Good morning and good afternoon, everyone, and welcome to the investor call in conjunction with the release of Atlantic Sapphire's 2021 ESG and Annual Report. My name is Johan Andreassen, and with me today to present is Karl Øyehaug. As we are reporting monthly on the operational development in the company, we will keep this presentation short and it focuses solely on the annual and ESG report. The next monthly update will be in the beginning of May. The report is in my view a great piece of work that our team has spent months on preparing, and I encourage everyone that loves Atlantic Sapphire and is interested in land-based salmon farming to read it.
Hello, everyone. This is Karl Øyehaug. We will go through the highlights of the report and open up for Q&A at the end of the presentation , in the same fashion as we do it with our monthly updates. You can ask your question in the Q&A tab. As with monthly, we will also only take questions from people that have identified themselves, so please add your name. Thanks. Johan Andreassen?
Yeah, before our CFO takes you through the highlights of the numbers, we wanted to take the opportunity to highlight our ESG report. In Atlantic Sapphire, we see sustainability as an integrated part of our business. It also works to always improve our reporting and transparency. Following a material assessment, we have identified four key areas that we believe are the most important to Atlantic Sapphire and its stakeholders. Our ESG report is structured along these four categories. Product responsibility, economic responsibility, environmental responsibility, and social responsibility. Looking at our updated materiality matrix on this slide, we have this year elevated fish health to the top right quadrant.
This is because we believe that the events of 2021 have increased the importance and impact of fish health and fish safety from our own internal decision-making and, on our stakeholders' assessments of our company, last but not least, on the profitability of the business. First, we're focused on lowering our salmon feed impact on the ocean. To Atlantic Sapphire, one of our most important sustainability challenges is that the industry today still relies on a limited resource, which is marine ingredients to feed the fish. Our mission is to lead the transitional industry out of the ocean. Last year, 25% of the fish oil in our feeds were replaced with domestic land-produced canola oil that's naturally rich omega-3s.
This has taken our marine derived ingredient factor, MFIF, down to under 0.75 and makes us a net marine protein producer and also taking the FCR into account. Further reducing freshwater consumption is important as fresh water is becoming a scarce resource in many places, and the focus on preserving fresh drinking water is just going to increase in the years to come. In 2021, approximately 95% of our water use was saline water from the Floridan aquifer. There's still room to reduce the freshwater consumption even further in the future by, amongst other things, to use fresh water for some of our current freshwater consumptions. The next point is recycle the recyclable packaging.
In 2021, we achieved to a 50% reduction in the styrofoam, thanks to compostable and recyclable shipping boxes being introduced. This is something that we have a better opportunity of achieving than suppliers that rely on airfreight. In airfreight, you have to use styrofoam. Another very interesting bullet point is carbon sequestration identified. One very exciting piece is that thanks to our unique Bluehouse water chemistry, in combination with our injection well into the Boulder Zone, we have been able to quantify the large amount of CO2 that we are capturing in the water and later disposing safely into the ground.
Once Phase 1 and Phase 2 are both in operation, we estimate that we will inject approximately 170 tons of CO2 per day, which of course comes on top of the significant reduction in carbon footprint of not having to fly the fish to Netherlands to reach the customer. Circular economy. Last year, 100% of our byproducts from filleting was sold as pet food ingredients. We have even greater ambitions for the future, and we hope to also be able to turn our byproducts into value-added products for human consumption. Our fish is not only delicious, it's also a very healthy protein.
In 2021, we were granted the American Heart Association's Heart-Check Certification. Last, local job creation. Finally, we are proud of all our employees, as of December 31 last year, the company had 166 full-time employees. Of course, many times that working together with us on the construction and supplier side, summing up to several thousands of local jobs in Florida. Thank you.
Over to the financials. Starting with the consolidated group, P&L, Atlantic Sapphire had revenues of $16.9 million in 2021, up 170% from $6.3 million in 2020. Increase in revenue is naturally linked to the ramp up of harvest volumes here in the U.S. The group harvest volumes increased by 140% year-over-year to 2,374 tons in 2021. At year-end 2021, we recognized an impairment of $34.8 million linked to the loss of the Danish production in the fire last year. Although we, as of December 31, believed that the insurance claim was very probable, we took a conservative accounting approach because no settlement had yet been reached, and the police report had not yet been concluded at that point.
However, we continue to expect to recover the book value of the Danish facility, net value of the assets that were undamaged by the fire. Therefore, we'll reverse the impairment by recognizing again in the P&L with the insurance claim once that is concluded. If one adjusts for the Denmark impairment, group EBITDA in 2021 would have been -$82.4 million. The group had a cost of materials in 2021 of $65.6 million, up from $18.2 million the preceding year, reflecting the ramp up in farming activities in the U.S. Included in that figure is $16.6 million of indirect production costs for underutilized capacity. Rather than these costs being booked in the balance sheet, to explain the accounting behind this, direct production costs are allocated fully to production costs, then capitalized on the balance sheet.
Indirect production costs, which consist of personnel costs, depreciation, and other overhead costs, are allocated based on a ratio of actual versus designed capacity of the system, which estimates normal capacity under the IAS 2 accounting principle. The underutilized portions of indirect production costs due to underutilized Bluehouse production capacity are recognized as cost of materials in the same period as they are incurred. Operating expenses in 2021 were up from $11 million in 2020 to $24.6 million in 2021. The increase is mainly explained by the $11 million in temporary chiller and generator rental costs in the U.S. following the breakdown of the chiller plant in the plant in Q1 2021. As we've discussed in the past, a $10 million insurance claim process is ongoing to cover the incremental costs due to the chiller plant breakdown.
Looking into 2022, we expect approximately $5 million in chiller rental costs, quite evenly distributed between the first and second half of 2022. Over to the balance sheet. The group ended 2021 with total assets of $312 million. The largest figure on the balance sheet is the property, plant, and equipment of $264.4 million. Despite large investments in 2021, the PPE line was only up by $7 million as the full impairment of $34.8 million for Denmark is reflected here in this line, as discussed on the last slide. Total 2021 CapEx was $67.5 million, mostly tied to U.S. Phase 2 construction. Other than the U.S. Phase 2, we also invested $9 million in U.S. Phase 1 CapEx at the start of the year and a total of $2 million in Denmark.
Atlantic Sapphire ended the year with $17 million of cash on the books. With $50 million of drawn term debt at the end of the year, the net interest-bearing debt of the group as of December 31 st was $33 million. Ultimately, as expected, we did book a $1.1 million gain on our COVID-19 related CARES Act PPP loan, which was forgiven in September of 2021. On the working capital and liquidity side, the full $10 million RCF facility was undrawn as of year-end. Jumping to the next slide, here we've split out by segment.
Here, you'll see that the gravity of the company's operations has completely shifted to the U.S. If one excludes Denmark, the U.S. reported a standalone EBITDA for 2021 of -$71 million. This result affects both the one-off events in the first half of 2021, but also that the U.S. company was in ramp-up mode, incurring all fixed costs while still building up biomass to get to Phase 1 steady-state production in Q3 of this year. We also note that with the U.S. Phase 1 in operation, the company started depreciating the U.S, infrastructure in 2021 by a total of $12 million. The last slide on the financial side that we've included this time is what we call our fixed cost base walk.
On the next slide, we will then look at more of underlying costs in 2021. 2021 was the first year with close to full production as more and more of our ongoing systems were brought online. Upon adjusting for one-off costs in the year, it allows us to identify an underlying fixed cost of the business and also calculate what the production cost per kilo would have been at steady-state production volumes. In a simplified world, we like to say that [biomass gain] is the main variable cost of placing a facility like this. The variable fixed cost that comes on top of the fixed cost base is calculated by taking the biomass gain for the period in round living weight, multiplying that number with the feed conversion ratio, and lastly multiplying with the feed price.
The table on the right side of the slide takes the total expenses we recorded in the U.S. in 2021 on an EBITDA level , and adjusts out the extraordinary cost by rental of the Stellar chillers and by extraordinary mortality that we incurred in the first half of the year. If we also remove the actual feed cost in 2021, $13.1 million, you're left with what we call our 2021 fixed actual base. As an example, if we assume we have the exact same base with no cost improvements and with this volume in the U.S. Phase 1 facility of 9,500 tons, then your total cost of production would be $53 million at a feed cost of 11,000 tons round living weight production multiplied by 1.2 in FCR, and that multiplied by approximately $2 per kilo in feed costs.
This example converts into approximately $79 million in total costs or what we call the cost per kilo of around $7.2 per kilo round living weight, which is approximately $6.6 per kilo as adjusted. However, we see large room for improving on the fixed cost side. First, we see significant economies of scale with Phase 2 coming online. Overhead costs excluding the current temporary chiller rental costs should only increase marginally with the additional 15,000 tons. There will be economies of scale across the shared services and infrastructure that both Phase 1 and 2 will benefit from. For example, on the maintenance, freshwater, and processing side. The design of Phase 2 includes some clever learnings that ensure an easier to operate farm. That should reduce both labor and maintenance costs.
Naturally, operational cost reductions are expected under stable conditions. This is exactly what we saw in Denmark as well, where costs initially were quite high but then ceased to tell as the systems got fine-tuned and things started working reliably. Numerous cost-saving opportunities have been identified for the cost of U.S. [Phase] Bluehouse. Some will take longer time than others to leverage, so I'd expect a gradual cost reduction over time. Finally, we expect lower processing costs, better yields, and more consistent quality grading when our new in-house filleting line comes online this summer. In conclusion, we are already seeing even the cost base from a challenging 2021 supports profitability once we reach Phase 1 steady-state production. With that, Johan, back to you.
Thanks, KARL. In summary, the key operational focus for 2021 was centered around keeping the fish safe and sound. Our risk of mortality events is now significantly reduced, both in size and frequency. In the year, all the grow-out systems in the farm was split in two, which is diminishing intoxication mortality risk, from a six-tank to a three-tank size. It's leaving us with 12 independent total grow-out systems in the Bluehouse. All the sensor grids were modified throughout the facility, reducing the risk, when we have initial smaller mortality, that potentially could disrupt the flow of new water into the tanks, and hence, by doing that, we avoid subsequent larger events, which, this small mortality we had in March, is a good example of.
Key water quality parameters were adjusted through a thorough vetting process, which is significantly reducing the H2S toxicity risk, and in addition to that, reducing the CO2 levels drastically in our water. This has also proven to be very beneficial for fish welfare. We have had a severe organizational restructuring, with significantly higher amount of staffing outside regular working hours, as well as having dedicated staffing owning their own systems, which, both drives feeling of ownership and it drives accountability. In 2021, we also established a facilities operation advisory board which is evaluating and vetting activities that are outside standard operating protocols, reducing the risk of human error.
We have had an advanced build-out and fine-tuning of our automation systems, including operational dashboards, giving us valuable data on both cash flows and spends, which we leverage to better decision-making, both to reduce risk as well as increase productivity. All in all, I want to summarize that we have done significant operational improvements that in sum have dramatically reduced the risk of large events, as well as put us in a place where we can more quickly react. The amount of learning in the company is at an all-time high. That said, I want to emphasize that in biological production, you can never completely eliminate risk of fish loss and events.
Our job is to get as close to elimination as possible. With that said, we will move over to the Q&A session. Karl.
Perfect. Thank you. To recap, we're opening up for questions in the Q&A tab. I can see that we already have two questions, so we'll start there, but feel free to add additional ones.
The first question comes from John Jay Aruna, who's asking, "When do you anticipate breaking even?" I can answer that question. We have already communicated on this previously, that once we reach our Phase 1 steady state, that will also bring with it the break-even production. We expect to be at that steady state production level sometime in Q3 of this year, so only months away.
The next question comes from Nils Thommesen. His question is if we can provide an update on the state of liquidity at the end of 2021 and the state of those now. I can also give that from the top. The recap, other than the cash on the balance sheet, Atlantic Sapphire has $200 million war chest that consists of different parts. The first part is $50 million that already is drawn and on the balance sheet. The second is a $20 million RCF that is fully committed and available to the company. The third part is $32 million of undrawn available term debt that is committed by DNB and ProCredit. The last part is an uncommitted $98 million term debt facility.
When we say uncommitted, that means that the credit decision has not been taken yet. When we announced the $25 million of short-term facilities that is granted to us by DNB, we also said that we expect to have a long-term solution for the Phase 2 financing in place now by the end of 2022. Speaking to the $98 million of uncommitted debt, then that's naturally a part of what we're working on. I will, of course, let the market know as soon as we have something to share on that front.
Next question comes from Alex [Jones] at [Intre ]. He has two questions. The first is, "Can you please reconcile the $46 million 2021 CapEx that you predicted for Phase 2 in the presentation today with the $34 million that instead have been invested in Phase 2 as of December 31st when you gave the monthly update at the start of February?" The second question is, "Taking into account the cost numbers you walked through and the harvest volumes you have already discussed, can you give us any guidance on adjusted EBITDA for 2022?"
To start with the question on CapEx, we have probably looked at the figure for phase—maybe let me just emphasize that we can show it here as well. Let me see if I can't. You'll see that the CapEx for 2021 was $67.5 million. Out of this number, $11 million was non-Phase 1 related, which is why it derives as $56 million of CapEx for Phase 1. The reason why there's a difference is probably due to a little bit of accounting in what is taken in what periods between types of moves, accounting-wise from year-end 2021 into Q1 2022. The audited figures for 2021 on what we've spent on CapEx are, of course, the most accurate ones.
While the ones we've been giving in monthly updates every month, they of course reflect that this is almost more work in progress and what I would call a very live animal in terms of the CapEx budget that is being moved around. As we said, the $34 million. That's not lower. I believe that number is actually a little bit higher. Just to go back to the monthly update from February when we reported that I think it might be a somewhat higher number than that we reported, closer to $46 million. The second question, taking into account the cost numbers and when or if we can give a guidance on adjusted EBITDA for 2022. We don't really have an exact guidance from our side.
I think if you use the fixed cost base and make your own assumptions on what this might look like in 2022 compared to 2021, and then you look at our guided expectation of around 1,000 tons of harvest in Q2, and then reaching steady state from Phase 2/3 with Q4 2022 being the first full quarter of steady state harvest volumes, then that will give you an idea. The last piece of the puzzle, so to speak, to be able to play around with that calculation is that you can assume probably a feed conversion ratio of anywhere close to 1.2 as a fair estimate. On the feed cost, using $2 per kilo as a round number is not going to be far away from the reality.
Even though, as we've talked about before, we are seeing fluctuations in feed prices every week. That should at least give an indication.
Next question we have is from Colin Neil. Has it been any additional elevated mortality in batch 2 in the last couple of weeks? I'll hand that question over to you, Johan, if you want to comment on that.
Sure. No. The answer to that question is no. That goes for all the other batches in the farm as well. They are very, very low and normalized mortality so far this month.
Good. The next question we have is from [indiscernible]. 2021 cost of materials, salaries and other OpEx add up to $100 million in 2021. Which items are excluded from the $86.7 million figure on page 8?
The $86.7 million figure is basically the U.S. standalone EBITDA true base. What is not in there is the depreciation. That's the delta. Yesterday before you came, come to the slide in the footnotes or to the footnote where you'll see the U.S. broken up, excluding Denmark, and simply take EBITDA and add on the revenue for the U.S. segment to get to the same number.
I don't see any more questions yet. Let's give it a minute to see if there are any more questions. Doesn't look like it. With that, I'll of course encourage anyone who has any questions after this call to contact Johan or myself directly. We're always happy to help. I'll give the word back to Johan, if you have any closing remarks.
Thank you, Karl. Yeah, I just want to wrap this up by saying that even if 2021 was a year of a lot of headaches for our company, it was also a year of growing up as a company. We had key information, restructuring, consolidation and improvement across all aspects of our business. 2021 has created the foundation to a bright future, and we're looking forward to prove to the world in the second half of this year that Bluehouse farming is profitable. In addition, I would say that we are better positioned than most companies to leverage a historical strong outlook for omega-3 rich fish, fresh and salmon in the years to come. Aside from that, stay tuned for our next operational update in a couple of weeks. Until then, take care.