on production is very significant. So I'll move on. Odd mentioned growth in TGC, which is a measure of growth. So it's not just about removing the second summer, it's also about the speed of growth, but the speed of growth from a healthy fish. Now Scotland offers a great opportunity. So the warmer waters which create increased risk, also give an increased opportunity for faster growth because growth is a measure of obviously, the quality of feed, the health of the fish, but it's also a measure based on temperature. So here's a representation of what a growth cycle might look like. And I'll start with 500 grams. So 500-gram smolt at high temperature, great health, could come out of the sea in as little as 11 months. Maybe with a little challenge, lower temperatures, 13 to 14 months. That's the difference that, that can make. This is where we are today, 100 grams smolt. So this performance here is the fish that I was talking about with good healthy smolt from our competitors. They were 90 grams. They went from 90 grams to 6 kilos in 13 months. This is the back end of where we are, where we have challenged smolt. It makes a huge difference. So health is a virtuous cycle. So health enables a fish to be able to withstand challenge, but it also promotes growth and it promotes a higher TGC. So our critical strategy, large, healthy smolt, reduces time in the sea, maintaining gill health, delivers the ability to grow and a critical factor smolt from RAS, biosecure healthy, robust. So we're currently -- our productivity is quite low. If we look at our utilization of our consent, it's quite low. It's driven from a number of factors. It's driven from survivability and speed of growth because of the health of our smolt and the health of our fish. So we've actually got a quite low utilization of our consent. So there's a huge opportunity to increase that by the length of the cycle, the health of fish and speed of growth. If you actually look at our consent, there's a dual factor. There's what we call operational consent, where we believe the farm sizes of the scale that we can operate it efficiently and then we hold a number of other consents, smaller farms from our history. Why do we hold those? We don't necessarily regard them as farmable as they are. But on a journey of consolidation, that consent can be consolidating to a larger farm, move further out into more open waters. We also hold consent in specific areas to control disease management in an area that means that it prevents entrants from crossing into our disease management area, so that's why you'll see a difference between our total consent and the operational consent that we farm. Our plan through our strategy is to move our production up to 55,000 tonnes by 2028 through those strategy. So there's a huge scope for growth, but our priorities: stabilize and ensure profitability, best practice husbandry and strategic investments, growth through larger smolt and then a site development strategy. So we're also -- we've got a development strategy for new sites in new areas, again, further out larger tonnages, et cetera. So moving from, let's call it, the biology and growth and size of our fish, et cetera, into what does that mean for cost. It's probably relatively easy to understand and see that the smaller the fish, the higher the cost for a number of reasons -- the allocation of fixed assets or the utilization of our assets and other factors. And as the fish get larger, our cost per kilo declined quite dramatically. In terms of then cost principles, so we get better yield because we've got much more utilization of our consent. We get an increased survivability and fundamentally, that reduces cost per kilo. This diagram here is actually from our forward plan, which demonstrates the impact on production scale in the bars and cost per kilo in the orange line, so this is a calculated impact on our business from our strategy. When will we see large fish? When will they move from production into the sales channel? The reality is [ from sat ] here today, we're only now producing a reasonable number of fish from RAS that we would regard as large, i.e., 200-gram plus, but not at the end of our journey. So we'll see our first benefits from a large smolt strategy starting to appear next year. This is a critical one. We will move all our production to Applecross. We will produce all our fish -- last month at 250 grams. 250-gram fish with higher TGC can be at harvest between 13 and 14 months at 5 kilos. This is what our journey looks like in terms of our production of smolt number, our production number and our harvest number moving forward, but 2024 is when we start to see the benefits. The benefits that we're seeing now are not from a large smolt strategy, that's from a husbandry strategy of controlling, in particular, gill health. And then value. And there are multiple value channels that battle for us to prove to generate a premium based on quality, consistency of supply, et cetera. Some market information to start. So this is the overall market that demonstrates that large fish generate a premium. So increased harvest weights are valuable for a number of reasons: Specific markets; obviously, the price premium; consistent supply to customers, all generate increased value. Here is a representation of what that actually means. So this is our Q1. So our performance in Q1 was pretty drastically better, why? Large fish above 6 kilos, consistently supplied to key Bakkafrost customers under the new sales strategy, and Simun will come on to that. Where was that driven from? So 50% of our revenue -- this is a mean weight difference. 50% of our revenue in Q1 was driven from volume. There was also demand outstripping supply, so there's a market pull on price. And our calculation estimate of that is that, that was worth about GBP 1.50 per kilo to us. The other GBP 1.50 was generated entirely by our strategy, a combination of Bakka salmon, selling the group salmon into key markets of large fish and our Bakkafrost premium, and this is our journey moving forward. So in summary, if you remember anything from our journey from this room, this is it on the page. It's about large smolt with gill health maintained in marine. They are the 2 principal tools of our toolkit and our approach, but we have a strategy that encompasses everything. The entire business, every process, every piece of equipment, every way of working. What does our strategy lead to? It leads to higher average mean weights, 5-kilo plus; higher survivability, 90% plus; and a reduced cycle down to around 12 months. And the impact of those, obviously, is higher production, higher prices because we access a different price point in the market with high-quality consistent supply and lower cost. So that's our strategy. Thank you.

Thank you, Ian and Dave. So we have heard a bit about the journey that we have had in the Faroes, how we, over a long period in the Faroes have developed a very strong operation, unique value chain where we are in control, and that's 1 of the important keywords here today, being in control. We have developed a model that works. We have demonstrated it in the Faroes as an industry as a whole, going from being far behind the Norwegian companies, to now being on the forefront. We have demonstrated that we have been able to replicate this transformation with the journey in the Southern Island, the Bakkafrost did since 2016, where we have taken an isolated area, replaced everything and transformed the operation. Ian and Dave have showed us the progress that we have made so far, and we are far from -- at the finish line. There's a lot of work to be done, but we are beginning to see the same changes showing effect in Scotland. Later this day, we will visit Applecross. We will see the large smolt. And hopefully, already next year, we will see the huge benefits of having large smolt of a higher quality. We have been talking very, very much about the smolt size, the average weights, that has been in every presentation that we have made in the past many quarters. We're talking about increasing average weight, average weight, average weight of the smolt. But as we have seen, the quality aspect is equally as important. And that's where we also in the Faroes have made a huge step forward in the past years, refining our production regime. And that knowledge, that experience is, of course, applied to the Scottish operation from the very beginning. We will take a short break now for approximately 50 minutes -- 15 minutes. So we will be starting up again at 9:25, where we will be looking at sustainability. The CapEx plan, [ Ian ] will present us the CapEx plan for the next 5 years and also look into sales and marketing and our one company strategy. So thank you for now, and we will continue in 15 minutes. [Break]

Finally, an update on our One Company strategy. So I will leave you with Tordis Poulsen, who will tell you a bit about our sustainability journey.

Yes. Thank you. Welcome back. My name is Tordis Poulsen. I'm the Group Director of Sustainability, which is the topic of the next presentation. To feed 9 million people by 2050, we must focus on further development of sustainable food systems with minimal footprint that preserves the earth for future generations. Bakkafrost wants to contribute to the solution by growing our production in a sustainable way. Given our location in the North Atlantic Ocean and the challenge of ensuring sufficient healthy and sustainable produce food for the world's growing population, we see it as our obligation to increase our supply of salmon. Farm salmon is a very eco-efficient form of protein. It outperforms other competing proteins on all important environmental KPIs like land use, water. Sorry, like land use, water, carbon footprint, et cetera. And salmon, as part of the blue foods can ensure supplies of critical nutrients, provide healthy alternatives to other meats while reducing environmental footprint. Bakkafrost has been preparing for the future, working towards consistency with the TCFD recommended disclosure since 2019. In 2022, we completed the climate-related scenario analysis. We looked at the potential impacts on Bakkafrost under 3 different scenarios: early transition, late transition and [indiscernible]. Each scenario has been considered for 2 time horizons, [ 2050 ] and [ 2070. ] We found that Bakkafrost is most exposed to the risk of a carbon tax on emissions given the ambitious growth strategy and carbon-intensive operation. Aside from this, Bakkafrost primarily faces risks to the Havsbrún Feed segment supply chain, even though the vertical integration of feed and farming brings a level of resilience and independence. Finally, significant climate-related opportunities exist for the business like further revenue streams in the biogas production and energy independence through renewables have shown to be significant under transition scenarios. As one of the world's largest salmon producers, our production has a significant footprint, thus using renewable energy to produce our salmon as one of our top priorities. Our aim is to decouple carbon emissions from our production. And therefore, we have ambitious carbon reduction targets, reducing Scope 1 and 2 by 50% by 2030 and Scope 3 by 52% per sold products also by 2030. We submitted our targets to the signed based targets initiative in the summer of 2022. We have not yet received the final target confirmation, but we are almost there. SBTi validation gives us further confidence that we are on the right track to achieve the targets required to help save our planet and protect future generations. Our Scope 1 and 2 emissions increased in 2022 due to the return to previous production levels at our FEED Division, Havsbrún, after a low production year in 2021. With a significant increase in the share of renewable energy provided through the National Grid in the Faroe Islands in 2022, we slowly started to see a decoupling of growth from emissions with our Scope 2 emissions decreasing by 16% compared to 2021. Our Scope 3 emissions decreased by 8%. And since Scope 3 accounts for 77% of the total greenhouse gas emissions, overall, we saw a decrease in emissions in 2022. To reduce our Scope 1 and 2 emissions, we are investing heavily in electrification, and we continue to look for more efficient technologies. In 2022, we received our new pure electrical workboat powered by batteries charged at night during hours with maximum green power production. Not only does this benefit the environment, the boat makes almost no engine noise, which is an advantage for the crew, for the local communities and also reduces salmon stress. Our new vessel, Bakkafossur, is equipped with hybrid technology. In addition to its 5 diesel electric engines, the vessel is equipped with large batteries, ensuring an approximately 20% increase in energy efficiency. The strategic placement of the engines on top of deck secures the opportunity for us with change to sustainable energy solution when such are available on the market. And then there is the Applecross hatchery, which is a sustainability case in itself, and Ian will go through that in this afternoon. In 2022, 79% of our products were transported by sea and 21% by airfreight. We have established a new air freight company to ensure that we are in control and able to reduce emissions. With the new route -- this is an example. So with the new route, for example, from the Faroes to New York, we will go from approximately 8,000 kilometers to 5,000 kilometers and 9 hours instead of 72 hours. This means that we can reduce the ice needed for cooling and replace it with salmon, adding approximately 30% more salmon in the boxes. We will reduce food waste and be able to trial environmental-friendly fuel. In 2022, we took an important step forward to develop closer collaboration with our major suppliers when we arranged the first Bakkafrost Supplier Day. This gave us the opportunity to engage with suppliers on sustainability topics, including climate change and carbon reduction. We launched our revised sustainable procurement policy, bringing sustainability to the forefront in procurement. The event was a huge success, and we will continue our engagement with suppliers, helping us reducing our Scope 3 footprint. Across our entire value chain, we seek to maximize the efficient use of resources and minimize waste generation. Our biogas plant, FÖRKA, saves approximately 11,000 tonnes of CO2 emission a year, and we are producing around 2% of the total renewable electric power in the Faroes. A recent collaboration between Bakkafrost local authorities, hotels and wholesalers concluded that our biogas plant has the capability to produce energy out of food waste. In the Faroe Islands, food waste has not been used for circular solution, and therefore, the project marks a milestone in achieving sustainable benefits out of food waste. We are committed to our carbon reduction targets, and therefore, we have included DKK 355 million for energy transition in our CapEx plan for the next 5 years. Mr. Regin Jacobsen will present to you now. Thank you.

Good morning, everyone. I am delighted to be here with you and talk about Bakkafrost plans for the future and our journey in Scotland, to see with you the Applecross hatchery, later this afternoon and also to have informal talks about what we see on any questions you may have. I hope that you have many questions for the Q&A session coming in a while. So I will now go a bit about through the investments that we plan to do in the Faroes and the Scotland and around the world. But first start with some of the investments we have done recently and over the last years, in Faroes and in Scotland and elsewhere. Over the last 10 years, Bakkafrost have invested heavily in the value chain, which are indicated on this picture. By department, hatcheries and marine have had the significantly largest investments. These are also core operations to our value chain and a large focus. The capacity and the agility of the operation has been increased and improved considerably through this development, and it creates a good foundation for the continued improvement of our operation for the future. Hatcheries have increased significantly in capacity to meet the request for more robust smolt and healthy large smolt. Since 2013, Bakkafrost have increased the capacity 10x in hatcheries from 1,000 tonnes 10 years ago to 10,000 tonnes now. The area with large hatcheries to produce large smolt really kicked on when the Strond facility, which you see on the top left picture, started operations in 2019. The first batch of fish transferred from Strond was harvested in September 2020 after 14 months in the Marine Farm. Stocking size in July was 220 gram. The KPI in the marine phase was a TGC of 3.3. And FCR, fee conversion ratio, of 0.99, so less than 1 kilo to grow 1 kilo of fish and a harvested average weight had ungutted on 5.1 kilos. That was the first batch from Strond, which was harvested in August, September 2020. The graph on this page, the right bottom shows the positive development on growth last year. Smolt from Strond is doing well compared with other origins from Bakkafrost on full cycles from marine sites in the period from 2020 to now, and we actually see the blue line increasing a bit more than the red line. Since the first batch from Strond, we have transferred 20 million fish from Strond and Faroes with an average weight of 415 gram into the Faroes farms. Average yearly production will be higher from Strond going forward, starting operation of large freshwater sites has also given us a lot of new information and knowledge to our teams how to operate and run these facilities. We have adopted new procedures to all of our sites to produce large smolt in Bakkafrost. Part of this change is the water temperature profile, which in the start was too high, which we have reduced. There are also a lot of other water profile issues or KPIs, which needs to be adopted in order to drive a strong biological development, especially from the marine farms, that will lead to good growth, low mortality, et cetera. As we speak, Norðtoftir and Glyvradalur, which we see also on the picture here, start their large expansions, operation in the large expansions, which are adding combined 24,000 cubic meters in these 2 hatcheries. Viðareiði added last year, Section C, and we'll add Section D, which is repurposed in August. And later today, we will see the Applecross hatchery here in Scotland, where we will see the expansion of AP 4, and that section is right now about to start operation. Next year, around 12 months from now, the AP 5 and 6 will start operations, and we will also see what stage they are in at the moment. Our increased focus on robust large smolt has still a lot of unplugged potential that will deliver more upside to our company. Also on this picture, we see Havsbrún, which is crucial for Bakkafrost. The impact from the marine diet, both on fish welfare and also the product itself to differentiate ourselves from the main market cannot be underestimated for Bakkafrost. Over the last 5 years, we have focused on investments on increasing capability, flexibility and also advantage with the marine diet and with feed -- different feed types. Also, we see FÖRKA, which is the first biogas plant, only biogas plant in the Faroes. In 2019, we built this site in order to utilize all waste from [indiscernible] . FÖRKA is an important part of combining circular solutions with investments and growth plans. Last year, around 2% of electricity in the Faroes were supplied by FÖRKA. In addition, district heating was supplied to the capital of Tórshavn and liquid fertilizers to the local farmers in the Faroe Islands. The plant has spare capacity. And therefore, in '23, FÖRKA started to produce energy out of food waste by receiving biodegradable waste from hotels, supermarkets and other suppliers in the local area that has not been used for circular solutions. Therefore, the project marks a milestone achieving sustainability benefits out of this type of biodegradable waste. Bakkafossur is our newest farming service vessel and started operations in Faroes 2 months ago. The vessel has multiple capabilities from transporting up to 1,100 tonnes of live salmon to freshwater dual treatment system and grading fish into different sizes so that we can harvest large fish out of the pens earlier and also preparing ourselves for operations in more exposed areas and eventually offshore. Other vessels like Bakkanes, [ Martin, Róland ] have also been added to our fleet to increase our capabilities to [ delist ] fish without using chemicals. We will later today see Bakkanes and [indiscernible] here in Scotland. FarCargo was established last year with Bakkafrost as majority owner, 70% to the shares. FarCargo have purchased a Boeing 757, and we expect to start the operation in the third quarter, where the main route will be between Vágar and New York. Grønarók, also on this picture is working boat, farm site working boat. What's different with this boat is that it is purely electric-driven and sourcing electricity from 100% renewable energy, and this seems to work well. It is operating on the farming Gulin outside Tórshavn, the capital in Faroes. Bakkafrost U.S., our subsidiary was acquired back in 2018. A new state-of-the-art -- built facility was built in 2020, tripling the production capacity. Operations in this new facility are BRC-certified, which gives us good abilities to reach the retail segment. The old facility acquired back in 2018 was sold. And also, we see a picture of Ranghamar, our feed barge, indicating a lot of the investments that we also do in marine farms in Faroes, but also in Scotland. Feed barges, a lot of feed barges are being equipped with electric shore connection and some new are added, new [indiscernible] are built for exposed areas, so there are a lot of investments in the farming division. On this page, we see an overview of our plan going forward, which is based on our experiences in the past. During the next 5 years, we are going to use the know-how in our organization to replicate the successful expansions that we have made both in the Faroes and in Scotland. We are going to expand our capacity through the value chain in order to reach minimum capacity of 200,000 tonnes by 2028. And this 200,000 tonnes will be achievable through the whole value chain, where all the elements must be capable to reach that capacity. The actual production, however, in 2028 is planned to be 165,000 tonnes. The current production for '23 is planned to 98,000 tonnes where of 68,000 tonnes are originating from the Faroe Islands and 30,000 tonnes from Scotland. In '26, Bakkafrost expects to harvest 140,000 tonnes where of 95,000 tonnes are from Faroes and 45,000 tonnes from Scotland. The expansion of hatcheries has been somewhat delayed, which has caused some delay in the volume growth. In '28, we expect to harvest 165,000 tonnes whereof 110,000 tonnes originate from the Faroe Islands and 55,000 tonnes from Scotland. The driver for the growth is the combination of shorter cycles on existing farms eventually leading to a harvest from each farm every year and then expansions of new farms, both in Faroe Islands and in Scotland. As Ian also mentioned earlier, we plan to relocate some sites in Scotland to deeper water. We expect less environmental challenges on deeper water. We saw also this development 30 years ago in the Faroe Islands. Actually, in [ Skálafjørðu ], our headquarter is in the '80s, a lot of challenges were from environmental blooms like algaes, et cetera. And just by moving the pens out of the fjords help the fish to survive. This was every second or every third year, this accord over a period of around 10 to 15 years. And eventually, we just moved the fish out there all the time, which is where we are today. And we don't have these environmental issues. This was not only [ Skálafjørður in Faroes ] , this was also in [ Funningsfjørður in Kaldbak ] and in the South Island. So when you fly over Scotland, you see a lot of shallow areas where the tide -- the difference on the tide in Scotland is around 5 meters, so the water is coming out from the tide areas through our pens every 5 hours and come back again. So we are quite confident that, that's also a similar case also in Scotland. But it takes time to change, especially in Scotland. The investments in Faroes will be taken somewhat down. For example, we will repurpose old hatcheries to brood stock sites instead of the previous plan to build new brood stock site in Skálavík. Some investments will be delayed and some, for example, offshore plants have been put on hold for now. We think there are more low-hanging fruits. And with the current system, we think the time is not right now to go really offshore. Therefore, Bakkafrost will reduce investment level in the Faroe Islands to around DKK 7 per kilo from previously DKK 10 to DKK 12 per kilo salmon. In Scotland, however, the investment level will be around DKK 14 for each kilo produced in Scotland for the next 5 years. So the total investment plan for the next 5 years amounts to DKK 6.3 billion from '24 to '28. And the overall goal is to reduce the biological risk, to improve the efficiency and increase organic growth. All investments will have this focus to reduce the biological risk to increase efficiency and create organic growth. In Faroe Islands, Bakkafrost will increase hatchery capacity up to 24 million smolt at 500 gram, that equals to 12,000 tonnes of biomass. This expansion is expected to be built in the period from '24 to '25, actually starting to deliver fish in '27 after a ramp-up period in '26. Instead of building the new Skálavík brood stock station, we will focus on repurposing old hatcheries to brood stock sites. This will be much lower cost than previously planned, but we expect to achieve the same outcome. The expansion will already start to deliver eggs from '25. The feed plant at Havsbrún will be doubling its capacity from 140,000 tonnes today to 280,000 tonnes in 1.5 years from now, which will start to deliver feed from '25. Optimization of existing farming sites will be prioritized both with existing sites and new sites. And this includes, of course, new cages, feeding barges, farming site boats, et cetera. A similar development will take place concerning new technology on new sites, but with existing licenses, and we will come back to that. There are some areas where we have licenses today where we can locate new farms. The growth requires more FSVs capacities during the period, and that's especially to transfer large smolt. Funds have been allocated to -- in the CapEx plan to meet this requirement. We have also in the plan allocated some funds for the green energy transition that's requested to meet our target to hold our CO2 footprint by 2030. This is an area where investments will be required and Bakkafrost will together with external stakeholders take part of this to create new opportunities in this development. In Scotland, Bakkafrost will increase hatchery capacity to 15 million smolt at 500 grams, which equals to 7,500 tonnes by '27, and this is from the 2 hatcheries Applecross and Fairlie. Our focus in this new program is to convert the Scotch operation into a more robust and healthy operation. The combined capacity from Applecross and Fairlie will be 7,500 tonnes, which can be converted to 15 million smolt at 500 grams or as Ian said earlier, in ramping up period, we might use a lower average weight in order to secure high robust smolt for all our sites earlier. But eventually, we could also do on both sides, for example, 19 million fish at 400 grams, so that will be according to the development during this ramp-up period. As volume increase in Scotland, so needs processing capacity. We will build a brand-new harvest and processing plant that will match the state-of-the-art technology and improve both quality and efficiency and capacity. Optimizing of existing farming sites will continue, both with existing sites and new sites, especially on more exposed areas and deeper water. This includes new cages, barges and farming site boats and more FSV will be needed, which has been included into the plan. When we look at the split per category, we see that the largest category in this new 5-year plan is also freshwater. The hatcheries or freshwater is the driver for growth, but it's also the driver for better biology in our operation. DKK 2.6 billion are allocated to this area to produce large robust smolt. The second largest category is marine operation which has been allocated DKK 1.4 billion to increase the capacity of the farms to reach our goal of 200,000 tonnes by 2028. DKK 1 billion have been allocated to FSV to meet the increased capacity needed for -- both for freshwater dual treatment systems, but also for harvest and smolt, and that can be a flexibility between those categories. Harvest and processing have been allocated DKK 800 million to increase the capacity. The FOF segment at Havsbrún has been allocated DKK 500 million to double the capacity of feed production to 280,000 tonnes and to increase storage silos and tunnel capacity, we started fishmeal in tunnels. Last but not least, we have included green energy transition as a separate area to meet our goals for 2030. It's however, important to remember that our plans will constantly be reevaluated in order to mitigate risks and adapt to the actual situation, and we will have possibility to reduce investments and pull back plans if needed. If you into the fresh water, and the hatcheries in Faroes and Scotland, the plan is to -- in Faroes to focus on more cost-efficient brood stock. Gjógv and Husar hatcheries will be repurposed for brood stock. This will speed up the process of being supplied as we have been delayed already by 1 year in our previous plans to build our brood stock facility in Skalavik. Therefore, in order to be self-supplied, we need to find other solutions, and the solution we have found is cheaper and faster. And as we are building new sites for smolt, the old sites are available. The new hatchery will be built at Skálavík or Ónavík, so we are planning our brand new hatchery in Faroes at the scale, similar as Strond and Applecross. And this new site will be built at Skálavík or Ónavík. One of the 2 places, which is earlier or earliest available for construction. In our plan, this hatchery will start to supply already from '27. Further information on this will hopefully be available shortly. In Scotland, the Applecross expansion 5 and 6 will be completed next year. This means that Applecross will be able to supply 3,500 tonnes already starting from '24, '25, starting operation in '24, but full operation in '25. The priority for Scotland is to get fully supplied with robust, healthy, large smolt, which means that Applecross first operation will be around 250 gram in order to meet the number needed in Scotland of robust and healthy fish. And with 250 gram, we should be able to supply around 14 million fish per year. As Fairlie starts to supply smolt in '27, the size will be lifted rapidly up to around 500 gram. And in our plan, we have estimated Fairlie to be ready operation in '26, meaning that Fairlie will supply from '27. Looking a bit into the marine area, the fjords, the farming sites, we are focusing on picking low-hanging fruits to ensure cost-efficient organic growth. In Faroes, Bakkafrost will prioritize utilization of and opportunities with existing licenses on areas where there are possibilities for expansion. Some of these will require new technology. However, the optimization of cycles and growth have, as Hogni showed on some of his slides, a huge impact and still, there is a huge unplugged capacity available on existing sites. On the graph on the bottom left on this slide, we see the blue line, which shows the actual cycle time in our operation today, not the theoretical, not with the size of smolt that we produce at the moment, but the actual average cycle time in Bakkafrost farms in the Faroe Islands. And despite that we have already increased the size of our smolt, we are using today more than 17 months for each cycle. Despite that, we could do it faster, but we need to produce more smolt, so we have availability of sites, but we are lagging behind on smolts. So this indicates our plan. This blue line indicates our plan going forward, and we see that there seem to be availability of sites over the next 10 years to have this growth plan as we have calculated. That's what we call low-hanging fruits. And in addition, we see opportunities to add some new farms on existing licenses. It is more efficient to grow with existing farms, existing investments that have been done rather than to build more, so that needs to wait until we are utilizing the assets that we already have. In Scotland, investments will be improved. Investment will be -- to improve our agility to operate in the environment. As we know, gradually, we'll see large, robust smolt in our farms, we will see stronger operation. We are committed to deliver also in Scotland. We will improve our competitive position on cost. On farming KPIs like feed conversion ratio as Odd talked us through, the growth, which Odd also showed the big importance on and the mortality ratio that will come down. The survivability will go up, and we want to grow these numbers to be best-in-class. Our program aims to move the KPIs towards what we see in the Faroe Islands. The utilization of consent in Scotland or [indiscernible] biomass or whatever you call it, is very low, but we will gradually move in the right direction in the coming years. As Odd said, our rationale to invest in Scotland was that we strongly believe that we can transform our experience from the Faroe Islands to Scotland and transform the operation to similar KPIs that we see in the Faroes. We know that in the world, there is a low supply of salmon and the number of fjords where you can grow salmon are not going to increase. It is scarcity, so it is very much about to transform the fjords that are out there to perform better and to utilize these natural areas that we already have to deliver. And the availability of companies for sale like the Scottish Salmon Company was back in 2019 will not be a replication. We will not see these opportunities, so that's the driver that we saw back in 2019. And we see that as from Faroe Islands -- salmon from the Faroe Islands has a brand premium, has a brand value, so has Scottish Salmon. Scottish Salmon and Faroese Salmon have in common that it is low volume available and it gives a good opportunity to be in a good position with branded products, so we strongly believe that this will be a good operation for Bakkafrost in the future. There are potential for growth opportunities with new sites in Faroes, which are indicated on this overview here. Many sites have possibilities to increase stocking allowance, which will take cost per kilo down. And these circles indicate where Bakkafrost thinks there are opportunities, and that's pretty much all over where we are today. This includes, as we have demonstrated earlier, one license in the Faroe Islands is a geographical area. Some of these geographical areas includes areas where we previously did not see the opportunity to farm salmon because the current is very high or the waves are too high. But over the last 20 years, we have found new kind of equipment, which means that there are new areas farmable, which were not farmable 20 years ago, so this is part of the plan that we expect for the next 10 years. And these are just the pictures on the bottom, demonstrating some type of technology that's out there currently. And then we see the bars, which indicates -- and these are all our licenses. The blue bars are all our licenses in the Faroe Islands, which indicates the marginal cost to grow more volume. We have identified on each area, and you see that there are a lot of opportunities. Each of the blue bars indicate one opportunity. And you see that from the left, it's a low marginal cost of growth. And then as you come further to the right, the cost of marginal growth gets higher, offshore is then the far to the right, which is then even more expensive. So of course, the blue bars are the best ones which needs to be plugged before. But at one point, sometime in the future, we might come to offshore as well. Harvest and processing is also an area both in the Faroes and in Scotland, where we have factories, and we will constantly, of course, upgrade this according to the operational development. In Faroes, we have 2 factories, 1 in Glyvrar, 1 in Vágar. In Scotland, we have 2, 1 in Applecross, 1 in Cairndow and 1 in Marybank. Cairndow is down in the South at Loch Fyne and Marybank is up in North at Stornoway. The capacity will be upgraded to meet the volume needed, especially in Scotland. But also in Faroes, there will be some upgrades that needs to be done. In Scotland, the capacity, combined with these 2 factories is around 180, 190 tonnes per day, combined. With the new factory that we plan to build, we will double the capacity. And we will also implement, of course, best-in-class operation and equipment, so funds have been allocated in the budget to meet these requirements. In the Faroes, we will make some upgrades in the current factories to meet the quantity needed 5 years from now. At Havsbrún, fishmeal, fishmeal, oil and feed is produced, and we are increasing the capacity. We started this expansion already last year. It takes a lot of time to prepare. And we will start the operation in this new plant in '25, where we double the volume. The project includes preparation for a further expansion, later maybe 10 years from now or whatever will be needed, where we can go up to 400,000 tonnes. The project also includes new storage silos and tank capacity for oil and more of the [indiscernible] to store fishmeal. Also, more key sites are part of the project because there will be a lot of ship traffic coming out and going out with heat. Last 5 years, we have had focus to invest in increasing fishmeal capacity, which actually have increased from 1,600 tonnes of raw material up to 2,400 tonnes of raw material per day and storage tank for oil and the tunnels have been built over these last 5 years. In '22, we're mainly focused on preparing the new feed factory and also built some key sites for increased traffic. The energy transition is important, and we have allocated DKK 355 million to reduce carbon emission. This is, of course, part of other investments where energy is part of the investment already, but we are focusing very much on making all these projects with sustainable resources. The fishmeal, oil and feed production accounts for the most of our CO2 footprint, and it is followed by the vessels, the FSVs and the hatcheries. If you look at the FOF, fishmeal, oil and feed, it's mainly driven by very extensive steam production, which is produced with fuel oil. And Bakkafrost plans to convert our steam production to renewable energy which will significantly reduce our footprint. There are many ways to achieve this outcome. We could, for example, use [ oil ] production in times with much availability of wind turbines or -- and we can install new wind farms. There's a lot of wind in the Faroes. So during the next years, Bakkafrost will search possibilities to include our operations in such projects. Our hatcheries also consume a lot of energy. However, these are already electrified, and energy is sourced from partly renewable energy sources and are expected to be 100% from renewables by 2030. The most difficult part to convert is probably the FSVs or the vessels. And already, some steps have been taken, for example, Grønarók, which I explained about earlier, the working boat, which is driven by renewable electricity supplied by [indiscernible] and Bakkafossur, the new 10,000 tonnes vessel [ 108-mile ] long, which is a hybrid boat, which is already equipped with high-voltage shore connection and is actually also prepared to go further when technology is available. We might see near future vessels driven by methanol or ammonia or even hydrogen. Making the green transition is among the biggest challenges we have faced in the history of Bakkafrost. Allocating significant capital expenditure is one important step, but we also rely on stakeholders if we are to succeed in achieving the net zero by 2050, including suppliers and policymakers. Thus, we are continuously working on establishing robust partnership with key stakeholders to solve these complex challenges which we face. So back to the overall or an overview of the investment plan. The aim with this new 5-year investment plan is to balance the investments across the value chain, so that every single step in our value chain synchronizes on the 200,000 tonne goal. Our '24 to '28 CapEx plan is DKK 6.3 billion and will create further uplift in capacity and better balance. During this period, we actually will produce 165,000 tonnes and planned for 200,000 tonnes, so there is a gap between, which indicates that the journey is not finished. We are continuing also after these 5 years. However, the recent tax changes in the Faroe Islands have hampered our plans. And therefore, we need to change some of the previous plans that we already talked a bit about. That's part of the driver for the reduced investments in Faroes down to NOK 7 per kilo compared with previous level where Faroe Islands, where we invested around NOK 10 to NOK 12 per kilo in the Faroe Islands. In Scotland, we will invest around NOK 14 per kilo for the next 5 years. Thus, of course, also driven by the need and the potential, the untapped potential that we see in Scotland. We have optimized the Broodstock plants in Faroes with the repurposed smaller hatcheries that will be available. And the new hatchery that we are going to build in Faroes will either be built in Onavik or Skalavik depending on which of these sites will become the best project in respect of financial terms and time line, time is also very important. We always hear about delays because of we are too late. And no offshore farming for now, but optimizing of current licenses and cost effective possibilities. We include VAP possibilities in Scotland, so our new site in Scotland will have these opportunities. Investment in Faroes that help in started, will, of course, continue and be finalized. The focus in Scotland is very high on Applecross and Fairlie to be delivered. And we also focus very much on upgrading the farms in Scotland, where some of them will be relocated and we will go deeper on deeper water. We expect to improve the operation and especially to take the risk profile down. The new processing facility that will be built is included in this CapEx plan and will significantly change our possibilities to supply Bakka Salmon around the world from Scotland. So last to summarize a few important things from today so far is that healthy fish in Scotland as Dave Cockerill said -- Dave Cockerill, our Veterinarian and Biological Director in Scotland said, a healthy fish is a precondition for a healthy business and our first and highest priority. Most important for Bakkafrost at this moment is to ensure a healthy operation, in particular in Scotland and multiple initiatives and projects, as Ian talked about, help in launch to reach this goal, both in the daily operations, I think Ian said that not a single area had not been touched, but also with investments because the company has been underinvested for a long time. It takes time to turn super [ at hungry ] Healthy operations and healthy fish are interconnected. It's a vital importance to have plenty availability of healthy, high-quality smolt to our farms. But also in Faroes, changes will drive stronger operations for many years to come. Investments are needed to reach these goals. We are continuing with our large smolt strategy. We are going to build this next hatchery in Faroes. Hopefully, to be able to deliver fish already 3 years from now. Unfortunately, some of the plans will be delayed and some will be put on hold since the increases in the revenue tax in the Faroes. We will do our best to adopt the new rules and to optimize our investments, trying to achieve the best, trying to reach longer with less. Thank you for now.

We also need a healthy balance sheet and good, strong financial position to carry out all the investments and the plan that we have laid out for you today, and I'm going to tell you a bit about that. If we look at Bakkafrost as a whole, we have high profits, low debt and a high equity ratio. Comparing with our listed peers in Norway, we are constantly above with good margin. However, when it comes to return on equity and capital employed, we are lagging behind. We have heard about our well-invested value chain, that's a part of what drives the profit margins that we have. And we will continue to invest in the value chain, not at least here in Scotland, which is you could say, the next leap forward for us. If we look at the financing situation, we have bank facilities with a group of 3 banks: Nordea, DNB and Rabobank of EUR 700 million and an accordion option of EUR 150 million. It has a maturity in the first quarter of 2028 but can be extended with 1 year, so we are in a good position in regards to financing the growth plans that we have laid in front of you today. It is a sustainability-linked finance agreement that we have linked to 3 KPIs in sustainability. One is the survivability of the salmon. One is the feed conversion ratio and also targets for own production of renewable energy. So we have set specific targets for Scotland and the Faroes in these areas and are then either adjusted upwards or downwards on the interest rates depending on our performance. Our net debt is -- was around DKK 2.4 billion by the end of the first quarter. And if I remember correctly, we had around DKK 2.9 billion in undrawn credit facilities at that point. We are a big player. Bakkafrost is a very large company, especially in the Faroes. We are the largest private employer in the Faroes. In Scotland, we are also a large company, especially in Outer Hebrides where we are one of the, if not the biggest private employer. And we have a significant footprint in the local communities where we operate. Salaries and employee taxes alone contributed with DKK 832 million in 2022. And if we look at corporate tax, revenue tax and dividend tax that our activities last year generated, they amounted to around DKK 739 million. So it's a significant contribution. We are also very important to many of the suppliers. We source locally whenever we are able to. And on average, we sold 60% of our sourcing was done locally with local suppliers, either in Scotland or in the Faroes. It would be very, very strange if we did not touch upon tax as we have done in every single investor meeting since you could say, the Norwegians disclose their plans for the new tax on salmon farming in Norway, which led to discussions also about the plans and the Faroes too changed the revenue tax, which was introduced back in 2014, and have been revised so far 4x. Finally, in May, the Faroes Parliament approved the new changes to the revenue tax in the Faroes which means that we move from having a maximum of 5% of the Nasdaq value of the fish that we harvest in a given month, to 20% as a maximum. There are 9 steps on the scale. So different tax levels apply, depending on the difference between the Nasdaq price and calculation of the average production cost in the Faroes salmon farming industry. So depending on that, that would either trigger let's say, 5% taxation or it could be a 10% taxation. So this has an impact, as Ian mentioned, this has an impact on our position. We will pay more taxes. It will make it more challenging for us to enter into VAP contracts where we fix our sales price. And of course, when you have a variable -- a large variable in regards to how -- what the tax rate you will pay because that is calculated based on the spot price, which goes up and down. It makes it more difficult for us to enter into such contracts. CapEx has been reduced, as Ian also has mentioned, we are doing more in Scotland, less in the Faroes, seeking more cost-efficient investments in the Faroes. And the next one is that since the cost price of the farming operation is so vital to get right. We plan to change the way we do segments. So today, we have 4 segments. We have a FOF segment, then we have a farming segment in the Faroes and the VAP segment in the Faroes. And then we have Scotland, which is a segment of its own. We plan to change this into still having the FOF segment that will be unchanged. But then we will split Freshwater up in 2 separate segments, 1 for Scotland and 1 for the Faroes. And the same applies for the Farming segment, a specific segment for the farming segment in the Faroes as well as in Scotland. And then we will introduce our Services segment where we will have the well builds, the packaging, the biogas and the harvest service that is provided to the farming segment, and sales and other segment, which includes the VAP production and the logistics and sales. The purpose of this is to derive to very clear definition of what are the real farming costs and that the costs are allocated to the right places in our value chain. This has not been an issue in the past. It is becoming a more important parameter to get right due to the changes in taxation. But also, as we have grown as a company, some of our segments, in particular, the farming segment has been more polluted with activities that do not naturally belong in the farming segment. So hopefully, this will be much more crisp and clear for everyone. And then I will leave it to Simun Jacobsen, who will tell us about sales and marketing.

Yes. I am Simun Jacobsen. For the next 5 minutes or so, I will do my best to give you some key messages from a sales and marketing perspective. hopefully, without too many shortcuts. First, this graph -- these graphs you are, I assume, familiar with. According to these graphs, the growth in supply of salmon for the coming years will stay below 4%. And historically, we know that we need 6% to 7% growth to keep balance in the market. During 2020 and 2021, we could see that price of salmon dropped. However, we do know that, that was linked to the pandemic, to lockdowns in all the main markets. But during 2022, the market returned to normal, and we could see that the prices increased again with probably up to somewhere between 20% and 25%. So I think it's fair to say that the market now is back to normal. It is difficult to see where the 6% to 7% growth rate should come from. Therefore, I think it must be expected that the price for salmon will stay at a high level for the coming years. However, there might be some ups and downs through the year. But in general, it will be a high or the salmon price will stay at a high level. For half -- for 1 year or 1.5 years or so, we have been in the sales department working under the slogan of One Company. This means that we have one sales organization. We have one management, but we have 4 different sales offices. We work as one organization, even though we are placed in U.S., France, Scotland or Faroes. With one management, we can plan the harvest in the Faroe Islands and Scotland. So the supply to the market is according to the demand. So it's more like a sales market driven plan now than it used to be. And hopefully, it is -- and I think we all can see that this is the best for the group. We do see now some synergies from the change in the operation. For 2023, this means that while we, in the Faroe Islands had a fairly -- a relatively low harvest volume, mean that we are not at where our target is. We had relatively higher mean rates in Scotland. So we could take advantage from our market position in Asia or U.S. for our Scottish salmon. One challenge for salmon from Scotland from our operation in Scotland at least, has been that we have not been steady with big salmon. And therefore, we have been in and out of the market and had to start from scratch every time we enter the market with new -- with 5-kilo fish or 6-kilo plus of salmon. But we changed this -- by doing this change, we are more flexible and can take the advantage of the good strong position Bakkafrost has in the market. So what we did beginning of this year or late 2022, where we were in a position in Scotland where we could hold back. Biology had improved. We could hold back so we could enter 2023, with bigger salmon than we had before. And what we did beginning of this year was that we changed the brand, especially of the fresh [ hook ] salmon and I will just focus on that. What is supplied in the 20-kilo boxes to the market. From the Faroes, we used to brand it Bakkafrost Salmon. And from Scotland, it used to be called the Scottish Salmon Company. But since we have supplied our Scottish operation with feed from Havsbrun. We now firmly can claim that we have reached the same Bakka standard allover. It was a challenge to take the Scottish Salmon Company, salmon, to our customers at the same price as we did -- as we could or get for our Bakkafrost salmon from the Faroes. However, when we changed the branding and told them that it is the same Bakka standard salmon, we have both in Faroes and Scotland. They accepted and it has been well received in the market. So that is like the big change done in 2022. So even though we have 2 origins, it's Bakka salmon from the Faroe Islands or Bakka salmon from Scotland. It is still the same good Bakka standard Bakka salmon. As mentioned, I think some of the previous slides, it has been mentioned that we are getting a premium both for Scottish branded salmon and Faroes-branded salmon. We could see that these are numbers from 2022. We could see that we had a brand premium. We had premium because of mean weight in the Faroes. We had a brand premium. However, we lost some margin because of downgrades. And we had a loss in our VAP contracts in the Faroes for 2022. In Scotland, we had a negative margin because of mean weight. We had low mean weight in Scotland. We had a brand premium in Scotland as we had in the Faroes. However, we had more downgrades in Scotland, and we had a loss of contracts. And I think it is fair to say that the loss in contracts, both in Scotland and in the Faroes were due to that the contracts were made in 2021 through -- during COVID when the markets were down. And then they entered into 2022 where markets opened up again, but came back to normal, and that was a challenge for the contracts already signed in 2021. In 2023, these numbers are not available yet. You could see some in the Q1 presentation but in the Q1 presentation, we could see that we are now getting a premium because of big sizes or high average weight in Scotland as well. And we are getting still a good brand premium for the Scottish salmon now even in U.S. and in Asia or China. So I would just mention one thing more is that for the group, for Bakkafrost, we have a lot of different certifications, and we have started the journey to harmonize the certifications and part of that is that we are starting the journey of taking over Scottish site into ASC certifications. All our sites in the Faroes are ASC certified, and we want to take our Scottish operation up at that level as well. The first 3 sites are certified, and we have some more in the pipeline. When we have the same certifications in both countries, the same good standard of salmon, it gives us in the sales department a better flexibility to serve our customers. So even though we can be low in volume in one like in the Faroes or in Scotland, we can serve the customers with salmon from the other plays or the other country, which, hopefully, at that time, have more salmon. That has been the case in the first quarter of this year or so far this year. So while the strength of this is we are taking the strength from the Bakka or the position of Bakka salmon in the airborne markets, U.S. and Asia, where Bakkafrost has all the years had a very strong position, and we are taking advantage of the strong position Scottish Provenance has in Europe. So together, it is a strong position to have. So just to conclude, I would say that -- just to read it, so I'd not say anything else than to talk, I meant to say. I think that the market is back to normal. That's the first good thing. I think the price will stay high for the coming years. However, some ups and downs to the years. And at Bakkafrost, we are in a very good position with a strong position in U.S. and China with our 6-kilo priced salmon and a good position in Europe with our VAP setup in the Faroes. However, there might be a new approach to that since the new taxation system came in the Faroes or the changed tax in the Faroes but we have a very strong setup in the Faroes and we will use that, of course, for the coming futures as well. And with the Scottish Provenance together with our certifications, Bakkafrost has a very good position for the coming years.

Hi, everyone. My name is Heini Kristiansen, and I'm the Group HR Director at Bakkafrost. And I'm here to give you an update on what we call One Company, Strategic Goal. I think this was first presented at the last CMD in 2021. So I will put some color on that and also tell you a bit about -- very briefly about what we have done since 2021. First, putting some color on the goal. At Bakkafrost, we are committed to adapting, streamlining and integrating our organization. And to reach that, we have some strategic goals that we call One Company. Our focus here is to shape our organization to be operationally effective and strategically positioned to reach our goals. Our recent One Company initiatives have been made to achieve a slimmer and simpler organization with a special focus on Scotland. This has meant that we are consolidating our group administrative and support functions, and we are aligning our organizational structures in the operations across both geographies so that we have the same structure in both areas. As part of this strategy, we have established more group functions where we have functions reporting to one group functional director. You just heard Simun explain about his One Company approach. So we do have a Group Sales and Marketing Director. We also do have a Group Sustainability Director, and Group IT Director. And more recently, we have also introduced Group HR Director, Group QESH Director, which is Quality, Environment, and Health and Safety. And Group FSV Director, which are Farming, Service, Vessels. And we also have VAP and harvest led by group directors. In addition to that, we have created centers of excellence within freshwater and biology, which are crucial to our operations, where we do have and facilitate a lot of knowledge sharing across. We have established several work streams throughout the organizations where people are working together to achieve goals, sharing knowledge and building best practice as we go. We do believe that the strategic approach to this is key, if we are to reap the benefits of our collective knowledge and experience. As an example, I can mention that we're going to vessel Applecross later today. And during the building process, we have had the core strong team, which some of you might have seen before have been to several visits at Applecross. We also have the central freshwater team in the Faroes working closely together with the freshwater management in Scotland to facilitate the building process. And as we have gone through it in the Faroes, we believe that we need to take the learnings to Scotland, too. On a strategic high level, we have also established a group SLT Forum which ensures alignment and is the main strategic driver for our organization. And you will meet many of the members from the SLT today. They are -- most of them sitting to your left. Looking forward, we will continue to align our processes and systems across geographies and divisions. Our vision and values will drive our employer brand and culture, and this will foster a sense of unity and shared purpose for everyone. As you know, the Scottish operation changed name to Bakkafrost Scotland and was this initiative also part of our One Company strategy. Our journey towards becoming One Company has also seen us implementing changes to ensure that our organization is leaner, yet robust. A recent restructure process in Scotland exemplifies this commitment. We've streamlined the Scottish headcount by more than 10%. This was a restructure process that was completed at the end of Q1 this year. This has allowed us to create an operation that is not only more efficient, but also fit for the realities of our operations. Although this was a significant and difficult step, it was taken with the understanding that it would lead to an even stronger, more focused organization, an organization that is ready and capable to take on future growth that we are hearing about today. So in spite of these recent difficult changes, our commitment to Scotland remains strong. The future looks bright and future growth will create many exciting opportunities and jobs in Scotland. Meaningful jobs in remote locations is a crucial part of our One Company vision. With our new operational structure, we're better equipped to serve our stakeholders and play an instrumental role in the growth of the Scottish part of the company. Our people remain our most valuable asset. Attracting, developing and retaining talent is crucial to achieve our goals. There is a unique provenance in our product. You can see provenance as part of our values. There's a unique provenance in our product, but equally special is the provenance in our people, their passion and their pride and the value they create for the local community and our company is special. We are recognizing the value of each member of our team, and we've designed a new share-based bonus incentive system to make every staff member and that is 1,800 people globally, an owner, a stakeholder in our success. This way, we share our victories and tackle our challenges together. We believe in the power of purpose and in our case, we feel that we provide an attractive purpose to be part of a company that helps feed a growing population with sustainable and healthy food. This is a key part of our employee value proposition. And this gives meaning to the jobs we provide, even in the most remote of places. But this isn't where the story ends. We provide a diversity of diverse career paths, and we offer opportunities that are as varied and exciting as the individuals that make up our team. So in closing, I would just like to say that we are incredibly proud of our colleagues, their resilience in the face of change and their dedication to our shared vision. They are the embodiment of our One Company strategy. It is through their continued efforts that we will look towards the future and embrace the growth that awaits us. Thank you.

Then we have come to the Q&A session. And we hope that there are some exciting questions. We have some microphones. It would be good if people could introduce themselves with the name and maybe where they come from.

Thanks. Herman Dahl from Nordea. Just with regards to the volume guidance, both for '26 and '28, how vulnerable would you say you are for risk on delays and other external factors?

Delays? What you said?

Delays in construction, for instance.

Yes. As we said, this target is very much driven with smolt, large smolt and Applecross is about to be finalized one stage next year and one stage this year. And in Faroes, we have -- which, as we mentioned, already some new capacity in place. But the new station in Faroes is not yet started. And the new hatchery in Fairlie is not yet started. The plan is to start Fairlie within the next year, the building process within next year. And the same is more or less the case with the previous Onavik project that now might be relocated depending on the availability on the timeline. And if it is relocated, it could be an upside on the timeline. And that is what we have -- we have already in the plan, calculated the present site in Onavik, which is not where the foundation is not laid. That has been laid in Skalavik. So I believe that there is a good chance that we can deliver these goals. If we should not deliver the goals, then it means that we will be more delayed compared with what we see at the moment. But it's very much driven by the hatcheries. So, I think it is a plan which has some resilience already built in -- already from the planning.

Nils Olav Thommesen from Fearnley, building on that question on the volume growth. On the Faroes, what should we think about the growth trajectory, considering the licensing system on the Faroes where you are able to grow if you perform well in terms of KPIs and sea lice mortality. The good levels you're showing now, does that sort of give you all the flexibility you need? Or do you need to see further improvements? Or is it about being stable at these current levels?

I would say that it is stable at current levels where we have the ability to grow. As you said, we -- the system in Faroes works like for every cycle, we need an approval for the next generation of fish depending on the operation on the previous generation. And it has been very much related to sea lice, which is very much under control. Now it is also mortality, which is also important. But both mortality and sea lice is very good in Faroes. But we actually don't plan to increase the number per generation. The growth will come from reduced cycles with same numbers. But the graph that I showed you with the blue bars indicates where we think that in the future, we might have opportunities to grow, and that will be growth with more fish and new sites. So that is unplugged potential also in this plant. So we expect that with the current levels with sea lice on mortality, we have the ability to speed up the growth and deliver the growth from the Faroe Islands.

I could perhaps add to that, that we also have received a new great tool in the Faroes with the new vessel Bakkafrost. So even though we are in very good control already on mortality levels and sea lice, we have this extra capacity that has become available to us. So there is definitely resilience in that plant.

Christian Nordby, Kepler Cheuvreux. You had some very interesting details on 90 grams smolt purchase from an external supplier in Scotland. How far or long are you on the Broodstock program in Scotland? Are you far away from your peers? Is that sort of being developed together with your smolt program in terms of size? And also, when you say that you're going to move sites out in Scotland to go to deeper waters, what's the timeline for that? How quick can you move out?

Yes. On the smolt in Scotland, we see actually, as Ian referred with that, the robust smolt is #1 priority to have robust smolt. Large smolt is also important because we can reduce the cycle more, but robust smolt is #1. The genes of the fish and the strain is, of course, also important. We are developing the native Hebridean strain, which we own in Scotland. And that is part also of the investment program to develop that further. In Faroes, we are doing the Faroes strain. And in Scotland, we are developing the native Hebridean. In the future, we might have the opportunity also to transport eggs between the countries. We are not doing that at the moment. But that could give some flexibility. We are confident that for each generation that we go forward, there will be improvements on the genetics. We see already now that we have mapped the genome of the Faroes fish. And we see already now that we can -- the new generation of fish will be selected from fathers and mothers, which have the ability to -- which are resilient on diseases. Even on sea lice, so that will have an important aspect in the Faroe Islands, but also in Scotland. In Scotland, this is still outside. We are outsourcing some of this in Scotland. I'm not sure how that will be in the future, but that's a very important program for us also in Scotland. So this is part of our plans, and it will be part of the operation in the future. To go deeper is we are at any time working with a number of new sites. But that is very much also up to the authorities to give us new licenses. To go deeper is a part of that. And we hope that we could consolidate some of the smaller sites also that Ian mentioned about where we hold some sites, which are in shallow waters, where there might be interest from locals, and we can go more exposed, where there might be less interest because it's more far away from any civilization. But it's difficult to say when that will happen. And that is not included in the growth plan. But these are opportunities that we think will be important in the future because we think, especially with the experience from the Faroe Islands that going deeper is one part of reducing biological risk. A lot of the shallow waters are probably factories for algae production, where the water is maybe only 10 meters deep, and the tide moves this water through our pens in and out every 6 hours.

And one last question, the Fairlie smolt facility. Is that at full run rate in your 2028 volume target for Scotland?

Yes.

A related question on Scotland. It was mentioned earlier that 2/3 of mortality happens in that second summer in the sea. And when you eventually reach the 500 grams with the second hatchery in Scotland, you'll be able to optimize and stay one summer. But between now and then in the next 4, 5 years, how will this progress? What can you do? What percentage of production, so to speak, will be one summer? And how will it be progressing until you are able to have 100% of it in one summer.

Thank you very much, Maria, for your question. As Ian mentioned, the Applecross Hatchery will start to deliver large smolt, some proportion of large smolt already this year. And that means that we will have some data points from large smolt already late this year, however, not harvested before next year. So by this time of next year or maybe in the autumn, we should see some fish that have been in the water on the one summer. But then gradually, the share of one summer fish will increase. And I believe that when we have robust healthy fish at 225, 250 gram, just as my example from Strond in the Faroes, which was based on 220-gram fish and was harvested 14 months later, I think this will also have a huge impact in Scotland when we will have 225-gram fish, which are robust and healthy. And we can probably grow them less than 14 months in Scotland because the temperature profile in Scotland is higher than in Faroes. So that is -- that will be very interesting to see that journey. And as Applecross is finish 1 year from now, that means that within the next 2 years, we should be able to supply all our smolts internally. Meaning that a majority of them will stay only 1 year in the summer. One summer in the sea.

James Filsell from Fidelity. I've got 2 questions. First one is in Scotland, you talked about having buying external smolt and the performance of that being much stronger than your own smolt that's coming from the flow-through systems. Why don't you just buy more from external smolt in Scotland in the meantime and wait until Applecross is ready for you to do your own smolt?

Yes, that will be an easy solution, if that was possible. But the problem is that the capacity of hatcheries everywhere is limited and no one has extra smolt to deliver. Only some, few times we always try to produce as much as possible. And only from time to time, someone has a bit extra to sell on the market. So that's the problem. We cannot rely on someone having some extras.

That was more of a one-off?

Yes. From time to time, there are some availability, which we -- I mean we will take everything that is available. But nobody builds hatcheries to supply others. Not these big ones. In older times, when you just had a river or a lake, that was possible.

And then on the -- in your plans, there's quite a lot of excess capacity even at these 200,000 kilotons mark when you only expected to produce 165,000. What do you do with the excess capacity around processing or the extra smolt capacity you have there and various elements of it -- how much can you sell to third parties? And how much do you just leave unutilized?

Well, we don't calculate to sell anything to third parties. We calculate to use everything internally. But as we are expecting to have a continuous organic growth over the next 20 years. We have a constant building of our value chain. We constantly build our value chain. Sometimes when you build one factory, it might have an overcapacity for a while, and that's filled up. And then you build the next one. And then for some time, that has an overcapacity. That's how it works. It might be that from time to time, we sell some extra capacity. But there are -- the industry has been very much consolidated over the last couple of years. So no one is relying on getting supplies or services delivered by third parties. Sometimes we do that. We have good neighbors. In Faroes, we are mainly neighbor with [ Mowie ] and that's also the case in Scotland. We are neighbors with [ Mowie ] And we -- sometimes we share common services, sometimes we deliver some to them and sometimes we buy some from them. But in generally speaking, we built our own facilities, same as [ Mowie ]

[indiscernible] DNB. You stated that you have long-term growth potential of 50% in the Faroe Islands within your existing licenses. Can you comment on the technologies behind this and what is needed to achieve it?

Well, as you know, we have over the last 20 years, especially maybe the last 10 years, changed most of our technology in the farming operation to heavier equipment, to larger boats, to more advanced technologies. And we see also now that going more exposed, higher waves, more current in the water requires new technology that we see examples in the market. So it's those kind of obstacles that we see in some of the sites that are available where we 10 years ago, thought that these sites were not usable for salmon farming. But now with the current technology and also the vessels that we operate, where we are able to service these sites together with the technology, we think that there are more opportunities, more farmable areas where we can operate. So that's the kind of obstacles that we are looking at.

I have one last question. Any comments on demand, how consumers are responding to the higher prices?

Like Simun said, we see high demand. But as you said, there have been a lot of pushback from the market with the exceptionally high prices that we have seen over the last year. But we must also remember that it comes also with a reduced supply. So when there is a reduced supply, not everyone is being served. And for example, in the first quarter, everyone remembers that the European market, I think this is probably the first time for the last 20 years, reduced in volume, 10%, that is very uncommon that the European market has had a very constant growth over the last 20 years. But in the first quarter, there was a drop of 10%. I am pretty sure that this is driven by a lower activity of promotions in some markets. The European market is around 16% on retail. And with extremely high prices and a lot of contracts people try to keep volume lower and reduce activity on promotions. And very often, maybe 40% of the volume -- yearly volume, result on promotion. So it's an easy way of reducing volumes, just reducing activities on promotions. So as soon as prices are coming somewhat down or volume is more available, then this will come up again. That is the normal pattern of the salmon for many, many years that in the first half of the year, there is less availability; in the second half of the year, there is more availability. And it is shifts between segments. It seems like the food service market is very strong. We see that despite the salmon prices to China in the first quarter was NOK 150 per kg in average. They increased their volume by 25%. And that is very much driven by food service in that market. So there are different segments which have different behaviors. And the salmon is a very, very international product. But the prices, of course, will be lower in the second half of the year when the volumes are coming up again. That is just the pattern of the market. One last question, and then I think we really have to -- need to head on to actually see some smolt.

Martin Kaland, ABG Sundal Collier. At the Faroes, you mentioned that the weaker smolt from the old production regime has hampered results. Is it fair to say that, that has also hampered the harvest weights. Is that the main explanation? And when are you likely over at smolt groups with a new regime? And should we expect then improved weights that help margins at the Faroes?

I think that is fairly -- that's a fair conclusion that the smolt driven or farmed in higher temperatures had weaker results and that also was at least part of the driver for harvesting fish at lower average weight. Of course, it is not so -- it's often -- at least for analysts, it's easier to keep it simple. But there are also other drivers, but that's at least our main or one of the main drivers. As we have said and also shown on the graph, we are on the right path. We see stronger biology now when we have changed our procedures. Now it's 3 years since Strond started. So we see now a strong operation with the new patterns. And of course, we are going to use our knowledge and our experiences now when we are upscaling the production in Scotland, so that we hopefully won't repeat too many mistakes. One final question.

Yes. Thank you. My question is about your careful steps towards deeper water. Is that a natural path to ultimately offshore? I mean, people are sometimes confused if you talk about offshore salmon farming. Is it like oil rigs in international offshore or is it just somewhat further from the coast? And if you want to develop that, is there's a big difference between the locations in the Faroe and the ones in Scotland thinking where they are situated compared to the main islands there just for a very far future perspective?

I think that going deeper in Scotland does not necessarily mean that we go really offshore. And as you said, these offshore rigs are very, very expensive, very heavy equipment. And that's not our intention by going deeper as we phrase it. By going deeper -- many of our sites in Scotland are on 20 meters depth. So going from 20 meters to, for example, 60 meters, means that we are a bit more far off the shelf. So if you think about the tide of 5 meters, when the water comes out from the tide, if you are at maybe, let's say, 20 meters you are just in the area where all this water is coming out with all the algaes that has been growing for the last day or 2. If you were out at 60 meters, we have more water to -- for the algae to be mixed up into, and that's at least what we saw on the Faroes just by going to areas with 40, 50 meters depth compared to the 15, 20 meters that we used to farm, that made all the difference. And it seems like there is a higher concentrate -- the algae are not growing on deepwater. They are typically growing from the sunshine and they are growing on the seabed or on the surface there. And then you have this tide going up and down, you have a natural exposure of water going forth and back. So that's our plan. And in Faroes, we have farms that are 60, 80 meters, very heavy equipment, but not a real offshore. So we -- so our idea is to use that kind of technology.

Thank you, Ian, Hogni. And thank you for all the questions. This marks the end of the Q&A session and also the end of the presentation session and the end of the live stream. So thank you, everyone, for participating.