Good morning. Welcome to our Q4 Webcast. My name is Christian Riber. I will be presenting together with my colleague and CFO, Kia Zadegan. The agenda for our webcast today will be we'll go through our highlights of the quarter. Kia will be presenting the Q4 results and the Q4 financials. I will then give an update on the after-quarter events we've seen lately and also give a summary of the future of our production. At the end of the session, we will have a Q&A as well.
We go through some highlights of the events of Q4. Although we've been overtaken by the new cycle with some of the more recent events, I'll just start with focusing on Q4 first. We started our second harvest period, the 2021 generation. We've had consistently and very, very high level of satisfied customers for our products. We've delivered consistently high-quality fish to the markets, over 93% superior from all our harvests in the Q4 period. We've transferred around 4.2 million cod fry to the ongoing facilities on land, ready to go out to sea in the next few months. We had at the end of the period.
Havlandet and Norcod, who has started producing last year, delivered 8 million fry in total, actually making a quite a significant profit during the period. We've had 6,800 tons of biomass at sea at the end of the year, which is quite an increase over the previous year. We'll go through that again. Very significant also, we got approved our biomass credit facility at the end there of NOK 75 million, which we've used during the period. After the quarter events, there's been conversations of escapes and maturation. Christian will go back into those things in detail. Christian. As for the results, not completely satisfactory as we had hoped. There's been , we have reported a total loss, operating loss of NOK 123 million for the period.
When you compare the two 1/2, the first half of 2022 and the second half, there's been an improvement of around NOK 50 million in the operating profits. The fundamentals of our financials were actually very strong going into 2023. The underlying numbers, the costs of the business and the production side, costs at Mausund, the site that we were going to harvest during the first quarter of this year, was on target and very positive. Christian will go back into that in more detail later. All the economic parameters that Norcod has under its control have performed well and have been on close or on targets.
That's the cost side of the business which we control fully. During the quarter, we've exercised very tight budget controls and expenditure controls also due to our cash flow situation during the time. Next. For the period, the numbers have been published already this morning, so I'm sure we've already had some analysts going through it. Harvest period, harvest volume for the period was 850 tons compared to 750 for the previous year, for the same quarter previous year. Just to compare the numbers, the numbers look very similar, but the Q4 2021 includes NOK 9.4 million of sale of cod fry, which we don't have in this quarter. This quarter, the Q4 2022 only includes whole fish sales, not any other items.
The big elephant in the room is the fair value adjustment of - NOK 103 million, which is a substantial number, and we don't take that lightly. For those who don't know, fair value adjustment is based on a number of parameters. It's based on the size of the fish, the timing of the harvest, the cost that's been put into producing the fish, and not least, the pricing expected. Now, with the accelerated harvest that we've been encouraged to enter into, there's been a significant drop in the market prices that we can expect for our fish. Not in our contracts, the contracts are still valid, but unfortunately, we have a high volume going on spot sales.
The spot sale market is volatile at best, and obviously, this is having a very negative effect on our results and on our expected cash flow. Both the reduced volume that because we're harvesting early and higher cost because we're harvesting early and in addition to that, a lower expected sale price. That's where the NOK 103 million comes from. We will see what the actual number is within the next few months. During Q4, we've had very tight cash flow. It's actually intentional partially because we wanted to delay the harvest. To maximize the size of the fish that we were getting out of the facilities.
But we've managed the cash flow on a week-to-week basis just to ensure that we meet all our obligations. Next. Finally on the balance sheets, the significant numbers, the biological assets, the cost value of them is valued at NOK 364. That's pre the NOK 100 million write down or adjustment, I should call it. That's an increase on quarter-on-quarter of NOK 49 million including the harvesting that we've done. There's still significant production ongoing which is not reflected directly in the balance sheet as we see it today. Christian, back to you.
Thank you, Kia. All right. Lately there's been a lot of media, and a lot has been said and done in general regarding cod farming, but also specifically regarding Norcod. For us, it's very important that all this information are fact-based and not just the media information. We'll try to address these two after core events being escapes and maturation. First off, escapes. We were alerted in the middle of January that a potential escape of farmed cod happened around our site for Frosvika up in Meløy, close to Bodø. Immediately steps were taken from our side. We had third party divers come in and inspect all our facilities and all our equipment.
Based on that, we could quickly conclude that there was no damage to our equipment or nets that could have caused escapes. Since then, we of course, have been running a very tight dialogue with the Directorate of Fisheries in Norway and trying to conclude where is this fish actually coming from. At all our sites, we operate with the newest equipment to lower the risk for escapes. At the same time we have constant surveillance of our pens through our operation at site, but especially also from our feeding central in Trondheim, where we have cameras in all the pens. If there was any change in the fishes, in the fish movement in the pens, we would see it straight away.
Also, at the same time, we've now harvested 4 out of 8 pens at this site. So far we haven't seen any deviation in numbers. It's clear for us that there's no significant, numbers of fish missing in our pens. At the same time, internally, we do our rechecks of all nets, on a weekly basis, internally and every month we have external, people coming inspecting our equipment. We have very, very tight, operations regarding this issue as we take it very seriously. At the same time, we have always deployed, fishing pods around all our sites. The minute we were informed about this potential escape, we put out, fishing equipment around our site to ensure to see if there was any fish going out of our site.
So far during now these last 1.5 Months, we haven't caught a single farm cod in any of this equipment. Based on these above information, it's been concluded for now that the fish haven't escaped through the nets. The only way fish from our site could come out has been what you say, what you call above the nets. This can be in relation to handling the fish when we deliver fish to the harvesting facilities, to wellboats, or if some fish has been taken out of our nets. So far none of our wellboats or service partners has registered any deviations.
We hope for final conclusion on this matter by end of April once the site is finalized, harvested and the Directorate of Fisheries have inspected our nets on land. Another after quarter event has of course been the discussion about the maturation. Three of our sites where we have harvest-ready fish, a development of the gonads in the fish has been detected through ongoing checks. It was concluded by veterinarians and the Fisheries Department that there was a possibility that our fish potentially could go into maturation during spring or summertime. Based on this possibility, we implemented an accelerated harvesting plan that we are following at the moment that we have built together with the Directorate of Fisheries.
We've installed additional equipment at all our sites with harvest-ready fish which close around the nets, and we can collect all eggs if anything was released from any of our fish. Far there's been no eggs or any spawning detected at any of our facilities. This has been confirmed by external veterinarians as well. There's no eggs or spawning going on at our sites. We've also asked both our wellboats, but also our harvesting facilities, to have additional control of their filters to check if they see any eggs in any of these filters. None has been detected so far. What we also have concluded is that our lighting control, which we use to control maturation of our cod, hasn't been as effective as possible.
We've done a lot of research on how to control this better. That will conclude in a different lighting machine we'll come back to in a second. What's also very important to take into consideration is that when we have approved a site where we're allowed to farm cod, it's based on the fish potentially going into maturation. Based on that, we have to have a certain distance for all spawning areas for wild caught cod. At the same time, we have to investigate current directions and other factors ensuring that if there is any maturation on our fish, it is not a risk for the wild-caught cod.
Experts such as Nofima, Akvaplan-niva and Havlandet, who's been working on farmed cod for the last 20 years, are very clear and are in agreement that the chance of any of farmed cod eggs hatching and fish actual surviving in the wild is extremely limited. When they produce and hatch on land, they need a very, very controlled environment to have any success at all. We know a lot of other people are trying to hatch farmed cod at the moment on land, being unsuccessful, so it's not an easy task. Among others, the eggs need a very specific environment with certain temperatures, lighting. They need access to first live feed and dry feed at very specific time of their existence. If this is not available, they simply don't survive on land.
These conditions are not available in the wild. There's a very limited opportunity for this to happen. Some of the actions we've taken going forward, number one, on the short term and already implemented now, is we've been having lights on all our sites 12 months a year, which we've seen hasn't had the effect that we hoped for. This has been changed to be a more periodical effect on lights, which data have shown from previous tests that is more effective on cod. Second thing we're working very hard on at the moment is to have a gender split on our fish going forward.
That way, we can have all male and all female sites, so there won't be any risk of this at our sites. This is being done today on salmon. The equipment is already there, so we are adapting that to cod as well. Looking a little bit further ahead, at 24-36 months ahead in the future, we expect to have access to a sterile fry, so the cod will be sterile. That way, all these above risks being discussed here will be eliminated. That's the plan going forward. Back to what we actually are doing with farming cod. As we see it, we have extremely strong belief in cod farming going forward.
Cod farming is the only way to meet the long-term demand from the market and from general need we have to produce sustainable and healthy protein. We see, of course, wild-caught cod is declining very rapidly. Over the last two years, we've seen a 40% decline in the quotas. Specifically Norwegian quota is at its lowest since 2009. What this farm cod can do, as Kia said earlier, we have extremely positive feedback from the markets, and one of the reasons why is because we can deliver stably 12 months a year, 52 weeks a year to the markets. Compared to today, where the category is a three-month category, we now are developing a 12-month category, which is a huge benefit for the whole category combined, both wild and farmed.
On top of that, of course, as we've said before, it's an extremely healthy protein. It's very environmental friendly production, and we have very low CO2 footprint. Compared to other proteins, fish farming and specifically cod farming as well, has an extremely efficient feed conversion ratio. We use very little feed to get the needed amount of the protein. We've seen, as we've known since we started, we are pioneering a new industry. It's starting from scratch. There is hiccups along the way. We're seeing some of them right now. We are still leading the way for cod farming. We've proven that we can bring cod farming into an industrial scale. We produced over 5,000 tons of farm cod in our cycle as the only company.
Also, as Kia said earlier, we are producing cod with very, very high quality, where we're seeing over 90% of our fish coming out with superior quality through a Q4 harvest. As Kia also mentioned in the beginning, we've had a very, very strong productions at our sites during all of 2022. Specifically, we have our Mausund 2 sites down at Frøya, where we saw a strong production being on track. As you can see from these numbers, all the way to end of November, On track with our budgeted price on our fish. At that time, we reached a price of NOK 33.42 per kilo, whole fish equivalent at sea. We're very much on budget on our fish production.
End of November, we started seeing a slowdown in our feeding and growth. In hindsight, it's now clear to us that this has been the beginning of the maturation and where our lighting control probably have failed. If we hadn't had this maturation started, if we had controlled that through our production, we would have reached a level below NOK 31 per kilo going into February, when we would start harvesting the fish based on our original harvesting plans. Having fish at NOK 31 per kilo combined with our current sales prices we've seen all through Q4 and January, we would have made an EBIT per kilo at about NOK 6 per kilo. Of course, this has changed now as we have as we've seen a slowdown in our growth.
At the same time now we have an accelerated harvesting plan, which will of course, significantly change these numbers. Shortly about our fry facility down in Florø, which we have together with Havlandet. Havlandet Norcod was finalized and started production in July last year. Delivered the first batch of fry in December to several cod farmers, us being by far the largest. The first production yielded over 8 million fry in the first batch. The facility, compared to the old facility where we produced the fry, has never seen better growth and survival rates on the fish. This is in the first batch in a new facility. This looks very, very promising.
Based on only producing one batch in 2022, we already now see that this facility will come out with a positive result in 2022. The facility in general is very important for our future production, as it gives us access to the fry of the highest quality available in the world and in stable volumes that we need to ramp up our production over time. Equally important with this new facility is also we can start new production cycles several times a year. Here in 2023, we'll start twice a year, and going forward, we have opportunity to start 3x, 4x or even 6x a year if that's needed. That's a very big change, which will give us a much more even production around the year. Our business plan going forward.
For now, there's no changes to our plan in the first half of 2023. We have fish on land, showing very good results in growth phase. The numbers we see at the moment, we've never had a better start to a cycle than we have after these first 12 weeks in our next cycle. We will stock two full sites in the sea phase with about 3 million fish. Also we have to acknowledge what's happened over the last two months.
Based on that, we will adapt our production plan for the two coming years, where we'll do a more moderate ramp up compared to the very ambitious ramp up plans we had previously, which will result that we'll have a yearly production about between 10,000-15,000 tons of cod for the next two years. We'll use that time to fine-tune our production, get full control over the maturation issues we've seen so far. We'll develop this gender split in our fish so we can get pure male and female sites. After these two years, we expect to have access to a sterile cod, which will give us completely new opportunities going forward. After these two years, we'll do a very quick ramp-up .
We will go to our long-term target of producing over 25,000 tons of farmed cod per year. Together with the Directorate of Fisheries, we've had a very good and intensive dialogue over the last couple of months. We're very clear that together with Directorate of Fisheries and Sjømat Norge, we will develop a framework for farming cod in the future, which is not present today, which gives everybody very clear guidelines how and where we can farm the cod. That's very important for us going forward. Our long-term plan is unchanged. We will produce 25,000 tons minimum per year of farmed cod with low production cost, as we've already shown we can do with very high and attractive margins.
To execute these plans, of course, we will need additional capital during 2023 to secure this further growth. We're expecting this to be a combination of new debt and equity. That's key related to we have DNB as our bank behind us, and we also have very, very long-term investors behind us. We still have very, very strong backing from our partners and have put together a very responsible and strong financial plan going forward. This concludes our webcast presentation for today, and we will go over to a Q&A session. You are welcome to drop questions in the chat and we will answer questions. Of course, if there's no questions, then we won't answer anything.
No. there. H ere comes one. Christian, shall I take this one ?
Sure.
I will publish this one. Yes, the question is how we're dealing with our financing. Yes, it's clear we had NOK 3 million at the end of the year, but, amusingly enough, our cash flow situation improves, because of the accelerated harvesting. It just not giving us the result that we wanted. On the cash flow front, the company's safe and secure for quite a period forward, and we have the action plan of raising more capital, in the form of equity and debt, as Christian went into already, during the next few months. That should be all in place by the end of April, from what I understand.
More questions are coming in now. We have one here from Knut Ivar Bakken from SpareBank1 Markets. If we can give an indication on how much fry will be released during the full year 2023. Far we're still fine-tuning the plan, but we're looking to a total of 4 million fry being released in 2023. That's the plan.
Christian, would you like to take the sales price?
Sure. We have Jonas Jønsberg who's asking what expected sales price are we expecting in the medium term. Well, right now, we've gone from having over 50% of our fish being on long-term contracts, giving us a satisfactory price above NOK 60 per kilo for head-on fish delivered to the markets. Of course, with having an accelerated harvest, we have a less balanced volume between contracted and spot sales. Of course, spot sales is a weekly, it's a weekly sales number. It's difficult to say where the final numbers will end up, but it will be significantly lower than our contracted prices.
I also noticed Knut Ivar has a lot of detailed questions. Knut Ivar, please just call me afterwards. I'll give you all the answers that you need.
Let's see. The 25,000 tons, Christian, would you like to answer that one?
Somebody's asking here, on the 25,000 tons. Where did it go?
That's in the publish now.
Is it planned for CY 2025? I don't know what he means by that, or later.
Calendar year. Thank you. No, it's not for that. It will be released during 2024 and 2025. With an 18-month production time at sea, it'll be end 2025 and into 2026 we'll start ramping up to these 25,000 tons.
Yes. I'll answer this one from Knut Ivar. The revenue is purely sale of head-on gutted or head-off gutted fish. That doesn't include any other revenues for Q4 of 2022. Liver, of course, but liver has been minimal during that period.
Also, we have a question regarding maturation. The question is, what level of maturation is set as the threshold for the Fisheries Department to enforce an earlier harvest, and what is the risk of additional pens being forced to be harvested out? See, this is part of the dialogue with the Fisheries Department. There is no framework and specific guidelines on when an accelerated harvesting plan is needed or not needed. It's a running dialogue.
moment, at one of the sites where we have harvested fish, which has approximately 1,000 tons of fish stocked, we see on the two pens, one pen has gone 50% down in gonad level, and the other pen has gone 10% down in gonad level. We are seeing the sites are going out of maturation and based on that, we expect to be able to slow down this accelerated plan, but for now, we are sticking to the accelerated plan
There's a number of questions about how much capital we need to raise. I will answer that in this way. We are finalizing the business plan. The number is overseeable. It's not substantial, and we'll be publicly announcing it next week during the meetings in Bergen. I can't say anything more than that until that point. Any other questions you'd like to answer, Christian, or?
No. I think it's 10:30, so we have reached the time, and we'll conclude. Of course, if any other people have more questions, you're always welcome to write either myself or Kia, at email or reach out on phone. We are available to answer all questions. With that, we will conclude our webcast of the Q4 for today. Thank you very much for participating.
Thank you.
Thank you.