Hofseth Biocare ASA

Fourth Quarter 2019 Financial Report

Hofseth BioCare ASA ("HBC") had operating revenues of NOK 11.1m (NOK 14.5m) in the fourth quarter of 2019. Cost of Goods Sold (CoGS) amounted to NOK 8.4m (NOK 9.9m) in the period. Operational profit (EBITDA) for the fourth quarter 2019 was negative NOK 15.0m (NOK 13.1m). Net financial items in the fourth quarter were negative NOK 2.6m (negative NOK 4.6m). Loss before tax was NOK 25.6m in the quarter, compared to a loss of NOK 23.5m during fourth quarter 2018.

Cash flow from operations during the fourth quarter was negative NOK 10.8m compared to positive NOK 46.2m in the same quarter last year. Cash and cash equivalents decreased by NOK 14.8m during the quarter, leaving total holding of cash and cash equivalents at NOK 94.6m by the end of the period.

Total assets for HBC were NOK 302.7m at the end of fourth quarter of 2019 (NOK 187.9m). Deferred tax assets are not posted in the balance sheet. Estimated value is NOK 141.0m. Total equity amounted to NOK 126.3m (NOK 86.0m) giving an equity ratio of 41.7 % (45.8 %) for the group.

UPDATE ON GOL

In the past 6 months, since execution of the LOI between Hofseth Biocare and Garden of Life, both parties have been engaged in formulation development, non-GMO certification, quality assurance approvals, product marketing and raw material forecasting.

Garden of Life is working with Hofseth Biocare and other partners to create approvable flavours, and with their retail partners to align on 2020 planogram slotting and determination of initial fill dates. Everyone is excited to launch these innovative salmon ingredients.

Hofseth Biocare has committed to Garden of Life that it will continue to develop new health claims that will help with product marketing and consumer satisfaction. Hofseth Biocare has also optimized salmon offcut supply chains in order to have sufficient raw material available for volumes above initial forecasts.

PRODUCTION UPDATE

In the fourth quarter of 2019, HBC Midsund processed 3,275 tons of salmon and trout raw materials. This is an increase of 662 tons compared to previous quarter, which is due to the summer break and the annual maintenance program for key components taking place in the plant in Q2. Compared to the same quarter in 2018, we have an increase of 625 tons (+23,6%). The reason for this increase is capacity improvements in the plant, as well as improved raw material access. A total of 914 tons of finished goods were manufactured at all HBC plants, compared to 791 tons in the same quarter 2018.