SalMar ASA

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This is SalMar Message From the CEO The History of SalMar The ABC of Salmon Farming SalMar’s Operating Segments SalMar’s Cultural Tenets Passion for Salmon Sustainability and Corporate Responsibility Fish Environment & Technology People & Society GRI Index and Third-Party Verification Corporate Governance Corporate Governance at SalMar ASA Executive Management Board of Directors Shareholder Information Report of the Board of Directors Financial Statement and Results Consolidated Financial Statements Notes to the Financial Statements for 2023 Annual Financial Statements of SalMar ASA Notes to the Financial Statements for 2023, SalMar ASA Statement by the Board of Directors and CEO Independent Auditor’s Report Message From the CEO The History of SalMar The ABC of Salmon Farming SalMar’s Operating Segments SalMar’s Cultural Tenets Passion for Salmon Fish Environment & Technology People & Society GRI Index and Third-Party Verification Corporate Governance at SalMar ASA Executive Management Board of Directors Shareholder Information Report of the Board of Directors Note 1 General information and accounting policies Note 2 Operating revenue Note 3 Salary and personnel expenses Note 4 Pension cost Note 5 Auditors fees Note 6 Financial items Note 7 Intercompany transactions – revenue and cost Note 8 Tax Note 9 Intangible assets Note 10 Property, plant and equipment Note 11 Subsidiaries Note 12 Associates and joint ventures Note 13 Intercompany transactions - receivables and liabilities Note 14 Other non-current receivables Note 15 Derivatives Note 16 Trade and other receivables Note 17 Cash and cash equivalents Note 18 Share capital and shareholders information Note 19 Non-current interest bearing debt Note 20 Security pledges and contingent liabilities Note 21 Acquisition of remaining shares and merger of NTS AS Note 22 Divestment of subsidiaries Note 23 Financial risk Note 24 Allegations of price collusion and events occurring after the reporting period 2023 Annual Report Passion for Salmon Contents This is SalMar Message From the CEO 8 The History of SalMar 12 The ABC of Salmon Farming 14 SalMar’s Operating Segments 15 SalMar’s Cultural Tenets 19 Passion for Salmon 20 Sustainability and Corporate Responsibility Fish 35 Environment & Technology 50 People & Society 64 GRI Index and Third-Party Verification 72 Corporate Governance Corporate Governance at SalMar ASA 74 Executive Management 82 Board of Directors 84 Shareholder Information 86 Report of the Board of Directors 88 Financial Statement and Results Consolidated Financial Statements 105 Notes to the Financial Statements for 2023 113 Annual Financial Statements of SalMarASA 186 Notes to the Financial Statements for 2023, SalMarASA 193 Statement by the Board of Directors and CEO 212 Independent Auditor’s Report 213 Annual report 2023 Contents Key Financial Figures Harvest volume by segment Our Locations SalMar Northern Norway SalMar Japan SalMar Thailand SalMar South Korea SalMar Taiwan Yu Fish Singapore Icelandic Salmon SalMar Vietnam SalMar Central Norway Scottish Sea Farms LTD. 2023 2022 Icelandic Salmon 1 2023 2022 Scottish Sea Farms Ltd. 2 2023 2023 SalMar Northern Norway SalMar Aker Ocean 2022 2023 141.4 92.8 17.9 16.1 12.4 18.0 SalMar Central Norway 2 Joint venture, 50% share 1,000 tonnes gutted weight 114.1 2022 63.4 2.3 4 20.0 18.6 16.1 23.1 31.8 153. 2 161.5 182. 1 193. 7 254. 1 Key Financial Figures Figures in NOK million 2023 2022 Revenue and other income 28,219 20,158 Operational EBIT 8,088 4,465 Adjusted earnings per share 33.50 25.27 Dividend per share 35.00 20.00 Total Assets 53,331 62,501 Equity Ratio 43.3 % 38.6 % NIBD incl. lease liabilities 14,952 20,505 NIBD incl. Lease liabilities /EBITDA 1.6 3.7 Operational EBIT per kg - Group NOK per kg Consolidated Harvest Volume - Group 1,000 tonnes gutted weight 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 Key Figures - Group Financial Statement 5 Contents Fish Good fish welfare is the foundation of SalMar’s business. We work systematically to create an environment in which the salmon thrives and remains healthy. Environment and Technology SalMar believes in preserving the seas for future generations. We minimise our footprint with measures and routines throughout the entire value chain. People and Society SalMar acts as a responsible corporate citizen. We believe in creating local value and safe workplaces and support the local communities where we operate. Fish People Environment 5.6 % 5.7 % 6.1 % Survival rate 94% Reduction in Scope 1+2 intensity since 2020 -16% 1.12 Biological Feed Conversion Ratio -25% Reduction in Scope 3 intensity since 2020 Sickness absence rate Women 26% Men 74% Employees 2,506 FTEs Key ESG Metrics for Norway 6 This is SalMar Message From the CEO 8 The History of SalMar 12 The ABC of Salmon Farming 14 SalMar’s Operating Segments 15 SalMar’s Cultural Tenets 19 Passion for Salmon 20 This is SalMar This is SalMar Message From the CEO A deep-rooted coastal culture has passed the test In 2023, SalMar’s corporate culture was put to the test. Our task was to merge four strong aquaculture companies, from various places along the Norwegian coast, into one; from now on, they would coordinate their activities at all levels in both Central and Northern Norway. Most importantly, we aimed to forge a common culture by combining the best that each of the four companies had to offer. As SalMar’s CEO, I can proudly say that we passed the test with flying colours. The credit goes primarily to our 2,500 employees, including all those who have recently become part of the SalMar family. They have all worked tirelessly, with good spirits and great expertise, to put the many pieces of a complex and demanding process seamlessly in place. Over the past year, we have built a strong and solid community, from which the company will reap great benefits in the near and long term. I believe this is a result that is deeply rooted in the coastal culture from which we spring. When I was appointed as SalMar’s new CEO in the autumn of 2022, after several years as head of sales and processing, the company was in the middle of a merger process with Norway Royal Salmon (NRS) following the acquisition of NTS, which also meant that SalmoNor and the former Midt-Norsk Havbruk became part of our family. In this case, it is clear to see that one plus one has become a great deal more than two. Even more important than cost synergies are the additional value creation and increased competitiveness that have already been manifested, and that we believe will strengthen in the years to come. This is due not least to our shared culture. We are one SalMar – one team. President & CEO Frode Arntsen 8 This is SalMar But we cannot rest content with previous successes. The aquaculture industry must address the challenges facing it, and pursue improve- ments in all areas – especially with respect to the environment and fish welfare. At the same time, we can be proud that Norwegian aquaculture scores highly in terms of sustainability compared to other food producers worldwide. SalMar is also proud that we were named one of the world’s most sustainable protein producers by FAIRR in 2023. Nevertheless, we must acknowledge that some things are also moving in the wrong direction. Fish mortality is increasing. Fish welfare is more challenging. It is our responsibility to change that. We must realise that there are simply too many gaps in our knowledge. We need to know more about the salmon which is the most important part of our value chain. A living laboratory The Salmon Living Lab will become a laboratory for innovation, research and development. Our ambition is for this knowledge centre to become a valuable contribution to sustainable growth in the aquaculture industry. It is with great pleasure that SalMar launches this initiative in partnership with Cargill, one of the world’s leading food producers and a global spearhead in the research, development and production of nutritious fish feed and feed ingredients. SalMar makes its operational facilities available so that research can take place where the challenges are and must be solved in the coastal waters where the salmon live and grow. On the salmon’s terms. Both SalMar and Cargill will invest significant resources to establish and develop the innovation centre. It will not be a “SalMar centre” but a collaboration where aquaculture companies, equipment manufacturers and research institutions are welcome to conduct research and innovation covering the entire biological value chain in aquaculture. The centre will not replace but complement the innovation and devel- opment SalMar carries out daily to ensure sustainable value creation in all parts of the value chain. Fish health and fish welfare are of the highest priority for SalMar every single day, as we strive to fulfil our ambition of being the world’s best aquaculture company. SalMar also had significantly lower salmon mortality in 2023 than the industry average. But still, we must adhere to SalMar’s important rule that everything we do today must be done better than yesterday. This is necessary to fulfil our social mission as an essential contributor to the global food supply. SalMar served two billion health-promoting salmon meals in 2023 to consumers in over 50 countries worldwide, a number that will only continue to increase in the coming years. Results As usual, our financial results can be studied in detail in various places in this report, but some figures also belong in the CEO’s reflections. Gross operating revenues in 2023 were NOK 28.2 billion, compared with NOK 21.1 billion the previous year. Operational EBIT was NOK 8 billion, compared with 4.5 billion in 2022. These results represent good underlying operations and the ability to achieve the produc- tivity improvements we expected from the acquisition of NTS and the merger with NRS. The results also reflect strong markets with good price achievement and a consistently weak Norwegian krone through the year. To illustrate the cost effects of the merger with NTS, NRS and SalmoNor, 97 per cent of the planned cost synergies have already been realised. NOK 821 million of the estimated NOK 844 million in reduced annual recurring operating costs. This, too, is the result of everyone pulling together, creating a fantastic result through team efforts. The Group achieved a new record in harvested volume in 2023, partly due to the merger with NRS/SalmoNor, more efficient utilisation of Norwegian licences, and the addition of new licences. The Group as a whole harvested 266,500 tonnes in 2023, up from 211,600 tonnes the previous year. A total of 233,900 tonnes was harvested in Norway, compared with 177,500 tonnes in 2022, while in Iceland, 17,900 tonnes were harvested, compared with 16,100 tonnes the year before. Significant production challenges in Scotland reduced production volume from 18,000 tonnes to 12,400 tonnes (based on SalMar’s 50 per cent shareholding in Scottish Sea Farms). Storm and calm The Norwegian coast can be both stormy and calm. Safety and pre- dictability are not characteristic of life at the outermost edge of the ocean. From the first day, challenges abounded for our ancestors, who ventured out along a rugged coastline to secure a livelihood based on the sea’s resources. Our generation can enjoy a significantly better and safer life thanks to those who lived and worked tirelessly before us. But stormy and calm still characterise life on the coast, something the aquaculture industry must always live with. Production of living animals in the sea presents biological challenges that can arise suddenly and hit hard. For example, a wave of jellyfish – called string jellyfish – spread along the Norwegian coast towards the end of 2023 and infiltrated several of SalMar’s locations in both Central and Northern Norway. Jellyfish are one of several risk factors in fish farming, but they rarely cause significant damage to the fish, as was the case in this instance. Fortunately, SalMar has contingency plans that account for such events, and the company has, in close collab- oration with the Norwegian Food Safety Authority, taken measures based on fish health assessments. The consequences of the jellyfish attack are a significant outtake of fish, reducing SalMar’s estimated volume harvested in Norway in 2024 by 20,000 tonnes, to a total of 237,000 tonnes. Culture and operations – hand in hand While SalMar declared 2023 to be the Year of Culture, we have des- ignated 2024 as the Year of Operations. The latter is not meant replace the former but rather reinforce it. Our common SalMar culture should enhance and improve everything we do every single day. As we advance, we will continue to build on the shared cultural platform established during the significant organisational changes in 2023. It 9 This is SalMar is said that the devil is in the details, and in these details, SalMar has shown its strength over the years. This has made us superior in terms of operations, and out in front is where we want to stay in the future. An important aspect of our operations will be to make even better use of the substantial investments SalMar has made both at sea and on land. These have made SalMar well-equipped for the future. The company has invested several billion kroner in advanced processing facilities on the coast: Vikenco at Aukra in Møre og Romsdal, InnovaMar at Frøya in Trøndelag and InnovaNor at Senja in Troms. Furthermore, we are coming to the end of an extensive programme to construct large new and highly advanced facilities for smolt production. In 2023, SalMar commissioned its new smolt facility at Senja. In 2024, it will commission the new facility at Tjuin in Steinkjer. The investment costs for building the two facilities alone amount to over NOK 3 billion. This will provide good access to smolt for SalMar’s operations and, at the same time, a basis for even better quality and more innovation in this part of the value chain. SalMar is an integral part of the communities in which we operate. What is good for our many coastal communities is also good for SalMar. Each year, SalMar supports a large number of sports, cultural events, associations and teams in municipalities and local communities. We believe this is also part of our social mission. For SalMar, it is important to encourage young girls and boys to choose to live on the coast and see all the fantastic opportunities the coast represents. Naturally, our main contribution is to create profitable, sustainable and attractive jobs. But we want to make sure that it is also appealing to live in the coastal districts outside of working hours, so that people enjoy themselves and have exciting things to do also in their spare time. Aquaculture in open oceans SalMar’s investment in offshore aquaculture is now being developed in partnership with Aker in SalMar Aker Ocean. This subsidiary has two offshore installations in operation. Ocean Farm 1, the world’s first offshore unit for salmon production, is now in its third production cycle off the coast of Trøndelag, after extensive upgrading. In addition, SalMar Aker Ocean took over Arctic Offshore Farming outside Tromsø in 2023. The company and the project originally belonged to NRS but were sold on to SalMar Aker Ocean after the merger with SalMar. On 25 September 2023, the Directorate of Fisheries granted SalMar Aker Ocean a location permit to establish a Smart Fish Farm 45 nautical miles west of Frøya. The permit is based on commitments for eight development licences for offshore aquaculture, which the Directorate of Fisheries announced in February 2019. However, there is still con- siderable uncertainty about the framework conditions for aquaculture in the open ocean, both with respect to areas suitable for farming, permits and the future tax regime. The new resource rent tax will not currently apply to offshore aqua- culture. Still, the industry and investors must take into consideration that it could happen if this category of aquaculture also becomes profitable. This means that the industry must take unlimited risk in the build-up phase, while the State will be able to introduce additional tax later if this becomes profitable. SalMar Aker Ocean has decided that further investment in offshore aquaculture will be put on hold until the Norwegian authorities have clarified the framework conditions. Unpredictable framework conditions On the 31 May 2023, the Storting decided, despite strong warnings from the industry, to introduce a resource rent tax on aquaculture in Norway at the rate of 25 per cent, with effect for the full 2023 fiscal year. The new tax comes on top of ordinary company tax, so the total marginal tax rate is 47 per cent. The uncertainty surrounding the new tax is reinforced by the fact that a new government price council will determine nominal prices on which the resource rent tax will be calculated. The pricing details have not yet been clarified, so there is still considerable uncertainty about the final tax bill. SalMar and the industry have collectively warned against the new price council and recommended that actual prices be used as the basis for the tax levy, as is the general rule in Norwegian tax law. Uncertain political framework conditions have meant that SalMar has put on hold a planned investment of approximately NOK 2 billion for a major expansion of the InnovaMar processing plant in Frøya. This decision has been taken because a significant part of the income from aquaculture that was to be channelled into this project will now be subject to resource rent tax, combined with the uncertainty surrounding the framework conditions for offshore aquaculture. In the latter part of 2023, the industry’s organisations put considerable effort into their consultation responses to the government-appointed aquaculture committee, which presented its report on 28 September 2023, see NOU 2023:23, Comprehensive management of aquacul- ture for sustainable value creation. SalMar also submitted its own in-depth consultation statement. The report contains a broad review and assessment of the entire permit system in Norwegian aquacul- ture. The committee proposes several changes that the aquaculture industry and large parts of the business community and civil society on the Norwegian coast have warned against. This includes abolishing the so-called time-limited demonstration licences. The Ministry of Trade, Industry and Fisheries has announced that the government will prepare a report to the Storting (white paper) during the first half of 2025, based on the committee’s report and the consultation responses. The white paper will cover a wide range of issues affecting the basis for aquaculture permits in Norway. Given the fundamental importance this has for the country’s second-larg- est export industry, we hope the government will engage in a close dialogue with all the parties concerned in its preparation of its report to the Storting. The hasty introduction of the resource rent tax is not an experience anyone wants repeated. 10 This is SalMar A mass movement SalMar will continue to invest and give our all to develop the company and the industry within the framework conditions the authorities give us. In 2024, SalMar will invest NOK 1.9 billion in maintenance and capacity increases, and NOK 1.6 of this will be in Norway. SalMar will continue to work systematically to achieve our goals and ambitions. This will be done in close cooperation with our customers and partners, not forgetting our owners. We are immensely grateful to our owners, of which the Norwegian State through the Folketrygdfondet pension fund is the second largest. Our largest shareholder is the investment company Kverva, which channels almost its entire share of the dividend from SalMar into investments in various industries or to enable its owners to pay the tax on Norwegian ownership. SalMar has approximately 23,000 shareholders spread across the world. In addition, several hundred thousand Norwegian women and men indirectly own SalMar as shareholders in different investment and pension funds. We appreciate that our shareholders have such great faith in SalMar that they have chosen to invest their savings in becoming owners of our company. We hope that we can be worthy of this trust. Our owners are so many that we can almost use the term mass movement. In this respect, uncertainty in tax regimes not only affects the companies in the aquaculture sector – but also hundreds of thousands of owners across different countries. Outlook The geopolitical challenges, with wars both inside and outside Europe, continue to leave their brutal mark on everyday life around the world. The solutions to these challenges will lie with the governments of the states concerned and the international community. Let us hope that the peace ambitions that laid the foundations for the UN eventually gain the upper hand. The Norwegian aquaculture industry also has a role as a bridge-builder between people and nations. This takes place through constructive cooperation with companies and customers worldwide and the industry’s contribution to a sustainable global food supply. The attached sustainability report describes in more detail SalMar’s significant efforts in this area in 2023. Eternal perspective Salmon will be a key factor in feeding the world’s growing population. It is not easy to imagine a more stimulating role than leading a business that supplies healthy and tasty seafood to the whole world. The aquaculture industry has some environmental challenges that must be resolved, as do other food producers. But we at SalMar believe in our social mission to produce renewable and sustainable food that the world needs, for as long as there are people on Earth. Therefore, we also have an eternal perspective on what we do. I am confident that SalMar, with its employees, culture and expertise, has all the prerequisites to be at the forefront also in the future. We will do everything today better than yesterday and do our utmost to satisfy all parts in the value chain up to the end consumer in the market. Our mission is to produce and bring healthy salmon to all corners of the globe. No one can replace the human competence, the urge to create and the enormous will to drive the world forward. The sum of many talented individuals has created SalMar. Our employees in all parts of the business have brought us to where we are today. At SalMar, we are passionate about continuous development on the salmon and nature’s terms; this is our passion – a passion for salmon. 11 This is SalMar The History of SalMar 1991 SalMar is founded in Frøya in Sør-Trøndelag following the acquisition of one licence for the production of salmon and a harvesting/ processing plant. The company’s primary business was the processing of frozen salmon. This was the start of a major restructuring of the Norwegian aquaculture sector, which gradually led to a substantial increase in its level of industrialisation. 1992 Acquisition of two licences for the production of farmed salmon in Central Norway. 1995 Start of smolt production. Acquisition of Follasmolt AS in Verran, Nord- Trøndelag and lease of Kjørsvik Settefisk’s hatchery in Aure, Møre & Romsdal. 2009 Acquisition of the remaining 66% of the shares in Volstad Seafood AS. 2010 Acquisition of 75.54% of Rauma Gruppen AS and 100% of Stettefisk AS. Broodfish in Central Norway (Møre & Romsdal). Acquisition of 23.3% of the shares in the listed Faeroese company Bakkafrost P/f. 2011 Completion of the world’s most innovative and efficient salmon harvesting and processing plant – InnovaMar. Acquisition of 7 licences in Central Norway through Bringsvor Laks A, Krifo Havbruk AS and Villa Miljølaks. Increase of shareholding in P/F Bakkafrost to 24.8%. Leif Inge Nordhammer steps Down as CEO and is replaced by Yngve Myhre on 6 June. 2012 Acquisition of 10 licences in Northern Norway (Finnmark) from Villa Artic AS. Increase of shareholding in P/F Bakkafrost to 25.2%. 2006 (44,000 tonnes gutted weight) Kverva Holding AS sells 42.5% of the company’s shares to a limited number of Norwegian and international investors. Acquisition of three new licences in Nordmøre. Acquisition of the remaining 51% of the shares in Senja Sjøfarm AS. 2007 SalMar shares listed on the Oslo Stock Exchange on 8 May 2007. Acquisition of 4 licences in Møre & Romdsdal through Halsa Fiskeoppdrett AS and Henden Fiskeoppdrett AS. Acquisition of Arctic Salmon AS (four licences) in Nordreisa, Troms. 2008 Acquisition of one licence in Central Norway (Møre & Romsdal) and one in Northern Norway (Troms). Acquisition of 34% of the shares in Volstad Seafood AS. 2005 (35,000 tonnes gutted weight) Focus on the core. Divestment of operations SalMar does not consider to be core businesses, including the production of herring, herring oil and fish meal. 2001 (15,000 tonnes gutted weight) Establishment of operations in UK through establishment a 50/50 joint venture with Lerøy Seafood Group which became sole owner of Scottish Sea Farms Ltd, the UK’s second largest salmon producer. 2000 (11,000 tonnes gutted weight) Establishment of operations outside of Central Norway through the acquisition of 49% of the shares in Senja Sjøfarm AS in Troms. 1997 Kverva Holding AS becomes sole owner of SalMar. Extension of the processing plant at Nordskaget in Frøya. Volume harvested in 1000’s of tonnes gutted weight 116 104 79 77 65 64 The History of SalMar 12 This is SalMar The History of SalMar 2019 Increased ownership in Icelandic aquaculture company Arnarlax Ehf to 59 per cent. Gustav Witzøe new CEO following Olav-Andreas Ervik appointment as new CEO in SalMar Ocean which strengthens the focus on offshore fish farming. Started construction of InnovaNor, the new harvesting and processing plant on Senja in Northern Norway. 2018 SalMar increased shareholding in Arnarlax Ehf to 41.95 per cent. First harvest from the worlds first offshore fish farm, Ocean Farm 1 Aqusition of 51 per cent of the shares in Mariculture AS, to establish fish farming offshore in the open ocean. Trond Williksen steps down as CEO, Olav- Andreas Ervik new CEO. 2017 September 2017, Ocean Farm 1 arrived at its destination in Frohavet, off the Trøndelag coast in Central Norway The new smolt production facility in Senja was completed 2023 Successfully integrated NTS, NRS and SalmoNor into operational set-up in Norway. Aquaservice company Frøy sold following a succesful strategic review. New unsecured financing in place. Finalized construction of new smolt facility in Tjuin in Central Norway. First harvest from semi-offshore unit Arctic Offshore Farming. 2020 Started construction of the expansion of the smolt facility on Senja, Senja 2 Successful private placement and listing of Icelandic Salmon on Euronext Growth, SalMars ownership reduced to 51 per cent. 2015 Principle approval of the ocean farming pilot. Establishment on Iceland through acquisition of 22.91 % of the shares in the Icelandic farming company Arnarlax Ehf. 2013 Acquisition of minority shares in SalMar Rauma AS and 50.4% of the shares in Villa Organic AS. Divestment of ownership in P/F Bakkafrost. 2014 Acquisition of 8 green licences Yngve Myhre steps down as CEO and is replaced by Leif Inge Nordhammer. 2016 SalMar awarded the first eight development licences for Ocean Farming AS. SalMar increased shareholding in Arnarlax Ehf to 34 per cent. Leif Inge Nordhammer steps down as CEO, Trond Williksen new CEO Volume harvested in 1000’s of tonnes 128 154.8 150 154 159 166 174 198 211267 131 2021 InnovaNor in operation, the new harvesting and processing plant on Senja in Northern Norway. Started construction of a new smolt facility in Central Norway, Tjuin. Successful issue of the first green bond and a private placement in SalMar ASA. Strategic partnership with Aker through SalMar Aker Ocean to establish a global offshore aquaculture company Increasing our production capacity in Central Norway through aqusition of ownershare in Refsnes Laks AS and Nekton Havbruk AS Scottish Sea Farms Ltd. acquired Grieg Seafood Hjaltland UK Ltd. strengthening our value chain and increasing our presence in the Shetland region 2022 Increasing position of SalMar to the worlds 2nd largest salmon producer by joining forces with NTS, NRS and SalmoNor at the end of 2022 through a series of transactions. Majority owner in aquaservice company Frøy after the transactions. Finalized construction of new smolt facility on Senja in Northern Norway. Gustav Witzøe stepped down as CEO and took up the position as Board Chair. Linda L. Aase CEO from May until October and Gunnar Nielsen CFO from April until October. Frode Arntsen new CEO and Ulrik Steinvik new CFO from October. 13 This is SalMar The ABC of Salmon Farming Contents This is SalMar The ABC of Salmon Farming 1 2 3 4 5 6 7 8 The ABC of Salmon Farming Broodstock The broodstock are the parent fish which provide the eggs and sperm (milt) required to produce new generations. The fertilised eggs take 60 days to hatch when placed in an incubator kept at eight degrees Celsius. Eyed salmon eggs After 25–30 days in the incubator the eggs have developed to the stage where the eyes of the salmon are clearly visible as two black dots inside the egg. Fry The egg hatches when the eggshell cracks open, liberating the baby fish (fry) inside. When it hatches the fry is attached to a yolk sac, which provides it with the sustenance it needs during its first few weeks of life. From now on the fish’s growth and development will all depend on temperature. Initial feeding When most of the yolk sac has been absorbed, the fry can be moved from the incubator into a fish tank. They are now ready for initial feeding. The water temperature is kept at 10–14 degrees Celsius, and the fry are exposed to dim lighting 24 hours a day. The initial feeding period lasts for six weeks. As they grow the fry are sorted and moved to larger tanks. Well ahead of their “smoltification” all the fish are vaccinated before being shipped by wellboat to the fish farm’s marine net-pens. Smoltification The process whereby the juvenile fish transition from a life in freshwater to a sea- going existence is called smoltification. During this process the fish develop a silver sheen to their bellies, while their backs turn a blue-green colour. Their gills also change when the juvenile fish turns into a smolt. On-growing The farming of fish for human consumption takes place in net pens, large enclosed nets suspended in the sea by flotation devices. In addition to a solid anchorage, net pens require regular cleaning and adequate measures to prevent the farmed fish from escaping. Growth in the net pens is affected by feeding, light and water quality. Here too the fish are sorted as they develop and grow. Harvesting & processing A year after transfer to the marine net pens, the first fish are ready for harvesting. The fish are transported live by wellboat to the processing plant. There the fish are kept in holding pens, before being carefully transferred to the plant itself. The fish are killed and bled out using high tech equipment, and always in accordance with applicable public regulations. After harvesting the salmon is subject to various degrees of processing. Sales The fish is sold either as whole gutted salmon (fresh or frozen), fillets, in individual portions or a wide range of other products, which are distributed to markets around the world. 14 This is SalMar SalMar’s Operating Segments Contents This is SalMar SalMar’s Operating Segments SalMar’s Operating Segments ICELANDIC SALMON Sea-farm production No. of licences: 23,700 tonnes MAB Harvest volume 2023: 17,900 tonnes gutted weight Smolt production No. of facilities: 4 smolt facilities in operation Production in 2023: Approx. 4.9 million smolt SALMAR AKER OCEAN Sea-farm production No. of licences: No. licences: 12,355 tonnes MAB 3 Harvest volume 2023: 2,300 tonnes gutted weight FISH FARMING CENTRAL NORWAY (Møre og Romsdal & Trøndelag) Sea-farm production No. of licences: 85,482 tonnes MAB 1 Harvest volume 2023: 141,100 tonnes gutted weight Smolt and cleaner fish production No. facilities: 3 smolt facilities and 1 lumpfish facility Production in 2023: Approx. 23.6 million smolt and 1.5 million lumpfish FISH FARMING NORTHERN NORWAY (Troms og Finnmark) Sea-farm production No. licences: 69,275 tonnes MAB 2 Harvest volume 2023: 92,800 tonnes gutted weight Smolt production No. facilities: 2 smolt facilities Production in 2023: Approx. 35.6 million smolt SALES & INDUSTRY Volume sold: Approx. 240,000 tonnes gutted weight Share of secondary processing: 36.5% Number of harvesting- and processing plants: 3 in operation 2 Includes 2 time-limited demonstra- tion licences. 3 Includes 6,051 tonnes MAB in development licences for the Arctic Offshore Farming project and in addition the company has 8 devel- opment licences for the Smart Fish Farm project 1 Includes 4 time-limited demonstration licences and 1,100 tonnes MAB in development licences. 15 This is SalMar SalMar’s Operating Segments Fish Farming Central Norway (Møre og Romsdal & Trøndelag) Fish Farming Central Norway is the region in which the SalMar Group first established its business. Initially this was based on assets acquired from a company which had gone into liquidation, and which had one licence for the production of farmed salmon and a harvesting and processing plant in Frøya that was designed to handle white fish. Since then, both the Group as a whole and the segment has experienced a fantastic growth journey. Central Norway has today 85,482 tonnes MAB, and also operates several R&D licences in collaboration with other companies. In 2022 SalMar acquired ownership in SalmoNor. increasing the production capacity in the region. The segment has 3 smolt facilities in operation. In addition the segment has 1 facility for the production of cleaner fish. The fish farming operations are located in Central Norway, stretching from Sunnmøre in the south to the Namdal coast in the north. Fish Farming Central Norway is divided into 5 regions, which are each led by a regional manager. The environmental conditions for salmon farming in this region are good, with favourable sea temperatures all year round thanks to the Gulf Stream, a high water replacement rate and several suitable locations. SalMar’s fish farms focus on cost-effective operation and maintain a high ethical standard with respect to animal husbandry. In order to contribute to SalMar reaching its goal of being the most cost-effective producer of farmed salmon, there is a continuous focus on sub-goals. The company was quick to introduce its own standards and ‘best practices’ in order to secure increased efficiency. This involves, among other things, concentrating marine-phase production at large, sustainable facilities stocked with the correct biomass volume and with a good environmental carrying capacity. SalMar is also working strategically to secure locations so that we can take our share of future production growth. In 2021 the first closed net pen for the company was taken into operation and a second closed net pen will start production in 2024. In addition, the segment both has semi-closed and submerged farming technology in operation. The segments smolt facilities have a high level of expertise with respect to day-to-say operations as well as development/project management. The production of smolt is currently transitioning to the use of recirculating aquaculture systems (RAS) technology. In 2023 a new RAS smolt facility at Tjuin, came into operation where the first smolt will be delivered to sea in 2024. Fish Farming Northern Norway (Troms og Finnmark) SalMar has the largest aquaculture operation in Troms og Finnmark County, with activities stretching from Harstad in southern Troms to Sør-Varanger in Finnmark. The business is divided into three regions, which are each led by a regional manager. The segment’s head office and administration are located at InnovaNor our harvesting and processing facility on Senja. The segment has 69,275 tonnes MAB for the production of farmed salmon. In addition, SalMar co-op- erates several R&D licences. In 2022 SalMar acquired ownership of NRS, increasing the production capacity in the region. The segment has 2 smolt facilities. Over many years, the segment has focused systematically on enhancing the expertise of its workforce and employs several apprentices. Remote feeding has been an important focus area for the segment. This means joint surveillance and control of all SalMar’s sea sites from South Troms to East Finnmark. The sea farms are monitored even when there is no one physically on site. Data collection is more structured in the remote feeding centre, which provides a better foundation for decision making forward in time. The segment has 2 smolt facilities, which is based on recirculating aquaculture systems (RAS) technol- ogy. Robust, high-quality smolt is a decisive factor for the success of the whole value chain and in the 2023 the first smolt from the expansion of the facility on Senja was delivered. The expansion will result not only in the capacity to produce more smolt, but also the flexibility to produce larger sized smolt. It is possible to produce more salmon in Norway, and Northern Norway has a considerable potential for further growth. This region has excellent environmental conditions for sustainable production, which we nurture through expertise and systematic improvement efforts. The expansion of SalMar’s smolt production, production capacity through NRS as well as the new local harvesting and processing plant, InnovaNor, underpin the importance to the Group of both Fish Farming Northern Norway and the region as a whole. 16 This is SalMar SalMar’s Operating Segments Sales & Industry Sales & Industry handles the Group’s sales activities and harvesting and processing activities in Norway. The segment sold approx. 240,000 tonnes of salmon and other fish-based products in 2023. Sales activities concentrate on the markets of Europe, Asia and America. In all, the segment distributes salmon to more than 50 different countries. Because SalMar attaches particular importance to market proximity, the segment opened a new sales office in Thailand in 2023 and has in addition sales offices in Japan, South Korea, Vietnam, Taiwan and Singapore. InnovaMar is SalMar’s main industrial processing facility. It is located at Nordskaget in Frøya, in close proximity to Fish Farming Central Norway’s sea farms. InnovaMar is a modern building covering 17,500m 2 . It has an advanced equipment park for harvesting, fileting and portioning. It has the capacity to har- vest 150,000 tonnes of salmon annually. A significant portion of the volume harvested goes on to secondary processing before being sent to customers and consumers around the world. Innovative use of production technology increases the quality of the final product, reduces costs and improves the employees’ working environment. Through SalMar’s co-ownership of Vikenco AS, SalMar facilitates the harvesting of fish from the southern part of Central Norway and Møre & Romsdal County. In 2021 upgraded Vikenco came into operation increasing both harvesting, processing, storage and freezing capacity of the facility and in 2024 further upgrade of harvest capacity is scheduled to be completed. At the end 2021 the new harvesting and processing facility in Northern Norway, InnovaNor, came into operation and during 2023 the facility showcased its ability to handle large volumes effectively. This is an important move to strengthen the region as an important industrial engine in the Group’s devel- opment and will contribute to local value creation and new employment opportunities. InnovaNor is the largest and most modern processing facility in Northern Norway covering 20,000 square meters. It has a capacity to harvest 150,000 tonnes of salmon annually. The building incorporates landing, harvesting, processing, packaging, freezing and storage capabilities including an office wing, which is the new headquarter for all our activities in Northern Norway. The facility is rigged with the latest in technology for value added processing built with scalability in mind with both post and pre-rigor capacity, thereby strengthening our product portfolio and offering to customers in all markets. Icelandic Salmon The company is listed on Euronext Growth and from October 2023 also on the Icelandic Stock Exchange NASDAQ First North. At the end of 2023 SalMar owned 52.5% of the shares in the company. Icelandic Salmon is Iceland’s largest producer of farmed salmon. The company is fully integrated, with its own hatcheries, sea farms, harvesting plant and sales force. The natural conditions, with good quality seawater and temperatures on a par with Northern Norway, provide a sound basis for engaging in sus- tainable aquaculture in Iceland. The company has its headquarters and harvesting plant in Bildudalur in Iceland’s Westfjords region, in close proximity to the sea farms located in the surrounding fjord systems. In addition, the company has 4 smolt facilities, three located on the south coast of Iceland and one in the Westfjords, as well as a sales office in Reykjavik. Farming in Iceland is still in an early phase, and during 2023 important measures have been implemented in the company that will provide better biological and economic results in the long term. Some highlights in 2023 include improved utilization of MAB capacity, increase of smolt production capacity for further growth and continued progress in the market of the brand Arnarlax-sustainable Icelandic salmon. SalMar together with Icelandic Salmon has a strong belief in sustainable aquaculture production in Iceland. 17 This is SalMar SalMar’s Operating Segments SalMar Aker Ocean To strengthen and concentrate its efforts in the area of offshore aquaculture, SalMar created the subsidiary SalMar Ocean AS, later changed to SalMar Aker Ocean AS. Late 2021 SalMar and Aker through Aker Capital entered into a partnership whereas Aker Capital has 15% ownership of SalMar Aker Ocean and SalMar ASA control the remaining 85%, with the purpose of creating the world leading off- shore farming company. The company aims to create the world’s most reliable and intelligent offshore farming operations with the highest requirements for fish welfare and with a zero-emissions value chain ambition. With an ambition of producing 150,000 tonnes of salmon per year. In 2023 the Arctic Offshore Farming project was included in the segment and the segment has currently 2 semi-offshore units in operation. Arctic Offshore Farming started harvesting of its first production cycle at the end of 2023 and finished the production cycled early in 2024. Ocean Farm 1 started its third production cycle in the spring 2023 and harvest is on plan for 2024. In end of September 2023, site approval for one open ocean unit was granted to SalMar Aker Ocean’s Smart Fish Farm, approximately 50 nautical miles west of Frøya in Central Norway. Due to regulatory uncertainty SalMar Aker Ocean decided that further work on offshore aquaculture in Norway is currently on hold. The company will now fully focus on growth semi-offshore and utilize the capacity of its existing two semi-offshore units for the production of sustainable Norwegian salmon. It will also continue to explore opportunities out- side of Norway. 18 This is SalMar SalMar’s Cultural Tenets Contents This is SalMar SalMar’s Cultural Tenets What we do today we do better than yesterday To be the most cost-effective salmon producer demands continuous improvement at all stages of the production process. This tenet is about daring to step into the unknown and develop a culture of winning, where performance is both measured and celebrated. The job is not done until the person you are doing it for is satisfied This means that we will meet the expectations of others and demand high standards of each other, in accordance with our own SalMar standards. There are many ‘suppliers’ and ‘customers’ in the production chain, and it is only by treating each other with mutual respect that we will succeed. Focus on the solution Everyone who works for SalMar, regardless of position or place, has a duty to help come up with solutions and contribute to improvement processes. We will challenge existing practices and systems, we will jointly implement solutions, and we will talk to, not about, each other. The job we do today is vital to the success of us all Although SalMar as a whole numbers more than 1,800 people, it is vital to develop personal attitudes and an understanding that what happens is up to me and my function. It is therefore vital that everyone is familiar with our vision, objectives and values, and that we support each other for our common passion for salmon, and on our way to being at all times the lowest-cost supplier of farmed salmon. Sustainability in everything we do High ethical and moral standards form the basis for developing an even stronger focus on safeguarding the environment that we work in day to day, and that we are the temporary custodians of. We shall not deplete the environment, but ensure that we pass it on unimpaired to the next generation. This is our shared social responsibility, and everything we do must stand up to public scrutiny both today and in the future. We care To succeed as a team we must also develop the right attitudes towards, as well as respect and care for salmon, co-workers, customers, business associates and the environment. We must think for ourselves but act with loyalty, and always bear in mind that we are engaged in food production. SalMar’s Cultural Tenets SalMar’s corporate culture is constantly evolving, and builds on the success factors that have been cultivated within the company since its inception in 1991. Although the company’s culture is affected by both external and internal framework conditions, it remains firmly anchored in a few overarching principles, in particular a strong focus on good husbandry, operational efficiency and safe food production. 19 This is SalMar Passion for Salmon Contents This is SalMar Passion for Salmon Passion for Salmon The aquaculture industry is developing rapidly, and the potential for further growth is enormous. However, at SalMar we are in no doubt that any growth must be sustainable: environmentally, socially and financially. In 2014, to reinforce our focus on the elements that have made SalMar the company it is today, we adopted a new vision that will henceforth guide our steps: “Passion for Salmon” Although SalMar continues to pursue its stated aim of cost leadership, it is moving from a focus on outcomes to a focus on performance. We aim for excellence at all levels and in all aspects of our operation. The new vision will underpin all activities and all actions within SalMar. All decisions relating to production will be made on the basis of our passion for salmon. The fish will be farmed in conditions most conducive to their well-being. We believe that the best biological results will pave the way for the best financial results, and thus safeguard our position as the most cost-effective producer of farmed salmon in the world. This new vision and ambition depend on the existence of a winning culture throughout the organisation. The source of SalMar’s corporate culture and the company’s cultural tenets is our shared passion for salmon. These tenets underpin our vision and describe the attitudes and conduct expected of all employees. 20 Sustainability and Corporate Responsibility Fish 35 Environment & Technology 50 People & Society 64 GRI Index and Third-Party Verification 72 Sustainability and Corporate Responsibility Sustainability and Corporate Responsibility Sustainability and Corporate Responsibility Fish Good fish welfare is the foundation of SalMar’s business. We work systematically to create an environment in which the salmon thrives and remains healthy. Environment and Technology SalMar believes in preserving the seas for future generations. We minimise our footprint with measures and routines throughout the entire value chain. People and Society SalMar acts as a responsible corporate citizen. We believe in creating local value and safe workplaces and support the local communities where we operate. Fish People Environment Sustainability is essential for SalMar as it ensures the longevity and profitability of our business while promoting environmental and social bal- ance. The transition and maintenance of sustainable practices, such as minimizing environmental impacts and preserving natural resources, can help maintain healthy ecosystems and promote fish welfare. This, in turn, can lead to a reliable and consistent supply of high-quality salmon for our consumers, as well as the long-term viability of the industry. Furthermore, practicing sustainability can also build consumer trust and ensure long-term success in an increasingly eco-conscious market. Today, the world's population is consuming resources at a rate that surpasses the planet's ability to generate them. Notably, food production is accountable for a significant fraction of the ecological and climate burden on the planet. To sustain the ever-expanding global populace, we require sustainable approaches to food production that minimize environmental impacts. Salmon farming stands out as one of the most sustainable techniques for producing food, primarily due to its eco-friendliness in terms of space utilization, freshwater consumption, and greenhouse gas emissions. Consequently, aquaculture and salmon farming hold great potential to provide the world's growing population with healthy, protein-rich food in the foreseeable future. 22 Sustainability and Corporate Responsibility Sustainability in Everything We Do "Sustainability in everything we do" is one of SalMar's key tenets. For SalMar, sustainability extends beyond the scope of its operations, encompassing its behavior in the surrounding areas and our direct and indirect impacts throughout the value chain. SalMar endeavors to safeguard the seas while simultaneously prioritizing the well- being of its employees, salmon, and the environment, and advancing sustainable development. This includes actively contributing to the evolution of new technology to decrease the biological footprint of its production and promote environmental preservation. The Group recognizes the diversity of its corporate social responsibility, which includes responsibilities as an employer, producer, supplier of healthy food, user of the natural envi- ronment, and administrator of financial and intellectual capital. Social responsibility is integral to SalMar's values, and the company is committed to conducting its operations transparently and with accountability, while minimizing the impact on the natural environment. SalMar's holistic approach hinges on the understanding of the interde- pendence between caring for people, the economy, and the environ- ment, which are essential components for sustainability. As a result, sustainability is a crucial consideration in everything that SalMar does. The 2023 report marks SalMar's 10-year anniversary for sustain- ability reporting. For ten consecutive years, SalMar have published their sustainability report, an important, and now long-lived, part of our devotion to transparency and benchmarking on important sustainability parameters. Like the previous year, the 2023 report underwent third-party verification by Ernst and Young, as detailed in the appendix. The report includes businesses in which SalMar held over 50% of the shares and/or had operating control in 2023, and is thus included in the consolidated accounts. Scottish Sea Farms, an associated company of SalMar through Norskott Havbruk, is not part of the sustainability reporting. Following the largest acquisition in the company's history in late 2022, much of the sustainability-related efforts in 2023 were focused around onboarding new employees, sustaining and progressing a strong corporate culture and establishing best practice. As previously, the report is prepared according to the principles required by the Global Reporting Initiative (GRI). Information on the report's alignment to the GRI Index is provided as an attach- ment to the report. This will be SalMar's final report aligned with the GRI, as SalMar prepares to comply with the upcoming EU Corporate Sustainability Reporting Directive (CSRD) and the associated European Sustainability Reporting Standards (ESRS) from 2024. The report is structured around SalMar's three core pillars of sustain- ability throughout the value chain. Key Performance Indicators (KPIs) under each part of the report are reported in Norway and Iceland, which represent the two key operating regions for SalMar. Our activity through subsidiaries in Norway, i.e., SalMar Aker Ocean, is consolidated in the presented values for Norway. Please address any queries about the report to SalMar’s Head of Sustainability Mats Wærøe Langseth. 10 years of sustainability reporting 23 Sustainability and Corporate Responsibility Our Principles SalMar's facilities are strategically located in rural coastal areas of Norway and Iceland, where the clean water and natural conditions are optimal for producing healthy salmon. These facilities have become vital institutions for both large and small coastal communities, providing job opportunities and supporting local economies. SalMar recognizes the importance of these communities and their surrounding environment to its operations and values the benefits it derives from them. Consequently, the Group is committed to fulfilling its responsibilities as an employer, supplier of healthy food, user of the natural environment, and administrator of financial and intellectual capital. Salmon farming demands optimal environmental conditions to ensure the fish's health and welfare. Therefore, SalMar undertakes extensive monitoring and research and development (R&D) activities to protect the environment and ensure sustainable operations. The Group assesses every aspect of its operations for sustainability risks, and appropriate measures are implemented through established procedures and instructions. To ensure compliance with the guidelines for sound operations, SalMar conducts regular measurements and internal audits. Leadership of SalMar’s sustainability endeavours The CEO of the Group bears the ultimate responsibility for SalMar's environmental impact and its efforts towards sustainability. SalMar has established quality departments to oversee and evaluate the progress being made in this area. Nonetheless, the Head of Sustainability and management teams in Fish Farming and Sales & Industry, with the assistance of qualified professionals, coordinate these efforts. To ensure that SalMar, as a whole, adopts a cautious approach and can execute necessary measures, systematic risk and opportunity assessments are carried out at the highest level and in all departments, including those related to climate risks. This holds true for SalMar's subsidiaries, where the Group's presence on the board of directors guarantees consideration for these matters. The departmental management is accountable for ensuring that monitoring activities are conducted and reported. The quality managers follow up and assist in this regard, supporting departmental and operational leaders. Quality managers, along with other quality assurance staff, participate actively in regular management meetings at all levels of the organization. These meetings address quality, safety, the working environment, fish welfare, and environmental/climate issues. Furthermore, SalMar engages with governing bodies and trade associations to ensure that ESG disclo- sures are done in accordance with active regulations both nationally and internationally. 24 Sustainability and Corporate Responsibility Dialogue with stakeholders SalMar recognizes that it has a diverse group of stakeholders and is committed to maintaining constructive communication with each of them. We engage in this dialogue through various means such as in-person meetings, media outreach, interim and annual reports, stock market notices, GRI reports, advertisements, R&D projects, and our website, www.salmar.no. These dialogues take place both locally and at the corporate level. At SalMar, we understand that our success depends on working collaboratively and treating each other with candour and respect. This is a fundamental part of our guiding principles for all dialogues. In determining which stakeholders to include in our future sustaina- bility reporting efforts, we consider the extent of their influence over our organization. Our aim is to engage our stakeholders in a meaningful and effective manner, while ensuring that they derive value from their interactions with SalMar. We take important steps in this process, such as gaining acceptance for the issues selected, shedding light on the different perspectives regarding impact, identifying challenges, gathering external feedback, and sharing knowledge. SalMar engages in a thorough process to identify stakeholders with whom it will initiate dialogue • Public authorities administer the public interest in the area and grant licences to operate, making them a natural inclusion for stakeholder dialogue. • Selection and approval of suppliers and engagement with local stakeholders and in R&D activities is determined by management teams in the various parts of the company. • Identification of the NGOs with which SalMar will have direct contact is determined by Group Management. The table shows the various stakeholder groups that are included in SalMar’s analyses. SalMar’s stakeholders Internal influence Business associates Customer groups External influence Employees Partners External customers Government / regulatory authorities Shareholders/investors Suppliers New customers Industry associations Board and Group Management Service providers International customers Discussion partners R&D partners National customers NGOs Research establishments Local communities Media 25 Sustainability and Corporate Responsibility Transparent reporting and benchmarking Open and transparent reporting of our performance increases our stakeholders’ trust in us. In 2023, we continued our efforts to report through a greater variety of channels. In furtherance of this, SalMar has also chosen to continue commission third- party verification of its sustainability KPIs and reporting in accordance with the Global Reporting Initiative (GRI). Benchmarking on sustainability and innovation trends is also important for SalMar to understand its position in the industry. This is done through a variety of channels. The table below shows some of the ways SalMar reports on sustain- ability-related matters. Annual Report Integrated report combining sustainability reporting with financial reporting. Green Bond Report For the allocation of the received proceeds from the green bond for 2021, SalMar issues reports annually outlining how the proceeds were used in accordance with the green bond framework. The report can be found on salmar.no. CDP Report Reporting to the Carbon Disclosure Project (CDP) involves reporting of strategy, climate, and energy accounts, with associated initiatives and improvements. SalMar reported to the CDP Climate Change in 2023 and will do so again for 2024. In 2023 SalMar received a score of A- for its CDP Climate Change response. ASC reports Audit reports from our ASC-certified sites are available on our website or at www.asc-aqua.org. Green licences A separate report is published annually on SalMar’s experience and evaluation of its operations under green licences. This is available on our website. TCFD Report Along with this Annual Report, SalMar publishes its TCFD report. The report assesses climate-related risks and opportunities, and their financial and operational implications on SalMar. The report can be found on salmar.no. Gender Equality Report In 2022, SalMar published its first Gender Equality Report, evaluating its gender equality practices, hereunder mapping its remuneration practices and involuntary part-time employments. This is a biennial report that complies with the expectations set by the activity duty and the duty to issue a statement set by the Norwegian Equality and Anti-Discrimination Act. Remuneration Report SalMar publishes its Remuneration Report on an annual basis, providing a full disclosure of the company`s remuneration decisions relating to the Board of Directors and the Executive Management Team as well as the related business context. SalMar Policies In 2022, SalMar published 18 sustainability policies on its webpage. These are public statements from SalMar that give insight into how SalMar conducts its endeavours while always considering sustainability in everything we do. Salmar.no Our website is updated regularly. Here you will find relevant information about SalMar. FOURTH QUARTER / 2022 Quarterly Reports Quarterly update of financial and operational results. 26 Sustainability and Corporate Responsibility Sustainability Ratings 2023 SalMar is among Europe’s Climate Leaders – Financial Times and Statista According to the Financial Times and Statista's annual publication, Europe's Climate Leaders 1 , SalMar is acknowledged as standing at the forefront in Europe for reducing Scope 1+2 emission intensity (emissions relative to revenue). The 2023 publication marks the third listing of Europe's Climate Leaders, with SalMar consistently included in all three. SalMar is a Climate Winner in Norway – PwC PwC’s annual Climate Index 2 evaluates the 100 largest companies in Norway on their ability to reduce their climate impact. The report con- cludes that only nine out of the 100 companies are reducing their total climate footprint aligned with the Paris Agreement. SalMar, along with three other aquaculture companies, were announced as “Climate Winners”. 1 https://www.ft.com/climate-leaders-europe-2023 2 https://www.pwc.no/no/pwc-aktuelt/pwcs-klimaindeks.html SalMar is a Low-Risk Company for ESG Risks – FAIRR Initative The Coller FAIRR Protein Producer Index 3 is one of the most detailed assessments of ESG in the world. The Index assesses 60 of the largest listed global meat, dairy and aquaculture companies on ten ESG factors: greenhouse gas emissions, deforestation and biodiversity, water use and scarcity, waste and pollution, antibiotics, working conditions, animal welfare, food safety, governance, and alternative proteins. SalMar ranks 7th among the 60 assessed companies and have for the first time been ranked as a “Low-Risk Company for ESG Risks”. SalMar has an A Score for ESRS readiness – Position Green Position Green’s annual report ESG100 4 reviews the ESG reporting of the 100 largest listed companies from Norway, Sweden, and Denmark, respectively. The 2023 analysis assesses how well prepared the 300 participating companies are for the introduction of the European Sus- tainability Reporting Standards (ESRS). SalMar were given an A rating, and will, as previously mentioned, be reporting in accordance with the ESRS from the 2024 annual report. 3 https://www.fairr.org/resources/reports/protein-producer-index-2023 4 https://www.positiongreen.com/esg100/ SalMar achieved an A- Score in CDP Climate Change – Carbon Disclosure Project (CDP) The CDP Climate Change assessment is an extensive analysis of a compa- ny's climate risks, mitigating actions and commitments. SalMar achieved an A- Score in 2023, placing us in the Leadership category. SalMar is included in the Euronext ESG Index SalMar is included in the Norwegian Stock Exchange’s ESG Index (OBX ESG) 5 , connecting the best performing companies on several hundred ESG KPIs through the Sustainalytics ESG Risk Rating. 5 https://live.euronext.com/en/product/indices/NO0012513474-XOSL 27 Sustainability and Corporate Responsibility Sustainable Supply Chain Management SalMar are experiencing increased attention and expectations from internal and external stakeholders towards a sustainable supply chain management. Rooted at the senior management, supply chain management is an integral part of SalMar’s operational and strategic external dialogue. SalMar acknowledges that sustainability does not only concern our own operations but must be rooted in all processes throughout the value chain. Obtaining and maintaining a sustainable value chain requires dedicated efforts and clear procedures. Please find SalMar’s Procurement Policy and Supply Chain Management Policy on our website. These provide insight into how SalMar works towards ensuring a sustainable supply chain. SalMar’s procurement and due diligence processes assess potential strategic partners on their environ- mental profile, social performance, professional reliability, and their ability to meet our product demands. Compliance with standards relating to social compliance, environmental practices and relevant regulations are also embedded in contracts with suppliers. Regular internal and external supplier audits are an integral part of SalMar’s supply chain management. As part of SalMar’s endeavours to achieve a strong, transparent, and sustainable value chain, and following the Norwegian Transparency Act, SalMar have conducted a due diligence assessment of its value chain related to human rights risks aligned with OECD guidelines. A full statement on findings can be found on our website, in accordance with the Norwegian Transparency Act. SalMar's due diligence process is described in further detail later in this report. For additional information on the topic, please see SalMar’s Human Rights Policy and Whistleblowing Policy on our webpage. Double materiality analysis A detailed and holistic materiality assessment is key to understanding our impacts, risks, and opportunities. The materiality assessment also provides valuable insights into what topics are most important to our internal and external stakeholders, and thereby reflects important focus areas for SalMar going forward. In 2023, SalMar initiated the process of carrying out a new double materiality analysis in accordance with the upcoming Corporate Sustainability Reporting Directive requirements. The analysis goes into even greater depth and will involve a larger number of stakeholders. The results will be published in the next Annual Report, in accordance with the CSRD guidelines. SalMar has performed an annual re-assessment of the existing materiality assessment aligned with the GRI methodology, and the results can be seen in the following figure. The process and results are approved by the Board and the Senior Management. The material aspects identified in our assessment are the foundation for the content covered in this report. The colours indicate the part of the report in which the aspect is described in more detail. Significance for stakeholders Material • Interaction with wildlife • Climate Risk • Waste and nutrient management • Water risk & scarcity • Fish escapes • Fish welfare • Safe and healthy food • Salmon lice • Sustainable feed • Biodiversity • GHG emissions • Human rights • Regulatory compliance • Safe and secure workplaces Important • Collaboration with others • Degree of secondary processing • Research & development • Site environment status • Equality • Local value creation Important Material Significance for SalMar People and Society Environment and Technology Fish 28 Sustainability and Corporate Responsibility Targets in focus: 5.1, 5.5, 5.C: SalMar published its first Gender Equality Report in 2022, concluding full gender pay equality at SalMar. SalMar also published its first public policy on Non-discrimination and Equal Opportunities, which can be found at our website. Moreover, SalMar’s female ratio has increased four years in a row. Targets in focus: 6.3, 6.4, 6.6: SalMar promotes circular economies and is working tirelessly to continue its tran- sition towards these. SalMar is continu- ing to increase water use efficiency and is transitioning to recirculating aquacul- ture systems. Targets in focus: 7.2: SalMar have committed to the Science Based Targets initiative to reduce its greenhouse gas emissions by 42% from 2020 to 2030. For SalMar’s direct opera- tions, the most important activities involve transitioning to renewable energy sources. This is one of SalMar’s key focus points towards 2030. UN’s Sustainable Development Goals At SalMar, we are committed to supporting the United Nations' 17 Sustainable Development Goals (SDGs) through our actions and initia- tives. While all SDGs are important to us, some are particularly relevant and provide areas where we can make the greatest contribution. We prioritize these SDGs as focus areas for our Group's efforts. More information on the targets for each goal can be found at sdgs.un.org/goals Targets in focus: 2.4: Salmon farming is a sustainable way of producing healthy, nutritious food with a low carbon footprint, low water con- sumption and high resource efficiency, all on the terms of the salmon to ensure high welfare standards and quality. Targets in focus: 3.4: Salmon is a healthy source of protein, an important source of omega-3 and a good source of vitamins and minerals. Moreover, it is well documented that eating salmon contributes to protect against cardiovas- cular disease. Targets in focus: 8.5, 8.8 SalMar is dedicated towards ensuring that all our employees are valued, safe and respected in the workplace. This includes our supply chain. SalMar has an anony- mous whistleblowing channel available for all public and public policies on Non-dis- crimination and Equal Opportunities, and Human Rights. 29 Sustainability and Corporate Responsibility Targets in focus: 11.3: SalMar is dedicated to its employees and to the local communities of where we oper- ate. SalMar is conscious that operating in remote areas requires contributing to the local communities so that they also see the value of SalMar’s presence. Targets in focus: 9.4: SalMar is a forerunner in the industry when it comes to improving, upgrading and transforming operations and activi- ties. Through more than 30 years, SalMar has been adapting and developing new ways of operating. In recent years, SalMar has brought more newbuilds to rural parts of Norway. Targets in focus: 10.1, 10.2, 10.4 SalMar contributes to reducing inequalities through fair, non-discriminatory wages, social inclusion for all employees and due diligence of social standards and equality practices through our value chain. Our Non-Discrimination and Equal Oppor- tunities Policy is available on our website. Targets in focus: 13.1, 13.3: SalMar published its TCFD Report, evaluat- ing the possible financial impacts on SalMar from different climate-related scenarios. SalMar takes climate change very seri- ously and is working towards limiting our impacts on the climate. Furthermore, we are ensuring that SalMar is resilient to the consequences that climate change brings. Targets in focus: 12.2, 12.3, 12.4, 12.5, 12.6, 12.8: Borrowing natural resources to carry out our operations brings responsibilities that SalMar takes very seriously. This involves responsible and sustainable operations in all parts of the value chain. SalMar is dedicated to reducing waste, food waste and increasing recycling rates and the procurement of products or services with circular designs. Targets in focus: 15.2: SalMar has, along with the rest of the Nor- wegian fish farming industry, taken a firm stance in the battle against deforestation. SalMar will only purchase feed ingredients that have been certified by a recognized entity to be deforestation free. This way, we ensure that our activities do not con- tribute to harmful deforestation. Targets in focus: 14.1, 14.2 SalMar has responsibilities concerning surrounding ecosystems to our opera- tions. SalMar is leading projects to gain more insight into our impacts on sur- rounding bodies and how to mitigate the adverse impacts. The fish farming indus- try is strictly regulated, but SalMar always wants to go beyond to be proud of the way we do things. Targets in focus: 16.5, 16.8: SalMar has a public policy on Anti-corrup- tion and bribery stating that SalMar will stay cognizant on this matter and report any risks or events of wrongdoings. SalMar also takes a firm stance stating that we have zero tolerance for corrupt practices from any employee, manager, member of the Board of Directors or any related third party. Targets in focus: 17.14, 17.17 Stakeholder engagement and estab- lishing common goals and pathways toward sustainable development is one of SalMar’s most important contributions to the industry, to local communities and to our other stakeholders. We believe that partnership is integral to our shared suc- cess of reaching our goals. 30 Sustainability and Corporate Responsibility Identifying Taxonomy-Eligible Activities As a fish farmer and producer of healthy food with a global reach, SalMar are involved in many economic activities. However, our main activity, aquaculture and food production, of which the majority of our economic activities lay, is not included as a potentially sustainable activity. It is our hope that the EU expands its list of sustainable activities to include food production, a necessary activity for humanity and an activity with a significant potential for being done in a sustainable way. SalMar has activities strongly related to all the environmental objectives and consider all objectives to be important to our endeavours. When going into the details of the Taxonomy-eligible activities, only one activity was significantly related to SalMar’s financial activities and within the scope of SalMar’s reporting: Activity 6.10 - Sea and coastal freight water transport, vessels for port operations and auxiliary activities. The activity is a transitional activity for Climate Change Mitigation. The activity was assessed against the Climate Change Adaptation criteria which was found not relevant. Each vessel has been assessed separately resulting in lowest level of disaggregation. SalMar are involved in several other Taxonomy-eligible activities through the use of third parties, e.g., through supplying our sea sites with onshore electrical power and through the recovery of our bio- waste by anaerobic digestion or composting, but the reporting privilege lays with those third parties. Also, SalMar’s substantial activity of building our newest smolt facility at Tjuin in 2023 was disregarded from the reporting, as Taxonomy Activity 7.1 – Construction of new buildings separates stringently between the structure of the building (e.g. walls, floors, roof) and the technical equipment of the building. Since the building is made for a technical purpose, we found it difficult to separate the two, especially in our accounts. Climate Change Mitigation Holding the increase in the global average temperature to well below 2°C and pursuing efforts to limit it to 1.5°C above pre-industrial levels, as laid down in the Paris Agreement. Sustainable Use and Protection of Water and Marine Resources Achieving the good status of bodies of water or preventing the deterioration of bodies of water that already have good status. Pollution Prevention and Control Prevent and reduce pollution significantly, covering air, water, and soil pollution, and comply with relevant environmental standards. Climate Change Adaptation Adjustment to actual and expected climate change and its impacts. Transition to a Circular Economy Foster the efficient use of resources, promote recycling, and minimize waste generation to support the transition to a circular economy. Protection and Restoration of Biodiversity and Ecosystems Preserve and restore good condition and resilience of ecosystems and the con- servation status of habitats and species. EU Taxonomy Reporting The EU Taxonomy refers to the framework established by the European Union to facilitate sustainable finance by providing a standardized classification system for environmentally sustainable economic activ - ities. It is a key element of the EU's broader sustainable finance agenda aimed at aligning private sector investments with the EU's sustainability goals, particularly those outlined in the European Green Deal. SalMar’s approach to the EU taxonomy starts by identifying the financial activities that have a potential of being sustainable, as per EU Regulation 2020/852 and the supplementing Delegated Acts. These activities are denoted “Taxonomy-eligible activities”. Next, the activities need to meet comprehensive technical criteria to be considered sustainable, including making a substantial contribution to one or more of the EU’s environmental objectives and doing no significant harm to any of the other objectives. Moreover, the activities must meet the Minimum Safeguards set out in the EU Regulation. The Minimum Safeguards aims to establish whether companies engaging in environmentally sustainable activities also meet certain standards when it comes to human and labour rights, bribery, taxation, and fair com- petition. If Taxonomy-eligible activities meet the technical criteria and the Minimum Safeguards, they are considered sustainable, denoted “Taxonomy-aligned activities”. The EU’s Environmental Objectives 31 Sustainability and Corporate Responsibility Identifying Taxonomy-Aligned Activities After deriving the Taxonomy-eligible activities, the next step is to evaluate the technical criteria for the activity to ensure substantial contribution and no significant harm. For the Taxonomy-eligible activity 6.10 - Sea and coastal freight water transport, vessels for port operations and auxiliary activities, the substantial contribution to Climate Change Mitigation encompasses the vessels’ energy consumption being derived at least 25% from zero direct (tailpipe) CO emission fuels, and the vessels not being dedicated to the transport of fossil fuels. SalMar's hybrid and electrical workboats meet this criteria, but the hybrid well-boats on long-term lease could not meet this criteria. The Do No Significant Harm criteria encompassed undertaking an environmental impact assessments and evaluating the risk of environmental impacts and impacts on water quality, fulfilling requirements towards waste handling, scrapping regulations, storage of hazardous materials, limiting emissions to air and to sea, documenting treatment and disposal of ballast water as well as coating used on the vessels, reducing noise and vibrations through choice of propellers and hull design, and overall limiting impacts on biodiversity and ecosystems. Complying with Minimum Safeguards Finally, it is necessary to verify that SalMar’s activities are undertaken while complying with the minimum safeguards set out under the Taxonomy Regulation. Please refer to the following sections of this report and/or our public policies for information on how we comply with the requirements: Human rights, including workers’ rights See the section on Society and Value Chain in this report and our Human Rights Policy. Bribery/corruption See our Anti-Corruption and Bribery Policy on our website. Taxation See our financial notes relating to tax in this report. Fair competition See our Anti-Competitive Behaviour Policy on our website. Note also that all points under the Minimum Safeguards are included in our due diligence process towards our suppliers, ensuring compliance with the Minimum Safeguards also in our value chain. Accounting Policies The performance disclosure to the EU Taxonomy shows an eligibility and alignment with EU Taxonomy definitions of sustainable activities for Turnover, CAPEX and OPEX. The Turnover definition of the Del- egated Act 2021/2178 Annex I coincide with the turnover reported in SalMar's Consolidated Financial Statements. The CAPEX comprises the additions made in the reporting year, and are broken down as follows with the relevant references to the financial notes: (NOK 1,000) CAPITAL EXPENDITURE IAS 16 PROPERTY, PLANT & EQUIPMENT IAS 38 INTANGIBLE ASSETS IAS 41 AGRI- CULTURE IFRS 16 LEASES RIGHT OF USE ASSETS SUM CAPEX Reference to financial notes 3.3 3.1 3.6 3.4 Additions through purchase 2,268,811 339,163 13,863,422 746,626 17,218,022 Additions through business combination (excl. Goodwill) 0 0 0 0 0 SUM CAPEX 2,268,811 339,163 13,863,422 746,626 17,218,022 The OPEX definition as presented in the Delegated Act 2021/2178 Annex I cannot be derived directly from SalMar’s financial notes. All CAPEX and OPEX disclosed are of Type A. Since we only disclose on one Taxonomy-eligible activity – double counting is not relevant and has not been assessed further. Please see the reporting documents presented in the EU Taxonomy Calculator template as an attachment to this Annual Report, available on our website. 32 Sustainability and Corporate Responsibility Performance Disclosure The following tables and graphs summarise SalMar’s performance on the EU Taxonomy Reporting for 2023. Turnover CAPEX OPEX Non Eligble Eligble, not AlignedEligble and Aligned (in million NOK) Turnover CAPEX OPEX Eligible and Aligned Activity 0 57 2 Eligible, not Aligned Activity 0 302 70 Non-Eligible Activities 28,219 16,858 1,037 Total 28,219 17,218 1,109 Eligible and Aligned Activity 0% 0.3% 0.2% Total Eligible Activity 0% 2.1% 7.0% 33 Sustainability and Corporate Responsibility Salmon Living Lab SalMar is launching an ambitious innovation and R&D initiative, Salmon Living Lab, calling upon industry leaders, NGOs, academia, and other people who live by and with the salmon to come together to share and learn. In addition to bringing partners across the salmon supply chain together, the Salmon Living Lab will also lead to the building of an innovation and R&D centre which will house various activities and function as a focal point for knowledge. In addition to its expertise, SalMar will be supporting the initiative with a strong financial commitment. One envisions about NOK 500 million to ensure that the project get off on a good start. The first partner to sign up for the collaboration is the global food corporation Cargill. The aquaculture industry has invested heavily in technology, now it needs to invest more in biology. The Salmon Living Lab will lead the way into the future. “Our aquaculture industry is at a crossroads. We have celebrated significant achievements in the past. We have succeeded in bringing large quantity of much sought-after salmon to customers and consumers worldwide. Now, we must acknowledge that we face greater challenges than we have done before. We must realize that there are simply too many gaps in our knowledge. We need to know more about the salmon which is the most important part of our value chain.” Gustav Witzøe, Founder and Chairman of the Board “We believe that bringing together the holistic capabilities of SalMar and Cargill will drive greater impact in improving animal welfare and sustainability, ultimately protecting, and aiding further sustainable growth of this critical industry. There is a need for more collaboration to tackle the challenges we are currently facing.” Helene Ziv-Douki, Cargill Aqua Nutrition President 34 Sustainability and Corporate Responsibility Fish Fish At SalMar, the salmon is our captain, and everything we do must be on the salmon’s terms. A “Passion for Salmon” is the foundation of SalMar’s entire business. Our goal is to produce sustainable, healthy and nutritious food for a steadily growing global population. And we will do so with the salmon in focus. Fish welfare is paramount for successful fish farming, and SalMar is actively engaged in developing and implementing initiatives and procedures to improve fish welfare. We acknowledge that every deci- sion we make regarding the fish's health also affects the financial, social, and environmental aspects of the value chain. Fish welfare exemplifies SalMar's comprehensive approach and highlights the importance of sustainable aquaculture, which must prioritize the well-being of the salmon. 35 Sustainability and Corporate Responsibility Fish Our KPI Scorecard The KPI for Norway reflects the results for SalMar and subsidiaries in Norway. The KPI for Iceland reflect the results of SalMar's Icelan- dic subsidiary, Arnarlax. Group Norway Iceland Target 2023 2022 2021 2023 2022 2021 2023 2022 2021 Survival 12-month rolling survival rate 1 >97% within 2030 93% 94% 95% 94% 95% 95% 86% 90% 93% Antibiotics Grams of active pharmaceutical ingredient (API) / tonne produced 0 0 0 0 0 0 0 0 0 0 Lice Number of observations over the national lice limits 0% 1% 3% 2% 1% 3% 2% NA NA NA Interaction with wildlife 2 Birds – Accidental mortality 0 0.73 0.38 0.44 0.74 0.32 0.47 0.43 0.43 0.17 Birds – Euthanised 0 0.15 0.05 0.15 0.16 0.09 0.16 0 0 0 Marine mammals – Accidental mortality 0 0 0 0 0 0 0 0 0 0 Marine mammals – Euthanised 0 0.01 0 0 0.01 3 0 0 0 0 0 Fish escapes No. of incidents 0 3 2 5 3 2 4 0 0 1 No. of escaped fish 0 168 11 81,790 168 11 226 0 0 81,564 Fish feed Certification of marine ingredients in fish feed 4 100% 94% 94% 97% 94% 94% 97% 96% 100% 98% Certification of soya in fish feed 5 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% FFDR (Fish meal) 6 <1.2 0.49 0.46 0.36 0.49 0.47 0.36 0.46 0.34 0.32 FFDR (Fish oil) 6 <2.52 1.48 1.36 1.63 1.45 1.36 1.64 1.91 1.38 1.56 Biological feed conversion ratio 7 1.10 within 2030 1.12 1.13 1.14 1.12 1.11 1.13 1.19 1.26 1.30 Certification Share of active sites certified at end of year 8 100% 99% 100% 99% 100% 100% 100% 83% 100% 83% 1 12-month rolling survival rate measured in accordance with the Global Salmon Initiative’s methodology. 2 Calculated as the number of interactions per active site during the reporting year. 3 A common minke whale made its way into one of our net pens, and the Directorate of Fisheries decided that the safe measure was to euthanise the mammal. 4 Marine ingredients to make fish meal and fish oil, certified in accordance with Marine Trust, MSC or equivalent. 5 Certified in accordance with ProTerra, Europe Soya or equivalent. 6 Calculated based on ASC methodology: https://www.asc-aqua.org/wp-content/uploads/2022/09/ASC-Salmon-Standard-v1.4-Final.pdf 7 Calculated as the total weight of feed fed at sea divided by the gross production at sea – i.e., the kg of feed used to produce one kg of salmon. 8 Sites certified in accordance with GlobalGap, Debio or ASC. All targets are timebound for the following calendar year unless otherwise specified. 36 Sustainability and Corporate Responsibility Fish Fish Welfare SalMar’s endeavours in the area of fish welfare build on the “Five Freedoms of Animal Welfare”. Good fish welfare requires systematic efforts to ensure that the fish’s welfare is safeguarded by providing them with optimal conditions throughout their lifecycle. SalMar's Fish Health and Fish Welfare policy can be found on its website. The policy states how SalMar works to ensure the highest standards for fish health and fish welfare at all times, including our cleaner fish. SalMar also has a separate public policy on responsible slaughtering practices of our salmon, named Humane/Ethical Killing Policy. SalMar uses a variety of metrics to measure fish welfare. Among others, SalMar monitors the salmon's appetite, growth rate, skin health, and wounds during operations, and oxygen uptake during transport. All in all, fish welfare is a prerequisite for SalMar’s business and is thus treated with the utmost importance. 37 Sustainability and Corporate Responsibility Fish We strive to increase our fish’s survival rate In our view, the most reliable indicator of fish welfare is the survival rate of fish from the time they are transferred to our sea farms until they are harvested. To measure this rate, we use a 12-month rolling survival rate, which is measured in absolute numbers and follows the Global Salmon Initiative's methodology. SalMar considers all lives of equal value, which is why all survival rates published in the report are based on number of mortalities rather than biomass. Over the past few years, SalMar has achieved a survival rate of between 94% and 96% in Norway. In 2021, we set an ambitious target of reaching a 97% survival rate by 2025. However, we have since seen a slight decrease in the survival rate. A major event affect- ing survival rates in Norway was the jellyfish attack in our Northern operating regions beginning late 2023. In Iceland, we also experienced a decrease in the survival rate. This was partly due to sea lice levels rising above previously seen levels. Our goal is to achieve a survival rate in Iceland of 95% by 2028 and 97% survival rate in Norway by 2030. SalMar analyzes seawater samples from around our sea farms as a core part of our algae management plan. Tests are carried out periodically and especially if there is suspicion towards potential algae blooms in the area. Samples are also taken if we see unusual fish behavior and prior to delousing operations. We recognize that some of the main causes of mortality are smolt quality, infectious diseases, and fish handling. In 2023, we made progress in enhancing smolt quality and fish handling in connection with delousing treatments. However, we acknowledge that we still need to improve our management of diseases such as PD, HSMI, ISA, and CMS, as well as gill health. When disease incidents happen, we comply with the local authority's protocols and report the incidents to the Norwegian Food Safety Authority, who lists diseases by cate- gory considering their potential effect on fish and other animals, communities and environment. SalMar with strong results compared to peers Benchmarking against industry peers is an important part of develop- ing an understanding of important focus areas and overall peformance. SalMar's annual survival rate is presented also as a monthly average survival rate through the year in the table below: Group Norway Iceland 12-month rolling survival rate by GSI methodology 93% 94% 86% Monthly survival rate 1 99.4% 99.5% 98.8% Our survival rate is high compared to peers, but we will continue our tireless work towards improving our results further. We promote cleaner fish welfare SalMar produces in-house cleaner fish for risk-based use to combat salmon lice in the salmon sea phase, but the number of cleaner fish used has been reduced over the last years. SalMar finds it only natural to promote fish welfare also when it comes to cleaner fish. We aim to maximize cleaner fish survival rates by farming robust cleaner fish and giving them healthy living conditions inside the net pens. SalMar uses a dedicated feed for cleaner fish which helps them grow and stay healthy while carrying out their operations. Furthermore, we use artificial kelp inside the net pens to give the cleaner fish a familiar environment where it can eat, hide out, rest and sleep when not eager at work. SalMar is continuously involved in R&D projects regarding cleaner fish husbandry, relating to cleaner fish species, size, feed, and living conditions. Cleaner fish are also included in our Fish Health and Fish Welfare policy which can be found on our website. We engage in fish welfare R&D SalMar is an active part of multiple R&D projects related to fish health and fish welfare. To name a few, SalMar is involved in the DigiHeart project with the Norwegian Veterinary Institute and the Norwegian University of Life Sciences (NMBU) which aims to better understand underlying causes of heart deformations in salmon, including digital- ization of cardiac morphology to examine discrepancies. SalMar is also engaged in the Optismolt pro- ject with the NMBU to increase the knowl- edge on the salmon's smoltification process and how input factors like temperature, light, and salinity affects fish welfare. We prevent antibiotic resistance In 2023, SalMar did not use antibiotics, nei- ther in Norway, nor in Iceland. This shows that the com pany's commitment to avoiding the use of antibiotics is ongoing. Important steps to eliminate the use of antibiotics include the vaccination of fish, ensuring good day-to-day fish welfare and upholding the zoning boundaries between generations of fish to minimise the spread of bacterial infection. SalMar engages with public policy officials and civil organisations to ensure that a responsible approach to the use of antibiotics is broadly implemented. Resistance to antibiotics is a growing problem worldwide. To prevent the development of resistance it is important that all food producers do what they can to keep the use of antibiotics as low as possi - ble. The Norwegian monitoring programme for antibiotic resistance (NORM-VET 2 ) concludes once again that the use of antibiotics in the production of Norwegian salmon is extremely low compared to all other animal protein sources. Antibiotics usage 2023 0 1 Monthly mortality rate calculated as number of mortalities in the sea phase in the last 12 months / (number of mortalities the sea phase in the last 12 months + number of individuals harvested in the last 12 months + number of individuals culled in the sea phase + closing number at sea in the last month) / 12. 2 Source: https://www.vetinst.no/overvaking/antibiotikaresistens-norm-vet 38 Sustainability and Corporate Responsibility Fish The fish have plenty of space As regulated by the current legislation in both Norway and Iceland, maximum density is 25 kg/m 3 (2.5%) for conventional salmon and 10 kg/m 3 (1%) for organic salmon. SalMar complies with this in all geographies, and on average the density in each individual net pen is significantly lower than the requirement. This means that the salmon always has more than enough space to freely move, which is an important prerequisite for good fish welfare. The average stocking density in 2023 was 8.45 kg/m3 in Norway and 3.74 kg/m3 in Iceland. As a fish welfare measure, we have decided to set a maximum limit of 13 kg/m3 in the winter season in Iceland. We keep the number of sea lice down Sea lice are a naturally occurring parasite in seawater. As fish farmers, it is our responsibility to ensure that our salmon can coexist with the lice. The presence of sea lice can have negative effects on the quality of the salmon's flesh and in severe cases can lead to disease and death. To prevent this, we take preventative measures to minimise lice numbers and use treatment regimes that are gentle to the fish and the environment. Our goal of staying within the limits set by regulations remains unchanged, and in 2023, SalMar worked systematically to control sea lice at our sites sites in Norway. This resulted in a significant improvement in the share of sea lice observations above national limits, which decreased from 3.3% in 2022 to 0.9% in 2023. In Norway the current regulation stipulates a maximum permitted number of lice. As a rule, the number is capped at 0.5 adult female lice per fish. However, for certain types of licence and in certain areas, the lice threshold is 0.2. All fish farmers report lice numbers to the authorities weekly using the government’s online portal Altinn. The updated status from all our farming sites is publicly available at www.barentswatch.no. In Iceland, the procedures with the national authorities are different to Norway regarding delousing operations. When the lice levels get close to 0.5 lice per salmon, companies can apply to the Icelandic Food Authority (MAST) for a delousing operation. MAST then engages with relevant third parties to evaluate whether to allow a delousing operation. Since there is no lice limit set by law in Iceland and the pro- cedures for delousing is different, Arnarlax is not included in this KPI. The main strategy for reducing the number of treatments is through preventive measures, such as lice skirts, reduced cycle time and fal- lowing, as well as risk-based use of cleaner fish produced in-house. In addition, SalMar has established its own internal capacity for non-medicinal delousing. We are working systematically to reduce the mortality rate from these operations. This includes strong risk assessments for the treatment process and performing evaluations after treatment has been completed. All personnel handling our fish have been sufficiently trained, and follow our handling policy and procedures. Fish welfare is our main focus, and new tools are being developed to improve these work processes. Throughout 2023, SalMar made ongoing efforts to enhance our technical equipment to make it more gentle on the fish and reduce the need for fish handling. We also focused on developing effective tools, such as indicators, that can aid us in better predicting the status of the fish's welfare. These efforts will continue into 2024. Additionally, we have made continued investments to increase our treatment capacity. SalMar introduced the innovative technology of lice lasers in 2022, where advanced optics identify sea lice on the salmon and remove them using a laser pulse. SalMar will continue to invest further in lasers in 2024. Furthermore, SalMar also introduced the OptoScale optic solution for increased insight and monitoring of fish welfare indicators, weight and lice counts. This has also been a progressive initiative that SalMar will continue to realize in 2024. 2021 01.01 0.1 0.2 0.3 31.12 2022 2023 97.5% water 2.5% fish Medication Medication zero emissions Active operations Non-medicinal treatments, lasers, and harvesting out Cleaner ﬁsh Risk-based use of cleaner ﬁsh produced in-house Preventive measures Lice skirts, cycle time, fallowing, operating routines, collaboration and genetics Average no. of adult female lice per week at SalMar in Norway Visualisation of SalMar’s anti- lice strategy: 39 Sustainability and Corporate Responsibility Fish We prevent and limit fish escapes SalMar has a zero-vision with respect to fish escapes and takes all such incidents seriously. In 2023, SalMar had 3 reported incidents in Norway and none in Iceland. A total of 168 fish escaped from our facilities in Norway and Iceland, which corre- sponds to less than 0.0001% of all the fish SalMar had at its sea farms. The authorities were informed of the three incidents at an early stage and non-conformance analyses were performed. Relevant remedial measures were then implemented as per established procedures, including recapturing all of the escaped salmon from one of the incidents. SalMar continues to strive every day to prevent fish from escaping. This means focusing on day-to-day routines for monitor- ing and checking the technical equipment, as well as procedures for operations involving the handling of fish. In addition, we continue to collaborate with suppliers and research institutes on the development of more secure equipment. SalMar recognizes that damage to net pens is a common cause of fish escapes in the industry. Therefore, in recent years, we have col- laborated with our net pen supplier to test different types of pens to find one that offers better protection against escapes. We have found a type of pen that not only provides enhanced protection but also delivers additional environmental benefits. Consequently, SalMar has launched an investment program to reduce incidents related to our net pens, even though our current pens are certified and are subject to strict controls. The number of escape incidents were halved from 2020 to 2021 and more than halved again from 2021 to 2022. The decrease in incidents in the last years have come despite increas- ing production, making these improvements extra demanding. No financial costs arising from fish escapes were recorded in 2023. We remain committed to continually improving our net pens to ensure that we meet our targets for fish welfare and sustainability and continue to target zero escapes. Partnership for wild salmon SalMar is committed to preserving wild salmon populations and ensur- ing that aquaculture can coexist with those who depend on wild salmon fishing in our operating areas. We are engaged in several biodiversity initiatives that aim to monitor wild salmon populations and track any escaped farmed salmon. For years, we have partnered with research institutes to monitor Norwegian rivers for escaped farmed salmon. Over several years, SalMar has been a partner in monitoring the fol- lowing rivers around Trondheimsfjord: Gaula, Nidelva, Orkla, Skauga, Steinkjerelva, Stjørdalselva, Verdalselva, Figga, Norddalselva and Stord- alselva. Scale samples from all fish caught in the rivers are sent for analysis to the Norwegian Veterinary Institute, to determine whether there are farmed salmon in the wild breeding population. 0.7% of the salmon tested in 2023 were farmed salmon. In Troms, we participate in the Wild Salmon Industry Collaboration Project, which aims to monitor the status of rivers and implement measures to increase the number of wild salmon in the area. The pro- ject covers the following rivers and watercourses: Tennelvvassdraget, Vardnesvassdraget, Ånderelva, Grasmyrvassdraget, Brøstadelva, Ross- fjordvassdraget, Skøelva, Salangselva and Breivikelva. We also work closely with Gramyrvassdraget in Senja and Målselv for monitoring and emergency preparedness. In Finnmark, SalMar participates in such projects for counting farmed salmon in Altaelva and Repparfjordelva, where the level of farmed salmon detected was 0 and 0.5% respectively. Furthermore, we collaborate with NINA, Ferskvannsbiologen, and Skandinavisk Mil- jøundersøkelser AS for advice and practical initiatives related to wild salmon conservation. Along with the Norwegian Seafood Federation and other industry players, SalMar is also running a project relating to the tracing of escaped farmed salmon. This will be achieved through a combination of geoelement markers (traces in fish scales) and DNA (tracing of the parent fish’s DNA). This will make it possible to trace escaped farmed fish back to their owner. Efforts to achieve this capability have been underway for several years. OURO 1 is a joint industry initiative which was established in 2015 in response to statutory regulations requiring action to reduce the genetic impact of farmed salmon on wild fish stocks. The OURO initiative’s activities are funded by SalMar and other players from the aquaculture industry. We impact wildlife as little as possible For SalMar, it is important to have as little impact on wildlife as possible, and we are working actively to prevent this. However, our presence will sometimes affect other animals. In 2023, we experienced an increase in the number of incidents in Norway. SalMar have, as a response, established an internal taskforce to investigate best practice and aim for using equipment at our sites that minimises the risk of harm to wildlife. We will continue working to reduce the number of such incidents in 2024, as we target no interactions with wildlife. Share of escaped salmon for the Group <0.0001% 1 http://utfisking.no 40 Sustainability and Corporate Responsibility Fish Sustainable Feed Fish feed must have the correct nutritional content, consistency and taste. But for SalMar, it is equally important that the feed is gentle on the environment. We require our feed suppliers to ensure that the ingredients they use are certified, so we can confidently sell a product that has been sustainably produced. This means that the feed ingre- dients are not genetically modified, have not been produced in areas threatened by deforestation and do not depend on endangered fish stocks. See SalMar’s Deforestation Policy at salmar.no. Sustainable feed ingredients SalMar uses an all-round feed that optimises production and pro - motes good fish health. In other words, a high-value salmon feed that ensures good growth, a low feed factor and meets the salm- on's nutritional needs. In 2023, around 347,000 tonnes of dry feed pellets were used in SalMar’s salmon farming and smolt operations in Norway, and 21,000 tonnes in Iceland. In the pie chart below, a typical pellet is shown by ingredients. The sum of these ingredients makes up a healthy feed for our salmon that optimizes fish health, welfare and growth. SalMar has a target for 2024 to increase its use of trimmings and by-products in the feed, as an important step in our transition to cir- cular economies. In 2023, 27% of SalMar’s marine ingredients derived from trimmings. More than 60% of the feed for organic salmon was derived from trimmings. SalMar also targets to increase the inclusion of novel feed ingredients. SalMar always seeks to apply clear and comparable KPIs and tar- gets. Because of varying definition of "novel feed ingredients" in the industry, SalMar does not wish to set a public numeric target for the inclusion of novel feed ingredients in our feed. However, we stay true to our commitment towards always choosing the best feed composi- tion for our fish, the climate, and the environment. This involves the increased inclusion of innovative, novel, low-emission feed ingredients across operations, as informed by SalMar's risk assessments. SalMar not only monitors the ingredients it uses, but also evaluates the nutritional value of the feed utilized in its hatcheries and sea farms. To verify the quality, SalMar examines the fat, protein, phosphorus, and fiber content of the feed. Moreover, SalMar conducts regular inspections on the physical quality of the feed upon receipt to identify any instances of non-conformances. How we safeguard our fish feed • All fish feed used by SalMar is required to be certified. • All fish feed used is deforestation-free and not genetically modified. • SalMar has dedicated personnel who work with fish feed and its nutritional content. • Continuous improvement through employee training and R&D. • SalMar has chosen to maintain a strategic partnership with our main feed suppliers (Cargill Aqua Nutrition Norge and Skretting), with whom we work to include sustainable ingredients in the feed we use, improve agricultural practices and nutrient management. • SalMar is involved in several R&D projects investigating the use of novel feed ingredients, such as algae, insect meal, kelp, salmon oil, seafood trimmings and excess raw material from processing. • SalMar recognizes that soil health and nutrient management is a global challenge in agriculture and require our feed suppliers to manage soil health and perform nutrient management in a responsible and sustainable manner. We engage with our suppliers to discuss ways of reducing nutrient spill, and make sure that we hold ourselves accountable. Carbohydrates – 10% Wheat, corn, etc. Microingredients – 3% Vitamins, minerals, etc. Vegetable oil – 23% Rapeseed oil, lineseed oil etc. Marine proteins – 12% Fish meal, trimmings etc. Vegetable protein – 40% Soy, guar meal, etc. Typical pellet ingredients Marine oils – 11% Fish oil, algae oil etc. 41 Sustainability and Corporate Responsibility Fish Sustainable Feed Sourcing Marine ingredients Marine ingredients currently make up approximately 23% of the fish feed, where 12% was fish meal and 10% was fish oil. 27% of the fish meal came from trimmings, and 26% of the fish oil came from trimmings. SalMar requires all its feed suppliers to purchase marine ingredients that are certified in accordance with the Marine Trust, MSC, or equivalent. This is to ensure that the fish stocks from which they are drawn are sustainable. In 2023, 94% of the marine ingredients used by our feed suppliers came from certified fisheries. This is a small improvement from 2022, but still some way off our target. The uncertified ingredients were mainly due to a weak supply of marine ingredients in the market and were largely derived from trimmings and legal by-catch. In 2023, the share of uncertified ingre- dients also was negatively impacted by some of the Danish fisheries transitioning from MSC to MarinTrust certification, leaving a period of no certification status. Through due diligence and continuous dialogue, we ensure that our feed suppliers are working purposefully to ensure sustainable feed sourcing. Our feed suppliers are working on the ground and at sea in several parts of the world, to ensure that fisheries are enrolled in Fishery Improvement Projects. Instead of simply changing the supply chain, leaving the issue unresolved, this is a targeted effort to improve the fisheries around the world. SalMar will work purposefully with its suppliers to reach its target of 100% certified ingredients in 2024. As a measure of feed sustainability, we use the Fish Forage Depend- ency Ratio (FFDR). This quantifies our dependence on wild fish stocks as raw materials in our feed. This is done by assessing the volume of live fish that is required to make the amount of fish meal or fish oil needed to produce one unit of farmed salmon. The lower the FFDR we can achieve, the more salmon we can produce based on a globally limited supply of marine raw materials. According to the ASC standard, the fish feed is withing sustainable limits if its FFDRm is less than 1.2 and its FFDRo is less than 2.52. In 2023, SalMar’s Norwegian and Icelandic operations both achieved values well below this level. By volume, the largest sources of marine ingredients in our feed were blue whiting and herring. See the feed suppliers’ own sustainability reports for further details 1 1 Skretting: https://www.skretting.com/en/sustainability/ sustainability-reporting/ Cargill Aqua Nutrition: https://www.cargill.com/sustainability/aquaculture/ aquaculture-sustainability-reporting 42 Sustainability and Corporate Responsibility Fish Vegetable ingredients Vegetable raw materials have become an important ingredient in fish feed. Vegetable-based proteins make up about 39% of the feed and vegetable oil make up about 22%. Responsible agriculture is therefore an important part of SalMar's value chain. SalMar ensures sustainable agricultural practices through partnership with feed farmers and sup - pliers, and through certifications. The sourcing of vegetable raw mate- rials for salmon feed, especially soy, has gained attention due to risks of deforestation and biodiversity loss. A prerequisite for all purchased soy by SalMar is that it is certified by ProTerra or its European equivalent Europe Soya. To reach the certifica- tion, feed farmers must comply with ten core principles as presented to the right. The soy purchased from Brazil in 2023 originated from the regions Minas Gerais, Paraná, Mato Grosso, and Goiás Through these principles, SalMar’s due diligence processes and our clear policies towards only purchasing certified feed ingredients, we ensure that our feed is sourced responsibly, with responsible water management, pollution control, pesticide control, sustainable nutri- ent management, good working conditions and rights for workers, and traceability on our feed resources. SalMar requires all soy to be traceable to region within the country sourced from, both for direct and indirect suppliers. Deforestation and conversion free feed 100% 6: Pollution and waste management This principle demands responsible management of wastes and pollutant materials, and control of atmospheric pollution. 7: Water management This principle requires farmers to conserve quantity and quality of existing natural water resources and implement best practices for water management. 8: Greenhouse gases and energy management This principle requires organisations to adopt practices to minimise the use of energy from non-renewable sources and to derive an increasing proportion of their energy from renewable sources such as solar and wind, or from local, recycled materials. Also, a greenhouse gas emission inventory and reduction targets should be made. 9: Adoption of good agricultural practices This principle requires farmers to use pesticides responsibly, and to with- stand from the use of pesticides listed in WHO Classes Ia, Ib and II lists, Rotterdam Convention and Stockholm Convention, as well as forbidden by local or national law. Farmers are also required to apply methods for agrochemicals use, including pesticide, that minimise harm to human health, wildlife, plant biodiversity, and water and air quality. Further, farmers must apply a suitable programme of pesticide rotation designed to minimise development of pest resistance and improves soil quality. Handling, storage, transport and disposal must be done according to manufacturer's instructions and legal requirements. 10: Traceability and Chain of Custody The final principle requires all records related to the Chain of Custody System to be kept for five years and have sufficient documentation to present traceability. 1: Compliance with law, international conventions, and the ProTerra Standard This principle demands that organisations implement procedures to assure consistent compliance with laws and the Proterra standard and document compliance for at least five years. 2: Human rights and responsible labour policies and practices This principle demands the absence of slave and forced labour, child labour, and coercive disciplinary or control methods, as well as working hours in accordance with law and trade organisations. It also demands fair wages, equal opportunities and treatment for workers including equal pay, professional training and development, freedom for workers to organise, join and form associations, worker’s rights, right to parental leave, health and safety, and living conditions. 3: Responsible relations with workers and community This principle requires the establishment and proper documentation of an effective and timely system of communication with all workers and with the local communities, including a system to receive, investigate and respond to all complaints from these parties. Also, it demands that the land use does not impair the rights of traditional other users. 4: Biodiversity conservation, effective environmental management and environmental services This principle sets the clear no-go policy on deforestation and conversion of native vegetation. Furthermore, it requires companies to maintain and enrich biodiversity, hereunder “organisations shall identify and maintain valuable biodiversity within their areas and shall, with the involvement of an external expert, restore areas of natural vegetation around bodies of water and on steep slopes and hills, and other sensitive parts of the ecosystem.” It also demands a social and environmental impact assess- ment and management plan 5: No use of Genetically Modified Organisms (GMOs) This principle states that Genetically modified organisms (GMOs) and their byproducts are prohibited. This includes technology that can be used to edit genes within organisms such as CRISPR/Cas9. Furthermore, it requires companies to have a Non-GMO control system to ensure com - pliance and no contamination of GMOs from external sources. 10 core principles of the ProTerra Standard 43 Sustainability and Corporate Responsibility Fish Traceability and availability of feed resources At SalMar, we ensure full traceability of the origin of all feed ingredients used in our fish feed, including those sourced through both direct and indirect suppliers. To ensure sustainability throughout our value chain, we conduct audits on our feed suppliers and verify that all ingredients used in our fish feed come from sustainable sources. SalMar conducts regular risk assessments to identify how the availability of our feed ingredients impacts our production and how it may influence our production going forward. Feed is the most expensive operating expense for SalMar, and thus predictability is key when it comes to feed costs. In the last few years, we have seen how the access to feed resources may be affected by global events like political conflict and global warming. It remains important for SalMar to collaborate with our feed suppliers in continuously assessing the availability of the necessary feed resources within our feed, while also exploring alternative feed ingredients. This way, we can increase predictability while gaining insight into the most urgent areas for R&D investments. Novel feed ingredients and feed innovation SalMar actively explores and invests in projects concerning novel feed ingredients in collaboration with our feed suppliers. To minimize the footprint of our feed ingredients and as a measure to reduce nutrient spill from agriculture, SalMar continuously test and evaluate novel and local feed ingredients such as algae, insect meal, kelp, salmon oil, seafood trimmings and excess raw material from processing. SalMar are prepared to apply sustainable feed ingredients across operations, as they become established through R&D testing and prove themselves suitable for our salmon. Through the partnership platform Råvareløftet, SalMar's feed suppliers engage to develop new, innovative feed ingredients and analyze the barriers towards implementing them in large scale. The partnership focuses especially on local, low-carbon ingredients that can reduce GHG emissions, water use, improve circularity and enhance food security. Our feed suppliers are also working on ground to establish and increase the modernization of agriculture, specifically projects relating to regenerative agriculture. This promotes biodiversity and soil health. 44 Sustainability and Corporate Responsibility Fish We ensure efficient feed utilisation At SalMar, we recognize the importance of not only the nutritional value, consistency, and taste of our fish feed but also the correct dosing to promote effective feed utilization and maintain fish health. Our continuous monitoring of key performance indicators such as effective feed utilisation helps us achieve several benefits, including optimal growth, reduced environmental emissions, good fish welfare, increased disease resistance, low mortality, less size variations, increased yield at har- vest, and high-quality fish. As such, the feed conversion ratio (bFCR) is a vital sustainability KPI that we prioritize. In 2023, SalMar decided to rather disclose the biological feed conversion ratio (bFCR) than the economic feed conversion ratio (eFCR). The difference is that the bFCR considers the feed used per gross growth at sea, while the eFCR considers the net growth at sea. We made this change because we want to focus on the essence of the KPI, which is how we can achieve optimal feeding and feed compositions that is best suited for our salmon. The bFCR is unaffected by the survival rate, so with the bFCR we can keep the survival rate and the feed conversion separate rather than having two central KPIs influence each other directly. Although not previously publicly disclosed, the bFCR has always been an important KPI internally, and the historic data is strong. The disclosed values for bFCR were verified through the third-party verification process. In 2023, SalMar saw a decrease in bFCR on the Group level from 1.13 in 2022 to 1.12 in 2023. The improvement comes due to significant focus on optimal feeding and high-energy feed. The improvement was greatest in Iceland where a significant reduction from 1.26 to 1.19 was achieved. We target a bFCR of 1.10 within 2030. Salmon is a very efficient protein converter. SalMar’s Protein Efficiency Ratio (PER) calculated as the gain in animal weight (kg) per protein consumed (kg) was 1.72 in 2023. The results are mostly affected by the feed conversion ratio and the protein content in the feed. To achieve optimal feeding, we tailor feed to the salmon's appetite in each net pen, monitoring feeding using technologies such as underwa- ter CCTV cameras that show where the fish are located in the water column and monitor their appetite. Our focus on optimizing feeding during the first 12 weeks at sea, providing the greatest amount of feed availability during this period, helps raise healthy and robust fish. In 2023, SalMar remained committed to the advancement of its feed- ing centers that are responsible for remotely controlling the feeding of its fish stocks. This has been achieved by bringing together highly skilled staff in a single location, thereby facilitating the development of a central "control room" and enabling the implementation of new routines and continuous learning. SalMar presently operates several feeding centers, each of which remotely feeds several sites from their respective control rooms. These centers are located in Senja, Fosen, Smøla, and Rørvik in Norway, with an additional one situated in Iceland. The remote feeding scheme has increased our focus on feeding and is considered a good environmental measure in terms of providing strong growth, a fast turnover and effective MAB and site utilisation. It also provides opportunities for increased focus on the competence of those employees who perform one of the most important tasks at SalMar. Facilitating their access to real-time data and customising optimal reporting and support tools are areas the company is contin- uing to work on. bFCR - Group 1.12 45 Sustainability and Corporate Responsibility Fish Safe and Healthy Food SalMar produces healthy food, which is easy to prepare and tastes delicious. SalMar’s products are based on first-class, sustainable raw materials, and the product quality is maintained through the whole value chain until the salmon reaches the customer. How we provide safe and healthy food to all our customers • Local processing makes it possible for SalMar to offer a wide range of first-class, fresh, frozen and organic salmon products. • We ensure good fish welfare and the correct nutritional content in the fish feed we use, which provides healthy food for human consumption. • Our value chain is certified from roe to plate. • Employee training with regards to routines and procedures is required to ensure the high quality of SalMar's products • We perform regular internal audits, and welcome audits and inspections by the regulatory authorities, certification agencies and customers. For more insight into how SalMar ensures that all food is safe and healthy for its customers, see our Food Safety Policy on our webpage. 46 Sustainability and Corporate Responsibility Fish SalMar’s whole value chain is certified from roe to plate We strive to conduct ourselves with honesty, propriety, and trustwor- thiness, and take pride in being transparent about our operations. To this end, we have obtained certification in accordance with the most stringent requirements and guidelines. Our compliance with third-party standards, as well as those set by our customers, is verified through auditing of our operations. In addition to this, our operations are also subject to oversight by government and regulatory authorities. It is our responsibility to ensure that our customers feel safe when they eat salmon from SalMar and know that it has a healthy nutritional content. For this reason, we are certified in accordance with the strictest requirements and guidelines for sustain- able aquaculture, including the Aquacul- ture Stewardship Council (ASC), Debio, and Global GAP 1 . 1 https://www.globalgap.org/ All our sea sites in Norway are certified in accordance with Global GAP 1 . In Norway, 61% of our sea sites are ASC-certified and increase from 57% in 2022. Furthermore, 8% of our sea sites are certified by Debio 2 for responsible organic salmon production. In Iceland, we chose to revoke one of our ASC certifications during 2023, making the certification percentage 83% at end of year. How- ever, all the salmon harvested in 2023 originated 100% from certified sites. We are working towards all sites being certified in 2024. The Aquaculture Stewardship Council (ASC) is an independent, inter- national non-profit organisation, which established the world’s most stringent sustainability standard in June 2012. The mission of the ASC Standard is to bring aquaculture one step closer to the sustainable, environmentally and socially responsible production of salmon. This is achieved through effective market mechanisms that create value along the entire value chain. By choosing ASC-certified salmon, con- sumers can be assured that they are buying salmon from a respon- sible farmer. With more than 400 auditing criteria within seven main categories, the ASC Standard is difficult to reach and to retain. It demands sub- stantial resources with respect to documentation and reporting, before, during and after certification. Furthermore, SalMar has been certified in accordance with the ASC’s Chain of Custody scheme. Openness regarding our performance is a key aspect of the standard. Further details can be found on our website www.salmar.no, and the ASC’s website www.asc-aqua.org. Both the Global GAP and ASC standards have requirements for proper HSE practices, making these standards important certifications on Health and Safety for SalMar. 2 https://debio.no/english/ Global G.A.P. Debio KRAV ASC Kosher BRCGS IFS Whole value chain Harvesting/processing Share of harvest from certified sites (ASC, Debio and/or Global GAP) 100% 47 Sustainability and Corporate Responsibility Fish Salmon is a healthy and delicious food Salmon contains a number of nutrients which makes it an important part of a balanced diet. Salmon is a healthy and delicious food. It is one of the most rigorously investigated foodstuffs and is perfectly safe to eat. The World Health Organisation (WHO) has published a detailed report on both the risks and benefits of eating salmon. The report concludes that eating oily fish, like salmon, reduces the risk of cardiovascular disease. It is the products’ fat composition, with a high content of the omega-3 fatty acids EPA and DHA, but also vitamin D, selenium and easily digestible proteins, which contribute to this health benefit. The report warns of higher human mortality rates if too little seafood is eaten. The biggest challenge with respect to seafood consumption remains the fact that people in general eat too little of the important nutrients provided by fish. One salmon meal a week (150g) has proved sufficient to cover the body’s recommended intake of the healthy fatty acids EPA/DHA. The Norwegian Scientific Committee for Food Safety (VKM) makes recommendations to the Norwegian Food Safety Authority. The VKM has concluded that it is well documented that oily fish protects against cardiovascular disease and has a positive impact on the neural development of babies, both before and after birth. Furthermore, they conclude that the positive effects of eating seafood far outweigh any potentially negative impact. 48 Sustainability and Corporate Responsibility Fish When you buy salmon from SalMar, you can be sure that it is safe to eat SalMar’s production is subject to Norwegian and Icelandic regulations for food production, and our facilities are regularly inspected by the Norwegian Food Safety Authority (NFSA) and the Icelandic Food and Veterinary Authority (MAST). In addition, the Group has its own sampling programme, under which feed and finished products are analysed and tested for a number of factors. The NFSA’s monitor- ing, performed by the National Institute of Nutrition and Seafood Research (NIFES), shows very little foreign matter in farmed fish, and no samples were found to exceed threshold values in the most recently published reports. For further details regarding the nutritional content and status with respect to contaminants, etc, in Norwegian seafood, please visit the Seafood Data section on NIFES’s website 1 or search the Food Composition Table 2 . Production is organised such that the demands of different stand- ards and customers are met. We perform regular internal audits, and welcome the public authorities, certification agencies and customers to carry out external audits and inspections. In 2023 SalMar performed 356 internal audits and safety inspections, this is 104 more than in 2022. In addition, 289 audits from external- parties were conducted, which is 46 more than in 2022. Food safety and the regulations relating thereto are taken very seri- ously. In 2023, there were no such incidents of product recalls. SalMar has defined routines for the follow-up of customer complaints, and the Group has informed its customers of how they should proceed if a product they have bought does not meet their expectations. All products can be traced back through the whole value chain, and a well- 1 https://sjomatdata.nifes.no/#search/ 2 www.matvaretabellen.no trained team is on hand to deal with any complaints from consumers. The complaints handling process is documented in a dedicated module in our quality system and provides managers with an overview of the current status. SalMar is BRCGS-certified, which is a part of the GFSI standard. We require our relevant suppliers to hold the same level of certification when engaging in food safety related matters. Pre-rigor filet SalMar provides fresh and frozen pre-rigor fillets to its customers. The company's emphasis on pre-rigor filleting is an important strategy for reducing energy consumption, minimizing transport-related emissions, utilizing 100% of the raw material, and creating local employment opportunities. Pre-rigor filleting means that the fish is harvested and filleted the same day, before the fish goes into rigor mortis. This processing enables delivery to the market 2–6 days earlier than has been the norm. This way of handling fish has a number of advantages: • Fresher fish to the customer • Firmer muscle texture, better colour and lower drip loss • Longer shelf-life in the market • No need to store and mature the fish before filleting and boning Organic salmon SalMar is one of the world’s largest producers of organically farmed salmon. Organic salmon is supplied all year round, and production is vertically integrated from the broodfish and roe down to the finished processed products. To be defined as organic, it must have been pro- duced in compliance with the EU’s directives and be approved by Debio. Local processing means that we can deliver a wide variety of first-class fresh and frozen organic salmon products. SalMar supplies both pre- and post-rigor organic salmon. A high content of marine oils means that this salmon is an exceptionally good source of EPA and DHA. Sashimi quality Since 2011, SalMar has produced sashimi-quality fish. Every single salmon is handpicked, and only the best boneless pieces of salmon are used. The ready to eat fillets are packed within 2 hours to ensure maximum freshness and taste. The objective is to offer a salmon product that maintains the same quality and taste as it had on the day it was caught right up until its use-by date. To maintain this level of quality, a unique packing, trans- port and refrigeration process is used. Our sashimi-quality products are transported in recycled cardboard boxes that are chilled using dry ice, which ensures optimal temperature control. 49 Sustainability and Corporate Responsibility Environment & Technology Environment & Technology SalMar operates under the fundamental principle of having a minimal environmental impact in the areas in which we operate. While food production is a major contributor to global greenhouse gas emissions, the farming of salmon is considered one of the most environmentally friendly methods of producing food. At SalMar, we strive to lead the development of a more sustainable aquaculture industry by protecting our oceans, reducing energy consumption, and minimizing greenhouse gas emissions. Salmon is considered one of the most sustainable sources of animal protein due to its low carbon emissions, low water consumption, and small area requirement. However, there is still much to learn about sustainable practices. By pursuing new knowledge and innovation, we can protect our natural resources for future generations while still meeting the growing demand for food worldwide. SalMar is committed to driving this development forward. Our Environmental Practices Policy, along with 17 other ESG-related policies, can be found on our website. 50 Sustainability and Corporate Responsibility Environment & Technology Group Norway Iceland Target 2023 2022 2021 2023 2022 2021 2023 2022 2021 Greenhouse gas (GHG) emissions Scope 1 + 2 (1000 tCO 2 e) 42% reduction from 2020 to 2030 1 30.8 32.1 32.7 28.6 30.1 30.5 2.2 2.1 2.2 Intensity Scope 1+2 (kgCO 2 e/kg produced) 0.10 0.11 0.11 0.10 0.11 0.11 0.13 0.10 0.13 Scope 3 (1000 tCO 2 e) 1,305 1,244 1,422 1,245 1,172 1,354 60 72 68 Intensity Scope 3 (kgCO 2 e/kg produced) 4.2 4.4 4.7 4.3 4.5 4.7 3.6 3.4 4.0 Scope 1+2+3 (1000 tCO 2 e) 1,336 1,276 1,455 1,273 1,202 1,385 62 74 70 Intensity Scope 1+2+3 (kgCO 2 e/kg produced) 4.3 4.5 4.8 4.3 4.6 4.8 3.7 3.5 4.1 Electrical/ hybrid solutions Farming sites supplied by onshore electrical power or hybrid solutions 100% 65% 55% 38% 67% 59% 41% 33% 0% 0% Secondary processing Share of secondary processing 40% within 2030 36 % 42 % 45 % 36 % 42 % 45 % NA NA NA Site environment B-analysis benthic score ≤ 2 100% 89% 92% 83% 89% 91% 88% 100% 100% 50% Freshwater use 2 Withdrawal (million m 3 ) 20% reduction from 2022 to 2030 59 63 57 39 46 51 20 16 6 Intensity (liters per kg produced) 190 220 186 133 171 178 1,183 779 325 Water risk & scarcity 3 Operational areas with low overall water risk and low water scarcity 100% 100% 100% 100% 100% 100% 100% 100 % 100 % 100 % Smolt from RAS Share of smolt from RAS facilities 100% 89% 89% 79% 96% 97% 89% 0 % 0 % 0 % 1 Targets verified by the Science Based Targets Initiative and aligned with the 1.5°C target set by the United Nations. 2 SalMar’s freshwater withdrawal equals SalMar’s freshwater consumption and discharge. No water is withdrawn and stored of significant quantities. 3 https://www.wri.org/aqueduct Our KPI Scorecard Full insights into our greenhouse gas emissions for every year back to base year 2020 can be found later in this chapter. All targets are timebound for the following calendar year unless otherwise specified. Following the acquisitions of NTS, NRS and SalmoNor i 2022, our GHG emissions have been recalculated back to base year 2020. 51 Sustainability and Corporate Responsibility Environment & Technology Greenhouse Gas Emissions The reduction of global greenhouse gas emissions is a pressing challenge, and SalMar aspires to be a prominent example for other companies worldwide. Salmon farming serves as a low-carbon alterna- tive for food production. A study conducted by SINTEF Fisheries and Aquaculture and the Institutet för Livsmedel och Bioteknik in Sweden (SIK) has confirmed that salmon production is significantly more climate-friendly than pork and beef production. The study found that the carbon equivalent contribution of 1 kg of farmed salmon is only half that of 1 kg of pork, and only one-seventh of that of 1 kg of beef. Nonetheless, SalMar recognizes that simply asserting the climate benefits of salmon farming is not enough. We aspire to lead the way in our industry and continue to develop sustainable practices to ensure our operations remain envi- ronmentally responsible. SalMar has pledged to reduce its greenhouse gas emissions To demonstrate our genuine commitment to reducing greenhouse gas emissions, SalMar recognized the importance of establishing a GHG inventory of the highest quality. As such, we engaged with the Science Based Targets initiative (SBTi) towards the end of 2021 to align our GHG inventory with the Greenhouse Gas Protocol. Through this process, we also revised our existing GHG reduction targets to align with science-based targets that are consistent with the United Nations' 1.5 °C target. This ensures that our GHG reduction efforts are aligned with global scientific consensus on what is required to limit global warming to a manageable level. Our targets are: Scope 1 and 2 absolute emissions: At least 42% reduction from 2020 to 2030 Scope 3 absolute emissions: At least 42% reduction from 2020 to 2030 The target on Scope 1 and 2 emissions means that SalMar must work purposefully towards reducing greenhouse gas emissions from its own operations. This is done by limiting our dependency on fossil fuels and ensuring that all the electrical power we use comes from renewable energy sources. The Scope 3 target means that SalMar must collaborate with its value chain to ensure that all operations both prior and subsequent to our own operations are done in a carbon efficient manner. This is done by ensuring that our suppliers' climate goals are aligned with ours and setting clear expectations towards this. Both targets include SalMar’s activities in Norway and Iceland. SalMar is very serious when it comes to anti-greenwashing. SalMar commits to always presenting accurate, honest, and holistic information. This also yields for our carbon accounting. SalMar is proud to have achieved a significant GHG reduction since our base year for emission targets. As we approach our already ambitious science-based targets, we will in due course re-evaluate our GHG reduction commitments including evaluating a Net Zero target. Scope 3 emissions are presented as per Greenhouse Gas Protocol categorizaton. Norway Iceland Scope 3 Description 2023 2020 2023 2020 Cat 1 Purchased goods and services 726,117 999,001 41,129 57,859 Cat 3 Fuel and energy related activities 8,028 9,060 673 248 Cat 4 Upstream transportation and distribution 509,351 484,837 18,157 7,640 Cat 5 Waste generated in operations 840 14,380 23 28 Cat 6 Business travel 450 612 32 4 Total All emissions in Scope 3 target 1,244,786 1,507,890 60,014 65,779 The categories presented above make up SalMar’s emission target for Scope 3 and were deemed most relevant to SalMar’s activities. SalMar has included categories 2, 7, 9, 10, 12 and 15 into our GHG inventory, but they were deemed negligible or too inaccurate in estimation for inclusion in our Scope 3 targets by our internal team and during consultation with the Science Based Targets initiative. Categories 8, 11, 13 and 14 were deemed not relevant for our activities. The groups GHG emission reduction 2020–2023 270.000 tons CO 2 -equivalents Equaling 9x the Group’s own Scope 1+2 emissions SalMar commits to apply to the Science Based Targets for updated GHG emission reduction targets by the end of 2024 following the Forest, Land and Agriculture (FLAG) recommendations. 52 Sustainability and Corporate Responsibility Environment & Technology –42% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 –36% –30% –24% –18% –12% –6% –0% 6% -17% -4% Scope 1+2 Scope 3 Total emissionsTarget 1.5˚C Scope 1+2 Scope 3 Total emissionsTarget 1.5˚C –42% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 –36% –30% –24% –18% –12% –6% –0% 6% -25% -13% Emission reduction performance In 2023 SalMar continued its strong efforts to reduce GHG emissions. The Group’s Scope 1 and 2 emissions were reduced by 4% from 2022 and is now moving at pace with our reduction target. The main reason for the increase from 2020 to 2021 was the addition of workboats in Iceland, more than doubling the Scope 1 emissions year over year for Icelandic Salmon. The improvements in 2023 comes after a year of focusing on establishing best practice across operations after acquiring two large aqua- culture companies in late 2022, and the results show that we are making progress. The progress in Scope 1+2 emissions comes despite an increased production, and as can be seen from the GHG emission intensity graph, the Group's emission intensity in Scope 1+2 is now leading our target trajectory. SalMar has been very successful in reducing Scope 3 emissions, resulting from strong collaboration and commitment towards our suppliers. The Group’s Scope 3 emissions have been reduced by 17% since base year. Since Scope 3 emissions make up almost 98% of the Group's total emissions, this also means that the Group’s total emissions have been reduced by 17% since 2020, a reduction of more than 270,000 tons of CO 2 -equivalents. This is an achievement SalMar is very proud of. SalMar's absolute emissions saw an increase in 2023 due to increased production, but is still leading the GHG reduction target trajectory. SalMar continued to decrease its GHG emission intensity (GHG emissions per gross growth at sea), meaning that SalMar is becoming more climate-efficient every year. SalMar was in early 2023 listed on the Financial Times publication "Europe's Climate Leaders 2023" for a third consecutive year following their third publication of the list. SalMar recognizes that its direct emissions in Scope 1 and 2 are small compared to the emissions in its value chain (Scope 3). Engaging with suppliers and trade associations to develop an understanding of best practice and effective emission reductions plans is vital to our strategy and overall performance on climate change mitigation. Group GHG Emissions – Absolute Group GHG Emissions – Intensity 53 Sustainability and Corporate Responsibility Environment & Technology Overview of energy and greenhouse gas emissions SalMar's greenhouse gas inventory is aligned with the Greenhouse Gas Protocol. 1 . The values are based on data reported from internal and external systems, where one uses a variety of emission factors 2 for the most accurate calculation of the greenhouse gas emissions. SalMar consumed a total of 10,325,762 litres of fossil fuel (368 TJ) and 182,741 MWh of electricity (658 TJ), where 46,080 MWh of the energy (166 TJ) came from reusing waste heat. All electricity in Iceland derives from geothermal and local hydro power sources, making the climate impact minimal. Following the steep increase in cost of Guarantees of Origin Certificates for electrical power, SalMar decided to pause these purchases in 2023. This results in SalMar's total market-based Scope 2 emissions being 46,981 tCO 2 e in 2023. SalMar has performed carbon accounting since 2014. For values presented back to 2014, please see our Annual Report for 2021. 1 The analysis is based on the international standard "A Corporate Accounting and Reporting Standard", which is developed by "the Greenhouse Gas Protocol Initiative" - GHG protocol. 2 Sources emission factors: DEFRA, IEA, IMO, Ecoinvent and information from suppliers in the value chain. The reference list is not complete but contains the most important references to factors used by CEMAsys. In addition, a range of local/national sources is relevant, dependent on which type of emission factor is used. Well boat & service boat – 4.2% Packaging – 2.6% Fuel and energy related activities – 0.7% Other – 0.3% Scope 1 – 2.0% Scope 2 – 0.3% Fish feed 54.6% Transport to market 35.3% Group GHG Emission Breakdown 54 Sustainability and Corporate Responsibility Environment & Technology Overview of energy and greenhouse gas emissions Group Norway Iceland Target Status vs. Target 2023 2022 2021 Base Year 2020 Status vs. Target 2023 2022 2021 Base Year 2020 Status vs. Target 2023 2022 2021 Base Year 2020 Energy consumption (TJ) Scope 1 368 379 326 316 338 349 294 301 31 30 32 15 Scope 2 658 679 640 532 619 637 617 513 39 42 22 18 Scope 1 + 2 1,026 1,058 966 848 957 986 911 814 69 73 55 33 Greenhouse gas emissions (1000 tCO 2 e) Scope 1 42% reduction from 2020 to 2030 -5% 27.3 28.7 29.7 28.7 -9 % 25.1 26.6 27.5 27.7 +110 % 2.2 2.1 2.2 1.0 Scope 2 1 +5% 3.5 3.4 3.0 3.4 +5 % 3.5 3.4 3.0 3.4 0.0 0.0 0.0 0.0 Scope 1 + 2 -4% 30.8 32.1 32.7 32.0 -8 % 28.6 30.1 30.5 31.0 +110 % 2.2 2.1 2.2 1.0 Scope 3 -17 % 1,305 1,244 1,422 1,574 -17 % 1,245 1,172 1,354 1,508 -9 % 60 72 68 66 Total (Scope 1+2+3) -17 % 1,336 1,276 1,455 1,606 -17 % 1,273 1,202 1,385 1,539 -7 % 62 74 70 67 GHG Intensity - Biological 2 Energy intensity (GJ/tonn produced) 3.3 3.7 3.2 3.0 3.3 3.7 3.2 3.1 4.1 3.5 3.2 2.4 Scope 1+2 emission intensity (kgCO2e/tonn produced) 42% reduction from 2020 to 2030 -13 % 100 113 107 115 -16% 98 114 106 117 71% 130 99 128 76 Scope 3 emission intensity (kgCO2e/tonn produced) -25 % 4,215 4,377 4,666 5,626 -25% 4,251 4,451 4,707 5,666 -26% 3,586 3,440 3,980 4,841 Scope 1+2+3 emission intensity (kgCO2e/tonn produced) -25 % 4,315 4,490 4,773 5,740 -25% 4,349 4,565 4,812 5,782 -24% 3,716 3,539 4,108 4,917 1 Location-based. Market-based GHG emissions are 46,981 tonnes CO 2 e for the Group in 2023. 2 All intensities are calculated with tonnes produced biomass, gross growth in sea. 55 Sustainability and Corporate Responsibility Environment & Technology We are electrifying the value chain As part of our endeavor to promote environmental sustainability in the aquaculture industry, SalMar is dedicated to increasing energy efficiency. We are actively exploring various strategies to achieve this goal, including supplying onshore electricity to power our sea farms and electrifying our vessels. We believe that electrifying our value chain will play a crucial role in reducing Scope 1 emissions. Over the past years, SalMar has undertaken projects to lay power cables from shore to several of our sea farms, resulting in the provision of electric/hybrid solutions to a total of 69 sea farms in Norway and two in Iceland. As of 2023, this represents 65% of our active sea farms, an increase from 55% in 2022. In addition to signif- icantly reducing diesel consumption and minimizing emissions, electrification also has positive occupational health impacts by decreasing noise pollution from diesel generators. Looking ahead, we will continue to expand our efforts by connecting additional sea sites to onshore electricity sources. In 2016, SalMar started using the world’s first fully electric aquaculture work boat. Named the Elfrida, the work boat is currently in operation at one of our sites in Møre & Romsdal County. In 2020, SalMar started using the world’s first battery-hybrid wellboat, the RoVision, and in 2023, SalMar entered the world's first fully electric service vessels into operation. While we will continue to put more electric and hybrid-propulsion boats into operation, we will also investigate alternative energy sources which can help to reduce our greenhouse gasemissions. In 2024, SalMar plans to put the first ever workboat running on hydrogen into operation. The hydrogen vessel will reduce SalMar's emissions by 300 tons CO 2 e per year compared to a conventional workboat. We use local energy and water resources As part of our efforts to improve energy efficiency, SalMar prefers to use local water-based energy sources, and we always strive to take advantage of such resources at our facilities. Our largest hatchery, Follafoss, utilizes heat exchangers to extract energy from the wastewater produced by the nearby cellulose plant. This process yields approximately 20 million kWh of energy, resulting in reduced energy consumption for SalMar. Additionally, the hatchery obtains its production water from the Follafoss Power Plant. To further harness the potential of the water supply, a turbine has been installed in the hatchery's supply pipe, which generates up to 1.5 MW of electrical power before the water is used for fish production. In Iceland, the hatcheries take advantage of the region's natural geo - thermal energy sources by using geothermal heat exchangers to warm the intake water, thereby reducing the energy requirement. Furthermore, the harvesting plant in the Westfjords utilizes the local hydro power to enhance efficiency. We make effective use of our fish feed Fish feed accounts for almost 55% of our Scope 3 emissions. To reduce our overall greenhouse gas emissions, it is therefore crucial to increase the efficiency of our feed consumption, and use novel, low-carbon feed ingredients in our fish feed. 169,651 tons of the Group's GHG emissions came from land-use change, all relating to feed farming operations in our value chain. This denoted 23% of the emissions from feed production. SalMar is in dialogue with feed suppliers on ways to both include more climate-friendly feed ingre- dients in the feed, but also on how to improve agricultural practices. The total emissions deriving from feed farming has been reduced by 29% since 2020. This is mainly due to strong collaborations with our feed suppliers in reducing the unit carbon footprint of our feed compositions and improving agricultural practices. Together with our feed suppliers, SalMar are currently running wider trials on projects to reduce emissions from feed farming. This involves introducing novel feed ingredients into our feed with lower carbon footprints, and applying innovative solutions on ground for more sustainable feed sourcing. SalMar are applying solutions across oper- ations continuously as new discoveries on best practices are made. Another important measure for reducing our carbon footprint through feed is to optimize our feed conversion ratio, i.e., how much feed we need for our salmon to grow. If we can optimize our feeding practices even further, we can reduce our impacts on the climate and environment. We are cutting emissions by investing in local processing and new methods of transport Local harvesting and processing of farmed salmon is essential to the industry’s value creation, and a core focus of SalMar. It is also a very climate-friendly action. The processing of salmon reduces both the weight and volume of the products to be transported, which cuts transport-related carbon emissions. In 2023, 36.3% of our harvested volume in Norway was processed locally. This has reduced emissions by more than 90,000 tonnes CO 2 e or 17%, compared to the entire volume sent to markets as whole fish. The level of processing is greatest with respect to overseas markets, which is also where the greatest emission reductions are obtained. Sites supplied by onshore electrical power (hybrid/el) 65% Reduction in GHG emissions due to local processing in 2023 90,000 tonnes CO 2 e 56 Sustainability and Corporate Responsibility Environment & Technology This clearly demonstrates that our focus on local secondary process- ing is an important factor in reducing greenhouse gas emissions. InnovaMar, our main harvesting and processing plant, is fully opera- tional in Central Norway. The upgrading of our secondary processing plant Vikenco, in Møre & Romsdal County, was completed at the start of 2021, and InnovaNor, our newest harvesting and processing plant in Northern Norway, came into operation at the end of 2021, and is now operating at full force. SalMar is exploring new methods of market transportation through various projects that combine sea, rail, and road transport. Since 2021, SalMar have trebled its rail transport from Northern Norway, which has almost 300 times lower GHG emissons than trucking. We are also dedicated to improving existing solutions for transport to market. Trucks provide a unique flexibility in salmon transport and remain a central part of our distribution network. Therefore, making sure that we improve the truck transport will be core to reaching our sustainability targets. SalMar have made an agreement at our main processing facility at Frøya for daily transport with trucks running on biogas. This could prove an important step towards reaching our GHG emission targets. In 2021 a new boat transportation route from Iceland to the east coast of the US was established, reducing the carbon footprint of our products as they previously have been sent with air freight. We have conducted a study analysing the footprint of different farming technologies At the end of 2021 SalMar together with experts from the R&D com- pany Asplan Viak conducted a life cycle assessment for the carbon footprint and energy requirement for different salmon farming tech- nologies. The study analysed: • Open net pen production (Coastal) • Offshore net pen production • Closed net pen production (Coastal) • Land-based production in recirculating aquaculture systems (RAS) The study showed that open net pen and offshore production have a lower carbon footprint than closed net pen and land-based pro- duction before transportation to the end consumer. This is because open and offshore technologies require less energy than closed and land-based technologies. The study also found that local processing is key to reducing the carbon footprint when using air freight. For the US market, fish produced in open or offshore net pens in Norway and transported as fillets by air freight has a similar carbon footprint to fish produced locally in land-based facilities in the US on an American electricity mix. The study gives us further confidence in SalMar’s strategic endeavours both coastal and offshore. We analyze climate-related risks and opportunities In 2023, SalMar conducted its annual assessment of climate risk for all its operations across the value chain from roe to plate and accompanying suppliers to the value chain. The assessment is aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework and evaluates both risks and opportunities and associated physical and transitional implications to SalMar’s financial position. Some key findings include: • SalMar’s assets running on fossil fuels, e.g., work boats, company cars, etc. are sensitive to SalMar’s climate ambitions and external pressure to quickly transition to zero-emission fuels. • Carbon taxation could have material financial implications on SalMar if introduced on imported and/or exported products. • Increased frequency of acute physical events like heatwaves and floods can affect the crops necessary to grow some of SalMar's feed ingredients. Reduced availability of feed ingredients contributes to increased costs on what is already SalMar's largest operational expenditure. • The low carbon footprint of salmon farming relative to other protein sources puts salmon in pole position to withstand CO2-efficiency regulations and presents an attractive option for climate-aware consumers. Central bodies like the Food and Agriculture Organization of the United Nations (FAO) states that the seafood industry will play an important role in achiving the UN's Sustianable Development Goals, given its high nutritional output and low footprint. In conclusion, there is not currently grounds to write off value from SalMar’s assets from climate change and its associated implications on SalMar’s activities, nor is there currently grounds to alter expected future cash flow. However, this remains an important matter to continue to assess in the coming years. No financially material events nor any direct costs occurred as a result of climate risk in the reporting period. For more information on SalMar's climate risk and opportunity analysis, see SalMar's Task Force on Climate-related Financial Disclosures (TCFD) Report published on our website. 57 Sustainability and Corporate Responsibility Environment & Technology Biodiversity and Site Environment Salmon thrive and develop optimally in their own natural habitat. At the same time, we have great respect for the fact that we use the local community’s shared assets in our production. Coming generations must have the same opportunities as us to draw benefits from the sea, and SalMar has a duty to keep the sea and all its living creatures in good condition. Our technology is therefore tailored to treat both the fish and the environment in a gentle fashion. We protect the seas The seabed beneath all our sites is inspected regularly to see whether/to what extent the surroundings have been affected by our operations. We are working continuously to find the optimal locations for our farms, so that we can realise our objective of having all our operational sites in a condition designated as “very good” or “good” B-analysis benthic score of ≤ 2 1 ). In 2023, 89% of our operational sites in Norway achieved this score, while 100% of our sites in Iceland did so. SalMar carry out risk assessments continuously, assessing the locations of our current and potential sea sites with respect to pollution sensitivity. Locations with a high sensitivity to nutrient pollution will not be chosen for operations. SalMar also monitors inorganic and organic loading, like nitrogen, carbon and phosphorous, through the quantities of uneated feed and the salmon's faecal matter. This is done at all sites to ensure that the loading is within site-specific permits. SalMar have also con- sidered Integrated Multi-Trophic Aquaculture (IMTA) with kelp and mussels as a possible method for removing organic and inorganic loading from the sea and seabed. 1 The B-analysis is set out by the Norwegian Standard NS9410. The condition is graded on a scale of 1 to 4. Together with the trade union Norwegian Seafood Federation (Sjømat Norge), other fish farmers and research institutions, SalMar moni- tors large areas to see whether fish farming operations are having a regional impact. The latest Risk Assessment of Norwegian Aqua- culture published by the Institute of Marine Research 2 states that the risk of eutrophication deriving from nutrient emissions is considered low in all production areas in Norway, and the risk of environmental impact on the seabed as a result of particulate organic emissions from fish farms is considered low at sites with a soft seabed and moderate at sites with a mixed or hard seabed. SalMar have in the last years significantly reduced the num- ber of sea sites with copper impregnation in the coating, moving towards zero inclusion. This is due to the negative impact copper may have on the seabed. In addition, all of our harvesting and processing facilities and onshore hatcheries comply with their discharge permits on excess wastewater which is treated before it is dis- charged to sea. SalMar measures and monitors wastewater quality at all our facilities to ensure that no breaches of our permits occur. All our facilities are located in areas with low risk within all main categories of the WRI Aqueduct map 3 , including water quality risk (physical risk quality), water stress, water depletion, and regulatory and reputational risk. There were no incidents of non-compliance to water quality permits or to discharge permits in 2023. Our wastewater volume target is aligned with our water withdrawal target, as we do not store water. All water that is withdrawn is dis- charged to the recipient after the appropriate treatment. Considering 2 Source: Risk Assessment of Norwegian Aquaculture, www.hi.no 3 www.wri.org/aqueduct SalMar’s water withdrawal reductions in the last years, this also means the same reduction in wastewater discharge. SalMar is involved in a large industrial project in Central Norway where we are developing circular solutions for our sludge and nutritious wastewater from smolt production. The project connects different industries, where the sludge from SalMar's smolt facility is sent to biogas production and the wastewater is sent to vegetable pro- duction where the nitrogen is extracted from the wastewater and used directly to grow vegetables. This is one of several examples of SalMar's approach to sustainable development of the industry, showcasing that partnership for the goals is important. As part of SalMar's community engagement strategy, SalMar engages with all local communities in our operating areas individually on a monthly basis on important topics for our local stakeholders. Here, we openly discuss the positive and negative impacts of our opera- tions on residents and take feedback from the public. Based on these engagements, SalMar have implemented several improvement action, including developing site-specific pollution plans. Biosecurity Biosecurity is vital for fish farmers to limit the introduction and spread- ing of parasites and harmful organisms to the sea sites. SalMar’s over- arching biosecurity plan is based on maintaining a high level of fish health and welfare, as well as complying with several national laws on animal health and proper aquaculture practices. SalMar's approach starts prior to our operations, when choosing the optimal locations for our sea sites. SalMar carries out benthic tests and a mapping of biodiversity and ecosystems in the areas around our site. This is then monitored throughout production. The mapping includes spawning grounds, fishing spots, areas with vulnerable species, both fauna and flora, any nearby protected areas and recreational interests, nearby salmon rivers and any other relevant topics at that site. B-analysis score ≤ 2 Norway: 89% Iceland: 100% 58 Sustainability and Corporate Responsibility Environment & Technology Important measures also include external factors at the site, like wind, current and wave exposure. This is important due to the spreading of organic and inorganic loading and the direction of movement for potential parasites in the water. SalMar has site specific biosecurity plans that all site managers must fill out stating their position, distance to other sites, distance to local rivers, any active local regulations at their site, silage manage- ment plans, site environment including current speed and directions, and a risk assessment of impacts on other sites and from other sites. SalMar also has specific biosecurity plans and procedures relating to high-risk operations. One example is when an external vessel approaches the site, or when we move fish from one place to another. SalMar participates in the NYBROK/BROK project led by the Norwegian Institute for Water Research (NIVA), where the goal is to establish improved measures for biosecurity and biological risk during transport of salmon and operations using well-boats. We make use of new areas and new technologies SalMar wishes to make use of the open ocean for food production. For this reason, we have developed the world’s first offshore fish farm, in collaboration with partners in the aquaculture, offshore oil & gas industry, and relevant research establishments. In connection with our pilot project Ocean Farm 1, new and innovative equipment technology has been developed, which will benefit the entire aquaculture sector. Offshore fish farming moves the salmon out to its natural habitat, which allows us to operate on the salmon’s terms to an even greater extent than today. At the start of 2021, our first closed net pen went into operation in Møre & Romsdal County. This is a new closed-containment unit, where water is pumped up from beneath the unit and purified before being discharged back into the sea. This increases biosecurity and helps keep control of lice numbers inside the unit. The unit is used for post-smolt production, where the fish will grow from a standard smolt size to around 800–1,000 g before being transferred to conventional open net pens. Building on this, SalMar began building what will be the world’s largest fish farming construction made by thermoplastics, the Marine Donut, in collaboration with Bluegreen in 2022. This is a new, innovative design for closed net pen that SalMar is excited to realize in 2024. 59 Sustainability and Corporate Responsibility Environment & Technology Water Management Compared to other food production types, salmon farming requires less freshwater since the fish spend much of their lives in the sea. SalMar’s total water withdrawal is presented in the table below. Water withdrawal (1000m 3 ) 2023 2022 Freshwater source Group Norway Iceland Group Norway Iceland Surface water 44,709 37,584 7,125 49,071 44,955 4,116 Ground water 1,978 1,366 612 1,535 1,351 184 Municipal/Third party water 12,064 0 12,064 11,932 0 11,932 Total water withdrawal 58,751 38,950 19,801 62,538 46,306 16,232 The Group saw a 6% decrease in water withdrawal in the last year, being well on track to reach our 2030 goal. We use fresh water only from low-risk areas In large parts of the world, access to water is a challenge. SalMar recognizes the risks posed by water scarcity on a global scale. In SalMar’s operations, all withdrawn freshwater comes from areas where the risk of water shortages, or the risk of poor water quality, is low. The water risk map produced by the World Resource Institute 1 provides a good overview of the water risk around the world. All SalMar’s activities and infrastructure are in areas defined as having a low water risk and low water stress, both in Norway and Iceland. In SalMar, we are continuously engaging with our suppliers on sustainability-related matters. An important matter is understanding the impact on freshwater availability, water stress, and overall water risk through our value chain. Therefore, we evaluate and engage specifically with suppliers carrying out activities in areas with a medium or high water risk. Among our suppliers, the suppliers of fish feed, especially soy which makes up approximately 20% of our feed, are considered to have the largest potential risk of negative impacts on water stress and scarcity in their value chains. SalMar requires its suppliers to withdraw, consume and discharge water responsibly and sustainably. Furthermore, we require our feed suppliers to have a freshwater reduction target including its value chain and a strategy to limit water risk in feed sourcing. It is important to SalMar to hold all suppliers accountable and responsible for their activities and their impacts, and we are in continuous dialogues to identify and implement best practice on sustainability, such as water use efficiency. You can read the approach of one of our feed suppliers in their Land & Water section of their ESG Report for 2023. This supplier also engaged the World Resource Institute to set context-specific water targets across their value chain, culminating in this white paper. 1 www.wri.org/aqueduct Both our main feed suppliers have carried out analyses on water risk and their impacts and risks through their value chains. The analyses provided strong insights and have resulted in our feed suppliers estab- lishing priority facilities for implementing water stewardship practices, involving substantial guidance and support towards the farmers. Furthermore, our feed suppliers have, through partnerships with third parties, established substantial water restoration targets and targets for reducing water pollutants in water-stressed regions. Progress is monitored by SalMar through continuous dialogue and guidance. Our largest feed suppliers' has further established a community engagement plan where they target to improve the access to safe drinking water and sanitation for 500,000 people in priority communities. Our feed supplier’s own facilities are all located in Norway and considered to have a low overall water risk according to the WRI Aqueduct Atlas. The water usage at these facilities were 0.14 million m 3 in 2023. We use state-of-the-art technology to reduce water consumption SalMar’s consumption of fresh water relates largely to its onshore hatcheries. These facilities accounted for 96% of freshwater consumption in 2023. The remaining consumption comes mostly from our harvesting and processing activities. In Norway, SalMar has reduced its freshwater withdrawal by 16% in 2023, and 24% in the last two years. This denotes a reduced freshwater with- drawal of 12.3 million cubic meters. The reduction in Norway is due to the transition from use of using flow- through technology to recirculating aquaculture systems (RAS) technology in our onshore hatcheries. The transition from flow-through technology to facilities based on RAS technology is an important part of our strategy to reduce the amount of freshwater used at our hatcheries. All our more recent hatcheries have been built using RAS technology, with 96–99% of the production water being purified and reused. In 2023, 96% of the biomass transferred from our smolt facilities in Norway had been raised in RAS facilities. Since all new capacity is built with this technology, water consumption per unit produced will continue to fall in the future. We target a 20% reduction in freshwater withdrawal from 2022 to 2030. See SalMar’s Water Management Policy for more information on how SalMar conducts responsible water management. Smolt delivered from SalMar in Norway from RAS: 96% 60 Sustainability and Corporate Responsibility Environment & Technology Circularity and Nutrient Management SalMar strives to transition from linear to circular economies, influencing material flow patterns, procurement strategy and strategic partnerships in operational areas with high potential for reuse of resources. At the Senja hatchery, an ultramodern drying facility has been installed for utilizing the produced sludge as a resource. All the sludge produced by the facility is dried to a 95% solid, which is then delivered to a third party for use in the production of soil improvement agents that can be found on sale in the retail sector. At the Follafoss hatchery, the sludge is sedimented out to form an 18% solid. The bulk of the sludge is used for biogas production. Some is also delivered to a third party, which sanitises it by adding it to livestock manure. The resulting product is spread on fields as a soil improvement agent/fertiliser. These are important steps for SalMar in performing responsible nutrient management. We also carry out monthly measurements of the total organic carbon (TOC), oxygen demand, total nitrogen and total phosphorus in all our wastewater which is sent to local authorities. If resources cannot be effectively reused, one must handle its disposal responsibly. All SalMar departments have a waste management plan, which stipulates the receiving facilities approved for various types of waste. Packaging and fish farming equipment, such as collars, nets and mooring devices are delivered to undertakings that reuse the materials. SalMar will continue to handle our resources responsibly and limit waste generation. We help to reduce marine pollution Pollution of the seas, and plastic pollution in particular, is a signifi- cant environmental problem. SalMar recognises this and wishes to help reduce the amount of plastic waste polluting the oceans. We are therefore striving for further improvements in our own waste handling and reductions in any microplastic emissions from our operations and are engaging in clean-up efforts along the coast. SalMar is working on several initiatives to reduce the volume of its plastic waste: • We ensure that obsolete plastic equipment is recycled by delivering it to established return schemes and collecting other waste for delivery to municipal waste handling systems. • We contribute to more reuse and recycling, particularly of plastic materials. This is achieved by improving the material surrounding our end products and increasing our use of reusable boxes. • We support measures that help to increase our knowledge of the presence and consequences of microplastics and nanoplastics in the sea. • We contribute to beach cleaning/collection of plastic waste through funding, lending boats for use during clean-up operations, as well as participating ourselves. • We work with the Norwegian Seafood Federation and other initiatives to reduce pollution of the seas, in particular by plastic waste. In 2023, SalMar became a partner in a research programme called DSolve, aiming to research the feasibility of using biodegradable materials as a substitute for plastics in aquaculture. More information about the programme can be found on their website: (DSolve) Sea pollution through uneaten feed and faecal matter is also a challenge in the fish farming industry. SalMar takes its responsibilities towards being an accountable industry actor seriously and is engaging in projects for increased knowledge on this matter. Furthermore, we are working with new optic technology to optimize feed conversion ratio, thus limiting the feed spilled to sea. We limit nutrient spill Through 20 23, SalMar has been working with feed suppliers to test a feed type for the smolt phase that contributes to more of the waste particles being taken up in the mechanical filters in the facilities. The results show reduced spill of phosphorous, carbon and nitrogen, and improved water quality. Through collaboration with our feed suppliers, we now have an established software for measuring, analyzing and predicting our organic and inorganic spill to sea (like carbon, nitrogen and phosphorus), down to each sea site, based on feed composition, feed volumes, digestibility of the feed and the salmon's uptake. This provides us with detailed and specific insights into our environmental footprint at site-level, both for dissolved particles and particulate matter. Through our value chain we also require that our feed suppliers have established Nutrient Management Plans and requirements towards their own suppliers at farm-level to have water quality assessments and targets. Our feed suppliers also require farmers to carry out an assessment of their potential adverse impacts on biodiversity and ecosystem services, and have measures in place to avoid, minimize or rectify these. SalMar are in continuous discussions with feed suppliers on how to optimize agricultural practices on ground. Our feed suppliers are today using crop rotation (e.g., rotating soy and wheat) which helps promote nutrient cycling, interrupt pest/disease cycles, and improves soil health and biodiversity. There is also ongoing work for increased adoption of organic farming techniques, limiting pesticide use. Raw materials in our feed shall not include highly hazardous pesticides (HHP) such as contaminants outside the limits set forth in the Directive 2002/32/EC on undesirable substances in animal feed (including all amendments afterwards) and Regulation EC 396/2005 on pesticides in food and feed (including all amendments afterwards). For ProTerra certified soy from Brazil, producers shall maintain records of all fertil- isers, pesticides, other agrochemicals and other inputs purchased, used, and disposed of, including biocontrol agents. Data on pests, diseases, weather conditions during spraying, and weeds shall also be recorded and retained. Operations that use agrochemicals should make stepwise changes in their systems to significantly minimise or eliminate the need for pesticides. The substances and quantities applied and the number of applications per field should be monitored. Agrochemicals, including pesticides and fertilisers, shall be applied using methods that minimise harm to human health, wildlife, plant biodiversity, and water and air quality. We exploit every part of the salmon SalMar exploits all by-products (head, spine, and offcuts) from our salmon fully. All offcuts from the production of fillets at SalMar’s harvest- ing and processing facilities are sent for further processing, resulting in 100% of the raw materials being utilised. From InnovaMar, the raw materials go directly to Nutrimar via a system of conveyer belts/pipes, which ensures a high degree of freshness and usable volume when processing this raw material. It also means that there is practically no need for input factors relating to its transport and handling. For more information about Nutrimar and its products, see www.nutrimar.no. The fish that die during production are sent to companies that use them as ingredients in the feed industry. 61 Sustainability and Corporate Responsibility Environment & Technology Research and Development Norway's aquaculture industry has undergone remarkable growth and development, with SalMar being a significant contributor to this progress by prioritizing the advancement of knowledge in its oper- ational areas. The company achieves this through close collaboration with pub- lic authorities, educational and research institutions, and industry associations. In 2023, SalMar continued its extensive research and development activities in various fields, with a focus on fish welfare and lice control. The company undertook significant R&D projects at its processing plant, with considerable attention devoted to optimiz- ing feeding and controlling feeding at its sea farms. SalMar remains committed to providing the industry with sector-specific knowledge, benefiting the sector as a whole. We support research establishments and academics SalMar’s communications with the NTNU have been growing in scope in recent years, which the company considers to be only natural. The NTNU’s Taskforce Salmon Lice research programme was set up in 2020 partly at the initiative of SalMar. The taskforce is a collaborative effort between the NTNU and many aquaculture industry organisations. The objective is to take a broad look at the problems caused by salmon lice. The programme is well underway, and SalMar is participating actively in several of its subprojects. The NTNU has created five doctoral research positions, with postgraduate and undergraduate students connected to each one. SalMar is also in close contact with the University of Tromsø (UIT) and has signed a cooperation agreement involving the sharing of experience and the initiation of joint projects. One example is the work being done to establish an endowment professorship in the field of recirculating aquaculture systems (RAS) at the UIT. This is a cooperative venture involving several industry players. We are very engaged in supporting the education of tomorrow’s researchers and ensure that students gain a good insight into the aquaculture sector, so they can contribute to its further development. In collaboration with the NTNU, SalMar has endowed a professor- ship within the field of aquaculture cybernetics. The professorship is intended to promote cross-functional research linking the areas tech- nical cybernetics, biology and aquaculture. It will act as a knowledge base for and link between the aquaculture industry and the academic world. The professorship will also contribute to the recruitment of more students to the field of aquaculture, thus securing the indus- try’s access to highly qualified technological expertise. This professor- ship will strengthen the NTNU’s position as one of the world’s leading universities for aquaculture and aquaculture technology. We actively use R&D licences and have multiple green licences SalMar has been actively engaged in partnerships with R&D estab- lishments for many years. This also includes collaboration on the operation of R&D licences. The scale and professionalism relating to important development tasks continues to increase. SalMar sees itself as a professional, but demanding partner, whose aim is to ensure that the results of all trials are as relevant as possible, and that plans and protocols take into account the practical realities of fish farming. SalMar has dedicated personnel who organise and assist research establishments in their efforts, at the same time as operational staff gain experience in how best to safeguard research results under busy day-to-day operating conditions. Proximity to the research, with opportunities to influence both its planning and areas of focus are important sources of motivation for SalMar. The development of vaccines, optimisation of medication, feeding and nutrition, and technological issues relating to large-scale operations are examples of important areas for further research. Following the Norwegian authorities’ 2013/2014 round of licence allocations, SalMar obtained “green” licences. The terms of the green licences set stricter limitations on the number of salmon lice and the number of medicinal delousing treatments, as well as a stronger focus on escape prevention. In connection with its green licences, SalMar has focused particularly on the use of cleaner fish, in the form of farmed lumpfish, to control sea lice levels, and the use of a more secure net- pen construction. We have also emphasised participation in a salmon surveillance project in Trøndelag’s salmon rivers, in order to assist in the development of methods and expertise related to the tracking and mapping of escaped farmed salmon in rivers. So far, experience from the operation of these sites has been good. A separate report is published annually detailing SalMar’s experience and evaluating the operation of its green licences. This report is available on our website. We are working long-term to develop a more genetically robust strain of salmon Genetics and the development of a more robust salmon are important preventive measures to reduce biological risk. SalMar has its own breeding programme based on the Rauma Broodstock. We use no form of genetic engineering in our breeding programme. See SalMar’s GMO and Growth Hormones Policy for more information on this. SalMar’s focus on breeding and genetics includes a collaboration with Benchmark Holding through our co-ownership of SalMar Genetics. SalMar is pleased to see that this model has provided a solid foun- dation for the further development of the Rauma Broodstock in the years ahead. In this effort, we will be focusing on the development of robust qualities, in addition to general resistance to disease and good growth. The change in focus and intensity of our efforts in this area is a natural consequence of the Group’s desire to control the value chain and safeguard the continued development of our products and the long-term future of our business. 62 Sustainability and Corporate Responsibility Environment & Technology We use new packaging solutions and reduce food waste SalMar is committed to reducing food waste and promoting sustainability through the development of better packing and packaging solutions. As part of this effort, we are involved in national and international projects aimed at creating effective and quality-preserving production, packaging, and distribution methods. Our focus is on further developing our packaging solutions by adopting more environment-friendly materials, promoting material reuse, and adding other desirable properties. We are working towards increasing the percentage of our products transported in reusable boxes, with a large proportion of our pre-rigor finished products already packed in such boxes. This approach results in significant savings by reducing the need for ice and avoiding polystyrene box disposal. We have also stopped using ordinary ice for a large part of our fillet production, instead opting for dry ice made from gas derived from fertiliser production. This approach reduces the weight and volume of our consignments and, consequently, the emissions generated during transportation. Moreover, we are continually developing new and better packaging materials and technologies, focusing on reusable boxes, ice-free shipments, and packaging technology that provides complete bacteriological security. We have initiated several projects aimed at extending the shelf-life of our salmon products through the use of new freezing technology and innovative packaging solutions. SalMar is involved in the use of Keep-It® shelf-life indicator, a device that displays the temperature and the remaining shelf-life of the product. This indicator helps to increase the shelf-life of the product and reduce food waste by focusing the attention of all links in the value chain, from the factory to the customer. Currently, we are working on new projects that aim to visualize the quality of the product in the package using new technological solutions. Our objective is to document additional quality attributes through simple technological solutions. 63 Sustainability and Corporate Responsibility People & Society 64 People & Society At SalMar, we care for our colleagues, partners, and the local commu- nities. As responsible corporate citizens, we believe that our behavior has a positive impact on both our own operations and society at large. With a workforce of over 2,500 employees, we are a significant employer and a key contributor to society, which in turn gives us mul- tiple responsibilities to people, society, and industry. We take these social obligations seriously and uphold ethical business practices as a core value. Our commitment is to operate in an honest, proper, and trustworthy manner, and we take pride in showcasing our operations. Our focus on sustainable development revolves around creating local value, fostering knowledge development, and enabling people to live a good life. As an employer, producer, supplier of healthy food, user of nature and the environment, and manager of intellectual and financial capital, we understand that these aspects are essential to our busi- ness. Given our position, we recognize the importance of positively and sustainably impacting our surroundings, while also giving back to the community whenever possible. 64 Sustainability and Corporate Responsibility People & Society Group Norway Iceland Target 2023 2022 2021 2023 2022 2021 2023 2022 2021 Employees Full-time equivalents (FTE) 2,674 2,266 1,960 2,506 2,112 1 1,828 168 154 133 Admin 73 66 51 55 49 36 18 17 15 Hatcheries 153 125 95 128 101 82 25 24 13 Fish Farming 1,089 817 720 1,025 759 668 64 58 52 Sales & Industry 1,357 1,258 1,094 1,297 1,203 1,041 60 55 53 Female ratio Increase 26% 28% 27% 26% 28% 28% 28% 26% 23% Admin Increase 48% 44% 44% 47% 44% 44% 49% 51% 49% Hatcheries Increase 26% 22% 21% 27% 22% 19% 18% 20% 39% Fish Farming Increase 14% 13% 10% 14% 13% 10% 12% 12% 9% Sales & Industry Increase 36% 37% 38% 35% 37% 39% 39% 33% 25% Safety & sickness absence Fatalities 0 0 0 0 0 0 0 0 0 0 LTIs 0 23 19 24 18 10 17 5 9 7 H-factor 2 < 3 5.4 5.3 7.7 4.5 3.0 5.9 3.0 5.8 5.5 Sickness absence <4.5% 5.5 % 5.6 % 6.0 % 5.6 % 5.7 % 6.1 % 4.7 % 4.1 % 4.1 % Regulatory compliance Violations 0 1 3 1 1 1 0 1 0 1 0 Fines (NOK million) 0 1.7 9 0.2 1.7 0 0.2 0 9 0 1 FTE in Norway in 2022 includes new employees from NRS, NTS and SalmoNor only after the date of acquisition, 1. Nov 2022. 2 SalMar reports H-factor as LTIs per million working hours both on Group level and in Norway. Icelandic Salmon reports H-factor as LTIs per 200.000 working hours. The H-factor in Iceland is 15 when using the same calculation method as for Norway and Group. 3 The fine in 2023 was from the Norwegian Food Safety Authority relating to an incident at a farming site. Our KPI Scorecard All targets are timebound for the following calendar year unless otherwise specified. 65 Sustainability and Corporate Responsibility People & Society The Workforce In order to achieve our strategic goals, it is imperative that we recruit and retain top-notch employees regardless of their gender, age, or background. However, this can only be achieved by providing a working environment that is both appealing and secure. By doing so, we can attract and retain highly skilled individuals who will contribute to our overall success. We have a diverse workforce In 2023, the Group employed a total of 2,674 full-time equivalents from 58 different countries. This is 408 full-time equivalents more than in 2022. The workforce was made up of 704 women and 1,970 men. The female ratio of the Executive Management is 14% in SalMar and 33% in Icelandic Salmon, SalMar's Icelandic subsidiary. SalMar works actively towards the recruitment of women in what has traditionally been a male dominated industry. Our goal is to exhibit the vast opportunities for women in all parts of the industry. This is done by actively targeting potential future employees (in school, universities etc.) and having female representatives speak about SalMar as a workplace. The female ratio of employees increased in all segments in SalMar except for in the Sales & Industry segment. The female ratio is con- siderably higher at the Group’s Admin and Harvesting & Processing plants than at its hatcheries and fish farms. One of SalMar’s focus areas have been the Fish Farming segment, as this has the lowest female ratio. This segment has seen an increase in the female ratio for five straight years, more than doubling female employees in this period. In accordance with the activity duty and the duty to issue a state- ment set forth in Norwegian regulations to promote more equality and prevent discrimination, SalMar has disclosed its KPIs in relation to this reporting also in 2023. These KPIs include part-time employees, temporary employees, non-guaranteed hours employees, average number of weeks parental leave, average cash benefits 1 , median cash benefits and ratio of highest to median cash benefits. Where all KPIs are divided between female and male. Temporary, part-time and non-guaranteed hours employees constitute a smaller proportion of the total workforce in SalMar. Despite this, it is important to understand whether there is involuntary part-time work carried out. Together with labour union representatives, SalMar regularly assess if there are employees who involuntary work part- time and in dialogue with the employees try to adapt the working situation. SalMar provides its full disclosure for 2023 according to the activity duty and the duty to issue a statement on its webpage within publication deadline 31.07.2024. You can also find SalMar's Gender Equality Report available on our webpage, due to be updated within the publication date mentioned above. The remuneration assessment for 2023 show that overall cash ben- efits in Norway are lower for female than for male. This is mostly due to the higher proportion of women within the industry segment with lower salary environment and since the overall seniority level is higher for male employees. Since seniority also is a decisive factor when employing senior managers, male representatives are overrepresented in managerial positions. SalMar's remuneration policy does not accept any form of discrimination of cash benefits provided to employees on the basis of gender. No non-conformance was found from this policy in the latest remuneration assessment. See also our ethical guidelines available on our website. Icelandic Salmon is certified by BSI, proving that that their remuner- ation policy promotes equality. Details of benefits to executive management and compensation according to the remuneration policy for 2023 is presented in a sep- arate remuneration report. Overview of employees, parental leave and average cash benefits in 2023 Female Male Total Female ratio Totalt FTE 704 1970 2674 26% Full-time employees 584 1748 2331 25% Part-time employees 47 100 148 32% Temporary employees 47 67 114 41% Non-guaranteed hours employees 26 55 81 32% Norway Female Male Total Difference Average number of weeks parental leave 27 13 16 14 Average cash benefits (KNOK) 578 718 683 -140 Median cash benefits (KNOK) 513 660 599 -147 Ratio highest to median 4.2 8.0 8.9 NA 66 Sustainability and Corporate Responsibility People & Society We have clear ethical guidelines In our Code of Conduct, we make our policy clear with respect to the promotion of diversity and equality. SalMar accepts no discrimina - tion, abuse or harassment of our workers or partners, and we treat everyone with courtesy and respect no matter what their ethnicity, gender, national or social background, age, functional capacity, sexual orientation, religious faith, political convictions or other status is. Nobody shall be be unfairly prevented from carrying out their duties and responsibilities. This attitude springs from the acknowledgement that diversity contributes to a better working environment, greater adaptability and better results in the long term. SalMar’s Code of Conduct is available on our website. All employees can safely report wrongdoing SalMar has a dedicated whistleblowing channel for both Norway and Iceland, through which all employees can report wrongdoing in the workplace or any grievances they may have. The whistleblowing channel was designed together with employees and trade unions, and is accessible via SalMar's website and on the intranet in both local languages and English. The service is operated by the inves- tigatory unit at BDO AS, and all employees are free to use it either anonymously or under their full names. The whistleblowing channel aims to be a contributor towards keeping all people accountable for their actions. It is encouraged for usage not only for matters regarding oneself, but also if we see others treated unfairly. All employees are given training in the whistleblowing procedure and know that they are protected from reprisal if they do make a report. The whistleblowing procedure is also described in the management system that is available to all employees. All cases are handled in close collaboration with internal safety representatives and local unions. The whistleblowing channel is open to the public, meaning that any- one who has grievances can report these to SalMar. This is done to ensure that our suppliers and customers also are accounted for. We require our suppliers to inform their employees that SalMar’s grievance mechanism is available if they want to raise concerns. In 2023, 12 whistleblowing reports were recorded. Six reports were deemed out of scope for the whistleblowing channel and handled individually with the relevant management team, four were related to working environment and two were related to external parties and noise. The grievances were each carefully handled in accordance with internal guidelines (Chap. 12.4 in the Code of Conduct). For more information on our whistleblowing channel and SalMar’s prac- tices related to this, see our Whistleblowing Policy on salmar.no. We actively work to ensure equal opportunities and non-discriminatory environments To properly ensure that SalMar conducts non-discriminatory business, and to uphold the requirements of the Activity Duty and the Duty to Issue a Statement issued through the Norwegian Equality and Anti-Discrimination Act, SalMar has initiated activities internally. The activities include a mapping of SalMar’s remuneration practices and the mapping of any involuntary part-time work, as well as activities against discriminatory working environments. The results of this mapping can be seen in our Gender Equality Report published on our website. SalMar will publish an updated Gender Equality assessment in 2024. In order to work actively, purposefully and well-structured with equality, SalMar has set an internal task force with representation from the senior management to investigate, analyse, and evaluate risks of discrimination. These processes are streamlined to involve all SalMar’s segments. Findings and experiences will be discussed in a greater forum with the task force to establish corrective and preventive actions. "SalMar shall treat everyone with dignity and respect and conduct their activities without discrimination on the basis of race, ethnicity, national or other origin, disability, age, gender, sexual orientation, language, religion or status" SalMar’s Non-discrimination and Equal Opportunities Policy 67 Sustainability and Corporate Responsibility People & Society We empower our employees and encourage their active participation If SalMar is going to develop and constantly forge ahead, it is vital that all employees contribute their views and suggestions for new ways of doing things. To facilitate this, the various departments hold regular planning and review meetings. Large parts of the Group make use of a scheduled meeting scheme, which focuses on individual action plans, development goals and close follow-up of the individual employee. New recruits to SalMar receive HSE training through induction courses, operational seminars, the SalMar School and the Arnarlax Academy. Annual refresher courses are also held on important HSE topics and our Code of Conduct. The SalMar School and Arnarlax Academy are our arenas for devel- oping individual competence and our corporate culture. In addition to operational updates, these arenas also address matters relating to corporate culture and leadership and involve both managers and employees in the process of creating the world’s best aquaculture company. Underpinning all our activities in this area, are our shared management principles and tenets – which enable us to develop even more SalMarians. The level of risk associated with the work being performed every single day at SalMar means that training and having the right competence is vital. Training is provided internally and in the form of external courses. Day-to-day follow-up and on-the-job learning are, nevertheless, the most important sources for individual competence improvement. SalMar is conscious of its role in helping to train skilled workers and employs numerous apprentices. We collaborate with “blue” courses of study at both secondary and university level. In Norway, these include schemes such as Ungt Entreprenørskap, Blått Kompetansesenter and the Norwegian University of Science and Technology (NTNU), while in Iceland we collaborate with the Fiskteknískolí. Furthermore, SalMar conducts periodic development discussions with its employees, at least annually. This is common practice in most busi- nesses, and SalMar considers this to be vital both in developing happy, high-performing employees and in giving the employees a familiar arena where open and honest dialogue with senior management is encouraged. We provide fair wages In SalMar, 96% of our employees are on collective agreements rooted in the national Basic Agreement negotiated between the Confeder- ation of Norwegian Enterprise (NHO) including all its national and local associations and individual enterprises, and the Norwegian Confederation of Trade Unions (LO) including all its unions and asso- ciations. This agreement ensures that employees are provided with fair remuneration relative to the cost of living. Industry-specific col- lective agreements relevant for SalMar's employees are negotiated by the unions on behalf of our employees. In SalMar, The Norwegian United Federation of Trade Unions (Fellesforbundet) and the Nor- wegian Union of Feed, Beverage, and Allied Workers (NNN) are the largest unions. The agreements are non-discriminatory, meaning that employees at the same level is provided with equal pay regardless of their gender, race, ethnicity, national or other origin, disability, age, sexual orientation, language, religion, or status. This is aligned with SalMar’s Non-Discrimination and Equal Opportunities Policy which is available on our website. SalMar also requires suppliers to provide fair wages to their workers, ensuring fair wages to all workers in our value chain. The remaining 4% in SalMar on individually negotiated contracts are employed in the company administration or in manage- ment positions. It is important to note that the employees have the right to co-de- termination in matters that are important to their everyday working life. Co-determination in the workplace is exercised through, among other, union representatives who are the employees' representatives vis-à-vis the company management. In addition to local agreements on cooperation, the agenda and rules of this collaboration can be found in collective agreements and various laws. This collaboration is an important mean for SalMar to ensure company insight, involve- ment and in the end sustainable measures regarding sociopolitical conditions for our employees. SalMar also provides paid sick leave to employees in accordance with national laws. Incentive schemes for senior executives are linked to our sustainability KPIs SalMar has a performance-based bonus scheme for its senior exec- utives, based largely on the achievement of the Group’s sustainabil- ity KPIs. Different individuals are measured against different KPIs, depending on where in the organisation they work and what their responsibilities are. This applies from members of Group Management down to fish farm technicians. For example, each individual sea farm has clear KPIs linked to fish welfare, with both survival rate and feed factor being included in the assessment of the performance-based bonus. 68 Sustainability and Corporate Responsibility People & Society We provide a safe and secure workplace Working at SalMar shall be safe. We work systematically with risk management and training to protect our workforce. In 2023, a total of 18 Lost Time Injuries (LTI) were recorded in Norway and 5 in Iceland. From the 23 in total, nine were related to fall incidents, eight were related to pinched fingers or hands, three were incidents involving tools, two were related to chemical exposure and one incident came from a falling object. SalMar is again reporting LTIs for subcontractors as a step towards full transparency and accountability throughout the value chain. There were 6 LTIs at SalMar's subcontractors in Norway in 2022 and 0 in Iceland. Three incidents were related to fall accidents, two were related to pinched fingers and one incident was related to a snapped rope. SalMar continuously strives for best practice to limit work-related injuries. Continued focus on our internal industrial safety capability is important to further reduce the number of personal injuries in 2024. All segments and/or facilities of the Group have a health and safety representative or committee with worker representatives, and two safety inspections are carried out in each department every year. In 2023, these inspections uncovered important areas for improvement to further reinforce workplace safety. All serious personal injuries are investigated to prevent similar inci- dents occurring in the future. In collaboration with DNV GL, our central technical staff department have developed company-specific tools to enable it to investigate such incidents. Nevertheless, prevention remains the most important factor. At SalMar, we place great emphasis on ensuring that hazardous operations are well planned. Operational plans are drawn up before any work commences and associated safe work analyses (SWA) are performed for those taking part. The mapping of our overall risk is the most effective measure we can implement to reduce the probability of injuries occurring. HSE performance is followed up systematically through targets and action plans. Based on overarching targets, each individual division and department has defined its own local sub-targets. Management has an obligation to monitor performance and evaluate progress, as well as the need for new measures and focus areas. Safety is followed up through weekly and monthly reviews by SalMar’s management teams. Lessons learned and improvements are shared across all departments by means of quality-assured reports. All employees are covered by a company health service in the vicinity of their workplace. The Group ensures that everyone receives the training necessary to perform their tasks. The Working Environment Committee also plays a key role in our HSE activities. The committee comprises selected management represent- atives along with nominated employees. The committee reports to the Group’s governing bodies and the employees’ union organisations. SalMar complies with national regulations also with regards to working hours and sufficient rest. This is paramount to maintain SalMar's strict demands for safe operations. We are working actively to reduce the sickness absence rate The sickness absence rate continued to be an area of intense focus in 2023. The sickness absence rate continued to improve for the Group in 2023, but is still some way off our target. Bringing the overall sickness absence rate down towards our company goal will be a continued focus area for 2024. H-factor Norway 4.5 H-factor Iceland 3.0 69 Sustainability and Corporate Responsibility People & Society Society and Value Chain SalMar has a global supply chain both upstream and downstream, which entails a responsibility to ensure and promote social standards and rights in all our activities, both direct and indirect. SalMar endorses wholeheartedly the principles set out in the Universal Declaration of Human Rights. All aspects are considered closely, and the most relevant for our operations (direct and indirect), are included in the Group’s Code of Conduct and other governing documents. SalMar complies fully with the Norwegian Transparency Act that entered into force in July 2022. This involves proper due diligence of our suppliers on human rights and working conditions. The Act is a strong initiative regarding business transparency and work on human rights aspects. SalMar performs due diligence on human rights as a core part of the company's supply chain due diligence process. In 2022, SalMar purchased and applied a dedicated software for supply chain man- agement. The software enables initial evaluations of human rights risk based on companies' industry, geography and known suppliers. SalMar's due diligence process involves a self-assessment question- naire where suppliers are asked to answer inquiries related to their practices and history on human rights, worker’s rights, health and safety, governance, tax, and their own supply chain management processes. The questionnaire answers and the risk assessment done by SalMar's dedicated software, together determine the companies relevant for closer follow-ups. The dialogue with suppliers continues until the identified risks are sufficiently handled. Overall, suppliers are audited on social responsibility certifications, health and safety certi- fications, employee contractual agreements and policies, procedures and events related to human rights in own operations and in the value chains including forced labor, child labor, fair wages, events of harass- ment, abuse, threats or violence, specific risk assessments for young workers, right to collective bargaining, freedom of association, freedom of unionization without the company's involvement, discrimination, compliance with the ILO conventions relating to working hours and documentation of any breaches, paid overtime work, workers' rights to vacations and paid leave, established grievance mechanisms, health and safety risks, mitigating actions and nonconformance reporting, corruption, fair competition, tax breaches, and clarity on any specific ESG-related matter. The suppliers are audited on whether they audit their own suppliers on each of the topics mentioned above. We also audit ourselves on the same standards. In our 2022 due diligence process, two potential breaches of human rights were identified. Both incident were related to our suppliers' own value chains, specifically two suppliers in China. The first risk was a breach of maximum allowed working hours and the risk is mitigated and monitored by third-party audits on the ground. The second risk was related to a potential breach of indigenous people's rights, and the resulting mitigating action was the termination of the business agreement with this supplier. No risks of human rights breaches were found in our own operations. A full statement on findings of our 2022 due diligence assessment can be found on our website, in accordance with the Norwegian Transpar- ency Act. The results of the 2023 assessment will be published in line with the annual deadline of the Transparency Act, 30th of June 2024. For additional information on the topic, please see SalMar’s Human Rights Policy and Whistleblowing Policy on our webpage. SalMar has a presence in local communities along the Norwegian coast and is attentive to developments in villages and local districts. Today, we have operations along the coast of Central Norway, Northern Norway and the Westfjords region of Iceland. It is important for our employees that the local communities in which they live have the necessary infrastructures and opportunities for leisure activities. For SalMar, it is crucial that the Group is able to operate at locations offer- ing good growing conditions for our fish stocks. It is also important for SalMar to participate in local arenas for the exchange of views and information, and to take part in planning processes. Salmon farming is still considered a young industry, and it is important to ensure that local decision-makers and other local residents are informed about our operations and plans for development. Through active participation in business associations and the public debate, SalMar contributes to important sustainable development processes in Norway and Iceland. We support and sponsor the local communities in which we operate To give something tangible back to the local communities in which the Group operates, SalMar supports several local sports teams and voluntary associations through the SalMar Fund. Overall, the fund gives priority to sporting and cultural initiatives, particularly those involving children and young people. SalMar also supports several national charities and campaigns, such as the Norwegian Cancer Society and WWF’s efforts to combat ocean plastic. SalMar continues its collaboration with the Norwegian Labour and Welfare Administration (NAV) to recruit people with shorter résumés to jobs at the InnovaMar harvesting and secondary processing plant in Frøya. 70 Sustainability and Corporate Responsibility People & Society In 2013, SalMar became a sponsor of the football club Rosenborg Ballklubb (RBK). This partnership was expanded in the start of 2023 to also encompass Rosenborg Kvinner, an aspiring female football club in the Norwegian top division. The partnership also includes a sep- arate programme for children and teenagers, and the development of grassroots football clubs in Trøndelag. RBK has highlighted the partnership through the SalMar Sports Ground and the SalMar Acad- emy. The objective is to help transfer competence from Rosenborg to grassroots clubs in Trøndelag County in the form of engaging training sessions to promote player and trainer development. We operate visitor centres so that the public can learn more about aquaculture SalMar wishes to increase the public knowledge about the aquacul- ture industry and the target audience includes locals, tourists and schoolchildren. Through exciting experiences on shore and at sea, the public will gain greater insight into a modern and sustainable industry. A visit to one of SalMars visitor centers includes an inter- active exhibition about fish farming in Norway, and visitors can see the high-tech solutions used to remotely feed the salmon. In addition, centers typically feature a modern kitchen where visitors can learn how easy it is to prepare delicious salmon meals. Visitors also have the opportunity to take a trip out to a sea farm, to see with their own eyes how and where the salmon live. Today SalMar with subsidiaries have six visitor centres open to the public. In 2017, a visitor centre, the SalMar Salmon Centre, opened in Finnsnes/Lysnes in Northern Norway. In 2022, SalMar opened another visitor centre in Molde in Central Norway. The visitor centre from Refsnes Laks is located in Trondheim and the visitor centre from Nekton is located on the Smøla archipelago. Through the acquisition of SalmoNor and NRS two additional visitor centres have been included in the group, one in Rørvik in Trøndelag County and Laksens Hus in Alta in Finnmark county. We ensure safe road transport At certain times every winter in Norway and Iceland, the weather makes the roads impassable, and we experience hazardous situations due to heavy goods vehicles not having the proper tyres/chains. We have therefore introduced control measures and routines. As a buyer of transport services, SalMar demands that its suppliers meet certain standards. To transport salmon from our production facilities and har - vesting plants, the transport service provider must sign a declaration stating that they comply with the Norwegian Public Roads Administra- tion’s technical requirements for vehicles in Norway. They also commit to familiarise themselves with the prevailing driving conditions on the roads they will be using. Together with the Norwegian Public Roads Administration, SalMar is a participant in the “Safe Trailer” project. This project is intended to help equip heavy vehicles to cope better with winter driving conditions in Norway and will lead to increased safety for all. Specifically, the project involves Norwegian Public Roads Administration staff teaching our employees how to check that tyres and chains are in order, as well as providing useful information to the company’s employees and drivers. In addition, our staff assess whether the trailer is in a technically accept- able condition and whether the driver is “competent” to drive it. In the event of any non-conformance, necessary measures are implemented. Our financing is linked to our sustainability endeavours In 2023 SalMar ASA refinanced its credit facilities with a new financing agreement with the intention of making it sustainability linked. SalMar achieves a lower interest margin if we succeed and a higher interest margin if we fail to fulfil the targets for the ESG KPIs. Since the financing was concluded in August 2023 the ESG KPIs linked to the financing will be agreed upon in 2024. In addition, SalMar issued a green bond at the start of 2021, with the funds raised being used in accordance with the published green bond framework. SalMar publishes a Green Bond Report annually on our web- page showing that the green bond’s funds were invested solely in areas that contribute to the sustainable development of the company and the industry at large. See SalMar’s website for further details. As part of our financing, SalMar is committed to align its capital expenditures with its GHG emission targets. We comply with the regulations The aquaculture industry is strictly regulated, and companies must comply with applicable laws and regulations. SalMar reports the num- ber of regulatory violations that have resulted in fines. This includes all violations relating to products and food safety, environmental and social regulations that resulted in monetary fines. SalMar's Anti-Corruption and Bribery Policy and Anti-Competitive Behaviour Policy, Policy states how SalMar works to stay compliant with relevant regulations and proper business practices. There were no violations relating to corruption or anti-competitive behaviour in 2023, nor did SalMar identify such events in its supply chain. Please see Note 4.9 to the annual financial statements for information concerning allegations of price fixing. 71 Sustainability and Corporate Responsibility GRI Index and Third-Party Verification GRI Index and Third-Party Verification Each year, SalMar reports on its activities in the field of corporate social responsibility and sustainability on the basis of the guidelines issued by the international organisation, the Global Reporting Initiative (GRI). Reporting takes place via this report, SalMar’s annual report and other information published on our website. The sustainability reporting for 2023 includes data for a number of disclosures drawn from GRI’s guide- lines. An overview of which indicators the report covers is presented in a separate publication on our webpage. EY has carried out a limited third-party verification of the 2022 report. The KPIs in the report that have been verified, along with accompanying comments, are presented below. Third-party verification The following shows the KPIs that have been the subject of third-party verification by EY. People & Society KPI Indicator Safety & sickness absence LTI – Own employees 403-9 LTI – Subcontractors 403-9 H-factor 403-9 Sickness absence 403-10 Fish KPI Indicator Survival rate 12-month rolling survival rate GSI Antibiotics Grams of active pharmaceutical ingredient (API/tonne produced) GSI Interaction with wildlife Birds – Accidental mortality GSI Birds – Euthanised GSI Marine mammals – Accidental mortality GSI Marine mammals – Euthanised GSI Fish escapes No. of incidents GSI No. of escaped fish GSI Fish feed Certification of marine ingredients in fish feed Own KPI Certification of soya ingredients in fish feed Own KPI FFDR (Fish meal) Own KPI FFDR (Fish oil) Own KPI Biological feed conversion ratio Own KPI Certification Share of active sites certified GSI Environment & Technology KPI Indicator Greenhouse gas (GHG) emissions Scopes 1 + 2 (GHG tCO 2 e) 305-1+2 Intensity Scopes 1+2 (kgCO 2 e/tonne produced) 305-4 Scope 3 (GHG tCO 2 e) 305-3 Intensity Scope 3 (kgCO 2 e/tonn produced) 305-4 Intensity Scopes 1+2+3 (kgCO 2 e/tonne produced) 305-4 Secondary processing Share of secondary processing Own KPI Site environment B-analysis benthic score ≤ 2 Own KPI Operational areas with low water risk Share of operational areas with a low overall water risk 303-5 Withdrawal of fresh water Withdrawal (1,000 m 3 ) 303-5 Intensity (liter per kg produced) Own KPI 72 Corporate Governance at SalMar ASA 74 Executive Management 82 Board of Directors 84 Shareholder Information 86 Report of the Board of Directors 88 Corporate Governance Corporate Governance Corporate Governance at SalMar ASACorporate Governance Corporate Governance at SalMar ASA Corporate Governance at SalMar ASA SalMar ASA aims to maintain a high standard of corporate governance. Good corporate governance strengthens public confidence in the company and contributes to long- term value creation by regulating the reciprocal roles and responsibilities of shareholders, the Board of Directors and the company’s management, over and above that which is provided in laws and other regulations. Corporate governance at SalMar shall be based on the following main principles: • All shareholders shall be treated equally. • SalMar shall maintain open, relevant and reliable communications with its stakeholders, including shareholders, public authorities and the general public, on matters relating to its business. • SalMar’s Board of Directors shall be autonomous and independent of company management. • A majority of board members shall be independent of the company’s majority shareholder. • SalMar shall have a clear allocation of roles and responsibilities between shareholders, the Board and management. 1. Corporate Governance Compliance and regulations SalMar’s Board of Directors have overall responsibility for ensuring that the company has adequate corporate governance. The compa- ny’s Board and management perform a thorough annual assessment of its principles for corporate governance. SalMar is a Norwegian public limited company listed on the Oslo Stock Exchange. The company is subject to section 3-3b of the Norwegian Accounting Act, pursuant to which the company must annually disclose its principles and practices with respect to corporate governance. In addition, the company is subject to the Oslo Stock Exchange’s require- ments for an annual statement of its principles and practices with respect to corporate governance. This disclosure shall cover each chapter in the prevailing Norwegian Code of Practice for Corporate Governance (code of practice) issued by the Norwegian Corporate Governance Board (NUES). The Oslo Stock Exchange’s Continuing Obligations provide an overview of the information that must be included in the disclosure. The Norwegian Accounting Act is available from www.lovdata.no, while the Continuing Obligations are available from www.oslobors.no. SalMar complies with the current Code of Practice for Corporate Gov- ernance, published 14 October 2021. The code of practice may be found at www.nues.no. Application of the code of practice is based on the ‘comply or explain’ principle, which means that the company must provide an explanation if it elects an approach different to that recommended in the code of practice. SalMar issues a comprehensive statement of its principles for corporate governance in its annual report, and this information is also available from www.salmar.no. This present statement describes how SalMar has conducted itself with respect to the code of practice in 2023 Deviations from the code of practice: Reference is made to item 6. 2. Business and Purpose SalMar is one of the world’s largest producers of farmed salmon. As at 31 December 2023, the company owned licences for marine production of 167,112 tonnes maximum allowable biomass (MAB) in Norway. This includes 6 time-limited demonstration licences and 4 broodstock licences covering 780 tonnes MAB each and 7,151 tonnes MAB in development licences. In addition, the company has 6,240 tonnes MAB development licences through the Mariculture AS. SalMar has substantial secondary processing and sales activities in Frøya at InnovaMar, Senja at InnovaNor and Aukra at Vikenco, as well as six sales offices in Asia. In 2021 SalMar entered into a strategic partnership with Aker establish- ing SalMar Aker Ocean. The company has ambition to become a global offshore aquaculture company with an ambition of 150,000 tonnes. At the end of 2023, SalMar owned 52.48 per cent of the Icelandic aqua- culture company Icelandic Salmon, which harvested 17,900 tonnes of salmon in 2023 and holds 23,700 tonnes MAB in licence capacity. 7474 Corporate Governance Corporate Governance at SalMar ASACorporate Governance Corporate Governance at SalMar ASA SalMar owns 50 per cent of Norskott Havbruk AS, which in turn owns 100 per cent of Scottish Sea Farms Ltd, the UK’s second larg- est producer of salmon, with an annual capacity of around 45,000 tonnes of salmon. SalMar ASA’s objectives are defined in Article 2 of its articles of association: “The objective of the company is fish farming, the processing and trading of all types of fish and shellfish, and other financial activities related thereto. The company may, in accordance with directives from the relevant authorities, undertake general investment activi- ties, including participation in other companies with similar or related objectives.” SalMar’s Board of Directors has drawn up clear objectives and strate- gies for the Group to secure optimal value creation for its shareholders and other stakeholders. Each business area has developed its own goals in line with these, and strategic priorities have been defined. Within the framework of the above article, SalMar is currently engaged in broodstock and smolt production, marine-phase farming, harvesting, processing and sale of farmed salmon. The Board also defines risk and sustainability profiles for the Group and ensures that these support value creation for its shareholders, and the board evaluates the risk profile annually. The company’s objectives and main strategies are further discussed in the annual report and can be found on the company’s website www.salmar.no. Corporate values, code of conduct and social responsibility SalMar’s corporate culture is based on the success factors that have underpinned its development since its establishment in 1991. Although this culture is affected by both internal and external frame- work conditions, it is firmly embedded in certain overarching principles, such as sustainability, equality, quality, care for the environment, focus on work tasks and continuous improvement. Underpinning all of SalMar’s actions and business operations is its vision: “Passion for Salmon”. This means that all choices relating to the company’s production shall be made on the basis of a passion for salmon. Salmon shall be produced on its own terms. SalMar considers that the best biological results will provide the basis for the best finan- cial results, and will safeguard SalMar’s position as the world’s most cost-effect salmon producer. SalMar has two main principles: minimizing our environmental impact in the areas we operate, and to maximize value creation from the fish we produce. One of our most important tenets is “sustainability in everything we do”. Sustainable food production is an issue that has gained increased significance and focus. SalMar is engaged in a number of initiatives which will help make our already sustainable food production even more sustainable. See our latest sustainability report for further details. SalMar has a set of tenets that describe desired behaviours and a shared understanding of how employees should behave. Through the SalMar School and day-to-day exposure to SalMar’s corporate and performance culture, all employees are given encouragement and opportunities for development. For more information on the SalMar culture, please see the annual report and the company’s website www.salmar.no. SalMar has drawn up a code of conduct and social responsibility, whose purpose is to safeguard and develop the company’s values, create a healthy corporate culture and uphold the company’s integrity. The code of conduct is also meant to be a tool for self-assessment and for the further development of the company’s identity. All employees of the company are bound to comply with the ethical guidelines laid down in the code of conduct. The reporting of any wrongdoing or other causes for concern is covered by specific procedures, which also allow employees to report anonymously through an external channel. The code of conduct is available from the company’s website www.salmar.no. SalMar has a presence in many local communities. The Group is there- fore very aware of the diverse nature of its social responsibilities: as an employer, an industrial processor, a producer of healthy food, as a cus- todian of financial and intellectual capital, and – not least- as a user of the natural environment. Increased biological control is one of the company’s most important focus areas, and is a material prerequisite for long-term success. The company is, among other things, working actively to safeguard fish welfare and prevent salmon from escaping. One of the company’s most important tenets is ‘We care’. This per- meates the SalMar culture, and ensures a high degree of awareness among employees, both internally and externally, in the areas in which the company operates. Deviations from the code of practice: None 3. Equity and Dividend Equity As at 31 December 2023, the group’s equity totalled NOK 23,079 million, which corresponds to an equity ratio of 43.3 per cent. The Board considers SalMar’s capital structure to be solid in relation to the company’s objectives, strategy and risk profile. Dividend policy SalMar intends to provide shareholders with a competitive return on invested capital by creating value for shareholders in the form of dividends and share price appreciation over time. 7575 Corporate Governance Corporate Governance at SalMar ASACorporate Governance Corporate Governance at SalMar ASA SalMar’s dividend policy takes as its starting point that the company shall at all times have a robust balance sheet and a liquidity reserve that is sufficient to meet future obligations. The company has established long-term financial targets linked to gearing: NIBD 1 in relation to EBITDA in the interval 1.0–2.5. Provided that the company is within these limits, and taking account of future investments, the intention is to pay out surplus liquidity in the form of a dividend or the buyback of treasury shares. Provided the Annual General Meeting (AGM) approves, the aim is to make annual payments of dividend. The company will also consider the buyback of treasury shares within the authorisation limits granted to the Board by the AGM. For the 2023 financial year, the Board proposes payment of a dividend corresponding to NOK 35.00 per share. This proposal is based on the Board’s assessment that company’s has demonstrated its capacity to adapt to changing market and regulatory conditions, delivering strong results and successfully completing large transactions, while maintaining a solid financial position with a strong liquidity reserve. Board authorisations Authorisations granted to the Board are normally time limited, and are valid only up until the next AGM and no later than 30 June the following year. The AGM of 8 June 2023 granted the Board four authorisations: to increase SalMar’s share capital, to issue convertible loans, to buy back SalMar’s own (treasury) shares and to acquire own shares in the market. These were extensions of authorisations granted by the AGM in 2022. In line with the Norwegian Code of Practice for Corporate Governance, each of the authorisations was considered separately. 1 NIBD includes liabilities in accordance with IFRS 16 and EBITDA is without fair value adjustment, onerous contracts and production tax The authorisation for the Board to increase the company’s share capital was limited to NOK 1,814,236.50, through the issue of up to 7,256,946 shares to finance investments and the acquisition of businesses through cash issues and contributions in kind. The second authorisation allows the Board to issue convertible loans for up to NOK 3,000,000,000 for the purpose of enabling SalMar, at short notice, to use such financial instruments as part of its overall financing requirement. In connection with the conversion of loans raised pursuant to this authorisation, SalMar’s share capital may be increased by up to NOK 1,814,236.50, though with account taken of any capital increases undertaken pursuant to the authorisation to increase SalMar’s share capital, such that the total capital increase for both authorisations combined may not exceed 5 per cent of the share capital. It follows from the purpose of the authorisations that the Board may need to waive existing shareholders’ preference rights. The third authorisation allows the Board to acquire up to 14,513,892 treasury shares with an aggregate par value of up to an aggregate of NOK 3,628,473 at a price per share of no less than NOK 1 and no more than NOK 1,000. The rationale for the Board’s proposal was that such arrangement would amongst other things give the Board an extended possibility to utilise mechanisms for distribution of capital to SalMar’s shareholders and to facilitate an adequate capital structure of SalMar. Exercise of such authorisation was made subject to principles of equal treatment of shareholders. To ensure that SalMar’s majority owner’s, Kverva Industrier AS, proportionate shareholding remained equal it was set in place an arrangement whereby any shares acquired in the market would be cancelled through a subsequent share capital decrease and that a corresponding part of Kverva Industrier AS’ shares would be redeemed. The total capital increase for the third authorisa- tion may not exceed 10 per cent of the share capital. All board authorisations are valid up until the next AGM, which will be held on 6 June 2024. Deviations from the code of practice: None 4. Non-Discrimination of Shareholders and Transactions With Closely Related Parties As of 31 December 2023, SalMar ASA owned 278,854 treasury shares, which accounts for 0.21 per cent of the company’s registered share capital. Transactions involving treasury shares are undertaken on the stock exchange or otherwise at the listed price. In the event of not immaterial transactions with related parties, the company shall make use of valuations and assessments provided by an independent third party. In the event of capital increases based on an authorisation issued by a general meeting of shareholders, where the existing sharehold- ers’ rights are waived, the reason for this will be provided in a public announcement in connection with the capital increase as it was done on the successful private placement that took place 8 June 2021. SalMar’s code of conduct and regulations regarding insider trading set out what is required of employees with respect to loyalty, conflicts of interest, confidentiality and guidelines for trading in the compa- ny’s shares. The code of conduct states that all employees must notify the Board if they, directly or indirectly, have a material interest in any agreement entered into by the company. Board members also have a duty to comply with the company’s code of conduct. SalMar’s Board Chair Gustav Witzøe is the company’s founder. He indirectly owns 93.1 per cent of Kverva AS, which, through Kverva Industrier AS, owns 45.4 per cent of the shares in SalMar ASA. Witzøe is a member of the board of Kverva AS. The instructions regulating the Audit and Risk Committee includes monitoring of the compa- ny’s routines and follow-up of transactions between related parties. 7676 Corporate Governance Corporate Governance at SalMar ASACorporate Governance Corporate Governance at SalMar ASA Transactions with related parties are disclosed in Note 4.8 to the 2023 consolidated financial statements. Deviations from the code of practice: None 5. Free Transferability SalMar has only one class of shares and all shares have equal rights. Each share has a face value of NOK 0.25 and carries one vote. The company’s shares are freely transferable on the Oslo Stock Exchange, and its articles of association do not contain any restric- tions on the right to own, trade or vote for shares in the company, as long as the regulations governing insider trading are complied with. Deviations from the code of practice: None 6. General Meeting of Shareholders The company’s highest decision-making body is the General Meeting of Shareholders. General meetings are open to participation by all shareholders. Pursu- ant to Article 7 of the company’s articles of association, the Annual General Meeting must be held by the end of June each year in Oslo, Trondheim or Kverva in the municipality of Frøya. The 2024 AGM will be held on 6 June 2024 at the company’s head office in Frøya. An invitation to attend the AGM or an EGM will be issued no later than 21 days prior to the date of the meeting. In accordance with the company’s articles of association, documents relating to matters to be addressed at a general meeting of share- holders may be made available on SalMar ASA’s website. The same applies to documents which by law must be included in or attached to the invitation to attend the general meeting. If the documents are made available in this way, the statutory requirement with respect to distribution to shareholders is not applicable. A shareholder may nevertheless ask to be sent documents relating to matters to be discussed at a general meeting by post. Case documents must con- tain all the documentation necessary to enable shareholders to take a standpoint on all matters to be addressed. Pursuant to section 5-11 of the Public Limited Companies Act, shareholders are also entitled to table their own items for consideration by the general meeting. The deadline for notification of shareholders’ intention to attend a general meeting is stipulated by the Board of Directors in the invi- tation thereto, no less than five days prior to the date of the meeting. Shareholders may send notification of their attendance, using the form provided, by post or email to the company’s account manager Nordea Bank Norge AS, or via the company’s website www.salmar.no. Shareholders are entitled to make proposals and cast their votes either in person or through a proxy, including a proxy appointed by the company. The proxy form also enables shareholders to grant a proxy vote for each individual agenda item and in connection with the election of each board member. Shareholders are entitled to cast their votes on each individual item on the agenda, including each individual Director nominated to the Board or members for the Nomination Committee. The Board determines the agenda for the meeting, and the main issues to be dealt with by the AGM are regulated by Article 9 of the company’s articles of association and section 5-6 of the Public Limited Companies Act. The Board Chair and the company’s auditor will be represented at general meetings, which will normally be chaired by the Board Chair. Other members of the Board of Directors and members of the Nomi- nation Committee may in addition be represented at general meetings. The present Board Chair, Gustav Witzøe, is a member of the board of Kverva AS, SalMar’s majority shareholder through its ownership in Kverva Industrier AS. Nevertheless, SalMar considers its Board Chair to be best suited to chair general meetings. In the event of any disa- greement on individual agenda items where the Board Chair belongs to one of the factions, or for some other reason is not deemed to be impartial, a different person will be selected to chair the meeting in order to ensure independence with respect to the matters concerned. The company will publish the minutes of general meetings of share- holders in accordance with stock exchange regulations. Deviations from the code of practice: It is considered from time to time whether the entire Board of Directors and the Chair of the Nomination Committee will be present at the general meetings. 7. Nomination Committee Article 8 of the company’s articles of association stipulates that the Nomination Committee shall comprise a total of three people, who shall be shareholders or shareholders’ representatives. The Nomination Committee’s composition shall be such that the interests of share- holders as a community are upheld, and the majority of committee members shall be independent of management and the Board. The members of the Nomination Committee, including its chair, are elected by the AGM for a term of two years. Members may be re-elected. To ensure continuity, members’ terms of office shall not coincide. The remuneration payable to members of the Nomination Committee is determined by the AGM. A set of regulations governing the work of the Nomination Committee was adopted at the board meeting of 21 March 2007 and updated at the AGM in 2014. 7777 Corporate Governance Corporate Governance at SalMar ASACorporate Governance Corporate Governance at SalMar ASA As at 31 December 2023, the Nomination Committee comprise of the following: • Bjørn Wiggen, Chair • Endre Kolbjørnsen (up for election in 2024) Karianne O. Tung was appointed member of the Norwegian govern- ment and resigned from her position as member of the Nomination Committee 16th of October 2023. A new member to the Nomination Committee will be elected at the AGM in 2024. The Nomination Committee shall make a recommendation to the AGM with respect to candidates for election to the Board of Directors and Nomination Committee, as well as propose the remuneration payable to the members of the Board and the Nomination Committee. In its work, the Nomination Committee shall take into consideration relevant statutory requirements with respect to the composition of the company’s governing bodies, as well as principles for corporate governance laid down in the Norwegian Code of Practice for Corporate Governance drawn up by NUES. Proposals for members of the Board and Nomination Committee should safeguard the shareholder com- munity’s interests and the company’s need for competence, capacity and diversity. The Nomination Committee has a dialogue with each of the board members yearly. The Nomination Committee draws up criteria for the selection of candidates for the Board and Nomination Committee, in which both genders should be represented. The Nomination Committee should, over time, balance the requirements for continuity and renewal in the individual governing body. Relevant candidates must be asked whether they are willing to undertake the office of director or deputy director. The committee should base its recommendations with respect to the remuneration payable on (a) information about the size of the remuneration paid to elected officers in other comparable companies, and (b) on the scope of work and the amount of effort the elected officers are expected to devote to the task on behalf of the company. The Nomination Committee’s recommendation to the AGM must be published in good time, so that it can be communicated to the share- holders before the meeting takes place. The recommendation shall accompany the invitation to attend the AGM, no later than 21 days before the meeting takes place. The committee’s recommendation shall contain information about the candidates’ independence and competence, including age, education and work experience. If relevant, notice shall also be given about how long the candidate has been an elected officer of the company, any assignments for the company, as well as material assignments for other group companies that may be of significance. Proposals to the Nomination Committee All shareholders are entitled to propose candidates for the Board or other elected offices to the Nomination Committee. Such proposals must be submitted to the Nomination Committee no less than six weeks prior to the company’s AGM. All proposals shall be sent by email to the Nomination Committee’s chair. Contact details are available from the company’s website www.salmar.no. Deviations from the code of practice: None 8. Board of Directors, Composition and Independence Pursuant to Article 5 of SalMar’s articles of association, the Board of Directors shall comprise of five to nine members, to be elected by the AGM. The Board Chair is elected by the AGM. The company’s current board is made up of seven members, including two employee repre- sentatives. Three out of seven of the company’s directors are women, including one female employee representative. The regulations governing the work of the Nomination Committee state that emphasis shall be placed on ensuring that board mem- bers have the necessary competence to carry out an independent assessment of the matters presented to it by management and of the company’s business activities. Emphasis shall also be placed on ensuring that there is a reasonable gender balance and that direc- tors are independent with respect to the company. The Nomination Committee’s recommendation shall meet the requirements relating to board composition stipulated by applicable legislation and the regulations of the Oslo Stock Exchange. Board members are elected for a term of two years and may be re-elected. An overview of the individual directors’ competence and background is available from the company’s website www.salmar.no. Through decades of expertise from the aquaculture industry three of the Board members (Gustav Witzøe, Leif Inge Nordhammer and Margrethe Hauge) has expertise within sustainability and food safety for the industry. In addition both Margrethe Hauge and Morten Loktu both have expertise within product development and innovation. As at 31 December 2023, four shareholder elected board members, Gustav Witzøe, Leif Inge Nordhammer, Arnhild Holstad and Morten Loktu owned shares in SalMar. And one of the employee-elected board members owned shares in SalMar. See company’s website www.salmar.no and Note 4.2 to the 2023 consolidated financial statements for further details. Independence of the Board SalMar’s Board of Directors is composed such that it is able to act independently of any special interests. Board Chair Gustav Witzøe is also a member of the board of Kverva AS, the company’s majority shareholder through its owner share in Kverva Industrier. Further, Leif Inge Nordhammer is also a member of the board of Kverva AS. These two are therefore not deemed to be independent. The remaining 7878 Corporate Governance Corporate Governance at SalMar ASACorporate Governance Corporate Governance at SalMar ASA directors are deemed to be independent of senior executives, mate- rial business associates and the company’s largest shareholders. In matters of material importance in which the Board Chair is, or has been, actively engaged, another director is appointed to chair the Board’s deliberations. No such matters have been addressed in 2023. Deviations from the code of practice: None 9. The Board of Directors The Board of Directors has overall responsibility for the management of the Group and the supervision of its day-to-day management and business activities. Furthermore, the Board determines the Group’s overall objectives and strategy, including the overall com- position of the Group’s portfolio and the business strategies of the individual business unit. The board is formally mandated to oversee all Sustainability/ESG issues. The work of the Board is governed by a set of regulations which describe the Board’s responsibilities, tasks and administrative procedures. The Board has also prepared a set of instructions for the group management team that clarifies its duties, lines of authority and responsibilities. The regulations governing the Board’s working practices provide guidelines for how individual directors and the CEO should conduct themselves with respect to matters in which they may have a personal interest. Among them is the stipulation that each director must make a conscious assessment of his/her own impartiality, and inform the Board of any possible conflict of interest. The Board shall approve the Group’s plans and budgets. Proposals relat- ing to targets, strategies and budgets are drawn up and presented by management. Strategy is normally discussed during the autumn, ahead of the Group’s budget process. Within the area of strategy, the Board shall play an active role in setting management’s course, particularly with regard to organisational restructuring and/or operational changes. The Board meets as often as necessary to perform its duties. In 2023, the Board held 12 meetings, of which 6 were held digitally. The overall attendance rate at board meetings was 100 per cent. The Board makes an annual assessment of its own work and competence. Audit and Risk Committee Pursuant to the Public Limited Companies Act, SalMar has a board-ap- pointed Audit and Risk Committee. The committee’s main tasks are to prepare the Board’s follow-up of the financial reporting process, moni- tor the Group’s internal control and risk management systems; monitor its routines and follow-up of transactions with related parties; and maintain an ongoing dialogue with the auditor. The committee held 8 meetings in 2023, with an overall attendance rate of 100 per cent. With effect from 1 January 2021, the committee has been given broader responsibilities. This has been prompted by changes in the Norwegian Auditing Act and implementation of EU directives. The Board has updated the committee’s instructions accordingly. The Audit and Risk Committee also monitors the routines and fol- low-up procedures of transactions towards related parties. At least one committee member must be independent of the business. If the committee has more than two members, a majority must be independent of the business. As at 31 December 2023, the Audit and Risk Committee comprised the following: • Margrethe Hauge (independent), chair • Morten Loktu (independent) Deviations from the code of practice: None 10. Risk Management and Internal Control The Board is responsible for ensuring that the company’s risk man- agement and internal control systems are adequate in relation to the regulations governing the business. The company’s systems and procedures for risk management and internal control are intended to ensure efficient operations, timely and correct financial reporting, as well as compliance with the legislation and regulations to which the company is subject. The Board performs an annual review of the company’s risk management/corporate governance. The most important risk factors for the company are biological risk associated with the biological situation in its hatcheries and sea farms, as well as the risk of fish escaping therefrom, and financial risk (fluc- tuations in salmon prices, foreign exchange, credit and interest rate risk). In addition, greater emphasis has been placed on IT security and the development of technologies and solutions to secure continued sustainable growth in the field of sustainable food production. These risk factors are monitored and addressed by managers at all levels in the organisation. For further information, please see the Annual Report for 2023. It is the CEO’s responsibility to ensure that the company operates in accordance with all relevant statutes and guidelines. Internal control of financial reporting is achieved through day-to-day follow-up by management and process owners, and supervision by the Audit and Risk Committee. Non-conformances and improvement opportunities are followed up and corrective measures implemented. Financial risk is managed by a central unit at head office, and, where appropriate, consideration is given to the use of financial hedging instruments. 7979 Corporate Governance Corporate Governance at SalMar ASACorporate Governance Corporate Governance at SalMar ASA Follow-up and control of compliance with the company’s values and code of conduct takes place in the line as part of day-to-day operations. The largest risk facing SalMar relates to the biological development of its smolt and marine-phase fish stocks. The company has internal controls which encompass systematic planning, organisation, perfor- mance and evaluation of the Group’s activities in accordance with both public regulations and its own ambitions for continuous improvement. The Group has, for example, drawn up shared objectives for its internal control activities relating to the working environment and personal safety, escape prevention, fish welfare, pollution, food safety and water resources. Please see the annual report for further details. Deviations from the code of practice: None 11. Directors’ Fees The Nomination Committee’s proposal for the remuneration payable to the Board of Directors is approved or rejected by the company’s AGM. Directors’ fees shall reflect the Board’s responsibilities, competence, time spent and the complexity of the business. Directors’ fees are not performance-related and contain no share option element. Additional information relating to directors’ fees can be found in the notes to the financial statements included in the Annual Report for 2023. In accordance with Section 6-16b of the Public Limited Companies Act, a separate report describing remuneration to management and directors in 2023 will be presented to the AGM for approval. Deviations from the code of practice: None 12. Remuneration to Senior Executives Pursuant to Section 6-16a of the Public Limited Companies Act, the Board of Directors has prepared a statement relating to the determi- nation of salaries and other benefits payable to senior executives. This statement will, in line with the said statutory provision, be laid before the company’s AGM in accordance with the existing regulations. The company’s senior executive remuneration policy is based pri- marily on the principle that executive pay should be competitive and motivating, in order to attract and retain key personnel with the necessary competence. The statement refers to the fact that the Board of Directors shall determine the salary and other benefits payable to the CEO. The salary and benefits payable to other senior executives are determined by the CEO in accordance with the guidelines laid down in the statement. The existing compensation scheme is divided into three and comprises a fixed salary, a performance-related bonus and a share-based incen- tive scheme in line with the Board’s authorisation. At the 2023 AGM, the statement on executive remuneration was set forth as a separate case document, which is available from the company’s website www.salmar.no. The AGM voted to approve the establishment of a new share-based incentive scheme for senior executives. The AGM approved separately the item relating to the remuneration of senior executives linked to shares or developments in the price of shares in SalMar or other group companies. In accordance with Section 6-16b of the Public Limited Companies Act, a separate report describing remuneration to management and directors in 2023 will be issued and presented to the AGM for approval. Deviations from the code of practice: None 13. Information and Communication Investor relations Communication with shareholders, investors and analysts is a high priority for SalMar. The objective is to ensure that the financial markets and shareholders receive correct and timely information, thus providing the soundest possible foundation for a valuation of the company. All market players shall have access to the same information, and all infor- mation is published in both Norwegian and English. All notices sent to the stock exchange are made available on the company’s website and at www.newsweb.no. SalMar seeks to comply with the Oslo Stock Exchange’s investor relations recommendations, which includes a recommendation to publish information to investors on companies’ websites. The com- pany has, in line with the Norwegian Code of Practice for Corporate Governance, also adopted an ‘IR Policy’, which is available from the company’s website. The CEO, CFO and Investor Relations Manager are responsible for communications with shareholders in the period between general meetings. Financial information The company holds open investor presentations in association with the publication of its year-end and interim results. These presenta- tions are open to all and provide an overview of the Group’s oper- ational and financial performance in the previous quarter, as well as an overview of the general market outlook and company’s own future prospects. These presentations are also made available on the company’s website. The company will continue to publish interim reports in line with the Oslo Stock Exchange’s recommendation. Such interim results will be published no more than 60 days after the close of each quarter. 8080 Corporate Governance Corporate Governance at SalMar ASACorporate Governance Corporate Governance at SalMar ASA Quiet period SalMar will minimise its contacts with analysts, investors and journal- ists in the final three weeks before publication of its results. During this period, the company will hold no meetings with investors or analysts and will give no comments to the media or other parties about the Group’s results and future outlook. This is to ensure that all interested parties in the market are treated equally. Financial calendar Each year SalMar publishes a financial calendar indicating the dates of publication of the Group’s interim reports and annual report, as well as the date of its AGM. The calendar is available from the Group’s website www.salmar.no. It is also distributed as a stock market notice and updated on the Oslo Stock Exchange’s website www.newsweb.no. The calendar is published before 31 December each year. Icelandic Salmon AS The subsidiaries Icelandic Salmon AS (previously named Arnarlax AS) is listed on Euronext Growth on the Oslo Stock Exchange and NASDAQ First North on the Icelandic Stock Exchange. Guidelines have been drawn up with respect to the disclosure of information to ensure that all shareholders in SalMar receive the same information (materiality) as shareholders in Icelandic Salmon. Deviations from the code of practice: None 14. Acquisition The Board of Directors has drawn up guidelines with respect to take- over bids, in line with the Norwegian Code of Practice for Corporate Governance. The guidelines were adopted by the Board at a meeting on 29 March 2011, and the Board undertakes to act in a professional manner and in accordance with applicable legislation and regulations. The guidelines shall ensure that the interests of shareholders are safeguarded, and that all shareholders are treated equally. Further- more, the guidelines shall help ensure that company operations are not unnecessarily disturbed. The Board will strive to provide shareholders with sufficient information to enable them to make up their minds with respect to the specific bid. If a takeover bid has been made, the Board will make a statement and at the same time assess whether to obtain a valuation from an independent expert. The Board will obtain an independent valuation if a major shareholder, board member, member of the management team, related party or any collaborator of such a related party, or anyone who has recently held one or more of the above-mentioned positions, is either the bidder or has a particular interest in the takeover bid. The Board will not seek to prevent any takeover bid, unless the Board is of the opinion that such action is justified out of consideration for the company and the company’s shareholders. The Board will not exercise any authorisations or adopt other measures for the purpose of preventing the takeover bid. This stipulation may be waived only with the approval of a general meeting of shareholders after a bid has been announced. Transactions which, in reality, involve the sale of the company’s busi- ness shall be laid before a general meeting of shareholders for approval. Deviations from the code of practice: None 15. Auditor The company’s auditor is appointed by the AGM. Each year, the Board of Directors shall receive written confirmation from the auditor that the requirements with respect to independence and objectivity have been met. Each year, the auditor shall draw up a plan for the execution of their auditing activities, and the plan shall be laid before and discussed by the Audit and Risk Committee. The auditor shall meet with the Audit and Risk Committee annually to review and evaluate the compa- ny’s internal control activities. The auditor shall hold at least one meeting each year with the Board of Directors at which no representatives of the company’s management are present. The auditor attends the board meeting at which the year-end financial statements are considered. The auditor attends the company’s AGM. The Board shall inform the AGM of the remuneration payable to the auditor, broken down into an auditing and other services component. The AGM shall approve the auditor’s fees. The company has drawn up guidelines to regulate the extent to which it is permitted to use the auditor to perform services other than audit-related services. Deviations from the code of practice: None 8181 Corporate Governance Executive ManagementCorporate Governance Executive Management Frode Arntsen CEO Frode Arntsen has been CEO since October 2022. He started in SalMar in 2017 as COO, Industry and Sales. He has a background from the Norwegian Military, and is educated as a lecturer within man- agement. He has worked in the seafood industry since 2000, and has previously held senior/director positions at Lerøy Midnor, HitraMat and Lerøy Midt. Born: 1970 Shares: 6,962 RSU-rights: 9,131 Ulrik Steinvik CFO Steinvik started in the position as CFO in October 2021, prior to this he has held several leading posi- tions in the executive management. Mr. Steinvik holds the title as Norwegian state authorized public accountant. Before Steinvik joined SalMar in 2006 he served with Arthur Andersen Norway and Ernst & Young AS from 1998 to 2006. He graduated from the Norwegian School of Econom- ics and Business Administration in 2002. Born: 1974 Shares: 120,478. Owns 19,721 shares directly and indirectly through personal related parties. Also owns 100 per cent of the shares in Nord- pilan AS. Nordpilan AS owns 0.17 per cent of the shares in Kverva AS, which in turn through Kverva Industrier AS owns 45.4 per cent of the shares in SalMar ASA. RSU-rights: 5,312 Roger Bekken COO Farming Roger Bekken took over as COO Farming on 4 June 2018. Mr Bekken has worked in the seafood sector since 1991. He has held a variety of executive positions in the industry. Before joining SalMar is 2014, he was COO of Farming at Norway Royal Salmon (NRS). From 2014 until June 2018, Mr Bek- ken was managing director at SalMar Farming AS. Born: 1967 Shares: 14,509. 14,373 directly and 136 shares indirectly through related parties. RSU-Rights: 6,541 Simon Søbstad COO Sales & Industry Simon Søbstad took over as COO Sales & Industry in October 2022. From January 2018 he held the position as second in command Sales & Industry and since he started in SalMar in 2007 he has held several roles. Søbstad has education within aquaculture and has worked in the seafood indus- try since 2002. Born: 1982 Shares: 604 RSU-Rights: 4,338 Executive Management 8282 Corporate Governance Executive ManagementCorporate Governance Executive Management Eva Johanne Haugen Director Quality Management/HSE Eva Haugen has held the position as Director Qual- ity Management/HSE since 2013. She has worked in SalMar since 2001 where she has held several leading positions within quality management. She has several years of experience as a teacher in secondary school subjects such as aquaculture, science and biology. Haugen is a graduate from NTNU in the fields of chemistry, biology and edu- cation studies and holds a degree in ecotoxicology and physiology in salmonids. Born: 1971 Shares: 7,900 RSU-Rights: 3,233 Arthur Wisniewski Director Human Resource Management Wisniewski has worked at SalMar since 2016 and took up the position as Director Human Resource Management in 2018. He previously worked as HR Manager in the company. Wisniewski came from a similar position at German Wacker Chemicals and has many years of experience working with change and development processes within the HR field as an advisor and consultant in both the private and public sector. He has a Master’s degree from NTNU in Science-Technology-Society studies (STS), as well as a Bachelor’s degree in sociology from the same university. Born: 1978 Shares: 2,772 RSU-Rights: 3,888 Runar Sivertsen Chief Strategy Officer Sivertsen has worked at SalMar since 2010 and took up the position as Chief Strategy Officer in April 2020. He has previously worked as the Investor Relations Officer and before that as an analyst for the company. Sivertsen has a Master of Science in Business degree from NTNU Business School and has also completed The Solstrand programme Accelerate. Born: 1985 Shares: 4,509. 4,314 directly and 195 shares indirectly through related parties. RSU-Rights: 3,806 8383 Corporate Governance Board of DirectorsCorporate Governance Board of Directors Gustav Witzøe Chair of the Board Gustav Witzøe joined the board of directors as board chair in SalMar June 2022. Mr. Witzøe is the co-founder of SalMar ASA. He holds a degree in engineering. After several years as an engineer he co-founded BEWI AS, a company producing styrofoam boxes for the fish farming industry. Mr. Witzøe held the position as managing director of BEWI AS until 1990. Since Mr. Witzøe founded SalMar ASA in 1991 he has gained extensive expe- rience in fish farming and processing. Mr Witzøe indirectly owns 93.02% of Kverva AS, which in turn through Kverva Industrier AS owns 45.3% of the shares in SalMar ASA. Mr Witzøe is also a director of Kverva AS. Citizenship: Norwegian citizen, and resident in Norway Independent: No Margrethe Hauge Vice-Chair of the Board and Leader of the Audit and Risk Committee Margrethe Hauge is CEO of Goodtech ASA and has held management positions within production, supply chain, service and sales in aqua, agriculture, maritime and oil & gas industries. She has held positions as CEO at Teknisk Bureau AS, Regional Managing Director – Nordic & Germany at MRC Global Inc. and Executive Vice President Services at TTS Group ASA. She has also held several man- agement positions at Kverneland Group. Ms Hauge started her career as trainee at Norsk Hydro ASA. She is member of the board of Borregaard ASA and Mesta AS. She holds a Master’s degree in Eco- nomics & Business Administration, University of Mannheim, Germany. Nationality: Norwegian citizen, and resident in Norway Independent: Yes Leif Inge Nordhammer Board Member Nordhammer was previously CEO in SalMar from 1996 to 2016, with a hiatus from 2011 to 2014. Today he works in his investment company LIN AS and is board member of Kverva AS. He has extensive experience from leadership positions from several companies within aquaculture and has been a part of the industry since 1985. Former companies include Sparebank 1 Midt-Norge, E. Boneng & Sønn, Frøya Holding AS/ and Hydro Seafood AS. Nor- dhammer has educational background for Norwegian Armed Forces, Trondheim Business School and University in Trondheim. Nordhammer joined the board of SalMar in June 2020. Nordhammer owns indirectly 1.47% of the shares in SalMar ASA. He owns 99.1% of LIN AS which directly owns 1.01% of the shares in SalMar ASA and indirectly LIN AS owns 0.45% of the shares in SalMar ASA through its 1% ownershare in Kverva AS, which through Kverva Industrier AS owns 45.4% of the shares in SalMar ASA. Nationality: Norwegian citizen, and resident in Norway Independent: No Arnhild Holstad Board Member Arnhild Holstad joined the board of directors in SalMar June 2022. She is the Regional Manager at Statskog, and non-executive board member in Helse Midt-Norge RHF. She has previously been the mayor of Namsos for 6 years, and has board experience from Sparebank1 SMN and NTE. She has extensive experience from political and executive positions within communication. She is a graduate of the Norwegian School of Journalism, Norwegian School of Sport Sciences and Norwe- gian University of Science and Technology (NTNU). Shares: Owns indirectly through related parties 3,346 shares in SalMar ASA. Citizenship: Norwegian citizen, and resident in Norway Independent: Yes Board of Directors 8484 Corporate Governance Board of DirectorsCorporate Governance Board of Directors Morten Loktu Board Member and member of the Audit and Risk Committee Morten Loktu joined the board of directors in SalMar June 2022. He has held several senior positions at Equinor as Vice President of Corpo- rate Strategy, Senior Vice President (LEAN and Operational Improvement), Senior Vice President (Operations North) and Senior Vice President (Research & Innovation). He was the CEO of SINTEF for 3 years and Executive Vice President of Statoil. He is a graduate of Norwegian Uni- versity of Science and Technology. He is a board member in SalMar Aker Ocean and Frøy. Citizenship: Norwegian citizen, and resident in Norway Independent: Yes Shares: 1,000 Ingvild Kindlihagen Board Member Employee Representative Ingvild Kindlihagen has a degree in Business Economics from UiT and NHH, and has also stud- ied for a year at the University of New South Wales in Sydney and a semester at Gründersko- len (UiO and University of Berkeley). In 2020, Ingvild began her career at SalMar as a Controller for Sales and Industry. She now works as the Financial Manager for InnovaNor and is part of the company’s improvement team. Nationality: Norwegian citizen, and resident in Norway Shares: 46 RSU-Rights: 974 Hans Stølan Board Member Employee Representative Educated traffic pilot. Has been working in the industry since 1993, both on fish farms, as a mate on a freighter vessel, and since 2002 at the factory in Frøya. Chief union representative for NNN InnovaMar since 2020 and currently serving on the National Board for NNN. Has served four terms in the municipal council in Frøya and as Mayor from 2007 to 2011. Nationality: Norwegian citizen, and resi- dent in Norway Shares: 0 RSU-Rights: 0 8585 Corporate Governance Shareholder InformationCorporate Governance Shareholder Information Shareholder Information SalMar’s 20 largest shareholders Name Shareholding 31.12.2023 Shareholding (%) KVERVA INDUSTRIER AS 59,934,476 45.39% FOLKETRYGDFONDET 5,787,976 4.38% State Street Bank and Trust Comp 2,076,996 1.57% TERBOLI INVEST AS 1,425,394 1.08% LIN AS 1,337,685 1.01% JPMorgan Chase Bank, N.A., London 1,335,830 1.01% HASPRO AS 1,330,830 1.01% FRØY KAPITAL AS 1,093,815 0.83% CACEIS Bank 1,087,941 0.82% State Street Bank and Trust Comp 1,087,715 0.82% VERDIPAPIRFONDET ALFRED BERG GAMBA 1,055,226 0.80% NILS WILLIKSEN AS 1,018,473 0.77% CACEIS Bank 923,297 0.70% PARETO AKSJE NORGE VERDIPAPIRFOND 916,400 0.69% JPMorgan Chase Bank, N.A., London 910,109 0.69% CLEARSTREAM BANKING S.A. 861,574 0.65% JPMorgan Chase Bank, N.A., London 844,806 0.64% Bank Pictet & Cie (Europe) AG 815,145 0.62% ANDVARI AS 810,468 0.61% State Street Bank and Trust Comp 798,063 0.60% Total 20 largest shareholders 85,452,219 64.72% Total other shareholders 46,586,701 35.28% Total number of shares 31.12.2023 132,038,920 100.00% Treasury shares 278,854 Shareholders by country As at 31 December 2023 the company had 22,998 shareholders from 83 different countries: Country Number of shareholders Shareholding in % Norway 21,583 72.7 % United States 153 9.2 % Luxembourg 63 4.2 % United Kingdom 106 3.3 % Sweden 195 2.1 % Other countries 898 8.5 % Total 22,998 100.0 % Share Ownership by Number of Shares Number of shares Number of shareholders Shareholding in % 1–100 16,890 0.3 % 101–500 3,752 0.7 % 501–1,000 858 0.5 % 1,001–5,000 847 1.5 % 5,000–10,000 209 1.1 % 10,000–100,000 321 8.0 % 100,001–1,000,000 109 28.5 % > 1,000,000 12 59.5 % Total 22,998 100.0 % 300.00 Jan Feb Mar Apr Mai Jun Jul Aug Sep Okt Nov Dec 400.00 500.00 600.00 700.00 2023 2022 Share price 2023 vs. 2022 Share Price Development Share price at the start of 2023 was NOK 384.80 per share, valuing SalMar at NOK 55.8 billion. The share price fluctuated between NOK 377.60 per share and NOK 593.40 per share during 2023 At the end of 2023 the share price was NOK 569.20 valuing SalMar at NOK 75.2 billion. Average number of shares traded per day was 239,026. 8686 Corporate Governance Shareholder InformationCorporate Governance Shareholder Information Share information: As at 31 December 2023 SalMar ASA had 132,038,920 shares, with each share having a face value of NOK 0.25. The company was listed on Oslo Stock Exchange (OSE) 8 May 2007 with the ticker SALM. The green bond SalMar issued in April 2021 was listed on Oslo Stock Exhange 21 July 2022 under the ticker SALM01 ESG. The company’s ISIN code is NO0010310956. Registrar is Nordea Bank and Auditor is Ernst & Young. Dividend SalMar ASA aim to provide shareholders with a competitive return on invested capital. This return shall be achieved through a combination of share price increase and the payment of a dividend by the group. SalMar ASA’s dividend policy is based on the company at all times having a solid balance sheet and liquidity reserve that is sufficient to handle future liabilities. The company has set long-term financing targets related to NIBD/ EBITDA level in the range 1.0 – 2.5. Provided that the company is within this range and also taking account future investments, the intention is to pay out its surplus liquidity, in the form of cash dividends and/or in the form of share buybacks NIBD includes leasing according to IFRS16 and EBITDA is without fair value adjustments For the financial year 2023 the Board of Directors propose a cash dividend of NOK 35.00 per share. The dividend proposal is subject for approval at the annual general meeting 6 June 2024 IR contact in SalMar Communication with shareholders, investors and analysts is a high priority for SalMar. The objective is to ensure that the financial market and shareholders receive correct and timely information, thus providing the soundest possible foundation for a valuation of the company. All notices sent to the stock exchange are made available on both the company’s website, the Oslo Stock Exchange’s www.newsweb.no site and through news agencies. Håkon Husby Head of Investor Relations [email protected] +47 936 30 449 Financial calendar 2024 Financial reports will be published through the company’s homepage, www.salmar.no, Oslo Børs news site, newsweb.no and other newswires. SalMar holds quarterly presentations open to the public. The presenta- tions will take place at 08:00 CET, and the material will be available from 06:30 CET. Annual general meeting: 6 June 2024 Results Q1 2024: 14 May 2024 Results Q2 and first half 2024: 20 August 2024 Results Q3 2024: 12 November 2024 Please note that the dates and location can be changed. Any changes will be communicated. Please see our website for further details Dividend per share 35.0 20.020.020.0 13.0 23.0 19.0 12.0 10.010.0 8.0 0.00.0 4.0 2.2 0.4 1.1 2023 2022202120202019201820172016201520142013201220112010200920082007 8787 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors Report of the Board of Directors An industrial powerhouse emerged in 2023 when NTS, NRS and SalmoNor were successfully integrated into SalMar after the completion of the transactions at the end of 2022. Thereby positioning SalMar firmly as a leading company in the industry as the second largest salmon producer in the world. The company posted record high harvest volume and strong annual results driven by continued solid operational performance and strong demand for salmon in markets around the world. 2023 was unfortunately impacted negatively by the introduction of resource rent tax on aquaculture in Norway. This represents a dramatic increase in the tax on seafood production – a tax level no other country has on its food production. Given the increasing competition from a growing number of salmon- producing countries, it is even more important that the Norwegian government ensures Norway’s aquaculture sector has stable, competitive and predictable framework conditions. In 2023, consolidated harvest volume increased with 31 percent to 254,100 tonnes and generated group operating income of NOK 28,219 million. Operational EBIT totalled NOK 8,088 million in 2023. The Group expects to harvest 244,000 tonnes in Norway 1 , 15,000 tonnes in Iceland and 37,000 tonnes in Scotland 2 in 2024. 1 Includes expected harvest volume in segments Fish Farming Central Norway, Northern Norway and SalMar Aker Ocean. 2 Joint venture Scottish Sea Farms through 50% ownership in Norskott Havbruk AS 8888 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors Business and Strategy SalMar ASA is a Norwegian public limited company, whose shares are listed on the Oslo Stock Exchange under the ticker SALM. SalMar is headquartered on Frøya, in Trøndelag County. The Group’s registered address is 7266 Kverva. The Group is one of the world’s largest and most cost-efficient pro- ducers of Atlantic salmon. It is vertically integrated along the entire value chain from broodstock, roe and smolt to harvesting, processing and sales. Through wholly owned businesses, subsidiaries and asso- ciates/joint ventures, SalMar has operations in Norway, Iceland and Scotland. The company sells its products to customers worldwide, with particular focus on markets in Europe, North America and Asia. At the close of 2023, SalMar had licences to hold a maximum allowable biomass (MAB) of 167,112 tonnes of MAB in Norway, this includes 6 time-limited demonstration licences (3,120 tonnes MAB), and a MAB of 23,700 tonnes in Iceland. In addition, SalMar operates several R&D licences in collaboration with other companies in Norway. SalMar has a substantial harvesting and processing capacity near its farming operations in Norway. InnovaMar in Frøya and Vikenco in Aukra in Central Norway and InnovaNor on Senja in Northern Norway. Icelandic Salmon, which is listed on Euronext Growth on the Oslo Stock Exchange and NASDAQ First North on the Icelandic Stock Exchange, is partially owned by SalMar with 52.48 percent of the company’s shares. In addition, SalMar owns 50 percent of Scottish Sea Farms Ltd (through Norskott Havbruk AS), which is UK’s second largest producer of salmon. SalMar has for many years explored and developed opportunities to expand its fish farming activities in exposed areas and far out at the open ocean. In 2021, SalMar took one important step further by entering into a strategic partnership with the industrial investment company Aker ASA, and together the two companies aim to create the world’s leading offshore aquaculture company. The efforts are being channelled through the company SalMar Aker Ocean, in which SalMar will retain a majority interest. Through the merger with NRS, SalMar also gained ownership in the development project Arctic Offshore Farming, which also became a part of SalMar Aker Ocean in 2023. Ambition and strategic position It is SalMar’s clearly expressed ambition to be the world’s best aqua- culture company, driven by our vision: “Passion for Salmon”. SalMar aims to be a driving force for sustainable growth in the global aquaculture industry and is convinced that the establishment of salmon farming in the ocean is an important step for further sus- tainable growth. SalMar will therefore pursue two separate growth strategies going forward: one for coastal fish farming and one for offshore fish farming. Coastal fish farming: The core of SalMar’s strategic position in coastal fish farming will continue to be cost leadership and operational effi- ciency. This will be achieved by operating a focused value chain, with significant emphasis on upstream activities. Furthermore, activities reported in the Sales and Industry segment will secure optimal utili- sation of the harvested salmon to maximize value creation. In addition to cost leadership, the company focuses on performance with the aim of achieving excellence at all levels and in all aspects of production. SalMar’s coastal fish farming will represent the core of the Group’s pro- duction and earnings capacity for many years to come. The company seeks to maintain a leading role in growing and further developing the industry. Salmar will continue to actively pursue attractive M&A oppor- tunities, provided they are on commercially acceptable terms. Offshore fish farming: With SalMar as the majority owner, SalMar Aker Ocean is a pioneer and leading the development of offshore salmon farming. By combining Aker and SalMar’s knowledge and leading expertise in salmon farming, focus on fish welfare and optimal conditions for the salmon, as well as industrial software and environmental technologies, Salmar Aker Ocean will create the world’s most reliable and intelligent offshore aquaculture business, meeting the highest standards for fish welfare. Important events in 2023 Successful integration of NTS, NRS and SalmoNor: Through a series of transactions, NTS, NRS and SalmoNor became a part of SalMar from November 2022 and throughout 2023 the companies have been successfully merged into SalMars existing operational structure. During 2023 the harvesting facility SalmoSea was closed down and the sales office in Kristiansand was sold. The combination allows for synergies in regions with good farming conditions and during 2023 NOK 821 million in synergies has been realized in yearly recurring cost savings. Divestment of Frøy: In the beginning of 2023, SalMar announced a strategic review of its indirect holding in Frøy AS with the aim of maximizing value for its shareholders. Through its former subsidiary NTS AS, SalMar held 72.11 percent of the shares in Frøy. Throughout the strategic review, one experienced strong interest from a broad field of reputable investors identifying the attractive business model and growth profile of Frøy. And in August 2023 a transaction was completed where Goldman Sachs Asset Management acquired 72.11 percent of the shares in Frøy for cash consideration of NOK 76.50 per share. New financing agreement and cancellation of treasury shares: In 2023 SalMar strengthened its balance sheet and financial flexibility by delivering strong financial results. SalMar refinanced its previous 8989 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors credit facilities by entering a new unsecured credit facility, totalling NOK 16 billion and accordion of NOK 3 billion. In addition, 13.1 million treasury shares were cancelled. Increase of smolt capacity: Expansion of the smolt facility in Tjuin in Trøndelag was completed in 2023, with first transfer of fish to sea planned for the spring 2024. In addition, the second closed net pen, located in the southern parts of Central Norway, finalized construction with first production to start in 2024. Two semi-offshore projects in operation: Both Ocean Farm 1 and Arctic Offshore Farming started production in 2023 and first harvest from Arctic Offshore Farming commenced late 2023. Events after the reporting date Allegations of price collusion: On 6 February 2019, the European Commission launched an investigation of SalMar ASA and several other producers of farmed Norwegian Atlantic salmon, concerning alleged anti-competitive conduct. On 25 January 2024 the European Commission issued a Statement of Objections in the case. The Com- mission’s preliminary assessment is that there may have occurred a breach of EU competition law in the period 2011 – 2019. SalMar strongly disagrees with the Commission’s preliminary assessment and is accounting for SalMar’s view in a thorough reply to the Commission. Please see note 4.10 for further details. Market Conditions Supply, exports and price of Atlantic salmon The global supply of Atlantic salmon decreased in 2023 with 2.3 percent, according to Kontali Analyse. Supply of Atlantic salmon in 1,000 tonnes whole fish equivalents (WFE) 2022 2023 Change Norway 1,517 1,479 -2.5 % Chile 753 766 1.7 % UK 161 154 -4.4 % North America 153 128 -16.5 % Faeroes 100 89 -10.2 % Other countries 180 180 0.3 % Total global supply 2,863 2,796 -2.3 % 2023 was the best year on record for Norwegian exports of seafood measured in value in NOK. The value of Norway’s salmon exports rose by 15 percent, reflecting that the average price of Atlantic salmon was higher in 2023 than the year before. Total export of Atlantic Salmon was around 1,408 tonnes round weight, down 2 percent from 2022. Norway exported 68 percent of its volume to the EU in 2023. Overall, the EU decreased its imports of salmon from Norway by 2 percent, with the largest market, Poland, increasing their imports by 1 percent and second largest market, France, decreasing with 8 percent. SalMar sold directly to more than 50 countries in 2023. Europe was the most important destination, with Poland, Sweden and France as the largest single markets. The second most important destination was Asia, with South Korea, Japan and Taiwan as the most prominent. North America is the third largest export destination. The price of Atlantic Salmon (NASDAQ) was significantly higher in 2023 than in 2022. The year’s lowest price was recorded in week 35 at NOK 70.4 per kg, while the highest price came in week 17 at NOK 127.3 per kg. The average price of salmon (NASDAQ Salmon Index) for 2023 was NOK 93.0 per kg, compared to NOK 82.6 per kg the year before while in EUR it was at the same level EUR 8.2 per kg. From the close of 2022 until the close of 2023, the Norwegian cur- rency (NOK) weakened by seven percent against the EUR, 3 percent against USD and 9 percent against the GBP. A weakening of the NOK against the respective trading currencies could lead to an increase in salmon prices measured in NOK and vice versa. Framework conditions Norway After several years of more stable framework conditions in Norway, the surprising tax proposal from the Norwegian government 28 September 2022 marked a change in this. In September 2022, the Norwegian government proposed the introduction of a resource rent tax on aquaculture production in Norway. On 31 May 2023, with a narrow majority, the Norwegian Parliament voted for implementing an additional resource tax on aquaculture in Norway, with a tax rate of 25 percent. This is in addition to the regular corporate tax and means that the marginal tax rate on aquaculture in the sea phase will increase by over 100 percent, from 22 percent to 47 percent. The new tax applied retroactively from January 1, 2023. SalMar remains strongly opposed to this the resource rent tax and has consistently cautioned against it. The tax relies on the incorrect assumption that aquaculture food production is a location-bound resource rent industry that consistently generates extraordinary returns disproportionate to the risk involved. The high tax level and the unfavourable design of the new tax are poised to withdraw a sub- stantial portion of investment capital from the industry. Therefore, 9090 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors SalMar will continue its fact-based dialogue with authorities and decision-makers to promptly restoring a tax system and tax level that is appropriate for Norwegian aquaculture. SalMar is open to legal steps in due course. Iceland After an improvement in framework conditions for salmon farming in Iceland in 2022, conditions have become more unpredictable at the end of 2023 and in to 2024. In December 2023, a bill was presented by the Icelandic government which could lead to changes in the regu- latory framework for the country’s aquaculture sector. The aim of the proposed changes is to increase the value of Iceland’s aquaculture sector, while do it in a sustainable way. The bill is expected to be finalised and implemented during the first half of 2024. Icelandic Salmon continues its active and constructive dialogue with the authorities with respect to these issues. The company believes there is room for further growth in Iceland and growth in production and market share is expected to increase going forward. Increased market share of Icelandic salmon the next few years should help infrastructure with much needed scale and therefore improved com- petitiveness of the Icelandic salmon industry. Increased awareness in the market also creates opportunities related to sales and marketing as Icelandic salmon has not been available in all main markets on a weekly basis. Icelandic Salmon today holds licences of 23,700 tonnes maximum allowed biomass in the southern part of the Icelandic Westfjords. At the end of February 2024 Icelandic Salmon, was informed that the Icelandic Food and Veterinary Authority (MAST) and Environment Agency of Iceland (UST) have advertised a licence to be issued to Arnarlax of a salmon farming licences in Ísafjarðardjúp. The licence will be for 10,000 tonnes maximum allowed biomass of sterile salmon. The licence is under consultation until 2 nd of April 2024 and the formal and final decision will follow up to four weeks after the end of the consultation period. The company is in the process of applying for additional licences in Arnarfjörður. Scotland Framework conditions for salmon farming in Scotland have remained relatively constant over several years. The growing influence of special interests (NGOs, organised anglers, etc.) has led to more challenging regulations than in Norway, which has in turn contributed to a higher level of costs (lower efficiency, less economies of scale). The Scottish authorities have expressed an ambition to grow the aquaculture industry from its present output level of around 170,000 tonnes. In 2023 some positive signals has been received in order to establish new farming sites or grow existing good performing sites. Access to markets Russia was previously an important market for SalMar and Norwegian salmon in general. However, trade restrictions introduced in the wake of the Crimean conflict in 2014, and more recently the Russian inva- sion of Ukraine in 2022, mean that the Russian market will remain closed to Norwegian fish farmers in the foreseeable future. Financial Performance Going concern The annual financial statements for 2023 have been prepared on the assumption that SalMar is a going concern pursuant to section 3-3a of the Norwegian Accounting Act. With reference to the Group’s results and financial position, as well as forecasts for the years ahead, the conditions required for continuation as a going concern are hereby confirmed to exist. In the opinion of the Board of Directors, the Group’s financial position is solid. Consolidated Income Statement The Group generated consolidated operating income of NOK 28,219 million in 2023, compared with NOK 20,158 million in 2022. This represents an increase of 40 percent. In 2023, consolidated harvest volume was 254,100 tonnes: 233,900 tonnes in Norway, 2,300 tonnes in SalMar Aker Ocean and 17,900 tonnes in Iceland. In addition, Norskott Havbruk harvested 24,900 tonnes, of which SalMar’s share was 12,400 tonnes (50 percent). The average price of salmon (NASDAQ) in 2023 came to NOK 93.0 per kg, up 13 percent from the average in 2022, which came to NOK 82.6 per kg. The price of salmon was higher in 2023 mainly due to continued strong demand of products in all core markets, price inflation on proteins in general and a weakening of NOK. Around 19 percent of SalMar’s total volume harvested in Norway in 2023 was sold under fixed-price contracts. The terms of these contracts vary, but do not normally last for more than 12 months. Overall, the price achieved under these fixed-price contracts was on par with the spot price (NASDAQ) for the year as a whole. 9191 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors The fish farming segments in Norway performed well throughout the year, although the results in Northern Norway was negatively impacted by string jellyfish at the end of 2023. The SalMar Group had salary and personnel expenses of NOK 2,454 million in 2023, compared with NOK 1,894 million in 2022. The num- ber of full-time equivalents (FTEs) in the Group rose by 18 percent in 2023, from 2,266 FTEs at the close of 2022 to 2,674 FTEs at the close of 2023. The main reason for the increase is the inclusion of NTS, NRS and SalmoNor for the full year in 2023 compared to only 2 months in 2022. Operational EBIT is SalMar’s most important measure of performance, this is an alternative performance measure used by the Group, since it shows the results of underlying operations during the period. Spe- cific items not associated with underlying operations are presented on separate lines in the consolidated financial statements. See note 4.11 for further details. The SalMar Group made an operational EBIT of NOK 8,088 million in 2023, compared with NOK 4,465 million in 2022. Production tax reduced profits with NOK 208 million, onerous con- tracts reduced profits with NOK 237 million, fair value adjustments increased profits by NOK 1,589 million and fair value adjustments included in the cost of goods sold due to business combinations reduced profits with NOK 723 million in 2023. The corresponding ele- ments in 2022 increased profits by NOK 274 million for production tax, onerous contracts, fair value adjustments and fair value adjustments included in the cost of goods sold due to business combinations. Fair value adjustments comprise changes in the fair value of the biological assets and unrealised value of Fish Pool contracts. See note 2.6, 2.11, 2.9 and 3.13 for further details. SalMar made an operating profit of NOK 8,509 million in 2023, up from NOK 4,738 million in 2022. Income from investments in associates and joint ventures contrib- uted less to the 2023 results than the year before. This is largely attributable to reduced results by Norskott Havbruk. SalMar’s share of the loss from these investments totalled NOK -27 million in 2023, compared with a profit of NOK 66 million in 2022. Net financial items in 2023 totalled NOK -1,203 million, compared with NOK -243 million in 2022. The change is largely due to increased interest bearing debt following completion of the transactions at the end of 2022 and increased interest rates and thereby interest expenses. SalMar’s net interest income and expenses for 2023 totalled NOK 1,172 million, an increase from NOK 336 million in 2022. Finan- cial income totalled NOK 30 million in 2023, a decrease from NOK 95 million in 2022. Financial expenses totalled NOK 60 million, an increase from NOK 2 million in 2022. See Note 2.10 for further details. SalMar’s profit before tax from continuing operations in 2023 totalled NOK 7,279 million, up from NOK 4,562 million in 2022. A tax expense of NOK 4,534 million has been calculated for 2023, up from NOK 954 million in 2022. The largest increase in tax expense in the profit and loss is due to implementation of resource rent tax in Norway, see Note 2.11 for further details. SalMar’s profit for the year from continuing operations totalled NOK 2,746 million in 2023, compared with NOK 3,608 million in 2022. Until Frøy was sold in August 2023 it was recognized as discontin- ued operations, see note 4.7 for further details, and profit after tax from discontinued operations amounted to NOK 657 million in 2022, compared with NOK 107 million in 2022. Profit for the year totalled NOK 3,402 million in 2023 down from NOK 3,715 million in 2022. Consolidated Statement of Cash Flows SalMar achieved a positive cash flow from operating activities of NOK 8,975 million in 2023, compared with NOK 4,222 million in 2022. During 2023, SalMar’s working capital increased with NOK 209 million, compared with an increase of NOK 806 million in 2022. In addition, SalMar paid NOK 608 million in corporate tax in 2023, compared with NOK 552 million the year before. Net cash flow from investing activities totalled NOK 1,775 million in 2023, compared with net NOK -2,633 million in 2022. See Notes 2.10, 3.1, 3.3, 3.5, 4.4 and 4.7 for further details. Net cash flow from financing activities totalled NOK -12,989 million in 2023, compared with NOK 164 million in 2022. Cash flow from interest-bearing debt and overdraft came to NOK -7,947 million in 2023, while repayments relating to leasing liabilities totalled NOK 321 million. Net interest paid came to NOK 1,247 million. A dividend payment of NOK 2,748 million was made in 2023. Acquisition of non-controlling interests totalled NOK 755 million while cash-flow from financing activities related to discontinued operations totalled NOK 29 million. In total, including currency translation of cash and cash equivalent, this gave SalMar a cash flow for 2023 of NOK -2,246 million. This decreased the Group’s cash and cash equivalents to NOK 785 million at the close of the year. Consolidated Statement of Financial Position As of 31 December 2023, SalMar had a total balance of NOK 53,331 million, a decrease of NOK 9,170 million since the end of 2022. The main reason for the decrease is the sale of Frøy. 9292 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors The book value of the Group’s intangible assets increased with NOK 394 million in 2023. At the end of the year, the value of the Group capitalised intangible assets was NOK 18,685 million. The book value of property, plant and equipment totalled NOK 14,169 million at the end of 2023, an increase of NOK 1,651 million during the year. This includes right-to-use assets of NOK 1,797 million, compared with NOK 1,386 million in 2022. The Group’s non-current financial assets totalled NOK 2,679 million at the end of 2023, down from NOK 2,746 million at the end of 2022. The Group’s biological assets were valued at 13,265 million at the end of the year. This is NOK 1,510 million higher than at the end of 2022. Measured in tonnes, the biomass is at the same level as at the end of 2022. See Note 3.6 for further details. The value of the Group’s other inventory at the end of 2023 stood at NOK 1,230 million. Trade receivables totalled NOK 1,457 million in 2023, up from NOK 1,414 million at the end of 2022. Other receivables increased by NOK 398 million during the period to NOK 1,061 million. At the end of the year, SalMar had cash and cash equivalents totalling NOK 785 million. At the end of 2022 Frøy was classified as assets held for sale and in August 2023 the company was sold, therefore assets held for sale stood at 0 at the end of 2023 compared to NOK 11,472 million at the end of 2022. See Note 4.7 for further details. At the end of 2023, the Group’s equity totalled NOK 23,079 million, down from NOK 24,155 million at the end of 2022. Due to reduction in total assets the equity ratio has increased from 38.6 percent at the end of 2022 to 43.3 percent at the end of 2023. Net interest-bearing debt (interest-bearing debt less cash and cash equivalents) totalled NOK 13,107 million at the end of the year, down from NOK 19,079 million at the end of 2022. See Note 3.11 for further details. The NOK 9,170 million decrease in the Group’s total capital in 2023 can be primarily attributed to the sale of Frøy decreasing the liabilities directly associated with the assets held for sale and also decreasing the interest-bearing debt. The Group’s solvency and financial position remains solid at the end of 2023 with a strong liquidity reserve. Reporting Segments Fish Farming Central Norway NOK million 2023 2022 Revenue and income 12,419 8,872 Operational EBIT 4,612 3,599 Volume harvested (tonnes gutted weight) 141,139 114,139 Operational EBIT/kg (NOK/kg gw) 32.7 31.5 Fish Farming Central Norway, the Group’s largest fish farming segment, posted good financial results in 2023 on the back of a continued strong operational performance. The segment’s operating income increased by NOK 3,547 million from 2022, to NOK 12,419 million in 2023. Operational EBIT increased with NOK 1,014 million to NOK 4,612 million in the same period. Operational EBIT per kg gutted weight increased with NOK 1.15 compared to 2022. The increase is attributable to higher salmon prices, despite an increase in cost level due to cost inflation on input factors. On average, the segment experienced an increase in the price achieved for its harvested salmon of NOK 10.2 per kg. The production cost of the harvested biomass has, on average, increased with NOK 9.1 per kg compared with 2022 driven by feed price inflation and weakening of NOK. Fish Farming Central Norway harvested a total of 141,139 tonnes in 2023, compared with 114,139 tonnes in 2022. This represents an increase of 24 percent. SalMar expects harvest volume in this segment will amount to 146,000 tonnes in 2024. The segment has unexploited potential within existing licences for further growth and SalMar expects good volume growth in the years to come. Fish Farming Northern Norway NOK million 2023 2022 Revenue and income 7,894 4,883 Operational EBIT 3,402 2,526 Volume harvested (tonnes gutted weight) 92,777 63,392 Operational EBIT/kg (NOK/kg gw) 36.7 39.8 Fish Farming Northern Norway had another solid year, where strong operational performance, has resulted in increased volume and solid cost level on harvested volume. Combined with higher salmon prices in 2023 this has contributed to the strong results. Unfortunately, the end of the year was negatively affected by string jellyfish leading to slightly lower harvest volume for 2023 and culling of fish which affects volume growth in 2024. The segment’s operating income increased with NOK 3,011 million from 2022, to NOK 7,894 million in 2023. Operational EBIT rose with NOK 876 million to NOK 3,402 million. 9393 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors Operational EBIT per kg gutted weight came to NOK 36.7 in 2023, compared with NOK 39.8 in 2022. The decrease of NOK 3.2 per kg was caused by inclusion of former NRS sites which had a higher cost compared to former SalMar sites. The average price achievement increased with NOK 8.1 per kg and the production cost increased with NOK 11.2 per kg driven by feed price inflation, weakening of NOK and inclusion of former NRS sites. Harvest volume in Fish Farming Northern Norway was 92,777 tonnes in 2023, compared with 63,392 tonnes in 2022. This represents an increase of 46 percent. SalMar expects a harvest volume of 91,000 tonnes in 2024. The slight decrease is due to the impact of string jelly- fish attack at the end of 2023. The segment has unexploited potential within existing licences for further growth and SalMar expects strong volume growth in the years to come. Icelandic Salmon NOK million 2023 2022 Revenue and income 1,871 1,595 Operational EBIT 230 366 Volume harvested (tonnes gutted weight) 17,919 16,139 Operational EBIT/kg (NOK/kg gw) 12.8 22.7 Icelandic Salmon is Iceland’s largest producer and processor of farmed salmon. The company is fully vertically integrated, with its own hatch- ery, sea farms, harvesting plant and sales force. SalMar controlled 52.5 percent of the company’s shares at the end of 2023. The segment’s operating income increased with NOK 276 million from 2022, to NOK 1,871 million in 2023. Operational EBIT decreased with NOK 136 million to NOK 230 million in 2023. Operational EBIT per kg gutted weight came to NOK 12.8 in 2023, compared with NOK 22.7 in 2022. The reduction is driven by biological challenges at the end of 2023 and feed price inflation. The company harvested a total of 17,919 tonnes in 2023 and Icelandic Salmon expects to harvest 15,000 tonnes in 2024. The reduction is due to the biological challenges at the end of 2023 leading to slightly lower volume in 2024. The increase in smolt capacity in 2021 and 2022 will come to effect in 2025, when the company expects a significant increase in harvest volume on Iceland. Sales and Industry NOK million 2023 2022 Revenue and income 27,094 19,141 Operational EBIT 254 -1,286 This segment places and sells the entire harvested volume of the Group in Norway. The fish is bought from SalMar’s farming segments at market prices. The segment’s income increased to NOK 27,094 million in 2023 up from NOK 19,141 million in 2022. Operational EBIT came to NOK 254 million in 2023 a strong increase from NOK -1,286 million in 2022. The margins for the Sales and Industry segment increased in 2023, due to higher price achievement and strong operational performance. In 2022 price point compared with average spot prices of our fixed- price contracts was lower compared to 2023 and together with strong operational performance and increased utilization of harvesting and processing capacity, this led to increase profitability for the segment. In 2023, around 18 percent of the volume harvested was sold under fixed-price contracts and in addition 1% was sold on financial con- tracts with fixed price. Around 214,000 tonnes of fish were harvested at InnovaMar and InnovaNor in 2023, compared with 181,000 tonnes in 2022. During 2022 volume at InnovaNor was gradually ramped up and in 2023 the facility showcased its ability to handle large volume and has shown itself as a important strategic and industrial investment for SalMar. Our harvesting and processing facilities is an important element for further improvement of biological and operational performance in the whole value chain. Strategically, SalMar process a relatively large portion of the raw material in Norway. This does not only increase the quality of the product sold to the customer, but it also enables by-products to be dealt with efficiently, reducing freight cost, as well as reduces CO2 emissions and boosts local value creation. SalMar Aker Ocean NOK million 2023 2022 Revenue and income 173 32 Operational EBIT -53 -155 Volume harvested (tonnes gutted weight) 2,267 - Operational EBIT/kg (NOK/kg gw) -23.2 - Salmar Aker Ocean reported as a separate segment effective from 1 January 2022. To strengthen and concentrate its efforts in offshore aquaculture, SalMar created the subsidiary SalMar Ocean AS, later changed to SalMar Aker Ocean AS. Late 2021, SalMar and Aker through Aker Capital entered into a partnership whereas Aker Capital has 15% ownership of SalMar Aker Ocean and SalMar ASA control the remain- ing 85%, with the purpose of creating the world leading offshore farming company. 9494 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors In 2023 the segment got two semi-offshore projects in operation. Ocean Farm 1 started its third production cycle following an upgrade in 2022 while Arctic Offshore Farming project became a part of the segment at the end of 2023 and also started its first production cycle in 2023. In 2023 the segment harvested a total of 2,267 tonnes from the Arctic Offshore Farming project. Operational EBIT totalled NOK -53 million in 2023. In 2024 the segment expects to harvest around 7,000 tonnes where the first production cycle of the Arctic Offshore Farming project will be concluded and harvest from Ocean Farm 1 will commence. In the end of September 2023, site approval for one open ocean unit was granted to SalMar Aker Ocean’s Smart Fish Farm, approximately 50 nautical miles west of Frøya in Central Norway. Due to regulatory uncertainty SalMar Aker Ocean decided that further work on offshore aquaculture in Norway is currently on hold. The company will now fully focus on growth semi-offshore and utilize the capacity of its existing two semi-offshore units for the production of sustainable Norwegian salmon. It will also continue to explore opportunities out- side of Norway. Joint Ventures Norskott Havbruk NOK million 2023 2022 Revenue and income 2,561 3,188 Operational EBIT -304 214 Volume harvested (tonnes gutted weight) 24,900 35,900 Operational EBIT/kg (NOK/kg gw) -12.2 6.0 Through its wholly owned subsidiary Scottish Sea Farms, Norskott Havbruk engages in the farming of salmon in mainland Scotland, Orkney and Shetland. SalMar controls 50 percent of the business. The company generated revenues of NOK 2,561 million in 2023, compared with NOK 3,188 million in 2022. The decrease in revenues is due to lower volume harvested. Operational EBIT for the year ended at NOK -304 million, down from NOK 214 million in 2022. Operational EBIT per kg gutted weight came to NOK -12.2 in 2023, compared with NOK 6.0 in 2022. Biological challenges, particularly those linked to gill health, have had a neg- ative impact on the results in 2023. It has led to harvesting of fish with a lower average weight, which has affected both cost and price achieved, and lower harvest volume than anticipated going into 2023. The company harvested a total of 24,900 tonnes in 2023, down from 35,900 tonnes in 2022. Going into 2024 conditions have improved, and the company sees improved biological situation for generations to be harvested during 2024. Volume guidance for 2024 is expected at 37,000 tonnes. Norskott Havbruk is recognised as a joint venture, with SalMar’s share of profit/loss after tax and fair value adjustment of the biomass (50 percent) recognised as financial income. SalMar’s share of the com- pany’s net profit in 2023 came to NOK -168 million, compared with NOK 41 million in 2022. 9595 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors The parent company’s financial statements and allocation of the profit for the year The parent company, SalMar ASA, is a shareholding and administra- tive entity. Group management and administrative resources are employed by this company. In 2022, it employed a total of 55 full- time equivalents. The annual financial statements for the parent company have been prepared in accordance with the Norwegian Accounting Act of 1998 and Generally Accepted Accounting Principles in Norway (NGAAP). SalMar ASA made a net profit for the year of NOK 4,042 million in 2023, compared with NOK 2,785 million in 2022. Total operating revenues totalled NOK 836 million and total operating expenses amounted to NOK -679 million, thereby giving a total operating profit of NOK 157 million. Income from investments in group companies amounted to NOK 4,945 million. In addition, SalMar ASA manages the Group’s primary financing arrangements and recognised NOK 1,213 million in interest income on loans to group companies and other interest income. Interest expenses amounting to NOK -1,251 million were incurred mostly in association with the Group’s financing arrangements. SalMar ASA had recognised total assets of NOK 29,840 million at the close of 2023. Of this amount, non-current assets accounted for NOK 24,910 million, of which NOK 16,502 million comprised of intercom- pany non-current receivables and NOK 6,763 million comprised of investment in subsidiaries. Current asset accounted for NOK 4,929 million where intercompany current receivables totalled NOK 4,853 million cash and cash equivalents was NOK 16 million at the close of 2023. Equity as of 31 December 2023 totalled NOK 10,050 million, which corresponds to an equity ratio of 33.7 percent. Non-current liabilities totalled NOK 11,165 million and mainly comprised inter- est-bearing debt. Current liabilities totalled NOK 8,625 million, of which current interest-bearing debt accounted for NOK 1,044 million and dividend provisions came to NOK 4,612 million. The Board of Directors is proposing a dividend of NOK 35.00 per share for the 2023 financial year. The Board proposes the following allocation of the year’s profit: Dividend NOK 4,612 million Transferred from (-) /to(+) retained earnings NOK 1,984 million Transferred from (-) /to(+) other paid-in equity NOK -392 million Transferred from (-) /to(+) share premium NOK -2,161 million Total allocated NOK 4,042 million At the close of the year, the company had a distributable reserve of NOK 10,017 million. 9696 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors Risks and Risk Management Risk management is a key function of the management team. The Group has systems and routines in place to monitor important risk factors in all business areas, and places particular emphasis on the control and follow up of production facilities in accordance with quality and certification standards. It is the CEO’s responsibility to ensure that the Group operates in com- pliance with all relevant legislation and operating guidelines for group entities. Follow-up and control of risk factors, as well as compliance with the Group’s values and code of conduct, is carried out in the line organisation as part of day-to-day operations. See Note 4.10 for details with respect to allegations of price fixing. SalMar has board liability insurance which covers both the Board of Directors, the CEO and executive management. Operational risk SalMar’s most important operational risk relates to the biological development of its fish stocks, at both its hatcheries and sea farms. Even though SalMar develops and implements risk-reducing measures, the nature of the industry is such that the inherent biological risk will always be present. In recent years, the aquaculture industry has faced challenges associated with the increasingly widespread presence of sea lice and greater prevalence of medicinally resistant lice. This has forced SalMar, along with the rest of the industry, to change the methods used and intensify its efforts to deal with the lice situation. And at the end of 2023 string jellyfish attacks particularly in our oper- ations in Northern Norway, clearly showcased the inherent biological risk the industry is facing, as the attacks led to early harvest and also culling of fish to safeguard fish welfare. SalMar takes a holistic, strategic approach to biological risk, includ- ing sea lice, which encompasses preventive measures and activities designed to limit damage to its stocks and further increase the fish welfare. SalMar continuously makes operational assessments to pro- tect the welfare of its fish. Access to suitable production areas is a crucial preventive measure. For SalMar, it is important that production take place in areas that have the capacity needed to sustainably produce the volumes involved. Offshore could lead to new and better locations being used. Selective breeding and the genetic development of a more robust salmon is another important preventive measure to reduce biological risk. SalMar’s operating procedures are designed to reduce biological risk. Vaccination against various fish diseases is a key element in the company’s operating procedures. It will always be necessary to use medication in connection with any form of biological production. However, such medication must be applied prudently to prevent the development of resistance. The company takes a risk-based approach to the sea lice situation, which involves both preventive and corrective measures. SalMar has teams of employees working specifically in this area. In the past couple of years, a substantial delousing capacity has been built up in the form of mechanical delousing equipment that also collects the lice to prevent reproduction, and SalMar are continuously evaluating and expanding its toolbox to handle sea lice. For further details of SalMar’s lice management and procedures related to fish welfare, please see the Sustainability Report. Over time, SalMar has built up an effective response capability to deal with biological challenges. Our harvesting capacity at InnovaMar and InnovaNor enables us to respond effectively. Furthermore, SalMar has good access to wellboat capacity. Access to suitable feed raw materials is a vital part of risk manage- ment as feed is the most important input factor for the fish during the lifecycle. SalMar are continuously evaluating and expanding feed ingredients suitable for the nutritional needs of the fish while at the same time securing access to raw material sources. Financial risk The follow-up of internal controls associated with financial reporting, is carried out through management’s day-to-day supervision, the pro- cess owners’ follow-up and monitoring by the Board’s Audit and Risk Committee. Non-conformances and improvement areas are followed up and remedial measures implemented. Financial risk is managed by a central unit at the head office, and financial hedging instruments are employed where they are considered appropriate. Through its activities, the Group is exposed to various kinds of financial risk e.g.: market risk, credit risk and liquidity risk. The Group man- agement oversees the management of these risks and draws up guidelines for dealing with them. The Group makes use of financial derivatives to hedge against certain risks. The Board of Directors has defined a financial risk appetite that sets overarching limits. The Group has credit facilities with a syndicate of banks, which ensures sufficient flexibility both operationally and with respect to the financing of investments in SalMar’s operations. In 2023 the group refinanced its financing agreements with unsecured credit facilities totalling NOK 16 billion with an accordion of NOK 3 billion. In 2021 the Group issued its first green bond totalling NOK 3.5 billion. In addition, the company has financial instruments, such as trade receivables, trade payables, etc., which are directly related to day-to- day business operations. It is the Group’s policy that no trading in derivatives for speculative purposes may be undertaken. 9797 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors Foreign exchange risk The bulk of the Group’s output is sold internationally, with accounts settled largely in EUR, USD, GBP and JPY. Changes in exchange rates therefore represent both a direct and indirect financial risk for the Group. Foreign exchange exposure linked to the Group’s costs is, how- ever, more limited compare to effect on revenue, since input factors and salaries are paid largely in NOK. The Group enters into forward currency contracts to reduce the risk associated with sales revenues denominated in foreign currencies that derive from contracts with customers. NOK 1,000 million of the green bond has been swapped to EUR with a fixed interest rate, this is a hedging of the currency exposure in Icelandic Salmon. For further details and description of use of forward currency contracts see Note 3.9. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obliga- tions with floating interest rates. With effect from February 2022, SalMar ASA entered into fixed rate interest swap contracts with a total principal of NOK 2,250 million. 750 million has a duration of 7 years starting 22 April 2022, 750 million has a duration of 7 years starting 22 January 2025, and 750 million has a duration of 10 years starting 22 January 2024. The interest swap contracts are established with the purpose to reduce the interest rate risk related to long-term loans. In 2021 the Group has entered into a to cross-currency interest swap and an interest swap to manage the interest rate. For more details regarding the swaps see note 3.9. Price risk SalMar’s entire business is related to salmon. The Group’s profitability and cash flows are strongly correlated with movements in the price of salmon. Historically, salmon prices have been highly volatile seen in an annual, quarterly and monthly perspective. In 2023, the spot price of Atlantic salmon fluctuated between NOK 70.4 and NOK 127.3 per kg, measured weekly on the NASDAQ salmon index. The global salmon market is largely a fresh-fish market, where most of the fish harvested is sold immediately to processing companies or directly to the consumer. For several years, growth in demand has been relatively stable, while growth in supply has varied more substantially from year to year. In addition to planned output volumes defined by the number of smolt transferred to sea farms, supply is also affected by a number of external factors. Fluctuations in sea temperatures, the spread of sea lice and outbreaks of disease or other environmental challenges are all factors which, directly or indirectly, affect fish growth and thus supply. As a consequence, relatively substantial variations in supply may occur within short periods of time. With relatively stable demand, this can result in considerable price volatility. SalMar sells a portion of its output through fixed-price contracts. The Group has drawn up guidelines for such contracts to limit exposure to salmon price volatility. It is the Sales and Industry segment which sells the entire Group’s harvested volume in Norway, the impact of the fixed-price contracts is therefore recognised in this segment’s financial statements. Approximately 19 percent of the Group’s volume was sold under fixed-price contracts in 2023. Credit risk The risk of a counterparty not having the financial resources to meet its obligations has, historically, been considered low, and SalMar’s losses resulting from bad debts have been small. The Group has guidelines to ensure that sales are made only to customers who have not pre- viously had material payment issues, and that outstanding totals do not exceed defined credit limits. Credit insurance is taken out as a general rule. The Group does not have any material credit risk associated with an individual counterparty or counterparties which may be considered a group due to similarities in the credit risk they represent, see Note 4.1 for further details. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. SalMar’s objective is to have sufficient cash, cash equivalents or short and medium-term credit facilities to meet its day-to-day fund- ing requirement. The Group prepares regular cash-flow forecasts to ensure that it has sufficient liquidity at all times. Furthermore, a flexible financing structure is maintained through established credit facilities. Unused credit facilities are described in the notes to the financial statements. The Group’s equity ratio, its prospects for future profits and cur- rent credit facilities mean that the Group’s liquidity risk is consid- ered to be low. SalMar has a BBB+ credit rating from Nordic Credit Rating, please visit their website for their latest assessment of the credit rating. 9898 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors R&D For many years, SalMar has engaged with various R&D institutes, including partnership relating to the operation of R&D licences. The scale and professionalism of important development activities has increased and continues to do so. For SalMar it is important to be a professional, but demanding partner, such that the outcomes of ongoing trials are as relevant as possible. SalMar has allocated person- nel specifically to organising and assisting R&D environments involved in such collaborative efforts, while production staff are becoming increasingly experienced with regards to the best way to safeguard research results in a busy working day. Proximity to the research, and the opportunity to influence both its planning and its area of focus are important sources of motivation for SalMar. SalMar is not satisfied with how the development over the last years has been with respect to both increased mortality and more chal- lenging fish welfare. Therefore, early in 2024 SalMar announced the broad industry initiative, Salmon Living Lab. This is a unique initiative that seeks to engage an entire industry in solving the challenges the salmon face today. In addition to bringing partners across the salmon supply chain together, it will also lead to building of an innovation and R&D centre which will house various activities and function as a focal point for knowledge. In addition to its expertise, SalMar will be supporting the initiative with a strong financial commitment. One envisions about NOK 500 million to ensure that the project get off on a good start where the contribution will be shared among the parties who join the project. The first partner to sign up is Cargill, a trusted partner for farmers and food and agriculture companies worldwide. The scale of SalMar’s R&D activities in a wide range of fields was substantial in 2023. During the year, SalMar continued to focus on fish welfare and sea lice control. Development projects were conducted at the secondary processing plant and great emphasis has been placed on feed optimisation. In addition, SalMar continuously assesses its own work processes and aims to establish more long-term projects and a closer cooperation with the supply industry and research institutions. SalMar’s efforts in the field of breeding and genetics include a col- laboration with Benchmark Holding PLC’s subsidiary SalmoBreed, through the joint venture, SalMar Genetics. This model has created a solid foundation for the further development of the Rauma strain in the years ahead, and that this work may also offer synergies in other areas that SalMar is focusing on. In 2023, SalMar continued its R&D activities in feed and collabo- rates with its main feed providers. SalMar sees a substantial need for greater focus on basic knowledge of how the fish are fed and how we can ensure that the entire population enjoys optimal conditions throughout the production cycle. It is SalMar’s clearly expressed goal to initiate better and more comprehensive research into these issues under large-scale conditions. And several of these projects will be included in the Salmon Living Lab initiative. For many years, fish farming in the open ocean has been an important part of SalMar’s strategy to ensure sustainable growth. The company has further strengthened its efforts in this field by transferring its activities and channelling all further R&D efforts and investments in offshore fish farming into SalMar Aker Ocean, jointly owned with Aker. The company has two semi-offshore projects in operation after also Arctic Offshore Farming was included in this company from 2023. Ocean Farm 1 was the first offshore project to be awarded special development licences in 2016. Since then, the company has completed two successful production cycles at this pioneering facility. In 2023 the third production cycle started which will be harvested in 2024. Through the acquisition of NRS, SalMar gained the ownership in the development project Arctic Offshore Farming. The technology differs from both Ocean Farm 1 and Smart Fish Farm where there are 2 cages which can be submerged and a barge connected between the cages. First production cycle started in 2023 and the harvest from the project was completed in December 2023 and January 2024. A third development project is also underway, this time for the world’s first fully offshore fish farm suitable for the open ocean, the Smart Fish Farm. SalMar has been granted eight development licences for this novel deep-water project. In end September 2023, site approval for one open ocean unit was granted to SalMar Aker Ocean’s Smart Fish Farm, approximately 50 nautical miles west of Frøya in Central Norway. Due to regulatory uncertainty SalMar Aker Ocean decided that further work on offshore aquaculture in Norway is currently on hold. The company will now fully focus on growth semi-offshore and utilize the capacity of its existing two semi-off- shore units for the production of sustainable Norwegian salmon. It will also continue to explore opportunities outside of Norway Organisation, Sustainability, and Social Responsibility It is SalMar’s goal to secure long-term profitability and growth through sustainable aquaculture and processing activities, and by acting as a responsible corporate citizen. For SalMar, the important thing is what sustainability is actually about: the future. It concerns not only the future of our children and grandchildren, but the protection of our fellow citizens today. In this, lies an acknowledgement that we have only one planet, with limited resources, which it is vital to preserve and protect. 9999 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors Today, the world’s population uses more resources than the planet manages to generate, and food production accounts for a substantial portion of humanity’s environmental and climate footprint. New ways of producing food are needed for an ever-growing global population, at the same time as we must minimise the impact we have on the environment. Salmon farming is one of the most environment-friendly ways of producing food, affording considerable benefits in the form of space, freshwater consumption and greenhouse gas emissions. Aquaculture and salmon farming will therefore make a significant contribution to providing a growing global population with healthy, protein-rich food in the years ahead. Sustainability in everything we do is one of SalMar’s key tenets. For us, sustainability is about the way we operate as a company and how we behave in the areas surrounding our operations. This includes taking care of our employees, the salmon and the environment while devel- oping the industry and moving society in a more sustainable direction. SalMar aims to safeguard the seas, while maximising our production at the terms of the salmon. This includes contributing to the development of new technology, so that we can continue to reduce the biological footprint of our production. The Group recognises the diversity of its corporate social responsibility, as an employer, producer, supplier of healthy food, user of the natural environment and administrator of financial and intellectual capital. Social responsibility is important for us, and we want everything we do to stand the light of day. At the same time, we aim to minimise the impact our operations have on the natural environment. Our holistic approach rests on awareness of the link between caring for people, economy, and the environment, which determines whether something is sustainable. This is the core reason for why we think sustainability in everything we do. As an employer, SalMar aims to provide a safe and developing work- place. The Group works continuously to enhance measures and pro- cesses associated with health, safety, and the environment (HSE), as well as provide professional development opportunities for manag- ers and employees. Good employees, irrespective of gender, age, or background, are crucial if we are to succeed in reaching our strategic goals. At the same time, it is important that we provide an attractive and safe working environment which makes it possible to attract and retain the most talented people. In 2023, SalMar employed a total of 2,674 full-time equivalents from 58 different countries. The workforce was made up of 704 females and 1,970 males. The female ratio of the Executive Management Team is 14%. SalMar works actively towards recruitment of women in what has traditionally been a male dominated industry. Our goal is to exhibit the vast opportunities for women in all parts of the indus- try. This is done by actively targeting potential future employees (in school, universities etc.) and having female representatives speak about SalMar as a workplace. The female ratio of employees was 26% in 2023 and increased in all segments in SalMar except for in the Sales & Industry segment. The female ratio is considerably higher at the Group’s Admin and Harvesting & Processing plants than at its hatcheries and fish farms. One of SalMar’s focus areas have been the Fish Farming segment, as this has the lowest female ratio. This segment has seen an increase in the female ratio for five straight years, more than doubling female employees in this period. This shows that SalMar’s continuous efforts to increase the female ratio of its workforce is effective. In its Code of Conduct, the Group makes its policy clear with respect to the promotion of diversity and equality. SalMar accepts no discrim- ination, abuse or harassment of our workers or partners, and we treat everyone with courtesy and respect no matter what their ethnicity, gender, national or social background, age, functional capacity, sex- ual orientation, religious faith, political convictions or other status. Respect for the individual is the cornerstone of the company’s policy. Everyone shall be treated with dignity and respect and shall not be unfairly prevented from carrying out their duties and responsibili- ties. This perspective arises from the recognition that diversity plays a crucial role in creating an improved work environment, increased adaptability, and ultimately, better long-term outcomes. SalMar complies with national regulations also with regards to working hours and sufficient rest. This is paramount to maintain SalMar’s strict demands for safe operations. Pursuant to section 3-3c of the Norwegian Accounting Act, the Board of Directors has drawn up guidelines covering business ethics and cor- porate social responsibility. These are available from the Group’s web- site www.salmar.no. SalMar’s activities in sustainability and corporate social responsibility, including human rights, labour rights, the working environment, equality, discrimination, anti-corruption, activity duty and the external environment, are described in further detail in the sustainability report. In 2022 and 2023, SalMar published sustainability policies on its webpage. These are public statements from SalMar that give insight into how SalMar conducts its endeavours while always considering sustainability in everything we do. 100100 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors Shares and Shareholders In 2023 the share price increased 48 percent from the closing price of NOK 384.80 at the end of 2022. The price on 29 December, the last day of trading in 2023, was NOK 569.20 per share. SalMar held its AGM on 8 June 2023. The AGM voted to pay a dividend of NOK 20 per share. The shares were traded ex. dividend from 9 June, with payment taking place on 22 June 2023. SalMar held an extraordinary general meeting (EGM) on 23 October 2023 regarding capital reduction following completion of intra-group merger with NTS AS. In December 2023, SalMar completed the share capital reduction which implied that SalMar reduced its share capital by NOK 3,275,000 from 36,284,730 to NOK 33,009,730 by cancellation of 13,100,000 treasury shares. As at 31 December 2023 SalMar ASA owned 278,854 treasury shares, this corresponds to 0.2 percent of the total number of shares out- standing as of 31 December 2023. The number of outstanding shares in SalMar was 132,038,920 as of 31 December 2023, divided between 22,998 shareholders. The company’s major shareholder, Kverva Industrier AS, owns 45.4 percent of the shares. The 20 largest shareholders own a total of 64.7 percent of the shares. The company’s Articles of Association contain no stipulations lim- iting the transferability of the company’s shares. Furthermore, the company is not aware of any agreements between shareholders that limit the possibility of trading in or exercising voting rights with respect to shares. Corporate Governance SalMar complies with the legislation, regulations, and recommenda- tions to which a public limited company is subject, including Section 3-3b of the Norwegian Accounting Act on corporate governance, day- to-day obligations of a company listed on the Oslo Stock Exchange and the current version of the Norwegian Code of Practice for Corporate Governance. These principles are discussed in detail in a separate chap- ter of the annual report and are available from the company’s website. The Group’s Board of Directors comprises five members elected by the shareholders and two employee representatives. Three of the board members are women, including one employee representative. Changes in the Board’s Composition As recommended by the nomination committee, the annual general meeting (AGM) on 8 June 2023 voted to re-elect Margrethe Hauge and Leif Inge Nordhammer as board members for a term of two years. Information relating to the competence and background of the various board members is available from SalMar’s website www.salmar.no. 101101 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors Outlook Market outlook In 2024 figures from Kontali Analyse, a leading provider of aquaculture data and research, estimate a limited supply growth of global harvest volume. The global volume of salmon harvested is expected to Increase with around 61,000 tonnes or 2 percent. The harvested volume is expected to increase with 3 percent in Nor- way, 9 percent in UK, 15 percent in Faroe Island, 4 percent in North America and 10 percent in other markets. In Chile it is expected to decrease with 5 percent. The limited growth in supply while combined with continued strong demand gives an optimistic market outlook for 2024. Supply of Atlantic salmon in 1,000 tonnes whole fish equivalents (WFE) 2024E Change Norway 1,525 +3 % Chile 731 -5 % UK 167 +9 % North America 133 +4 % Faroes 103 +15 % Other countries 197 +10 % Total, global supply 2,858 +2 % Outlook for SalMar and associates SalMar expects an increase in harvest volume in 2024. SalMar expects to harvest 237,000 tonnes in Norway, SalMar Aker Ocean 7,000 tonnes and 15,000 tonnes in Iceland in 2024. In addition, SalMar expects its share of the volume harvested by Norskott Havbruk (50 percent) to come to 18,500 tonnes in 2024. This totals a harvest volume of 277,500 tonnes or an increase of 4% from 2023. It is expected that around 40 percent of the volume will be harvested in the first half of the year, with the remaining 60 percent in the second half. In 2023, SalMar expects a contract share in Norway of around 25 percent for the full year of the expected volume harvested. The con- tracts portfolio average price and volume is relatively stable through the whole of 2024, where the prices on contracts are higher than the contract prices in 2023. In addition to the fixed price contracts SalMar also has several volume contracts where the price of the contract is linked to the current spot market prices. Over time, SalMar has invested heavily to increase its competence and capacity to handle biological challenges in the best possible way. SalMar has a high level of preparedness at its harvesting facility, to ensure that extraordinary events can be handled in compliance with the regulations and optimally for the fish welfare. In addition, efforts are continuously being made to develop the most sustainable and best production sites. In this context, SalMar’s offshore farming strategy is important. SalMar expects stable cost in the value chain in 2024. Feed is the most important cost factor in salmon farming. SalMar expects feed prices to be more stable in 2024 compared to the significant increase experienced in 2022, due to inflationary pressure on raw materials. Following the completion of the transactions with NTS, NRS and SalmoNor, SalMar has reinforced its position as a leader in the aqua- culture industry, and thereby wants to utilize this position to make an important contribution to the sustainable development of salmon farming, both coastal and offshore. As announced on the capital markets day in September 2023 SalMar has a significant organic growth potential within existing licence without the need for larger investments. A total of 362,000 tonnes including relative share of Scottish Sea Farms implying a growth of 35% from the harvested volume in 2023 and 30% from the expected volume in 2024. 102102 Corporate Governance Report of the Board of DirectorsCorporate Governance Report of the Board of Directors Investments Due to the resource rent tax, all new larger industrial projects are still on hold in SalMar in Norway. Therefore, SalMar is only finalizing already sanctioned projects in 2024. SalMar expects to invest NOK 1.6 billion in its Norwegian operations. Maintenance investments accounts for NOK 0.7 billion or around 2.8 NOK/kg in line with company guidance of around 3 NOK/kg. Capacity investments account for NOK 0.7 billion where expansion of Vikenco accounts for the largest single investment. In addition, construction of Tjuin will be finalized, Dåfjord smolt facility will be upgraded and there are farming investments in the value chain to reduce cost and improve fish welfare. To unlock potential on Iceland one expects to invest NOK 0.2 billion in 2024 where increased seawater farming capacity accounts for the largest investment. In SalMar Aker Ocean one expects NOK 0.1 billion. The Board’s assessment Through hard work and dedication over many years, SalMar has built a strong position in a growing aquaculture industry. And through the transactions with NTS, NRS and SalmoNor SalMar has firmly positioned itself as a leading company in the industry and the world’s second largest salmon producer. Both Norway and Iceland benefit from excellent conditions for the farming of salmon and in 2023 SalMar has increased its presence in its core regions in Norway. SalMar will continue to manage these resources in the best possible way for its shareholders, employees, customers and affected local communities. The SalMar Group is determined to maintain its position as one of the world’s top aquaculture companies with sustained profitability in the future, given its strong market standing. The Board of Directors believes that SalMar is well-equipped to achieve this goal. SalMar is committed to producing healthy food sustainably, and the increasing global population requires more food. Salmon farming is one of the most sustainable methods of food production, as it provides signifi- cant advantages in terms of space utilization, freshwater consump- tion, and greenhouse gas emissions. As a result, aquaculture and salmon farming will make a significant contribution to supplying the world’s expanding population with nutritious and protein-rich food in the future, and SalMar will continue to focus on achieving sustainable growth on the salmon’s terms. However, the new tax regime in Norway from 2023 will have a major impact on the capacity for innovation and investments in the Nor- wegian aquaculture industry. This strengthens the need to seek efficiency and economies of scale. Given the greater competition from a growing number of salmon-producing countries, it is even more important that the Norwegian government ensures Norway’s aqua- culture sector has stable and predictable framework conditions. In 2023, SalMar has demonstrated its capacity to adapt to chang- ing market and regulatory conditions, delivering strong results and successfully completing large transactions, realizing synergies while building a solid financial position with a strong liquidity reserve. It is important for SalMar to provide its 23,000 shareholders a competitive return on invested capital. Due to strong results in 2023 and the strong financial position the board of directors has resolved to propose a cash dividend of NOK 35.00 per share for the financial year 2023. The SalMar culture, expressed through our cultural tenets, is funda- mental to the entire business, and our vision, “Passion for Salmon”, is the vision that guides us on our way towards realising our ambition of being the world’s best aquaculture company. SalMar’s employees are our most important resource in our quest for further success. Continuous development of the organisation and culture is therefore a key focus area for the Group. The Board of Directors would like to thank all the company’s employees for the dedicated efforts they put in every single day. It is these efforts which have created the SalMar Group’s excellent results year after year, and which will underpin our continued success in the years ahead. Frøya, 12 April 2024 Gustav Witzøe Chair of the Board Margrethe Hauge Vice-Chair of the Board Morten Loktu Board Member Arnhild Holstad Board Member Leif Inge Nordhammer Board Member Hans Stølan Board Member Employee representative Frode Arntsen CEO Ingvild Kindlihagen Board Member Employee representative 103103 Consolidated Financial Statements 105 Notes to the Financial Statements for 2023 113 Annual Financial Statements of SalMarASA 186 Notes to the Financial Statements for 2023, SalMarASA 193 Statement by the Board of Directors and CEO 212 Independent Auditor’s Report 213 Financial Statement and Results Financial Statement and Results Consolidated Financial StatementsFinancial Statement and Results Consolidated Financial Statements Consolidated Financial Statements 2023 SalMar Group Consolidated Statement of Profit or Loss NOK1,000 Note 2023 2022 Revenues from contracts with customers 2.2 28,099,174 20,070,115 Other operating income 119,374 88,164 Revenue and other income 28,218,548 20,158,279 Cost of goods sold 12,880,225 9,599,414 Fair value adjustment included in cost of goods sold due to business combination 2.9 -722,809 -283,398 Salary and personnel expenses 2.3, 2.4, 2.5 2,453,907 1,893,764 Other operating expenses 2.6, 3.4 4,067,095 3,446,233 Depreciation and amortisation 3.1, 3.3, 3.4 1,419,159 1,001,053 Write-downs 3.3, 3.4 33,071 36,642 Total operating expenses 20,130,648 15,693,708 Operational EBIT 8,087,900 4,464,571 Production tax 2.6, 2.11 -208,374 -85,232 Onerous contracts 3.13 -237,346 126,330 Fair value adjustments 2.9 1,589,853 515,887 Fair value adjustment included in cost of goods sold due to business combination 2.9 -722,809 -283,398 Operating profit 8,509,224 4,738,158 Income/loss from from investments in associates and joint venture 3.5 -27,295 66,432 Financial items Interest income 2.10 51,087 28,408 Financial income 2.10 29,737 95,052 Interest expenses 2.10 1,223,249 364,247 Financial expenses 2.10 60,183 1,771 Net financial items -1,202,608 -242,558 Profit before tax from continuing operations 7,279,321 4,562,032 Income tax expense 2.11 4,533,736 953,996 Profit for the year from continuing operations 2,745,585 3,608,036 Profit after tax from discontinued operations 4.7 656,594 107,372 Profit for the year 3,402,179 3,715,408 Profit for the year attributable to: Non-controlling interests 4.6 199,423 403,453 Shareholders in SalMarASA 3,202,756 3,311,955 Earnings per share 4.3, 4.11 24.36 27.64 Earnings per share - diluted 4.3, 4.11 24.33 27.60 105 Financial Statement and Results Consolidated Financial StatementsFinancial Statement and Results Consolidated Financial Statements Consolidated Statement of Other Comprehensive Income NOK1,000 Note 2023 2022 Profit for the year 3,402,179 3,715,408 Other comprehensive income: Other comprehensive income that may be reclassified to profit or loss in subsequent periods: Translation differences in associated companies and joint venture 3.5 93,024 21,444 Translation differences in group companies 164,010 124,028 Gain/loss on hedge of net investment 3.9 -68,442 -51,997 Gain/loss on cash flow hedges 3.9 375,879 200,931 Net change in costs of hedging 3.9 -39,165 69,290 Tax related to other comprehensive income 2.11 -59,020 -49,085 Net other comprehensive income that may be reclassified to profit or loss 466,286 314,611 Other comprehensive income that will not be reclassified to profit or loss in subsequent periods: Remeasurement gain on defined benefit plans 2.5 708 3,422 Tax related to gain on defined benefit plans 2.5 -156 -753 Net other comprehensive income that will not be reclassified to profit or loss 552 2,669 Other comprehensive income 466,838 317,280 Total comprehensive income 3,869,017 4,032,688 Comprehensive income for the year attributable to Non-controlling interests 4.6 321,038 477,406 Shareholders in SalMarASA 3,547,979 3,555,282 106 Financial Statement and Results Consolidated Financial StatementsFinancial Statement and Results Consolidated Financial Statements Consolidated Balance Sheet NOK 1,000 Assets Note 31.12.2023 31.12.2022 Non-current assets Intangible assets Licences 3.1, 3.12 15,216,687 14,875,519 Goodwill 3.1 3,011,250 2,999,859 Other intangible assets 3.1 456,660 415,674 Total intangible assets 18,684,597 18,291,052 Property, plant and equipment Property, plant and equipment 3.3, 3.12 12,371,370 11,131,221 Right-to-use assets 3.4, 3.12 1,797,701 1,386,604 Total property, plant and equipment 14,169,071 12,517,825 Non-current financial assets Investments in associates and joint venture 3.5 2,417,700 2,371,747 Investments in shares and other securities 17,102 42,434 Pension fund assets 2.5 2,985 2,802 Other receivables 3.7, 3.9 241,634 328,876 Total non-current financial assets 2,679,421 2,745,859 Total non-current assets 35,533,089 33,554,736 Current assets Biological assets 3.6, 3.12 13,264,679 11,754,721 Other inventory 3.6, 3.12 1,229,653 929,877 Total inventory 14,494,332 12,684,598 Receivables Trade receivables 3.7, 3.12 1,456,963 1,414,135 Other current receivables 3.7, 3.9 1,061,256 662,978 Total receivables 2,518,219 2,077,113 Cash and cash equivalents 3.10, 3.11 785,271 2,712,707 Total current assets 17,797,822 17,474,418 Assets held for sale 4.7 0 11,471,809 Total assets 53,330,911 62,500,963 107 Financial Statement and Results Consolidated Financial StatementsFinancial Statement and Results Consolidated Financial Statements Frøya, 12 April 2024 Gustav Witzøe Chair of the Board Margrethe Hauge Vice-Chair of the Board Morten Loktu Board Member Arnhild Holstad Board Member Leif Inge Nordhammer Board Member Hans Stølan Board Member Employee representative Frode Arntsen CEO Ingvild Kindlihagen Board Member Employee representative Consolidated Balance Sheet, continued Equity and Liabilities Equity Note 31.12.2023 31.12.2022 Paid-in equity Share capital 4.2 33,010 36,285 Treasury shares 4.2 -70 -3,185 Share premium 10,016,688 12,182,189 Other paid-in equity 0 343,902 Total paid-in equity 10,049,628 12,559,191 Retained earnings Retained earnings 9,851,408 6,796,778 Total equity attributable to shareholders of the parent 19,901,036 19,355,969 Non-controlling interests 4.6 3,177,806 4,798,794 Total equity 23,078,842 24,154,763 Liabilities Non-current liabilities Pension liabilities 2.5 8,020 17,877 Other non current liabilities 3.9 12,898 0 Deferred tax liability 2.11 6,724,797 1,927,804 Non-current interest-bearing debts 3.11, 3.12 12,211,226 18,349,972 Long-term lease liabilities 3.4, 3.11, 3.12 1,501,741 1,152,216 Total non-current liabilities 20,458,682 21,447,869 Current liabilities Current interest-bearing debts 3.11, 3.12 1,680,742 3,442,121 Short-term lease liabilities 3.4, 3.11, 3.12 343,753 273,081 Trade payables 3.11 3,965,936 3,337,649 Tax payable 2.11 1,814,423 2,612,569 Public duties payable 534,636 350,512 Other current liabilities 3.9, 3.13 1,453,897 1,269,954 Total current liabilities 9,793,387 11,285,886 Liabilities directly associated with the assets held for sale 4.7 0 5,612,445 Total liabilities 30,252,069 38,346,200 Total Equity and Liabilities 53,330,911 62,500,963 108 Financial Statement and Results Consolidated Financial StatementsFinancial Statement and Results Consolidated Financial Statements Consolidated statement of changes in equity Foreign Attributable Other currency Cost of to Non- Share Treasury Share paid-in translation Cashflow Hedge of net hedging shareholders controlling Total NOK 1,000 Note capital shares premium equity Other equity differences hedges investments reserve of the parent interests equity As at 1 January 2022 29,450 -26 3,101,961 295,105 9,657,823 92,653 57,593 5,734 -9,944 13,230,349 2,252,827 15,483,176 Profit for the year 0 0 0 0 3,311,955 0 0 0 0 3,311,955 403,453 3,715,408 Other comprehensive income Other comprehensive income that may be reclassified to profit or loss in subsequent periods: Translation differences in associates and joint venture 3.5 0 0 0 0 0 21,444 0 0 0 21,444 0 21,444 Translation differences in subsidiaries 0 0 0 0 0 62,813 0 0 0 62,813 61,215 124,028 Gain/loss on hedge of net investment 3.9 0 0 0 0 0 0 0 -51,997 0 -51,997 0 -51,997 Gain/loss on cash flow hedges 3.9 0 0 0 0 0 0 184,145 0 0 184,145 16,786 200,931 Net change in costs of hedging 3.9 0 0 0 0 0 0 0 0 69,290 69,290 0 69,290 Tax related to other comprehensive income 2.11 0 0 0 0 0 0 -41,232 11,439 -15,244 -45,037 -4,048 -49,085 Net other comprehensive income that may be reclassified to profit or loss in subsequent periods 0 0 0 0 0 84,257 142,913 -40,558 54,046 240,658 73,953 314,611 Other comprehensive income that will not be reclassified to profit or loss in subsequent periods: Remeasurement gain on defined benefit plans 2.5 0 0 0 0 3,422 0 0 0 0 3,422 0 3,422 Tax related to gain on defined benefit plans 2.5 0 0 0 0 -753 0 0 0 0 -753 0 -753 Net other comprehensive income that will not be reclassified to profit or loss in subsequent periods 0 0 0 0 2,669 0 0 0 0 2,669 0 2,669 Other comprehensive income 0 0 0 0 2,669 84,257 142,913 -40,558 54,046 243,327 73,953 317,280 Total comprehensive income 0 0 0 0 3,314,624 84,257 142,913 -40,558 54,046 3,555,282 477,406 4,032,688 Transactions with shareholders Share-based payment, expensed 2.4 0 0 0 51,818 1,522 0 0 0 0 53,340 926 54,266 Share-based payment, tax effect 2.11 0 0 0 -2,838 0 0 0 0 0 -2,838 0 -2,838 Share-based payment, release 2.4 0 30 0 0 -30 0 0 0 0 0 0 0 Dividend 4.2 0 0 0 0 -2,353,953 0 0 0 0 -2,353,953 -51,400 -2,405,353 Borrowed treasury shares 4.3 0 -8 -11,536 0 0 0 0 0 0 -11,544 0 -11,544 Issue of share capital 4.2 6,835 0 9,091,995 0 0 0 0 0 0 9,098,830 0 9,098,830 Contribution of equity in group companies 4.6 0 0 0 0 7,154 0 0 0 0 7,154 3,753 10,907 Transaction costs related to capital 0 0 -238 0 -67 0 0 0 0 -305 0 -305 contribution, net of tax Acquisition of non-controlling interests 4.6 0 0 0 0 0 0 0 0 0 0 6,268,346 6,268,346 Treasury shares in subsidiaries 4.2 0 -3,181 0 0 -4,190,629 0 0 0 0 -4,193,810 -319,060 -4,512,870 Change in non-controlling interests 4.6 0 0 0 0 -40,155 0 0 0 0 -40,155 -3,832,936 -3,873,091 Reclassifications and Other changes 0 0 7 -183 3,702 0 10,093 0 0 13,619 -1,068 12,551 Total transactions with shareholders 6,835 -3,159 9,080,228 48,797 -6,572,456 0 10,093 0 0 2,570,338 2,068,561 4,638,899 At 31 December 2022 36,285 -3,185 12,182,189 343,902 6,399,991 176,910 210,599 -34,824 44,102 19,355,969 4,798,794 24,154,763 109 Financial Statement and Results Consolidated Financial StatementsFinancial Statement and Results Consolidated Financial Statements Consolidated statement of changes in Equity, continued Foreign Attributable Other currency Cost of to Non- Share Treasury Share paid-in translation Cashflow Hedge of net hedging shareholders controlling Total NOK 1,000 Note capital shares premium equity Other equity differences hedges investments reserve of the parent interests equity As at 1 January 2023 36,285 -3,185 12,182,189 343,902 6,399,991 176,910 210,599 -34,824 44,102 19,355,969 4,798,794 24,154,763 Profit for the year 0 0 -2,163,200 -392,469 5,758,425 0 0 0 0 3,202,756 199,423 3,402,179 Other comprehensive income Other comprehensive income that may be reclassified to profit or loss in subsequent periods: Translation differences in associates and joint venture 3.5 0 0 0 0 0 93,024 0 0 0 93,024 0 93,024 Translation differences in subsidiaries 0 0 0 0 0 79,415 0 0 0 79,415 84,595 164,010 Gain/loss on hedge of net investment 3.9 0 0 0 0 0 0 0 -68,442 0 -68,442 0 -68,442 Gain/loss on cash flow hedges 3.9 0 0 0 0 0 0 328,416 0 0 328,416 47,463 375,879 Net change in costs of hedging 3.9 0 0 0 0 0 0 0 0 -39,165 -39,165 0 -39,165 Tax related to other comprehensive income 2.11 0 0 0 0 0 0 -72,250 15,057 8,616 -48,577 -10,443 -59,020 Net other comprehensive income that may be reclassified to profit or loss in subsequent periods 0 0 0 0 0 172,439 256,166 -53,385 -30,549 344,671 121,615 466,286 Other comprehensive income that will not be reclassified to profit or loss in subsequent periods: Remeasurement gain on defined benefit plans 2.5 0 0 0 0 708 0 0 0 0 708 0 708 Tax related to gain on defined benefit plans 2.5 0 0 0 0 -156 0 0 0 0 -156 0 -156 Net other comprehensive income that will not be reclassified to profit or loss in subsequent periods 0 0 0 0 552 0 0 0 0 552 0 552 Other comprehensive income 0 0 0 0 552 172,439 256,166 -53,385 -30,549 345,223 121,615 466,838 Total comprehensive income 0 0 -2,163,200 -392,469 5,758,977 172,439 256,166 -53,385 -30,549 3,547,979 321,038 3,869,017 Transactions with shareholders Share-based payment, expensed 2.4 0 0 0 43,750 2,857 0 0 0 0 46,607 1,133 47,740 Share-based payment, tax effect 2.11 0 0 0 766 2,670 0 0 0 0 3,436 0 3,436 Share-based payment, release 2.4 0 22 0 -22 0 0 0 0 0 0 0 0 Dividend 4.2 0 0 0 0 -2,628,651 0 0 0 0 -2,628,651 -136,981 -2,765,632 Sales of treasury shares 4.3 0 8 -4,626 0 16,162 0 0 0 0 11,544 0 11,544 Acquisition of interests with settlement in treasury shares 4.5, 4.6 0 52 0 4,073 112,763 0 0 0 0 116,888 130,377 247,265 Treasury shares in subsidiaries 4.6 0 -242 0 0 -318,818 0 0 0 0 -319,060 319,060 0 Change in non-controlling interests 4.6 0 0 0 0 -239,271 0 0 0 0 -239,271 -516,073 -755,344 Divestment of non-controlling interests 4.6 0 0 0 0 0 0 0 0 0 0 -1,737,163 -1,737,163 Share capital reduction 4.2 -3,275 3,275 0 0 0 0 0 0 0 0 0 0 Reclassifications and Other changes 0 0 2,325 0 3,270 0 0 0 0 5,595 -2,379 3,216 Total transactions with shareholders -3,275 3,115 -2,301 48,567 -3,049,018 0 0 0 0 -3,002,912 -1,942,026 -4,944,938 At 31 December 2023 33,010 -70 10,016,688 0 9,109,949 349,349 466,765 -88,209 13,553 19,901,036 3,177,806 23,078,842 110 Financial Statement and Results Consolidated Financial StatementsFinancial Statement and Results Consolidated Financial Statements NOK 1,000 Note 2023 2022 Cash flow from operating activities Profit before tax 7,279,321 4,562,032 Profit before tax from discontinued operations 684,567 91,098 Tax paid in the period 2.11 -608,301 -551,630 Depreciation, amortisation and write-downs 3.1, 3.3, 3.4 1,452,230 1,037,695 Employee share schemes charged to expenses 2.4 47,740 54,266 Income from associated companies and joint venture 3.5 27,295 -66,432 Gain related to remeasured shares in associated companies 3.5 0 -90,776 Gains on disposal of shares in group companies 4.7 -365,154 0 Gains/losses on sale of non-current assets 3.3 -31,005 0 Net interest expenses 2.10 1,172,162 335,839 Onerous contracts 237,346 -126,330 Fair value adjustments 2.9 -867,044 -232,489 Change in inventory / biological assets at cost -903,550 -1,103,935 Change in trade receivables -31,607 -158,776 Change in trade payables 620,955 44,178 Change in other accruals 105,409 412,092 Cash flow from operating activities related to discontinued operations 4.7 155,113 15,612 Net cash flow from operating activities 8,975,477 4,222,444 Cash flow from investing activities Receipts from disposal of property, plant and equipment 3.3 4,031 104,473 Purchase of property, plant and equipment 3.3 -2,268,811 -2,265,008 Purchase of intangible assets 3.1 -83,512 -189,884 Receipts from disposal of group companies 4.4, 4.7 4,453,707 1,859,913 Receipts from disposal of other investments 45,000 0 Payments on business combinations, net of cash 4.5 0 -2,091,790 Dividends from associated companies 3.5 18,446 2,865 Dividends from other companies 6,664 0 Loan to third parties -14,169 22,020 Interest received 2.10 25,086 4,112 Cash flow from investing activates related to discontinued operations 4.7 -411,853 -79,927 Net cash flow from investing activities 1,774,589 -2,633,226 Consolidated Statement of Cash Flows 111 Financial Statement and Results Consolidated Financial StatementsFinancial Statement and Results Consolidated Financial Statements Consolidated Statement of Cash Flows, continued NOK 1,000 Note 2023 2022 Cash flow from financing activities Proceeds from interest-bearing debts 3.11 7,788,052 11,604,620 Repayment of interest-bearing debts 3.11 -16,448,307 -4,458,033 Net change in overdraft 3.11 713,521 -127,923 Payment of instalments on lease liabilities 3.4, 3.11 -321,096 -229,333 Payment of interest on lease liabilities 3.4, 3.11 -102,177 -64,654 Interest paid 2.10 -1,145,257 -215,410 Dividend 4.2 -2,747,573 -2,405,353 Net proceeds from issuance of shares in group companies 4.6 0 10,907 Acquisition of non-controlling interests 4.6 -755,344 -3,873,091 Cash flow from financing activities related to discontinued operations 4.7 29,060 -77,494 Net cash flow from financing activities -12,989,121 164,236 Net change in cash and cash equivalents -2,239,055 1,753,454 Currency translation of cash and cash equivalents -7,086 6,898 Cash and cash equivalents as at 01.01 2,712,707 901,644 Cash and cash equivalents discontinued operations at acquisition 0 369,416 Cash and cash equivalents discontinued operations as at 01.01 318,705 0 Cash and cash equivalents as at 31.12 3.10 785,271 3,031,412 Of which cash and cash equivalents in discontinued operations as at 31.12 4.7 0 318,705 Cash and cash equivalents excluding 785,271 2,712,707 discontinued operations as at 31.12 Unused drawing rights 3.11 9,754,227 8,133,813 112 Financial Statement and Results Notes to the Financial Statements for 2023Financial Statement and Results Notes to the Financial Statements for 2023 Notes to the Financial Statements for 2023 Part 1 General information and significant accounting policies Note 1.1 General information 114 Note 1.2 Basis of preparation 114 Note 1.3 Principles of consolidation 115 Note 1.4 Principles of classification 116 Note 1.5 Functional currency and translation of foreign currencies 116 Note 1.6 Statement of Cash Flows 116 Note 1.7 Use of estimates 117 Part 2 Financial results Note 2.1 Business segments 118 Note 2.2 Revenues from contracts with customers and material customers 121 Note 2.3 Salary and personnel expenses: 122 Note 2.4 Share-based incentive scheme 125 Note 2.5 Pensions plans 127 Note 2.6 Other operating expenses 128 Note 2.7 Government grants 129 Note 2.8 Audit fees 129 Note 2.9 Fair value adjustments 129 Note 2.10 Net financial items 130 Note 2.11 Income tax, resource rent tax and production tax 131 Part 3 Assets and liabilities Note 3.1 Intangible assets 134 Note 3.2 Impairment of non- financial assets 138 Note 3.3 Property, plant and equipment 140 Note 3.4 Right-of-use assets and lease liabilities 142 Note 3.5 Investments in associated companies and joint ventures 145 Note 3.6 Biological assets and other inventories 148 Note 3.7 Trade and other receivables 151 Note 3.8 Financial assets and financial liabilities 152 Note 3.9 Hedging activities and derivatives 155 Note 3.10 Cash & cash equivalents 159 Note 3.11 Interest-bearing liabilities 160 Note 3.12 Mortgage and guarantees 164 Note 3.13 Current liabilities 165 Part 4 Other Notes Note 4.1 Financial risk management 166 Note 4.2 Share capital and shareholders 169 Note 4.3 Earnings per share 171 Note 4.4 Group companies 172 Note 4.5 Business combinations and other investments in group companies 173 Note 4.6 Non-controlling interests 176 Note 4.7 Discontinued operations 180 Note 4.8 Related party transactions 182 Note 4.9 Climate risk 183 Note 4.10 Allegations of price collusion and events occurring after the reporting period 183 Note 4.11 Alternative performance measures 184 113 Financial Statement and Results Notes to the Financial Statements for 2023 Note 1.1 General information Part 1 General information and significant accounting policies NOTE 1.1 General information SalMar ASA is a listed public limited liability company, registered and domiciled in Norway. The company's shares are listed on the Oslo Stock Exchange. The company's head office is located at Industriveien 51, 7266 Kverva , in the municipality of Frøya. SalMar's consolidated financial statements of 31 December 2023 and for the year as a whole is comprised of SalMar ASA and its subsidiaries, as well as the Group's share of associates and joint venture accounted for using the equity method. The Group operates in Norway, Iceland and Asia, and has operations in Scotland through an associate. The annual financial statements were formally approved by the Board of Directors on 12 April 2024. NOTE 1.2 Basis of preparation SalMar's consolidated financial statements is comprised of the state- ment of profit or loss, statement of other comprehensive income, balance sheet, statement of changes in equity and Statement of Cash Flows. The consolidated financial statements have been pre- pared in accordance with IFRS® Accounting Standards and inter- pretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS as adopted by EU. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB) at 31 December 2023, as well as disclosure requirements pursuant to the Norwegian Accounting Act as at 31 December 2023. Significant accounting principles relating to specific accounting lines and accounting items are described in the introduction to the relevant notes. The consolidated financial statements are presented in Norwegian kroner (NOK). The financial statements have been prepared on a his- torical cost basis, except for the following: • Biological assets – measured at fair value (Note 3.6) • Financial derivatives - measured at fair value (Note 3.8) • Other shares and securities – measured at fair value (Note 3.8) New and amended standards adopted by the group The Group applied for the first-time certain standards and amend- ments, which are effective for annual periods beginning on or after 1 January 2023. The Group has not early adopted any other stand- ard, interpretation or amendment that has been issued but is not yet effective. Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2 The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements provide guidance and examples to help enti- ties apply materiality judgements to accounting policy disclosures. The amendments have had an impact on the Group’s disclosures of accounting policies, but not on measurement, recognition or presenta- tion of any items in the Group’s financial statements. Definition of Accounting Estimates - Amendments to IAS 8 The amendments to IAS 8 clarify the distinction between changes in accounting estimates, changes in accounting policies and the correc- tion of errors. The amendments had no impact on the Group’s consol- idated financial statements. New standards and interpretations not yet adopted At the end of 2023 there are some amendments to existing standards that are not yet effective. There are no amendments that is expected to have a significant impact on the Group's financial statements. Financial Statement and Results Notes to the Financial Statements for 2023 114 Financial Statement and Results Notes to the Financial Statements for 2023 Note 1.3 Principles of consolidation NOTE 1.3 Principles of consolidation SalMar's consolidated financial statements encompass SalMar ASA and its subsidiaries as at 31 December 2023. Subsidiaries are all entities over which the group has control. The group controls an entity where the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activ- ities of the entity. If the Group has a majority of the voting rights in an entity, the entity is presumed to be a subsidiary of the Group. To substantiate this presumption, and where the Group does not hold a majority of the voting rights, the Group considers all relevant facts and circumstances to determine whether the Group has control over the entity in which it has invested. This includes assessing the size of its shareholding, its voting share, the shareholder structure and its relative strength therein, as well as options controlled by the Group, shareholder agreements or other agreements. This assessment is performed for each investment. A reassessment is performed when facts and circumstances indicate that changes have taken place in one or more of the factors determining control . The acquisition method of accounting is used to account for business combinations by the group. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are decon- solidated from the date that control ceases. The entity perspective is applied in connection with acquisitions where control is established. The exception is goodwill, where for each acquisition it is optional whether to recognise the controlling owners' share or 100 %. In the cases where the fair value of the acquired assets exceeds the amount paid, the difference is treated as income in profit and loss. Inter-company transactions, balances and unrealised gains on trans- actions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group . Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity and balance sheet respectively. The group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any dif- ference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a sep- arate reserve within equity attributable to owners of SalMar ASA. When the Group no longer has control, any remaining shareholding is measured at fair value, with changes in value recognised through profit and loss. In connection with its future recognition as an invest- ment, associate, jointly controlled entity or financial asset, fair value is deemed to equal acquisition cost. Amounts which were previously recognised in OCI with respect to this company are treated as if the Group had divested the underlying assets and liabilities. This may mean that amounts which have previously been recognised in OCI are reclassified to profit and loss . Financial Statement and Results Notes to the Financial Statements for 2023 115 Financial Statement and Results Notes to the Financial Statements for 2023 Note 1.4 Principles of classification NOTE 1.4 Principles of classification Changes in the fair value of biological assets are presented as fair value adjustments and are included in the Group's operating profit/ loss. Fair value adjustments also includes changes in the unrealised value of Fish Pool contracts. Operational EBIT is reported before fair value adjustment, changes in onerous contracts and production tax in the period in order to show the Group's underlying sales performance during the period . NOTE 1.5 Functional currency and translation of foreign currencies The consolidated financial statements are presented in Norwegian kroner (NOK), which is the parent company's functional currency. Foreign currency transactions are translated into the functional cur- rency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates, are generally recognised in profit or loss. They are deferred in other comprehensive income if they relate to qualifying cash flow hedges and qualifying net investment hedges. The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency as follows: a. assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet b. income and expenses for each statement of profit or loss and statement of comprehensive income are translated at average exchange rates c. all resulting exchange differences are recognised in other comprehensive income. NOTE 1.6 Statement of Cash Flows The Group's Statement of Cash Flows shows a breakdown of the Group's overall cash flow into operating, investing and financing activi- ties. The statement shows the individual activity's impact on liquid assets. Cash flow deriving from the acquisition and sale of businesses is presented under investing activities. Financial Statement and Results Notes to the Financial Statements for 2023 116 Financial Statement and Results Notes to the Financial Statements for 2023 Note 1.7 Use of estimates NOTE 1.7 Use of estimates Preparation of the financial statements in accordance with IFRS requires management to make evaluations, estimates and assumptions which affect the application of accounting principles and the value of assets and liabilities recognised in the Consolidated balance sheet as well as income and expenses in the Statement of profit or loss for the financial year. Estimates and their underlying assumptions are based on past experience and other factors deemed relevant and probable at the time the evaluations are made. These evaluations affect the book value of the assets and liabilities whose valuation is not based on other sources. Estimates are reviewed continuously and final values and results may differ from these estimates. Changes in accounting estimates are included in the period in which the changes occur. The following evaluations and estimates are considered to be sig- nificant for the Group: Fair value of the biomass Biological assets held at the Group's sea farms are measured in accord- ance with IAS 41. The principles for calculating fair value are described in Note 3.6 "Biological assets and other inventory". The valuation is based on a number of assumptions that require considerable discretionary judgement. The key assumptions relate to volume, costs, price and the discount rate. The estimated volume at harvest is based on the number of fish held at sea farms, adjusted for estimated growth and mortality from the time the fish were transferred to the sea until they have actually been harvested. The actual volume harvested may deviate from the estimated volume as a result of biological developments. Uncertainty with regard to biological developments may affect the date of harvest and therefore the discounting period in the model. Expected market prices underpin the measurement of fish at fair value. The industry considers the Fish Pool forward price to be the best estimate of market prices. Historically, the market price for fish has proved susceptible to relatively large fluctuations from period to period and between seasons. The price achieved will moreover, differ depending on the size and quality of the fish at harvest. At the same time, the date of harvest will depend on the fish's biological development. There is considerable uncertainty to the estimated remaining pro- duction costs to harvest. Biological challenges, such as disease and sea lice infestations, will affect fish-related costs. In addition, there is uncertainty related to the price of other important input factors, such as fish feed. Expected future cash flows for the individual sites are discounted by a monthly discount factor. The discount factor is comprised of several elements (see Note 3.6 "Inventory and biological assets" for further details). As described in Note 3.6, a synthetic licence fee and site leasing cost is added to the discount factor in the model, instead of these elements being treated as a cost in the calculation. In order to engage in the farming of salmon, it is necessary to have access to infrastructure in the form of production licences and sites. The market price for a production licence in today's market is high, and it is reasonable to assume that in a hypothetical market there would be a considerable cost attached to use of the infrastructure and licences necessary to operate an aquaculture business. This cost is reflected as an element of the discount rate and will be subject to considerable discretionary judgement. Fair value at acquisition In connection with an acquisition, the cost price of the acquired entity must be allocated such that the opening balance in the Group's accounts reflects the estimated fair value of the acquired assets and liabilities. To determine the fair value at acquisition, alterna- tive methods are used to determine the fair value of assets for which there is no active market. Value excess identifiable assets and liabilities is recognised in the Consolidated balance sheet as goodwill. If the fair value of equity in the acquired entity exceeds the consideration paid, the excess amount is immediately recognised as income. The allocation of cost price in connection with business combinations is updated if, no later than 12 months after the acquisition took place, new information is obtained with respect to fair value on the date of takeover and assumption of control. Financial Statement and Results Notes to the Financial Statements for 2023 117 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.1 Business segments Part 2 Financial results NOTE 2.1 Business segments Accounting policies The Group's business areas comprise of Fish Farming, Sales & Industry and the Group's operations in Iceland which are reported as a separate unit and are defined as a separate segment. In addition, SalMar Aker Ocean, the Group's offshore farming is defined as a separate segment. Fish farming in Norway is divided into two regions, Fish Farming Central Norway and Fish Farming Northern Norway, which are defined as separate segments, and are reported and administered as such internally. The Group’s hatchery operations are also included in these segments. The operating unit Icelandic Salmon, located in Iceland, is a fully integrated aquaculture company, with its own hatchery, sea farms, harvesting plant and sales force. This segment’s combined results are reported through the business segment Icelandic Salmon. SalMar Aker Ocean is a partnership between SalMar (85 per cent ownership) and Aker (15 per cent) that specialise in offshore farming. The company has two semi-offshore units in operation, Ocean Farm 1 in Central Norway and Arctic Offshore Farming in Northern Norway. Group management evaluates the segments’ performance on the basis of Operational EBIT. The column Other/Eliminations includes costs relating to share-based employee cost, R&D costs relating to jointly operated licences and other overheads not allocated to segments. In addition, it includes transaction costs from business combinations, restructuring cost and for 2022 costs incurred in the settlement of allegations of price collusion related to lawsuits in North America. Sales between segments are carried out in accordance with the arm’s length principle. When revenues from external parties are reported to group management, they are measured at the same amount recognised in profit and loss. Assets and liabilities are not reported to group management at segment level . Financial Statement and Results Notes to the Financial Statements for 2023 118 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.1 Business segments Fish Farming Fish Farming Central Northern Sales & Icelandic SalMar Aker Other/ 2023 (NOK 1,000) Norway Norway Industry Salmon Ocean Eliminations SalMar Group External operating revenue - sale of goods and services 170,134 50,825 26,017,108 1,861,107 0 0 28,099,174 Internal operating revenue - sale of goods and services 12,128,520 7,829,649 1,057,997 1,284 172,834 -21,190,283 0 TOTAL revenues from contracts with customers 12,298,654 7,880,474 27,075,104 1,862,391 172,834 -21,190,283 28,099,174 Compensation 10,998 8,989 0 0 0 0 19,987 Other operating income 109,673 4,855 18,982 8,865 1 -42,989 99,387 Revenue and income 12,419,325 7,894,318 27,094,086 1,871,256 172,835 -21,233,272 28,218,548 Depreciation and amortisation 656,799 362,578 201,762 103,160 77,637 17,222 1,419,159 Write-downs 0 16 1,965 0 -7,543 38,633 33,071 Other operating expenses 7,150,100 4,129,703 26,636,056 1,537,896 155,313 -20,930,650 18,678,418 Operational EBIT 4,612,426 3,402,021 254,303 230,199 -52,572 -358,478 8,087,900 Production tax -208,374 Onerous contracts -237,346 Fair value adjustments 1,589,853 Fair value adjustment included in cost of goods sold due to business combination -722,809 Operating profit/loss 8,509,224 Income from investments in associates and joint venture -27,295 Net financial items -1,202,608 Profit before tax 7,279,321 Tax 4,533,736 Profit for the year from continuing operations 2,745,585 Profit after tax from discontinued operations 656,594 Profit for the year 3,402,179 Investments in PP&E 957,299 561,041 357,222 294,138 98,114 997 2,268,811 Investments in right-to-use assets 723,657 38,379 0 9,132 0 0 771,169 Investments in licences 255,651 32,571 0 0 0 0 288,223 Financial Statement and Results Notes to the Financial Statements for 2023 119 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.1 Business segments Fish Farming Fish Farming Central Northern Sales & Icelandic SalMar Aker Other/ 2022 (NOK 1,000) Norway Norway Industry Salmon Ocean Eliminations SalMar Group External operating revenue - sale of goods and services 3,317 50,825 18,429,251 1,586,722 0 0 20,070,115 Internal operating revenue - sale of goods and services 8,831,134 4,830,067 675,897 7,402 0 -14,344,500 0 TOTAL revenues from contracts with customers 8,834,451 4,880,892 19,105,148 1,594,124 0 -14,344,500 20,070,115 Compensation 3,901 0 0 0 32,460 10 36,371 Other operating income 33,971 2,231 36,267 1,052 0 -21,728 51,793 Revenue and income 8,872,323 4,883,123 19,141,415 1,595,176 32,460 -14,366,219 20,158,279 Depreciation and amortisation 480,084 186,472 176,278 75,472 72,420 10,328 1,001,053 Write-downs 2,788 0 213 0 33,641 0 36,642 Other operating expenses 4,790,235 2,170,897 20,251,179 1,153,761 81,167 -13,791,227 14,656,013 Operational EBIT 3,599,217 2,525,754 -1,286,255 365,943 -154,769 -585,319 4,464,571 Production tax -85,232 Onerous contracts 126,330 Fair value adjustments 515,887 Fair value adjustment included in cost of goods sold due to business combination -283,398 Operating profit/loss 4,738,158 Income from investments in associates and joint venture 66,432 Net financial items -242,558 Profit before tax 4,562,032 Tax 953,996 Profit for the year from continuing operations 3,608,036 Profit after tax from discontinued operations 107,372 Profit for the year 3,715,408 Investments in PP&E 1,291,718 244,919 280,340 168,200 265,565 14,265 2,265,008 Investments in PP&E through business combinations 999,317 1,121,628 163,367 195,909 0 99,259 2,579,479 Investments in right-to-use assets 49,107 56,313 5,220 28,148 3,509 0 142,296 Investments in right-to-use assets through business combinations 163,499 270,558 40,094 0 0 72,753 546,905 Investments in licences 50,000 0 0 2,812 0 0 52,812 Investments in licences through business combinations 2,968,852 4,293,183 0 3,857 0 0 7,265,892 Financial Statement and Results Notes to the Financial Statements for 2023 120 Financial Statement and Results Notes to the Financial Statements for 2023 NOTE 2.2 Revenues from contracts with customers and material customers Accounting policies Income from the sale of goods comes mainly from the sale of fresh whole Atlantic salmon and a wide selection of fresh and frozen salmon products, either on spot sales or from contracts. Income from the sale of services mainly relates to the sale of harvesting services. Revenue is recognised when control of the goods is transferred to the customer at an amount that reflects the consideration to which the group expects to be entitled in exchange for these goods. This is typically when the goods are picked up by the carrier or on delivery to a terminal or the customer. This depends on the delivery conditions and varies from customer to customer. The normal credit period is 30 days net. Income from harvesting services is recognised as income as the services are provided. For further details, see Note 2.1 for operating revenues relating to the Group's business segments. Specification of revenues (NOK 1,000) 2023 2022 Sale of goods 27,828,296 19,800,190 Sale of services 270,878 269,925 Total revenues from contracts 28,099,174 20,070,115 with customers No individual customers have accounted for more than 10 per cent of the Group's revenue in the past two years. Specification of the Group’s revenues by geographic market 2023 % 2022 % Asia 6,433,961 22.9 % 4,729,240 23.6 % USA/Canada 5,174,950 18.4 % 4,155,643 20.7 % Europe, ex. Norway 9,716,399 34.6 % 8,369,116 41.7 % Norway 6,444,116 22.9 % 2,269,477 11.3 % Other 329,748 1.2 % 546,638 2.7 % Total Revenues from contracts with customers 28,099,174 100.0 % 20,070,115 100.0 % Specification of the Group’s revenues by currency 2023 % 2022 % NOK 8,406,400 29.9 % 4,318,522 21.5 % JPY 1,223,998 4.4 % 1,046,147 5.2 % GBP 289,588 1.0 % 253,989 1.3 % USD 9,941,620 35.4 % 7,371,387 36.7 % EUR 7,441,625 26.5 % 6,315,563 31.5 % SEK 335,321 1.2 % 310,512 1.5 % KRW 61,089 0.2 % 67,651 0.3 % CAD 361,234 1.3 % 347,875 1.7 % CHF 2,174 0.0 % 2,167 0.0 % ISK 36,125 0.1 % 36,301 0.2 % Total Revenues from contracts with customers 28,099,174 100.0 % 20,070,115 100.0 % Note 2.2 Revenues from contracts with customers and material customers Financial Statement and Results Notes to the Financial Statements for 2023 121 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.3 Salary and personnel expenses: NOTE 2.3 Salary and personnel expenses: Salary and personnel expenses: NOK 1,000 2023 2022 Salaries and other short-term employee benefits 2,058,602 1,548,764 Social security expenses 157,358 117,907 Pension expenses 107,763 92,498 Employee share schemes charged to expenses 47,740 54,266 Other benefits 82,443 80,329 Total 2,453,907 1,893,764 Average number of full-time employee equivalent in the Group 2,674 2,266 Loans and guarantees granted to employees: NOK 1,000 Loans Guarantees Employees 251 0 Financial Statement and Results Notes to the Financial Statements for 2023 122 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.3 Salary and personnel expenses: Remuneration paid to Executive Management and Board of Directors: Reference is made to the Board's guidelines for remuneration and other benefits for SalMar ASA's senior executives adopted by the ordinary general meeting on 8 June 2021. 2 Fixed remuneration Variable remuneration Total fixed Total variable Total Executive Management 2023 (NOK 1,000) Base salary Pension Benefits remuneration Severance pay Bonus Shares remuneration remuneration Frode Arntsen, CEO 4,461 87 10 4,559 0 850 1,145 1,995 6,554 Linda Litlekalsøy Aase, former CEO 0 0 0 0 2,043 0 0 2,043 2,043 Ulrik Steinvik, CFO 2,559 83 10 2,652 0 800 867 1,667 4,319 Roger Bekken, COO Farming 3,160 95 10 3,265 0 800 1,026 1,826 5,091 Simon Andre Søbstad, COO Sales & Industry 2,179 175 10 2,364 0 650 595 1,245 3,609 Eva Haugen, Director Quality Management/HSE 1,550 83 10 1,643 0 450 572 1,022 2,664 Arthur Wisniewski, Director Human Resource Management 1,861 77 10 1,948 0 650 600 1,250 3,199 Runar Sivertsen, Chief Strategy Officer 1,838 77 10 1,925 0 650 512 1,162 3,086 Total earned 2023 17,607 676 73 18,356 2,043 4,850 5,317 12,210 30,565 Fixed remuneration Variable remuneratio n Total fixed Total variable Total Executive Management 2022 (NOK 1,000) Base salary Pension Benefits remuneration Severance pay Bonus Shares remuneration remuneration Frode Arntsen, CEO, former COO Industry & Sales 2,710 84 9 2,804 0 750 765 1,515 4,319 Linda Litlekalsøy Aase, CEO 2,576 55 117 2,749 6,643 1,800 0 8,443 11,191 Gustav Witzøe, CEO 1,090 34 3 1,127 0 0 0 0 1,127 Ulrik Steinvik, CFO, former Director Business Improvement 2,081 80 9 2,170 0 670 673 1,343 3,514 Gunnar Nielsen, CFO 1,583 18 6 1,607 0 0 0 0 1,607 Trine Sæther Romuld, CFO & COO 1,051 31 2 1,084 0 2,943 0 2,943 4,028 Roger Bekken, COO Farming 2,454 91 9 2,555 0 700 782 1,482 4,037 Simon Andre Søbstad, COO Sales & Industry 7 1,413 45 11 1,468 0 380 428 808 2,277 Eva Haugen, Director Quality Management/HSE 1,384 79 9 1,473 0 360 460 820 2,292 Arthur Wisniewski, Director Human Resource Management 1,660 75 9 1,745 0 600 451 1,051 2,796 Runar Sivertsen, Chief Strategy Officer 1,432 75 9 1,516 0 535 358 893 2,409 Total earned 2022 19,434 668 196 20,298 6,643 8,738 3,917 19,298 39,596 1 From 24 October 2022 2 From 9 May 2022 to 23 October 2022. Ms Aase had a severance agreement of one year fixed and variable remuneration. 2/3 of the severance pay was settled as per 31.12.2022. 3 Until 9 May 2022 4 From 27 October 2022 5 From 1 April 2022 to 26 October 2022 6 Until 31 March 2022 7 From 28 October 2022 1 2 3 4 5 6 7 7 7 7 Financial Statement and Results Notes to the Financial Statements for 2023 123 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.3 Salary and personnel expenses: Board of Directors 2023 (NOK 1,000) Annual base fee Audit and Risk Committee Nomination Committee Salary and benefits Total remuneration Gustav Witzøe, Chair of the Board 545 0 0 103 648 Leif Inge Nordhammer, Board member 305 0 0 0 305 Margrethe Hauge, Vice-Chair of the Board 305 130 0 0 435 Arnhild Holstad, Board member 305 0 0 0 305 Morten Loktu, Board member 305 138 0 0 443 Employee representatives Ingvild Kindlihagen, Board Member (from 8 June 2023) 80 0 0 902 982 Hans Stølan, Board Member (from 8 June 2023) 80 0 0 504 584 Nomination Committee Bjørn M. Wiggen, Chair of the Nomination Committee 0 0 44 0 44 Endre Kolbjørnsen 0 0 28 0 28 Karianne O. Tung 0 0 28 0 28 Former members of the Board of Directors and the Nomination Committee Simon Andre Søbstad, Employee representatives (until 7 June 2023) 73 0 0 0 73 Tone Ingebrigtsen, Employee representatives (until 7 June 2023) 73 0 0 0 73 Total remuneration 2023 2,070 268 100 1,509 3,946 8 Full period effect on audit-and risk committee 8 Board of Directors 2022 (NOK 1,000) Annual base fee Audit and Risk Committee Nomination Committee Salary and benefits Total remuneration Gustav Witzøe, Chair of the Board (from 8 June 2022) 260 0 0 0 260 Leif Inge Nordhammer, Board member (Chair of the Board until 8 June 2022) 395 0 0 0 395 Margrethe Hauge, Vice-Chair of the Board 283 123 0 0 405 Arnhild Holstad, Board member (from 8 June 2022) 145 0 0 0 145 Morten Loktu, Board member (from 8 June 2022) 145 43 0 0 188 Employee representatives Simon Andre Søbstad, Board Member 141 0 0 2,277 2,418 Tone Ingebrigtsen, Board Member 141 0 0 1,311 1,453 Nomination Committee Bjørn M. Wiggen, Chair of the Nomination Committee 0 0 41 0 41 Endre Kolbjørnsen 0 0 26 0 26 Karianne O. Tung 0 0 26 0 26 Former members of the Board of Directors and the Nomination Committee Magnus Dybvad, Board Member (until 8 June 2022) 138 40 0 0 178 Linda Litlekalsøy Aase, Board Member (former representative until 9 May 2022) 138 0 0 0 138 Total remuneration 2022 1,785 205 92 3,588 5,670 Financial Statement and Results Notes to the Financial Statements for 2023 124 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.4 Share-based incentive scheme NOTE 2.4 Share-based incentive scheme Accounting policies The Group has a share-based incentive scheme, whereby the compa- nies receive services from the employees in return for Restricted Share Units (RSUs) in the Group. The fair value of the services received by the business units from the employees in return for the RSU entitlements awarded is recognised as an expense. The fair value of RSU entitlements is established when they are granted. The fair value of RSU entitlements that are not at mar- ket terms are valued at the share price in effect when the RSUs are granted. The probability of the performance criteria being met is considered when assessing how many RSU entitlements will be redeemed. The fair value of RSU entitlements that are not at market terms is calculated using a Monte-Carlo simulation. The value is established when they are granted and charged in profit and loss over the RSU's vesting period, with a corresponding increase in paid-in equity. Employers' national insurance contributions are recognised over the vesting period . Restricted Share Unit Plan (RSU): In accordance with the authorisation granted by the company's Annual General Meeting, SalMar ASA's Board of Directors has implemented a share-based incentive scheme (Restricted Share Unit Plan) for senior executives and key personnel employed by the company and its sub- sidiaries. As at 31 December 2023, the scheme encompassed up to 323,380 shares and has a term of three years. The company's board members do not receive RSUs, with the exception of those elected by the employees, who may take part in the programme in their capacity as employees. The company's obligations under the scheme will be covered by its existing holding of treasury shares. Participants of the plan are granted Restricted Share Units (RSUs) free of charge. These will be released and transferred as shares to participants after a vesting period subject to predefined performance criteria. The shares are then transferred to the employee free of charge. The plan comprises three vesting periods of, respectively, one, two and three calendar years. Each vesting period covers 1/3 of the total annual RSUs in the plan. One RSU affords a contingent entitlement to one share. The award of RSUs in each of the three vesting periods rests on the following performance criteria: • 1/3 of the RSUs will vest irrespective of the performance criteria. • 1/3 of the RSUs will vest provided that SalMar achieves a better EBIT/kg ratio than other aquaculture enterprises listed on the Oslo Stock Exchange during the vesting period. • 1/3 of the RSUs will vest provided that SalMar’s shares deliver a higher total shareholder return (TSR) than a defined group of comparable companies during the vesting period. The plan stipulates that RSUs will vest only if the participant is still an employee of the Group. The total gains from released RSUs dur- ing the course of one calendar year may not exceed 100 % of the participant’s basic salary. The fair value of the RSU entitlements is calculated on the date they are granted. The total fair value of the entitlements as at 31 Decem- ber 2023 is calculated to be NOK 184.1million (2022: NOK 114.5 mil- lion). The cost is expensed over the vesting period, and a total of NOK 43.4 million was recognised in connection with the scheme in 2023 (2022: NOK 51.8 million). Provisions for employers' national insurance contributions in respect of the scheme have also been made. The expense is recognised to the extent that the performance criteria are met. The fair value of RSU entitlements that are not at market condition is set as the share price on the date the award was made. The probability of the performance criteria being met is taken into account when assessing how many RSU entitlements will be redeemed. When the 2023 award was formally made on 19 December 2023, the share price was NOK 571.44. (2022: NOK 379.60). The fair value of the RSU entitlements that are at market terms is calculated using a Monte-Carlo simulation. The most important input data when calculating the value of these RSU entitlements is the share price on the date the award was made, volatility, risk-free interest rate, expected yield and the vesting period. Based on the Monte-Carlo simulation, each RSU entitlement is worth NOK 556.89 for those awarded on 19 December 2023, NOK 289.99 for those awarded on 21 December 2022 and NOK 544.46 for those awarded on 20 December 2021. In 2023, 87,990 RSUs were exercised. The market price per share at the time the RSUs were exercised was NOK 569.05. Correspond- ingly, 118,075 RSUs were exercised in 2022. The market price per share on the date these RSUs were exercised was NOK 338.73. The value of the RSUs exercised is treated as a salary payment to the individual employee . Financial Statement and Results Notes to the Financial Statements for 2023 125 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.4 Share-based incentive scheme Movements in the number of outstanding RSUs: 2023 2022 1 January 297,503 234,954 Granted during the year 162,394 184,859 Released during the year -87,990 -118,075 Forfeited -6,231 -11,623 Performance adjustment -53,278 0 Dividend adjustment 10,982 7,388 31 December 323,380 297,503 Calculation of the year's award was based on the following parameters : 2023 2022 Grant date 19.12.2023 21.12.2022 Plan 2023 2022 Share price on date of issue 571.00 379.60 Weighted average fair values at the measurement date 556.89 288.99 Dividend yield ( %) 0 % 0 % Expected volatility ( %) 38.73 % 44.76 % Risk-free interest rate ( %) 3.76 % 3.07 % Expected lifetime 1.92 1.92 Model used Monte Carlo & Monte Carlo & Black-Scholes Black-Scholes Vesting period for the outstanding RSUs at year end: Date granted Vesting period 2023 2022 17.12.2020 2020–23 42,117 20.12.2021 2021–23 35,495 20.12.2021 2021–24 35,992 35,537 21.12.2022 2022–23 61,397 21.12.2022 2022–24 62,455 61,435 21.12.2022 2022–25 62,539 61,522 19.12.2023 2023–24 54,071 19.12.2023 2023–25 54,125 19.12.2023 2023–26 54,198 Outstanding RSUs as at 31 December 323,380 297,503 Outstanding RSUs - group management: Outstanding Performance Dividend Outstanding per 01.01 Granted Released adjustment adjustment per 31.12 Frode Arntsen, CEO 8,454 4,024 -2,022 -1,662 337 9,131 Ulrik Steinvik, CFO 5,300 2,311 -1,530 -975 206 5,312 Roger Bekken, COO Farming 6,427 2,865 -1,811 -1,194 254 6,541 Simon A. Søbstad, COO 4,074 1,941 -1,050 -782 155 4,338 Sales & Industry Eva J. Haugen, Director 3,332 1,386 -1,009 -602 126 3,233 Quality Management/ HSE Arthur Wisniewski, Director Human Resource 3,857 1,664 -1,060 -722 149 3,888 Management Runar Sivertsen, Chief 3,606 1,664 -903 -698 137 3,806 Strategy Officer Share option agreements - Icelandic Salmon AS: On 19 February 2021, Icelandic Salmon AS granted 205,850 share options with an exercise price of NOK 115.00, respectively, to CEO and key employees. The company's intention is that the options will be equity-settled with shares in Icelandic Salmon AS. The option holders must stay in the employ- ment of the group over a three year vesting period from the grant date until 19 February 2024. As at 31 December 2023 the fair value of the agreements was determined to be NOK 5.2 million. In 2023 a total amount of NOK 1.4 million was expensed as other employee benefits, with a corresponding entry to other paid in equity. Share option agreements - SalMar Aker Ocean AS: On 21 December 2021, SalMar Aker Ocean AS entered into an option agreement with the company's CEO. The agreement have a six year vesting period from the grant date. The fair value of the agreements was determined to be NOK 7.3 million at grant date. In 2023 a total amount of NOK 1.2 million was expensed as other employee benefits, with a corresponding entry to other paid in equity. The company's intention is that the options will be equity-settled with shares in SalMar Aker Ocean AS, see further information below. Financial Statement and Results Notes to the Financial Statements for 2023 126 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.5 Pensions plans In 2022 SalMar Aker Ocean AS entered into a share option agreement with key employees and granted 574,396 share options with an exer- cise price of NOK 49.50. The program is based on given criteria, and gives the employees the right to buy a certain number of shares at a given price, and where the price is set equal to the value the company was valued at when Aker Capital AS invested in the company in 2021. The company's intention is that the options will be equity-settled with shares in SalMar Aker Ocean AS, assuming a listing of the SalMar Aker Ocean group before 31 December 2024. If the condition is not met, the share options could be cash settled. The option holders must stay in the employment of the group over the vesting period from the grant date 1 January 2022, alternatively from the startdate, until 31 December 2024. At grant date the fair value of the agreements was determined to be NOK 9.8 million. In 2023 a total amount of NOK 1.3 million was expensed as other employee benefits, with a corresponding entry to other paid in equity. NOTE 2.5 Pensions plans Accounting policies The Group has a defined-contribution pension scheme for its employ- ees. The company pays contributions to a privately held insurance plan and under this scheme, it has no further payment obligation once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Social security costs are charged based on the contribution paid . SalMar has a defined contribution plan that is in accordance with the legal requirements in Norway. After the business combination with Norway Royal Salmon ASA (NRS) in 2022, SalMar also has a defined benefit scheme which entitles the 11 members of the scheme to defined future benefits. These are mainly dependent on the number of years of entitlement, level of salary upon reaching retirement age and the size of the pension benefits paid by the National Insurance Scheme. The liability is funded through an insurance company. Specification of the pension cost for the Group: NOK 1,000 2023 2022 Defined-contribution scheme 107,158 67,920 Defined-benefits plan (Early 30,008 23,682 Retirement Pension) Defined-benefits plan -8,617 883 Employers' national insurance contributions 9,148 6,188 Total pension cost 137,697 98,673 NOK 1,000 2023 2022 Prepaid pension contributions 2,985 2,802 Pension liabilities foreign operations 8,020 7,717 Pension liabilities defined benefits plan 0 10,161 Total pension liabilities in balance sheet 8,020 17,878 Liabilities associated with the Early Retirement Pension are not included in the Group’s pension calculations. For accounting purposes, the scheme is deemed to be a multi-employer occupational pension plan. The Group is unable to identify its share of the scheme's underly- ing financial position and results with sufficient reliability, and there- fore recognises it as a defined-contribution scheme. This means that liabilities in respect of the Early Retirement Pension are not provided for. Contribution paid into the scheme are charged to expenses as they accrue. Financial Statement and Results Notes to the Financial Statements for 2023 127 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.6 Other operating expenses Specification of the pension cost for the Group under the defined benefit scheme: Members in the defined benefit scheme was in 2023 reduced due to the sale of the sales business in former NRS. The employees related to this sales business left SalMar as a result of the sale, and no compensation was paid to these employees. As a consequence of reduced members, there was recog- nised a gain of NOK 9.5 million related to the settlement in 2023. 01.11.2022– NOK 1,000 2023 31.12.2022 Current service cost 722 715 Interest cost 56 59 Payroll tax 112 109 Administration cost 17 0 Net pension costs service – defined benefit scheme 907 883 Settlement/ curtailment -9,524 0 Net pension costs service – defined benefit -8,617 883 scheme net of settlement/ curtailment Assumptions defined benefit scheme: 31.12.23 31.12.22 Discount rate 3.7 % 3.0 % Future salary increases 3.8 % 3.5 % Inflation rate 2.0 % 3.0 % Future pension increase 2.4 % 1.5 % Demographic factors: Disability table IR02 IR02 Mortality table K2013 BE K2013 BE Number of employees in the scheme Active 2 22 Pensioners 9 8 Total 11 30 Paid into the scheme during the period 1,105 0 Calculation of amount recognised in the balance sheet: Present value of funded obligations 12,045 65,783 Fair value of plan assets -12,489 -55,622 Net pension liabilities in balance sheet -444 10,161 NOTE 2.6 Other operating expenses Specification of other operating expenses (NOK 1,000) 2023 2022 Maintenance 555,820 304,810 Energy 480,797 329,902 Third-party services 161,548 142,978 Freight 1,838,027 1,668,036 Insurance 87,749 61,376 Travel cost 35,655 21,866 Other operating expenses 907,499 917,266 Total other operating expenses 4,067,095 3,446,233 Production tax The production tax implemented on the Norwegian aquaculture activity with effect from 01 January 2021. The production tax on the Norwegian activity increased from NOK 0.56 per kg to NOK 0.90 per kg with effect form 1 July 2023. For 2022 the production tax was NOK 0.405 pr kg. With effect from 2020 production tax was implemented on Iceland. The production tax will increase gradually over a seven-year period from 2020. According to a temporary provision of the law, the amount of the fee was 4/7th of the calculated fee in 2023 and will be 5/7th in 2024. From 2026 the fee charged will be full fee in accordance with the law. Of the total cost of NOK 208.4 million in 2023, NOK 183.5 million is related to the activity in Norway and NOK 24.9 million is related to the activity in Iceland. The corresponding numbers in 2022 were a total production tax of NOK 85.2 million, whereof NOK 71.8 million was related to activity in Norway and NOK 13.5 million to activity in Iceland. To highlight the performance of underlying operations before deduction of the production tax, SalMar has chosen to report it on a separate line in the income statement below Operational EBIT. To ensure consistent treatment of the equivalent tax in Iceland, the resource tax in Iceland has been classified similarly in the financial statement . Financial Statement and Results Notes to the Financial Statements for 2023 128 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.7 Government grants NOTE 2.7 Government grants Accounting policies Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of capitalised operating assets reduce the carrying amount of the assets. The grant is then recognised in profit or loss over the useful life of the depreciable asset by way of reduced depreciation charge . In 2023, Group companies recognised NOK 3.4 million in tax incentives under the SkatteFUNN scheme and derecognised NOK 13.0 million in SkatteFUNN-related amounts in respect of capitalised operating assets. (2022: NOK 6.3 million recognised in income, and derecognised NOK 11.9 million in Skatte- FUNN-related amounts in respect of capitalised operating assets). In addition to this, the group occasionally receives various grants, which are not of significant value. NOTE 2.8 Audit fees Breakdown of total auditor’s fee: 2023 (NOK 1,000) EY Others Audit services 6,480 1,140 Other certification services 1,939 177 Tax advisory services 1,307 22 Other non-audit services 711 0 Total 2023 10,436 1,339 2022 (NOK 1,000) EY Others Audit services 5,979 981 Other certification services 1,524 50 Tax advisory services 359 0 Other non-audit services 2,186 123 Total 2022 10,048 1,154 1 1 1 Some of the fees disclosed are inclusive of VAT . NOTE 2.9 Fair value adjustments Fair value adjustments are part of the Group's operating profit. Changes in fair value are presented on a separate line to provide a better understanding of the Group's profit and loss with respect to goods sold. NOK 1,000 2023 2022 Change in unrealised value of Fish Pool contracts 18,737 69,737 Change in the fair value of the biological assets 1,571,116 446,150 Fair value adjustment 1,589,853 515,887 Fair value adjustment included in cost of goods sold due to business combination -722,809 -283,398 Total fair value adjustments 867,044 232,489 See Note 3.6 for details regarding change in fair value of biological assets and change in fair value adjustment due to business combination. See Note 3.9 for details regarding change in fair value of Fish Pool contracts . Financial Statement and Results Notes to the Financial Statements for 2023 129 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.10 Net financial items NOTE 2.10 Net financial items Financial items (NOK 1,000) 2023 2022 Interest income 51,087 28,408 Change in fair value of derivatives 0 18,661 Dividends and gain on investment in other companies 26,640 0 Remeasurement of previously held equity interest 0 90,776 Other financial income 3,097 4,251 Total financial income 29,737 113,688 Interest expenses 1,223,249 364,247 Other exchange differences 10,231 18,637 Change in fair value of derivatives 6,990 0 Other financial expenses 42,963 1,771 Total financial expenses 60,183 20,408 Net financial items -1,202,608 -242,558 Included in interest expense is an amount of total NOK 60.5 million that relates to income from interest rate swap contracts. Corresponding income in 2022 was NOK 20.5 million. Changes in fair value of derivatives through profit or loss relates to inefficiency in forward currency contracts which do qualify for hedge accounting. For more details see note 3.9. Remeasurement of previously held equity interest With effect from 17 August 2022, the Group acquired 50 % of the shares in the smolt facility Isthor in Iceland. Prior to the transaction SalMar Group owned 50 % of the shares in Isthor through SalMar's 51.02 % ownership in Icelandic Salmon AS. Icelandic Salmon AS owns 100 % of the shares in Arnarlax Ehf, which owns the shares in Isthor. The Group's holdings prior to the acquisition date, was remeasured at fair value at the time control was obtained, and a gain of NOK 90.8 million was recognised as other financial items in the profit or loss in 2022. See Note 4.5 for more information . Financial Statement and Results Notes to the Financial Statements for 2023 130 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.11 Income tax, resource rent tax and production tax NOTE 2.11 Income tax, resource rent tax and production tax Accounting policies and general information Income tax Income taxes is comprised of taxes on the taxable profit for the year, changes in deferred taxes and any adjustments in prior years' taxes. Income tax relating to items recognised in the equity are recognised directly in equity. Tax payable is calculated using the nominal tax rate for the relevant tax jurisdiction at the end of the reporting period. Deferred tax is calculated on the basis of temporary differences between accounting and taxation values at the close of the account- ing year. Deferred tax assets arise from temporary differences that give rise to future tax deductions. Deferred tax assets are recognised to the extent that it is probable that a taxable profit will arise, against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses, can be utilised. Tax increasing and tax decreasing temporary differences are offset against each other to the extent that the taxes can be net settled within one tax regime. Resource rent tax On 31 May 2023, the Norwegian Parliament approved an additional resource rent tax on aquaculture in Norway with a tax rate of 25 % The resource rent tax is structured as a cash-flow-tax, and is related to the aquaculture business in the sea phase. The resource rent tax is in addition to the regular corporate tax on 22 %, gives a total tax rate on aquaculture in sea phase of 47 %. The new tax applied retroactively from 1 January 2023. An implementation effect related to deferred resource rent tax on biomass and the deductible consideration on historical acquisition of production capacity has been recognised in the comprehensive income. Production tax The production tax implemented on the Norwegian aquaculture activity with effect from 1 January 2021 is directly deductible in the payable resource rent tax with effect from 1 January 2023. The total resource rent tax related to the profit in the period is therefore the total of production tax related to the Norwegian aquaculture activity and resource rent tax calculated in the period. The production tax is not classified as a tax expense in the statement of comprehensive income, but are included on a separate line in the Operational EBIT. See Note 2.6 for further information. The total effect of the resource rent tax including production tax is shown below . Financial Statement and Results Notes to the Financial Statements for 2023 131 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.11 Income tax, resource rent tax and production tax Nominal tax rate in the consolidated statement of profit or loss: Norway Iceland Income tax rate 22 % 20 % Resource rent tax rate 25 % With effect from 2024 the income tax on Iceland increases to 21 %. Deferred tax liability related to temporary differences on Iceland at 31 December 2023 are calculated with a tax rate of 21 %. Tax expense in the consolidated statement of profit or loss (NOK 1,000) 2023 2022 Income tax payable 1,292,859 2,589,042 Income tax payable abroad 49,383 31,266 Income tax - change in deferred tax 279,386 -1,670,885 Resource rent tax payable 464,329 0 Resource rent tax- change in deferred tax 371,633 0 Resource rent tax -implementation effect (deferred tax) 2,079,987 0 Adjustment for tax of prior periods -3,843 4,573 Tax expense in the consolidated statement of profit or loss 4,533,736 953,996 Tax payable in the balance sheet 2023 2022 Income tax payable - Norway * 1,311,451 2,589,049 Income tax payable - abroad 38,643 23,520 Resource rent tax payable 464,329 0 Tax payable in the balance sheet 1,814,423 2,612,569 * At 31 December 2022 the income tax payable in Norway was calculated to NOK 2,589 million. The high calculated tax payable was due to the fact that no deduction was made for production costs related to stock of live fish at 31 December 2022 related to legal entities subject to resource rent tax. The background was unclear legislation related to the resource rent tax implemented with effect from 1 January 2023. At 31 December 2022 there was high degree of uncertainty whether production costs on fish in the sea would be deductible in the resource rent tax in 2023. At the end of April 2023 the authorities stated that no deduction will be granted in the resource rent tax for 2023 related to his- torical cost on existing biomass at 31 December 2022. SalMar strongly disagrees with this conclusion. However, the production cost was deducted in the income tax calculated in the final tax report for 2022 finalized in June 2023. As a consequence of this, the tax payable was reduced with NOK 1,999 million with a corresponding increase in deferred tax liability. Deferred income tax liability - comprise 2023 2022 Non-current assets 1,972,491 1,709,435 Inventory 2,696,076 390,133 Receivables -5,576 -1,624 Derivatives 133,246 69,435 Provision onerous contracts -75,211 -22,742 Other -69,794 -43,919 Tax losses carried forward -378,057 -172,914 Deferred income tax liability 4,273,176 1,927,804 Deferred resource tax liability - comprise: 2023 2022 Inventory 2,768,345 0 Other -245,171 0 Tax losses carried forward -71,554 0 Deferred resource tax liability 2,451,621 0 Total deferred tax liability 6,724,797 1,927,804 Financial Statement and Results Notes to the Financial Statements for 2023 132 Financial Statement and Results Notes to the Financial Statements for 2023 Note 2.11 Income tax, resource rent tax and production tax Tax losses carried forward are mainly related to the companies in the subgroup SalMar Aker Ocean and other Norwegian group companies not included in tax groups. The loss carry forward are expected to be deducted from taxable income in the future. In assessing the recoverability of tax assets the Group relies on the same forecast assumptions used elsewhere in the financial statements and in other management reports. NOK 1,000 Change in net deferred tax liability 2023 2022 Deferred tax liability at 1 January 1,927,804 2,258,689 Deferred tax liability associated with acquisitions 0 2,222,092 Deferred tax liability associated discontinued operations 0 -939,965 Change in deferred tax liability 279,386 -1,670,885 Deferred tax liability associated with equity transactions -3,247 2,771 Deferred tax liability on items recognised in OCI 59,020 49,085 Deferred tax related to disposal of group companies -2,007 0 Other changes in deferred tax liability -5,095 0 Reclassification between tax payable and deferred tax liability * 1,998,631 0 Deferred resource tax - implementation effect 2,079,987 0 Change in deferred resource tax liability 371,633 0 Translation differences 18,685 6,017 Deferred tax liability at 31 December 6,724,797 1,927,804 * Regarding reclassification between tax payable and deferred tax liability in 2023, see information above. Tax reconciliation 2023 2022 Profit before tax 7,279,321 4,562,032 Tax calculated at nominal Norwegian tax rate (22 %) 1,601,451 1,003,647 Foreign tax rate differences -4,139 -10,888 Income from investments in associates and joint venture 6,005 -14,615 Net of other permanent differences 2,096 -28,720 Change in unrecognised deferred tax assets 16,216 0 Resource rent tax expense (25 %) 835,962 0 Resource rent tax - implementation effect (25 %) 2,079,987 0 Adjustment of income tax from previous years -3,843 4,573 Calculated tax expense 4,533,736 953,996 Effective tax rate 62.3 % 20.9 % Effective tax rate exclusive implementation effekt 33.7 % Total resource rent tax including production tax in the consolidated statement of profit or loss 2023 2022 Production tax recognised in the period 208,374 85,232 Production tax related to activity on Iceland 24,924 13,453 Production tax related to activity in Norway 183,450 71,779 Resource rent tax payable 464,329 0 Resource rent tax – change in deferred tax 371,633 0 Resource rent tax – implementation effect (deferred tax) 2,079,987 0 Total resource rent tax and production tax 3,099,400 71,779 related to the activity in Norway Financial Statement and Results Notes to the Financial Statements for 2023 133 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.1 Intangible assets Part 3 Assets and liabilities NOTE 3.1 Intangible assets Accounting policies Intangible assets acquired separately are measured on initial recog- nition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Intangible assets with a limited economic life are amortised over the economic useful life. Impairments of intangible assets are recognised in the extend of which the carrying amount of the asset exceeds its recoverable amount. Expenses related to research are expensed as they are incurred. Devel- opment costs are capitalised when specific criteria relating to future benefits are met. Capitalised development costs are recognised at acquisition cost, less accumulated amortisation and write-downs. With respect to major development projects, a specific assessment is made to determine when the project has changed from being a development project to a construction project. Capitalised development costs are amortised in a straight line over the asset's estimated useful life. Depreciation commences when the asset is put into operation . Fish-farming licences Licences acquired by the Group are capitalised at cost. Fish-farming licences are deemed to have an indefinite useful life and are not amortised, but are tested annually for impairment or more frequently if there is indication of impairment, see Note 3.2 for further information. Norway Licences that the Group owns are capitalised at cost. Licences granted in Norway are deemed to have an indefinite usable life and are there- fore not amortised, but tested annually for impairment. The exception is time-limited licences, which are depreciated over their remaining life. Any value identified in connection with the acquisition of licences is capitalised as an intangible asset. Iceland The sea farming licences in Iceland are issued, in accordance with the current regulations, with a nominal lifespan of 16 years. The licences will be renewed if the applicant meets the requirements set pursuant to statute and regulation at the time the licence comes up for renewal. A small fee must be paid for the licence renewal. This means that sea farming licences are operated in a 16-year rolling lifespan system, where the licences are renewed every 16th year. The Groups judgment is that the fish-farming licences on Iceland, which are capitalized, will not be amortised, but tested annually for impairment. Goodwill When the company assumes control over a separate business entity for a consideration that exceeds the fair value of the individual assets and liabilities assumed, the difference is entered as goodwill in the statement of financial position. Goodwill deriving from purchases of subsidiaries is presented under intangible assets. Goodwill is not depreciated but is tested for impairment annually and when there are indications that its value is lower than the carrying amount. When assessing the need to write-down goodwill, this is assigned to relevant cash flow generating units or groups, which are expected to benefit from the acquisition. See Note 3.2 for further information. Financial Statement and Results Notes to the Financial Statements for 2023 134 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.1 Intangible assets Other intangible NOK 1,000 Licences Goodwill assets TOTAL Acquisition cost at 1 January 2023 14,903,657 3,023,585 519,960 18,447,202 Additions 288,223 0 50,941 339,163 Disposal -2,500 0 0 -2,500 Currency translation differences 98,270 11,391 398 110,058 Acquisition cost at 31 December 2023 15,287,649 3,034,975 571,298 18,893,923 Accumulated depreciation & write- downs at 1 January 2023 28,137 23,725 104,286 156,149 Depreciation 42,824 0 10,353 53,177 Accumulated depreciation & write- downs at 31 December 2023 70,962 23,725 114,639 209,326 Carrying amount at 31 December 2023 15,216,687 3,011,250 456,660 18,684,597 Estimated lifetime Indefinite/3–7.5 years Indefinite 5–50 years Depreciation method Linear Linear The majority of other intangible assets totalling NOK 456.7 million are made up of capitalised devel- opment costs. NOK 10.5 million of this is comprised of capitalised development costs relating to the development of the Ocean Farm 1 installation. These costs are amortised over 5 years. A further total of NOK 397.9 million relates to the development of the Group's Smart Fish Farm concept and Ocean Farm 2. This projects is still in the development phase and amortisation has not yet commenced. In addition, other intangible assets includes excess value relating to the purchase of breeding nuclei. Breeding nuclei are depreciated over 50 years, and their residual value as of 31 December 2023 was NOK 22.0 million. Of the total carrying amount related to licences of NOK 15,217 million, NOK 212 million is related to time-limited demonstration licences. The licences is amortised over the remaining life which various from 3 years to 7.5 years. Other intangible NOK 1,000 Licences Goodwill assets TOTAL Acquisition cost at 1 January 2022 7,508,421 775,788 380,778 8,664,987 Additions through business combinations 7,265,892 2,241,170 1,791 9,508,853 Additions 52,812 0 137,072 189,884 Currency translation differences 76,532 6,627 319 83,477 Acquisition cost at 31 December 2022 14,903,657 3,023,585 519,960 18,447,202 Accumulated depreciation & write- downs at 1 January 2022 21,000 23,725 89,791 134,517 Depreciation 7,137 0 14,495 21,633 Accumulated depreciation & write- downs at 31 December 2022 28,137 23,725 104,286 156,149 Carrying amount at 31 December 2022 14,875,519 2,999,859 415,674 18,291,052 Estimated lifetime Indefinite/3–.5 years Indefinite 5 –50 years Depreciation method Linear Linear Financial Statement and Results Notes to the Financial Statements for 2023 135 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.1 Intangible assets Specification of fish farming licences 2023 (NOK 1,000) MAB tonnes Acquisition cost Carrying amount 31.12.2023 Fish Farming Northern Norway 69,275 5,398,841 5,387,540 Fish Farming Central Norway 85,482 7,362,214 7,297,360 SalMar Aker Ocean 12,355 1,035,173 1,035,173 Norway 167,112 13,796,228 13,720,074 Icelandic Salmon 23,700 1,278,560 1,496,614 Group 190,812 15,074,788 15,216,687 Specification of fish farming licences 2022 (NOK 1,000) MAB tonnes Acquisition cost Carrying amount 31.12.2022 Fish Farming Northern Norway 75,116 6,305,262 6,300,262 Fish Farming Central Norway 84,749 7,109,063 7,080,732 SalMar Aker Ocean 6,304 96,181 96,181 Norway 166,169 13,510,506 13,477,175 Icelandic Salmon 23,700 1,278,560 1,398,344 Group 189,869 14,789,065 14,875,519 Additional information Icelandic Salmon holds licence of MAB 23,700 tonnes in the Icelandic Westfjords. Of the total MAB, 10,000 tonnes must be renewed by the end of 2026, 12,200 tonnes by the end of 2029 and 1,500 tonnes by the end of 2038. Included in the specification of fish farming licences above there are 4 time-limited demonstration licences in Central Norway, and 2 time-limited demonstration licence in Northern Norway. In addi- tion SalMar operates several R&D licences in collaboration with other companies. SalMar Group also holds 8 development licences with a total of MAB 6,240 tonnes. The licences is owned through the sub-group SalMar Aker Ocean. The licences was granted in 2019 by the Norwegian Directorate of Fisheries to develop the Smart Fish Farm, a specially designed deepwater installation for the farming of fish in the open ocean. No consideration has been paid for the 8 development licences. 2023 Change in fish farming licences (MAB tonnes) In 2023, SalMar increased its production capacity through the acquisition of Øylaks MTB AS. The fair value of the licences was NOK 255.7 million. This led to a net increase in MAB of 733 tonnes in Central Norway. In addition SalMar acquired MAB of 210 tonnes in Northern Norway through the governments auction of residual capacity with a total amount of NOK 32.8 million. In 2023 Arctic Offshore Farming AS was sold from SalMar ASA to the 85 per cent owned subsidiary SalMar Aker Ocean AS. Through the transaction development licences with a total of MAB 6,051 tonnes and a total carrying amount of MNOK 939.0 was moved from Fish Farming Northern Norway to SalMar Aker Ocean. See Note 4.6 for further information about the transaction. The disposal in the period is related to the sale of the subsidiary Salmonor Settefisk AS, and had no impact on the MAB. 2022 Change in fish farming licences (MAB tonnes) In 2022, SalMar increased its production capacity through the acqui- sitions of NTS and the merger with NRS. The fair value of licences related to the transactions was NOK 7,262 million. This led to a net increase in MAB of 19,635 tonnes in Central Norway and a net increase in MAB of 30,814 tonnes in Northern Norway. In addition the acquisi - tion included 8 aquaculture development licences in Northern Norway with MAB of 6,051 tonnes. The total MAB includes one time-lim- ited demonstration licence in Central Norway and one time-limited demonstration licence in Northern Norway. See Note 4.5 for further information. In addition SalMar acquired MAB 1,100 tonnes in development licences in 2022. Total consideration for the licences was NOK 50 million. Financial Statement and Results Notes to the Financial Statements for 2023 136 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.1 Intangible assets Specification of goodwill 2023 (NOK 1,000) Acquisition year Acquisition cost Carrying amount 31.12.2023 Fish Farming Northern Norway 2022 1,482,363 1,482,363 Fish Farming Central Norway 2022 602,850 602,850 Goodwill arising from the acquisition 2022 2,085,213 2,085,213 and merger of NTS and NRS Fish Farming Northern Norway 2006 95,114 95,114 Fish Farming Central Norway 1999 –2021 680,674 656,949 Icelandic Salmon 2022 155,956 173,973 Total goodwill 3,016,957 3,011,250 Specification of goodwill 2022 (NOK 1,000) Acquisition year Acquisition cost Carrying amount 31.12.2022 Fish Farming Northern Norway 2022 1,482,363 1,482,363 Fish Farming Central Norway 2022 602,850 602,850 Goodwill arising from the acquisition 2022 2,085,213 2,085,213 and merger of NTS and NRS Fish Farming Northern Norway 2006 95,114 95,114 Fish Farming Central Norway 1999 –2021 680,674 656,949 Icelandic Salmon 2022 155,956 162,583 Total goodwill 3,016,957 2,999,859 The goodwill of NOK 2,085 million arising from the acquisition and merger of NTS and NRS in 2022, comprises both the value of expected synergies arising from the acquisition which is not separately recognised and technical goodwill. Due to fish farming licences having an indefinite useful life, SalMar has assessed that the present value of the deferred tax related to the excess value identified for licences being close to 0. Deferred tax related to excess value identified for licences amounts to a total of NOK 789 million, which is recognised as technical goodwill. The deferred tax is computed with the statutory tax in Norway of 22 %. The goodwill of NOK 156 million allocated to segment Icelandic Salmon is arising from the acquisition of Eldisstødin Isthor Ehf in 2022 . Financial Statement and Results Notes to the Financial Statements for 2023 137 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.2 Impairment of non-financial assets NOTE 3.2 Impairment of non-financial assets Accounting policies Annually or upon indication, each cash generating unit, is tested for impairment. If the recoverable amount of a cash generating unit is estimated to be less than the carrying amount of the net assets of the cash generating unit, impairment to the recoverable amount is recognised. The Group has substantial assets with indefinite lives in the form of licences and goodwill. The licences are subject to impairment testing in combination with goodwill in the annual test. Assets that are subject to amortization are reviewed for impairment whenever there are indications that future earnings do not justify the carrying value. SalMar has identified the Group's business segments as cash generating units. In connection with acqui - sitions, goodwill and intangible assets are allocated to each of the Group’s cash generating units that are expected to benefit from the combination. The cash generating units are the lowest level in which independent cash flows can be identified, and no higher than the Group's business segments based on the geographic distribution of its sea farming operations in Norway, the segments Fish Farming Central Norway and Fish Farming Northern Norway, Sales & Industry, Icelandic Salmon and SalMar Aker Ocean. Impairment testing is carried out by calculating the net present value of estimated future cash flows (value in use) for the cash-generating unit and comparing the net present value of the cash flow towards the carrying amount of net assets held by the cash-generating unit. The cash flow used in the calculations represents the management’s best estimate at the time of reporting. If the carrying amount is higher than the calculated value in use, the assets are considered impaired. The estimated cash flow is based on the assumption of continued operation. Value in use is calculated by estimating future cash flows, based on approved budgets and forecasts. Cash flow growth after the last year in the calculation is assumed to equal the expected rate of inflation. Cash flows are discounted by a rate of interest before tax which takes account of relevant market risk. If the calculated value in use is less than the carrying amount of the cash flow-generating entity, goodwill is impaired first and then other assets as required . The groups analyses of climate risk have so far not identified climate-related matters with substantially affect on the value of the groups assets or future cash flow. For further information see Note 4.9 . Carrying amount of licences and goodwill allocated to cash generating units as at 31 December 2023: NOK 1,000 Goodwill Licences Total 31.12.2023 Fish Farming Northern Norway 1,577,477 5,387,540 6,965,017 Fish Farming Central Norway 1,259,799 7,297,360 8,557,159 SalMar Aker Ocean 0 1,035,173 1,035,173 Icelandic Salmon 173,974 1,496,614 1,670,588 3,011,250 15,216,687 18,227,938 Carrying amount of licences and goodwill allocated to cash generating units as at 31 December 2022: NOK 1,000 Goodwill Licences Total 31.12.2022 Fish Farming Northern Norway 1,577,477 6,300,262 7,877,739 Fish Farming Central Norway 1,259,799 7,080,732 8,340,531 SalMar Aker Ocean 0 96,181 96,181 Icelandic Salmon 162,583 1,398,344 1,560,927 2,999,859 14,875,519 17,875,378 At the end of the reporting periods, the market value of the Group’s equity was significantly higher than the carrying amount of equity, which is an indication that the market considers the value of the Group’s assets to exceed the carrying amount . Financial Statement and Results Notes to the Financial Statements for 2023 138 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.2 Impairment of non-financial assets Key assumptions The key assumptions used in the calculation of value in use are har- vested volume, EBIT/ kg, capital expenditure, tax, discount rates and the terminal growth rates. Discount rate The discount rates are based on the Weighted Average Cost of Capital (WACC) methodology. In the model a ten-year risk-free rate has been used. Calculation of the final discount rates also takes into account market risk premium, debt risk premium, gearing and beta value. In the calculations, the Group has applied estimated cash flows after tax and the corresponding discount rates after tax. The discount rate after tax and before tax is calculated at 7.7 % and 7.9 % respectively for the Group's Norwegian entities. For the operations in Iceland, the discount rate after tax and before tax is 8.1 % and 10.2 % respectively. In the sensitivity analysis the discount rate after tax is tested as it will yield the same result as before tax. Terminal growth rate The growth rate is set at 2.5 % for Norway and 2.0 % for Iceland. EBIT/ kg EBIT margin per kg is highly volatile with respect to changes in salmon prices. Forward prices are based on the Fish Pool Index at the reporting day and estimates. Estimates for production cost are based on historic figures and expectations. Harvested volume Harvested volume is based on the current stocking plans for each unit, and forecasted figures for growth, assumed harvest weight and mortality, based on historical figures. Tax A 22 % corporate tax has been used for Norwegian entities and 21 % on Iceland. For Norwegian entities estimate of resource rent tax has been added in the calculation. In addition current resource tax and licence tax has been added for Iceland. Climate Risk As mentioned in note 4.9 SalMar has conducted a climate risk anal- ysis of its assets. Based on current knowledge this is deemed to be less sensitive compared to the other factors used in the impair- ment evaluation. Based on the above assessments, there were no impairment indica- tors identified related to the fish farming licences or goodwill as of 31 December 2023. All segments have a material positive difference between the calculated recoverable value and book value. Sensitivity In connection with the impairment testing of intangible assets, a sen- sitivity analysis has been carried out. Sensitivity analysis has been performed for each of the defined cash generating units. Value in use is sensitive to changes in the assumptions made, the most important of which are the discount rate and EBIT/kg. The table below shows the extent of which the input factors must be changed for the value in use to be equal to the carrying amount of net assets held by the cash-generating unit. Discount rate Cash generating units after tax EBIT/kg (NOK) Fish Farming Northern Norway +4.9 % -14.3 Fish Farming Central Norway +8.9 % -17.8 Salmar Aker Ocean +6.7 % -15.3 Icelandic Salmon +0.8 % -2.1 Financial Statement and Results Notes to the Financial Statements for 2023 139 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.3 Property, plant and equipment NOTE 3.3 Property, plant and equipment Accounting policies Property, plant and equipment (PPE) is measured at acquisition cost, less a deduction for accumulated depreciation and write-downs. Borrowing cost that are directly attributable to the construction of a qualifying asset form part of the cost of the asset. Straight- line depreciation is applied over the useful life of property, plant and equipment, based on the asset’s historical cost and estimated residual value at disposal. If a substantial part of an asset has an individual and different useful life, this part is depreciated separately. The asset’s residual value and useful life are evaluated annually. The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset. PPE under construction is not depreciated. Depreciation is charged to expenses when the asset is ready for use . Impairment tests for PPE are performed when there are indications of impairment. If the recoverable amount is estimated to be less than the carrying amount of the net asset, impairment to the recoverable amount is recognised. The recoverable amount is the higher of net sales value and value in use. Value in use is the present value of future cash flows which the asset will generate . Other Land & Machinery & Boats & operating Assets under NOK 1,000 buildings equipment barges assets construction Total Acquisition cost at 1 January 2023 4,769,724 5,924,366 2,332,729 318,589 1,941,887 15,287,295 Additions 211,890 887,838 389,660 63,551 715,871 2,268,811 Reclassification asset under construction 832,935 706,906 25,421 20,652 -1,585,914 0 Reclassification between categories 0 496,720 -457,932 -38,787 0 0 Reclassification RoU 32,066 5,319 232 0 0 37,618 Disposal group company -38,034 -2,044 0 -1,329 0 -41,408 Disposals -2,312 -48,720 -19,931 -10,961 0 -81,923 Currency translation differences 26,823 15,382 17,521 175 6,234 66,135 Acquisition cost at 31 December 2023 5,833,092 7,985,767 2,287,700 351,890 1,078,078 17,536,527 Accumulated depreciation & write- downs at 1 January 2023 402,407 2,683,855 880,049 189,447 317 4,156,075 Disposal group company -28,052 -805 0 -104 0 -28,961 Depreciation 236,987 594,994 171,528 36,292 0 1,039,802 Write-downs 27 30,000 0 1,079 0 31,106 Disposal depreciation and write-downs -850 -44,568 -15,448 -6,833 0 -67,699 Reclassification RoU 2,210 -4,630 15,057 0 0 12,636 Reclassification between categories 0 193,769 -179,784 -13,668 -317 0 Currency translation differences 2,451 5,606 14,011 131 0 22,198 Accumulated depreciation & write- downs at 31 December 2023 615,180 3,458,219 885,414 206,345 0 5,165,157 Carrying amount at 31 December 2023 5,217,912 4,527,548 1,402,286 145,545 1,078,078 12,371,370 Estimated lifetime 5 –33 years 5–25 years 3–15 years 3–20 years N/A Depreciation method Linear Linear Linear Linear N/A Gains/losses on the sale of PP&E 0 -86 0 -3,406 0 -3,492 Financial Statement and Results Notes to the Financial Statements for 2023 140 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.3 Property, plant and equipment Other Land & Machinery & Boats & operating Assets under NOK 1,000 buildings equipment barges assets construction Total Acquisition cost at 1 January 2022 2,503,586 4,312,018 1,806,879 276,327 1,838,751 10,737,560 Additions through business combinations 1,482,389 421,005 546,186 23,801 106,099 2,579,479 Additions 139,765 624,599 100,593 9,453 1,390,598 2,265,008 Reclassification assets under construction 819,515 403,014 153,692 38,271 -1,414,492 0 Disposals -139,611 -151,858 -30 -49,844 1,425 -339,919 Reclassification -36,195 306,921 -299,077 16,529 11,822 0 Currency translation differences 276 8,668 24,488 4,052 7,684 45,167 Acquisition cost at 31 December 2022 4,769,724 5,924,366 2,332,729 318,589 1,941,887 15,287,295 Accumulated depreciation & write- downs at 1 January 2022 308,805 2,349,679 734,312 211,251 267 3,604,314 Depreciation 137,728 435,929 135,358 25,021 50 734,085 Write-downs 0 34,144 0 2,499 0 36,642 Disposal depreciation and write-downs -45,802 -139,981 -30 -49,425 0 -235,238 Currency translation differences 1,677 4,083 10,409 102 0 16,272 Accumulated depreciation & write- downs at 31 December 2022 402,407 2,683,855 880,049 189,447 317 4,156,074 Carrying amount at 31 December 2022 4,367,316 3,240,512 1,452,681 129,142 1,941,570 11,131,221 Estimated lifetime 5 –33 years 5–25 years 3–15 years 3–20 years N/A Depreciation method Linear Linear Linear Linear N/A Gains/losses on the sale of PP&E 0 426 0 0 0 426 As of 31 December 2023, the company had capitalised a total of NOK 1,078 million in connection with assets under construction. The amount was divided into NOK 387.1 million on real estate, NOK 461.9 million on plant and equipment, NOK 218.8 million on ves- sels, and NOK10.3 million on other operating assets. As of 31 Decem- ber 2022, the company had capitalised a total of NOK 1,942 million in work on investment projects that had not been completed and put into operation and for which depreciation had not commenced. Of this was NOK NOK 835.3 million related to real estate, NOK 998.8 million to plant and equipment, NOK 63.4 million to vessels and NOK 44.2 million to other operating assets. Write-downs in 2023 derive primarily from a NOK 30 million impairment in the value of Salmosea plant and equipment. For 2022 there was a NOK 36.6 million impairment in the value of the net relating to the Ocean Farm 1 installation . Financial Statement and Results Notes to the Financial Statements for 2023 141 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.4 Right-of-use assets and lease liabilities NOTE 3.4 Right-of-use assets and lease liabilities Accounting policies The Group recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the asset. When a purchase option has been included in the cost at recognition, the right-of-use asset is depreciated over the estimated useful life of the asset. Short term leases (lease term less than 12 months) and leases of low-value assets are not recognised as right-of-use assets and lease liabilities, as the recognition exemptions for these leases is applied. Lease payments of such leases are recognised as expense over the lease term. Contracts may contain both lease and non-lease components. The group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. This applies to some of the groups lease arrangements of wellboats and service boats, where crew and other service elements are included in the contract. The cost related to service elements not defined as lease, are expensed in the period they occur. The lease liabilities at commencement date are measured at the pres- ent value of the lease payments. The lease payments are discounted using the Group's incremental borrowing rate as the interest rate implicit in the lease is not readily determinable. For leasing contracts with optional renewal period, and where we are reasonably certain to exercise this option, the renewal periods are included in the calculation of the lease liability and asset. Right-of-use assets and lease liabilities includes offices and produc- tion facilities, including the InnovaMar facility in Frøya. There are also significant leasing agreements in place for wellboats, service boats, plant and equipment. Right-of-Use Assets Land & Machinery & Boats & NOK 1,000 buildings equipment barges Total Acquisition cost at 1 January 2023 451,380 536,518 1,506,046 2,493,943 Adjustments of existing agreements 0 0 24,544 24,544 Additions 11,966 12,577 722,082 746,626 Disposal acquisition cost -1,299 -3,108 -20,205 -24,611 Reclassification of acquisition cost to property, plant and equipment -32,066 -5,319 -232 -37,618 Currency translation differences 0 3,557 2,776 6,332 Acquisition cost at 31 December 2023 429,981 544,224 2,235,010 3,209,216 Accumulated depreciation & write-downs at 1 January 2023 158,250 257,019 692,070 1,107,339 Depreciation 29,593 57,989 238,598 326,180 Write-down 0 1,965 0 1,965 Disposal accumulated depreciation 0 -774 -12,470 -13,244 Reclassification of depreciation to property, plant and equipment -2,210 4,630 -15,057 -12,636 Currency translation differences 0 850 1,061 1,911 Accumulated depreciation & write-downs at 31 December 2023 185,633 321,680 904,202 1,411,515 Carrying amount at 31 December 2023 244,348 222,544 1,330,808 1,797,701 Estimated lifetime 2 - 30 years 1 - 5 years 1 - 9 years Depreciation method Linear Linear Linea r Financial Statement and Results Notes to the Financial Statements for 2023 142 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.4 Right-of-use assets and lease liabilities Land & Machinery & NOK 1,000 buildings equipment Boats & barges Total Acquisition cost at 1 January 2022 380,201 390,392 977,027 1,747,619 Additions through business combinations 22,410 85,479 439,016 546,905 Adjustments of existing agreements -1,573 0 54,644 53,071 Additions 50,343 62,228 29,725 142,296 Disposal acquisition cost 0 -1,582 -5,719 -7,300 Currency translation differences 0 0 11,352 11,352 Acquisition cost at 31 December 2022 451,380 536,518 1,506,046 2,493,943 Accumulated depreciation & write-downs at 1 January 2022 132,846 213,584 524,385 870,816 Depreciation 27,210 45,016 173,109 245,335 Disposal accumulated depreciation 0 -1,582 -427 -2,009 Currency translation differences -1,806 0 -4,997 -6,803 Accumulated depreciation & write-downs at 31 December 2022 158,250 257,019 692,070 1,107,339 Carrying amount at 31 December 2022 293,130 279,499 813,975 1,386,604 Estimated lifetime 2 - 30 years 1 - 5 years 1 - 9 years Depreciation method Linear Linear Linear Other leasing costs recognised in profit and loss (NOK 1,000) 2023 2022 Costs relating to short-term leases (less than 12 months duration) 263,323 125,413 Costs relating to the lease of low-value assets 51,802 32,993 Total leasing costs included in other operating expenses 315,125 158,405 Leases of low value are recognised in other operating expenses. Costs relating to short-term leases mainly relates to ad hoc leasing of service boats . Financial Statement and Results Notes to the Financial Statements for 2023 143 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.4 Right-of-use assets and lease liabilities Lease liabilities NOK 1,000 2023 2022 Lease liability 1 January 1,425,297 967,166 Additions through business combinations 0 483,609 Adjustment of lease liabilities 24,544 54,429 New contracts 746,626 145,708 Interest on lease liability (profit and loss) 102,177 64,654 Instalments on lease liabilities paid (cash flow) -321,096 -229,333 Interest on lease liabilities paid (cash flow) -102,177 -64,654 Disposal and reclassification of lease liabilities -32,372 0 Currency translation differences 2,496 3,718 Total lease liabilities at 31 December 1,845,494 1,425,297 Short-term lease liabilities 343,753 273,081 Long-term lease liabilities 1,501,741 1,152,216 Total lease liabilities at 31 December 1,845,494 1,425,297 Cash flow relating to lease liabilities NOK 1,000 2023 2022 Instalments on lease liabilities paid (cash flow) 321,096 229,333 Interest on lease liabilities paid (cash flow) 102,177 64,654 Lease liabilities recognised in profit or loss 315,125 158,405 Total cash flow relating to lease liabilities 738,398 452,392 See Note 4.1 for further details of the lease liabilities' maturity profile . Financial Statement and Results Notes to the Financial Statements for 2023 144 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.5 Investments in associated companies and joint ventures NOTE 3.5 Investments in associated companies and joint ventures Accounting policies Joint ventures are entities where the group has joint control and the parties in the joint arrangement have right to the net assets of the arrangement. Associates are all entities, except joint ventures, over which the group has significant influence but not control. This is generally the case where the group holds between 20 % and 50 % of the voting rights. Investments in associates and joint ventures are accounted for using the equity method of accounting, after initially being recognised at cost. Where the group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. The carrying amount of equity-accounted investments is tested for impairment in accordance with principles described in Note 3.2 . Investments in joint ventures and associated companies at 31 December 2023: Ownership Ownership Company Head office Sector 01.01 31.12 Norskott Havbruk AS Bergen Fish farming 50.00 % 50.00 % SalMar Genetics AS Rauma Genetics 50.00 % 50.00 % Kirkenes Processing AS Kirkenes Harvesting 50.00 % 50.00 % Romsdal Processing AS Molde Harvesting & processing 44.45 % 44.45 % Yu Fish Ltd Singapore Sales 45.30 % 45.30 % Wilsgård Fiskeoppdrett AS Torsken Fish farming 37.50 % 37.50 % Hellesund Fiskeoppdrett AS Høvåg Fish farming 33.47 % 33.47 % Nordnorsk Smolt AS Hasvik Fish farming 50.00 % 50.00 % Sikkerhetssenteret Rørvik AS Rørvik Education 21.26 % 21.26 % Flatanger Settefisk AS Flatanger Smolt production 41.00 % 41.00 % Oppdretternes Miljøservice AS Rørvik Aquaculture services 25.00 % 25.00 % Skamik AS Ottersøy Aquaculture services 24.88 % 24.88 % All associates and joint ventures are accounted for using the equity method. Since none of the Group's associates or joint ventures are listed on a stock exchange, no observable market values are available . Financial Statement and Results Notes to the Financial Statements for 2023 145 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.5 Investments in associated companies and joint ventures Companies recognised in accordance with the equity method Wilsgård Hellesund Fiskeoppdrett Fiskeoppdrett Norskott NOK 1,000 AS AS Havbruk AS Others TOTAL Opening balance at 1 January 2023 572,330 433,407 1,152,989 213,024 2,371,747 - goodwill 0 0 0 3,605 3,605 Income from associated companies and joint ventures 80,449 40,209 -167,703 19,750 -27,295 Items recognised in other comprehensive income 0 0 90,809 2,215 93,024 Dividend received 0 -10,060 0 -8,386 -18,446 Other changes -1,445 0 0 116 -1,329 Carrying amount at 31 December 2023 651,335 463,555 1,076,095 226,718 2,417,700 Wilsgård Hellesund Fiskeoppdrett Fiskeoppdrett Norskott NOK 1,000 AS AS Havbruk AS Others TOTAL Opening balance at 1 January 2022 0 0 1,094,686 79,745 1,174,428 - excess value not amortised 0 0 0 327 327 - goodwill 0 0 0 3,051 3,051 Addition recognised through business acquisition 559,000 420,000 0 145,161 1,124,161 - addition of excess value not amortised 302,898 220,471 0 0 0 Remeasurement of equity interest at fair value 0 0 0 90,776 90,776 Derecognition due to reclassification to subsidiary 0 0 0 -105,632 -105,632 Income from associated companies 13,330 7,551 41,492 4,058 66,432 Items recognised in other comprehensive income 0 0 16,811 4,632 21,444 Dividend received 0 0 0 -2,865 -2,865 Other changes 0 5,855 0 -2,853 3,002 Carrying amount at 31 December 2022 572,330 433,407 1,152,989 213,024 2,371,747 In 2022 the Group acquired 50 % of the shares in the smolt facil- ity Isthor in Iceland and the company was consolidated in the Group's financial statements. The recognition according to equity method was from the same time ended, with a remeasurement of already held equity interest at fair value at acquisition. See Note 4.5 for further information. Furthermore, with effect from 01.11.2022, a number of associates were added to the Group in the acquisition and merger of NTS and NRS, of which Wilsg pdrett AS are considered material associates. Excess value in the two material associates mainly relates to licences. See Note 4.5 for further information . Financial Statement and Results Notes to the Financial Statements for 2023 146 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.5 Investments in associated companies and joint ventures Material associates and joint ventures Based on an overall assessment, in which size and complexity have been taken into account, Norskott Havbruk AS, Wilsgård Fiskeop- pdrett AS and Hellesund Fiskeoppdrett AS are considered to be mate- rial associates and joint ventures. Further details relating to these material assets are presented below. Wilsgård Fiskeoppdrett AS Located in Senja, Wilsgård Fiskeoppdrett AS is a fishfarming company with 6 ordinary licences. SalMar ASA owns 37.5 % of the shares in the company. Hellesund Fiskeoppdrett AS SalMar ASA has a ownership share of 33.5 % in Hellesund Fiskeop- pdrett AS. The company has one licence in Lillesand kommune in the southern part of Norway. In addition it owns 75 % of the shares in Korshavn Havbruk AS, a fishfarming company with one licence in Lyngdal, and 100 % of the shares of Sørvest Laks AS, with one licence in Lillesand. Norskott Havbruk AS Located in Bergen, Norskott Havbruk AS is a holding company that owns 100 % of Scottish Sea Farms Ltd, which has operations in mainland Scotland and Shetland. Norskott Havbruk is 50/50 owned by SalMar ASA and Lerøy Sea- food AS. The board of directors has 4 members, with each shareholder represented by 2 directors. The shareholders alternate in having the board's chair. SalMar and Lerøy are consider to have joint control over the investment and are classified a joint venture. The following table shows a summary of financial information relating to material associates, based on 100 % figures: Wilsgård Fiskeoppdrett AS Hellesund Fiskeoppdrett AS 01.11.2022– 01.11.2022– NOK 1,000 2023 31.12.2022 2023 31.12.2022 Operating revenues 733,342 159,674 264,976 64,493 Operating expenses 542,734 88,207 125,033 29,068 Fair value adjustments 50,181 -29,594 -6,513 -912 Net profit/loss 214,531 36,831 120,146 83,430 Non-current assets 351,332 391,583 70,941 77,872 Current assets 940,280 679,020 734,070 660,405 Non-current liabilities 192,795 224,556 5,117 50,770 Current liabilities 215,539 173,446 62,693 40,806 Equity 883,278 672,601 737,201 615,305 The Group's share of equity 331,229 252,225 246,741 205,942 Excess value 302,898 302,898 220,471 220,471 Carrying amount at 31 December 651,335 572,330 463,555 433,407 The following table shows a summary of financial information relating to material joint ventures, based on 100 % figures: Norskott Havbruk AS NOK 1,000 2023 2022 Operating revenues 2,561,466 3,187,853 Operating expenses 2,865,278 2,914,267 Fair value adjustments 16,337 -28,582 Net profit/loss -335,406 82,984 Non-current assets 3,591,919 3,403,086 Current assets 2,539,809 1,904,111 Non-current liabilities 2,396,226 2,080,868 Current liabilities 1,583,312 920,249 Equity 2,152,190 2,306,080 The Group's share of equity 1,076,095 1,153,040 Carrying amount at 31 December 1,076,095 1,152,989 Financial Statement and Results Notes to the Financial Statements for 2023 147 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.6 Biological assets and other inventories NOTE 3.6 Biological assets and other inventories Accounting policies Inventory and biological assets Live fish are recognised at fair value less sales costs. Other inventory is comprised of feed, packaging materials, roe, fry, smolt, cleaner fish and finished goods. Inventories of goods are meas- ured at the lowest of cost and net realisable value. The cost of finished goods includes direct material costs, direct per- sonnel expenses and indirect processing costs (full production cost). Interest costs are not included in the inventory value. The cost is based on the principle of first-in first-out. Biological assets Live fish are accounted for in accordance with IAS 41 Agriculture. The general rule is that such assets are measured at fair value less sales costs. Fair value is measured in accordance with IFRS 13 within level 3, based on factors not drawn from observable markets. Changes in value are recognised and classified under fair value adjustments in Consolidated statement of profit and loss. Roe, fry, smolt and cleaner fish are valued at historic cost. Historic cost is deemed to be the best estimate of fair value for these assets, due to little biological conversion. The fair value of biological assets held at the Group's sea farms is calculated using a model based on future cash flow. The present value is calculated on the basis of estimated revenues, less estimated remaining production costs until the fish is harvestable at the individual site. A fish is harvestable when it has reached the estimated weight required for harvesting specified in the company's budgets and plans. The estimated value is discounted to present value on the reporting date. Present value is estimated for the biomass at each site. Incoming cash flows are calculated as the estimated biomass at har- vest multiplied by the price expected to be achieved at the same time. The estimated biomass (volume) at harvest is calculated on the basis of the number of individual fish held at sea farms on the reporting date, adjusted for expected mortality until harvest and multiplied by the estimated weight of the fish at harvest. The price is calculated using the Fish Pool forward price for the esti- mated harvesting date that was in effect on the reporting date. Forward prices are adjusted for an exporter supplement, as well as harvesting, sales and well-boat costs. In addition, an adjustment is made to take account of expected differences in fish quality. The price is also reduced by production tax. Se further information in note 2.6. The price adjustments are made at the site level. In the absence of price quotations on Fishpool, forward prices for 2025 have been calculated on the basis of price expectations obtained from industry analysts. Estimated remaining production costs are estimated costs that a rational person would presume necessary for the farming of fish up until they reach a harvestable weight. In the model, instead of being a separate cost element in the calculation, compensation for licence fees and site rent are included in the discount factor, and thereby reduces the fair value of the biomass. The fair value of the biomass is calculated using a monthly discounting of the cash flow based on the harvest plan. The discount factor is intended to reflect three main components: 1. Risk of incidents that affect cash flow 2. Hypothetical licence fees and site rental cost 3. Time value of money The discount factor is set on the basis of an average for all the Group's sites, which, in the Group's assessment, provides a sensible growth curve for the fish - from smolt to harvestable size. The risk adjustment must take into account the biological risks of farming, including the average time in sea for the fish. The number of months left until harvesting will affect the risk. Biological risk, the risk of increased costs and price risk will be the most important elements to be recognised. The present value model includes a the- oretical compensation for licence fees and site rent as an addition to the discount factor in the model, instead of being a cost-increasing factor in the calculation. A discount rate of 6.5 % per month has been used to calculate the fair value of biological assets for the Group's Norwegian operations. Correspondingly, a discount rate of 6 % per month was used in 2022. For the Group's operations in Iceland, a discount rate of 5 % per month was used both in 2023 and 2022. The discount rate reflects the biomass's capital cost, risk and synthetic licence fees and site rental charges. Change in margins as a result of changes in prices or cost, will cause a change in the synthetic licence fee and the discount rate. The increase in the discount rate in 2023 for the Norwegian oper- ation is based on higher forward prices and thereby an expectation of higher margins . Financial Statement and Results Notes to the Financial Statements for 2023 148 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.6 Biological assets and other inventories Fair Value due to business combinations Due to business combinations, assets and liabilities are taken over at fair value. Fair value adjustment on biological assets at the time of acquisition are included in the cost of biological assets. In order to give the users of the financial statement an better understanding of the Group’s profit and loss related to goods sold in the period, the effect of fair value adjustment from the acquisition related to sold fish in the period have reduced the cost of goods sold. The effect is shown in a separate line in the statement of profit or loss, and the corresponding effect is presented on a separate line together with fair value adjustments. Change in fair value adjustment due to business combination is included in the group's operating profit. Incident-based mortality In the event of incidents exceeding 3 % mortality in a period based on a single incident, or if the mortality exceeds 5 % over several periods based on one and the same incident, an assessment is made as to whether there is a basis for write-down. The assessment relates to the number of fish and is carried out at site level. Incident-based mortality is recognised under cost of goods sold in the Consolidated Statement of Profit or Loss . Carrying amount of inventory NOK 1,000 31.12.2023 31.12.2022 Raw materials 433,528 426,741 Finished goods 796,125 503,136 Total carrying amount of other inventory 1,229,653 929,877 Biological assets 13,264,679 11,754,721 Total carrying amount of inventory 14,494,332 12,684,598 Carrying amount of biological assets NOK 1,000 31.12.2023 31.12.2022 Biological assets held at sea farms at cost 7,887,537 7,295,443 Fair value adjustment of biological assets 4,760,821 3,908,118 Total carrying amount of biological assets held at sea farms 12,648,358 11,203,560 Roe, fry, smolt and cleaner fish at cost 616,320 551,160 Total carrying amount of biological assets 13,264,679 11,754,721 Raw materials mainly comprise feed for smolt and fish at sea farms. In addition, raw materials are used in connection with processing and packaging. Stocks of biological assets relate to SalMars fish farming operations both in freshwater and seawater, and comprise roe, fry, smolt, cleaner fish and fish at sea farms. Finished goods comprise whole fish (fresh and frozen), as well as processed salmon products. Carrying amount Tonnes (NOK 1,000) Change in biological assets: 2023 2022 2023 2022 Biological assets at 1 January 161,542 124,884 11,754,721 7,280,917 Increase from business combination 0 42,423 0 3,254,063 Increase due to production 299,922 220,811 13,863,422 8,647,629 Decrease due to sale/ harvesting -296,094 -225,586 -13,006,570 -7,575,881 Decrease due to incident-based mortality -3,528 -991 -251,089 -62,061 Decrease due to sale of group companies -8,612 0 Fair value adjustment at 01.01 -3,908,118 -2,645,574 Fair value adjustment from business combination due to fish 813,222 0 not sold on opening balance Fair value adjustment from business combination due to fish -90,413 -813,222 not sold on closing balance Fair value adjustment from business combination included in cost of goods sold in the period -722,809 -283,398 Fair value adjustment at 31.12 4,760,821 3,908,118 Currency translation differences 60,103 44,131 Biological assets at 31 December 161,841 161,542 13,264,679 11,754,721 Financial Statement and Results Notes to the Financial Statements for 2023 149 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.6 Biological assets and other inventories The calculation is based on following estimated forward prices: Expected Expected harvesting period 31.12.2023 harvesting period 31.12.2022 Q1–2024 107.95 Q1–2023 91.75 Q2–2024 113.45 Q2–2023 95.55 Q3–2024 83.70 Q3–2023 76.48 Q4–2024 86.12 Q4–2023 78.22 1st half 2025 101.11 1st half 2024 85.91 2nd half 2025 74.60 2nd half 2024 75.00 Sensitivity: The change in the estimated fair value of biological assets has been calculated by changing individual parameters in the calculation. The effect on the carrying amount of biological assets is summarised below. Effect on estimated Effect on estimated fair value at fair value at 2023 (NOK 1,000) Increase 31.12.2023 Decrease 31.12.2023 Change in forward price + NOK 5.00 796,399 NOK 5.00 -796,399 per kg per kg Change in monthly 1 % -748,613 -1 % 831,296 discount factor Change in harvesting date 1 month 1,123,469 1 month -817,731 earlier later Change in number of fish held at sea farms 1 % 144,607 -1 % -144,607 Effect on estimated Effect on estimated fair value at fair value at 2022 (NOK 1,000) Increase 31.12.2022 Decrease 31.12.2022 Change in forward price + NOK 5.00 901,185 NOK 5.00 -901,185 per kg per kg Change in monthly 1 % -695,372 -1 % 772,027 discount factor Change in harvesting date 1 month 855,123 1 month -679,186 earlier later Change in number of fish held at sea farms 1 % 47,854 -1 % -47,854 Financial Statement and Results Notes to the Financial Statements for 2023 150 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.7 Trade and other receivables NOTE 3.7 Trade and other receivables Accounting principles The Group's receivables are recognised at amortised cost. Receivables in foreign currency are converted at the exchange rate at the time of the transaction. Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value. The group uses a simplified method to calculate provisions for losses on trade receivables. The group uses credit insurance to secure its accounts receivable and makes provisions for expected losses on the excess that is not covered by the insurance. The group measures the provision for bad debts based on the expected credit loss over the remaining lifetime of the exposure, and not based on an expected loss of 12 months . NOK 1,000 31.12.2023 31.12.2022 Trade receivables 1,468,617 1,429,071 Allowance for credit losses -11,654 -14,936 Total trade receivables at 31 December 1,456,963 1,414,135 Other current receivables 1,061,256 662,978 Other non-current receivables 241,634 328,876 Total receivables at 31 December 2,759,853 2,405,989 Prepaid expenses included in other current receivables 113,233 89,681 VAT refunds included in other current receivables 13 225,680 Derivatives included in other current receivables 469,162 99,082 Derivatives included in other non-current receivables 158,522 247,802 Credit losses are classified as other operating expenses in profit and loss. Changes in allowance for credit losses and credit losses charged to expenses during the period are presented below. For further information related to credit risk and foreign exchange risk, see Note 4.1. NOK 1,000 31.12.2023 31.12.2022 Provisions for bad debt 1 Jan 14,936 8,946 Provisions for bad debts 31 Dec 11,654 14,936 Change in provisions for bad debts during the period -3,282 5,990 Actual bad debts 9,694 2,451 Change in provisions for bad debts -3,282 5,990 Bad debts charged to expenses during the period 6,411 8,440 Trade receivables had the following maturity profile NOK 1,000 Not due <30 d 30–45d 45–90d >90d Total 31.12.2023 1,161,096 172,013 44,684 2,762 88,062 1,468,617 31.12.2022 1,016,521 330,067 18,167 8,493 55,822 1,429,071 Receivable Purchase Agreement SalMar has entered into an agreement with a credit institution for the purchase of trade receivables that meet certain specified criteria. SalMar transfers trade receivables that meet these criteria as and when they arise and receives immediate settlement thereof. Normal maturity of trade receiva- bles is 30–45 days. The material part of the credit risk is transferred when the trade receivables is transferred to the credit institution. The receivables are derecognised in the balance on the date the transfer takes place. As at 31 December 2023, a total of NOK 1,299.9 million in outstanding receiva- bles has been transferred and derecognised (31 December 2022, a total of NOK 1,103.8 million). The change in trade receivables deriving from this derecognition is included under operating activities in the statement of cash flow. Financial Statement and Results Notes to the Financial Statements for 2023 151 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.8 Financial assets and financial liabilities NOTE 3.8 Financial assets and financial liabilities Accounting policies A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets The Group's financial assets is comprised of derivatives, unlisted equity investments, other receivables, and cash & cash equivalents. The classification of financial assets at initial recognition depends on the nature of the asset's contractually determined cash flows, and which business model the Group applies to the management of its financial assets. At initial recognition, financial assets are recognised at fair value. Transaction costs may be added if financial assets are measured at amortised cost. The Group classifies its financial assets in three categories: • Financial assets measured at amortised cost • Financial assets measured at fair value with changes in value through profit and loss • Financial assets measured at fair value in other comprehensive income (OCI) Financial assets measured at amortised cost The Group measures financial assets at amortised cost if the following conditions are met: The financial asset is being kept in a business model whose purpose is to receive contractually determined cash flows, and the contractual terms and conditions for the financial asset give rise to cash flows solely comprising payments of interest and principal on certain dates. The Group's financial assets at amortised cost comprise trade receiv- ables, other receivables, cash & cash equivalents. Trade receivables which do not have a substantial financing element are measured at the transaction price in accordance with IFRS 15 Revenue from Contracts with Customers. Financial instruments measured at fair value with changes in value through profit and loss The Group makes use of forward currency contracts to hedge against fluctuations in exchange rates that arise during its operational activ- ities. The contracts are initially recognised at fair value. Changes in fair value related to contracts that don't qualify for hedge accounting are recognised in profit and loss. The Group enters into contracts on Fish Pool to manage the salmon price risk. Fish Pool contracts are also used to hedge margins in certain cases relating to salmon purchase agreements. The derivatives are recognised at fair value at the date of acquisition. Any subsequent changes in value are classified on the line for fair value adjustments in profit and loss. This category also includes the Group's unlisted equity instrument and other receivables. These instruments are recognised at fair value on the date the contract is entered into and subsequently measured at fair value. Financial instruments measured at fair value in other comprehensive income (OCI) The Group uses derivatives to hedge against fluctuations in foreign exchange rates that arise during its operational activities. When for- ward currency contracts meet the requirements for hedge accounting, changes in fair value are recognised in OCI. The Group has entered into a cross-currency interest swap and inter- est rate swaps to hedge risk related to interest-bearing debt and the operations on Iceland. Changes in fair value in these derivatives are recognised in OCI. Derecognition of financial assets A financial asset or, if relevant, a portion of a financial asset or portion of a group of identical financial assets, is derecognised if: • The contractual entitlement to receive cash flows from the financial asset expires, or • The Group has transferred the contractual entitlement to receive cash flows from the financial asset or retains the right to receive the cash flows from a financial asset but at the same time pledges to transfer these to a counterparty, and either: a. The Group has transferred the bulk of the risk and benefits associated with the asset, or a. The Group has neither transferred nor retained the bulk of the risk and benefits associated with the asset but has transferred control over the asset . Provisions for losses on financial assets The Group has made a provision for expected losses on all debt instru- ments that are not classified at fair value through profit and loss. The Group recognises expected credit losses based on a specific assessment of each individual customer. The Group recognises its loss provision based on expected credit losses over the remaining life of the exposure, and not the 12-month expected loss . Financial Statement and Results Notes to the Financial Statements for 2023 152 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.8 Financial assets and financial liabilities Financial liabilities Financial liabilities are, after initial recognition, classified as loans and liabilities, or derivatives designated as hedging instruments in an effective hedging arrangement. Derivatives are initially recognised at fair value. Loans and liabilities are recognised at fair value adjusted for directly attributable transaction costs. Derivatives are financial liabilities when the effective interest method fair value is negative, and are treated for accounting purposes in the same way as derivatives that are assets. Loans and liabilities After initial recognition, interest-bearing loans will be measured at amortised cost. Gains and losses are recognised in profit and loss when the liability is derecognised. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest method amortisation process. Amortised cost is calculated by recognising any discount or premium on acquisition and fees or costs that are an integral part of the effective interest method. The effective interest method amortisation is included as finance cost in the statement of profit or loss. See Note 3.11 for further details . Financial instruments at 31 December 2022 At fair value At amortised through At fair value NOK 1,000 cost profit & loss in OCI TOTAL Assets Derivatives Forward currency contracts 0 -3,028 69,105 66,076 Interest and currency rate swaps 0 0 247,802 247,802 Financial contracts Fish Pool 0 33,006 0 33,006 Equity instruments Unlisted equity instruments 0 42,434 0 42,434 Debt instruments Other non-current receivables 81,074 0 0 81,074 Trade receivables 1,414,135 0 0 1,414,135 Other current receivables 544,728 10,561 0 555,289 Cash and cash equivalents 2,712,707 0 0 2,712,707 Total financial assets 4,752,644 82,973 316,907 5,152,524 Liabilities Interest-bearing debt Debts to credit institutions 18,324,946 0 0 18,324,946 Green bond 3,467,147 0 0 3,467,147 Derivatives Financial contracts Fish Pool 0 26,924 0 26,924 Other financial liabilities Trade payables 3,337,649 0 0 3,337,649 Total financial liabilities 25,129,742 26,924 0 25,156,666 Financial instruments by category Financial instruments at 31 December 2023 At At fair value amortised through At fair value NOK 1,000 cost profit & loss in OCI TOTAL Assets Derivatives Forward currency contracts 0 0 444,343 444,343 Interest and currency rate swaps 0 0 158,522 158,522 Financial contracts Fish Pool 0 24,819 0 24,819 Equity instruments Unlisted equity instruments 0 17,102 0 17,102 Debt instruments Other non-current receivables 83,112 0 0 83,112 Trade receivables 1,456,963 0 0 1,456,963 Other current receivables 478,861 0 0 478,861 Cash and cash equivalents 785,271 0 0 785,271 Total financial assets 2,804,207 41,921 602,864 3,448,993 Liabilities Interest-bearing debt Debts to credit institutions 10,416,775 0 0 10,416,775 Green bond 3,475,193 0 0 3,475,193 Derivatives Interest and currency rate swaps 0 0 12,898 12,898 Other financial liabilities Trade payables 3,965,936 0 0 3,965,936 Total financial liabilities 17,857,904 0 12,898 17,870,802 Financial Statement and Results Notes to the Financial Statements for 2023 153 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.8 Financial assets and financial liabilities Financial instruments – assessment of fair value All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant observable inputs an minimising the use of unobservable inputs. • Level 1 - Price listed in an active market for identical assets or liabilities • Level 2 - Valuation based on other observable inputs either directly (price) or indirectly (deduced from prices) than listed price (used in level 1) for the asset or liability • Level 3 - Valuation based on inputs not derived from observable markets (non-observable assumptions) The following table presents the fair value measurement hierarchy of the Group's assets and liabilities. See Note 3.9 for details of derivatives measured at fair value under Level 2. Quoted prices in Significant Significant active observable unobservable markets inputs inputs 31 December 2023 (NOK 1,000) (Level 1) (Level 2) (Level 3) Total Assets Derivatives Forward currency contracts 0 444,343 0 444,343 Interest and currency derivatives 0 158,522 0 158,522 Financial contracts Fish Pool 0 24,819 0 24,819 Equity instruments Other shares and securities 0 0 17,102 17,102 TOTAL assets 0 627,684 17,102 644,786 Liabilities Derivatives Interest and currency rate swaps 0 0 12,898 12,898 TOTAL liabilities 0 0 12,898 12,898 Quoted prices in Significant Significant active observable unobservable markets inputs inputs 31 December 2022 (NOK 1,000) (Level 1) (Level 2) (Level 3) Total Assets Derivatives Forward currency contracts 0 66,076 0 66,076 Interest and currency derivatives 0 247,802 0 247,802 Financial contracts Fish Pool 0 33,006 0 33,006 Equity instruments Other shares and securities 0 0 42,434 42,434 Debt instruments Other receivables 0 0 10,561 10,561 TOTAL assets 0 346,884 52,995 399,879 Liabilities Derivatives Financial contracts Fish Pool 0 26,924 0 26,924 TOTAL liabilities 0 26,924 0 26,924 Financial Statement and Results Notes to the Financial Statements for 2023 154 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.9 Hedging activities and derivatives NOTE 3.9 Hedging activities and derivatives Accounting policies Forward currency contracts The Group uses forward currency contracts and currency option con- tracts to reduce the foreign exchange risk relating to future sales revenues deriving from customer contracts denominated in foreign currencies for the physical delivery of salmon. The Group's contracts fall due for payment between January 2024 and December 2025, and hedge all trade receivables and cash flows from sales contracts in foreign currencies during this period. The contracts are recognised at fair value in the balance sheet. The fair value are measured by using valuation techniques, which employ the use of market observable inputs such as forward pricing and swap models using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective cur- rencies, currency basis spreads between the respective currencies. Recognition of gains and losses relating to the forward currency contracts depends on whether they qualify for hedge accounting. For forward currency contracts and currency option contracts that qualify for hedge accounting, the fair value of the effective portion is recognised in other comprehensive income. When time differences arise between receipts from sales contracts and the settlement of forward hedges, the currency account replaces the forward hedges as the hedging instrument. Drawdowns on the currency account, when this is deemed to be the hedging instrument, are recognised at the exchange rate in effect on the reporting date and the revalu- ation effect is recognised in OCI. Gains and losses recognised in OCI and accumulated equity are recycled to profit and loss in the same period as the hedged expected future cash flows affect profit and loss. Inefficiency in hedging factors arises when the hedged volume deviates from the delivered volume. The inefficiency is recognised as a financial item in profit and loss. The Group complies with the criteria set out in IFRS 9 when assessing whether the contract meets the requirements for hedge accounting. This means that satisfactory documentation of the matter to be hedged must exist when the hedge is entered into, and there must be a high level of efficiency, in that the hedge reflects the expected cash flow from the underlying sales contract. There must also be a high degree of probability that the future cash flow will materialise and the efficiency of the hedge must be measurable. The efficiency of hedges is monitored continuously. For contracts which do not qualify for hedge accounting, any change in the fair value are recognised as a change in fair value through profit and loss. The hedging rate is the spot rate adjusted for a forward element. The forward element is the difference between the spot rate and the forward rate, and reflects the difference in the rate of interest between NOK and the currency traded. When several forward hedges are linked to a sales contract, the hedging rate is calculated as the volume-weighted forward rate for the underlying hedges. Interest and currency swaps The group has entered into interest swaps and a cross-currency interest rate swap with the purpose of hedging interest rate risk for a share of the group's loans with floating interest rates and hedging of currency risk related to the operations in Iceland. The hedging of interest rate risk is a cash flow hedging, and the hedging of the busi- ness in Iceland is a net investment hedging, both hedging conditions are considered to satisfy the requirements for hedge accounting. The fair value of the swaps are valued using valuation techniques, which employ the use of market observable inputs such as forward pricing and swap models using present value calculations. The models incor- porate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies and interest rate curves. Recognition of gains and losses relating to the forward currency contracts depends on whether they qualify for hedge accounting. The fair value changes of the swaps qualifying for hedge accounting are recognised in other comprehensive income, and the swap costs are amortised as interest costs over the term of the agreement. The effectiveness of hedging is measured at the end of each period, any ineffective portion will be recognised as a financial item in the profit and loss. Financial contracts with Fish Pool The Group enters into financial contracts on Fish Pool to hedge prices relating to purchase and sales contracts for the physical delivery of salmon. The contracts fall due for settlement within one year. Real- ised gains or losses on these contracts are recognised in operating profit/loss. The contracts are measured at fair value. Unrealised gains and losses are included in fair value adjustments in profit and loss. The fair value of Fish Pool contracts is calculated on the basis of the contract's agreed settlement price, the market value of the fish on the reporting date, the contract's term and observable market prices for contracts with an equivalent term . Financial Statement and Results Notes to the Financial Statements for 2023 155 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.9 Hedging activities and derivatives Derivatives 2023 2022 Other non- Other Other non- Other non- Other Other Recognised at fair value current current current current current current at 31 Dec (1,000 NOK) receivables receivables liabilities receivables receivables liabilities Forward currency contracts 444,343 0 66,076 0 Interest and currency swaps 158,522 0 12,898 247,802 0 0 Financial contracts Fish Pool 24,819 0 33,006 26,924 Total 158,522 469,162 12,898 247,802 99,082 26,924 Forward currency contracts 2024 2025 Average Average volume- volume- Forward currency contracts Currency weighted Currency weighted with changes in value through amount hedging amount hedging Carrying profit and loss (NOK 1,000) (1,000) rate (1,000) rate amount Forward Sale CAD 4,500 7.10 0 0 -2,608 Forward Sale EUR 86,248 11.81 0 0 1,933 Forward Sale GBP 476 13.34 0 0 53 Forward Sale JPY 1,301,105 0.076 0 0 5,184 Forward Sale SEK 6,565 1.022 0 0 50 Forward Sale USD 37,368 10.55 0 0 13,999 Total 18,612 Forward currency contracts with changes in value through OCI (NOK 1,000) Forward Sale CAD -39,500 7.86 0 0.00 14,467 Forward Sale EUR 174,857 11.79 1,108 12 90,849 Forward Sale GBP 16,242 13.27 0 0 6,515 Forward Sale JPY 2,402,385 0.077 31,734 0 10,683 Forward Sale USD 442,580 10.66 7,700 10.80 248,943 FX Option EUR 104,400 10,800 54,273 Total 371,457 Carrying amount at 31 December 2023 444,343 2023 2024 Average Average volume- volume- Forward currency contracts Currency weighted Currency weighted with changes in value through amount hedging amount hedging Carrying profit and loss (NOK 1,000) (1,000) rate (1,000) rate amount Forward Sale CAD 4,700 7.08 0 0 -991 Forward Sale EUR 4,883 10.41 0 0 -486 Forward Sale GBP 190 11.86 0 0 -5 Forward Sale JPY 341,193 0.075 0 0 290 Forward Sale SEK 2,385 0.95 0 0 1 Forward Sale USD 35,297 9.66 0 0 -2,570 Total -3,762 Forward currency contracts with changes in value through OCI (NOK 1,000) Forward Sale CAD 37,500 7.14 800 7.61 -6,468 Forward Sale EUR 19,814 10.19 0 0.00 -6,469 Forward Sale GBP 912 12.02 0 0.00 150 Forward Sale JPY 4,338,968 0.075 0 0.000 -1,052 Forward Sale USD 347,317 10.21 5,870 10.06 83,677 Total 69,838 Carrying amount at 31 December 2022 66,076 Change in value Specification of cash flow As at 31 of drawdowns on Change in fair hedging through OCI As at 1 January Dec currency account value through OCI 2023 69,838 433,642 8,363 355,441 2022 53,801 69,838 688 15,349 For forward currency contracts which qualify for hedge accounting, an inefficiency of NOK -10.3 million has been recognised in 2023 (NOK -9.2 million in 2022). The effect is classified as a financial expense in profit and loss . Financial Statement and Results Notes to the Financial Statements for 2023 156 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.9 Hedging activities and derivatives Interest and currency derivatives regarding debt 2023 Interest and currency derivatives Nominal Carrying with changes in Nominal value Book value value hedge value of net value through OCI hedge instruments hedge object instruments investment Hedging Carrying (NOK 1,000) (1000 NOK) (1000 NOK) (1000 EUR) (1000 EUR) efficiency amount Cash flow hedge reserve 3,434,667 3,434,667 100 % 220,825 Net investment reserve -98,335 126,260 100 % -102,662 Cost of hedging reserve 19,322 Total 137,485 Changes through profit and loss Accrued value of net interest 8,138 Carrying amount at 31 December 2023 145,623 Specification of hedging As at 1 As at Changes effects in OCI in 2023 January 31 Dec over OCI Changes in Cash flow hedge reserve 217,578 219,790 2,213 Changes in Net investment reserve -34,221 -102,662 -68,441 Changes in Cost of hedging reserve 58,487 19,322 -39,165 Total 241,844 136,450 -105,393 Changes Specification of hedging over effects over profit As at 1 As at profit and loss in 2023 January 31 Dec and loss Changes in net accrued interest 5,958 8,138 2,180 Amortization of swap cost reclassified from hedging reserve to interest cost -3,124 -4,970 -1,845 Total 334 In 2021, an interest rate currency swap agreement was entered into of which NOK 1,000 million of the group's bond loan (note 3.11) with floating interest rates was swapped to EUR 98,335 million with fixed interest rates (the agreement is divided between three banks). The agreement matures in January 2027. The change from floating interest rates to fixed interest rates in NOK in the agreement is defined as cash flow hedging of interest costs. Interest rate conditions and maturity structure on the bond loan and swap are identical and there is therefore an effective financial connection between the hedging instrument and the hedged item. The conversion of loan amounts from NOK to EUR debt through the swap contract is defined as Net Investment Hedging. This is a hedging of the currency value of investing in Icelandic Salmon. The hedging of the exposure in EUR in Iceland will be effective as long as the nominal value of the net investment is greater than the nominal value of the hedging instrument. There has been no inefficiency in hedging conditions in the past year. In 2021 an interest rate swap was entered into in which NOK 192.7 million of the groups bank loan (note 3.11) with floating interest rates was swapped to a fixed rate. The agreement matures in January 2032. With effect from 4 February 2022, SalMar ASA entered into fixed rate interest swap contracts with a total principal of NOK 2,250 million. 750 million has a duration of 7 years starting 22 April 2022, 750 million has a duration of 7 years starting 22 January 2025, and 750 million has a duration of 10 years starting 22 January 2024. The interest swap contracts are established with the purpose to reduce the interest rate risk related to long-term loan . Financial Statement and Results Notes to the Financial Statements for 2023 157 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.9 Hedging activities and derivatives Interest and currency derivatives regarding debt 2022 Interest and currency derivatives Nominal Carrying with changes in Nominal value Book value value hedge value of net value through OCI hedge instruments hedge object instruments investment Hedging Carrying (NOK 1,000) (1000 NOK) (1000 NOK) (1000 EUR) (1000 EUR) efficiency amount Cash flow hedge reserve 3,442,667 3,442,667 100 % 217,578 Net investment reserve -98,335 119,458 100 % -34,221 Cost of hedging reserve 58,487 Total 241,844 Changes through profit and loss Accrued value of net interest 5,958 Carrying amount at 31 December 2022 247,802 Specification of hedging As at 1 As at Changes effects in OCI in 2022 January 31 Dec over OCI Changes in Cash flow hedge reserve 0 217,578 217,578 Changes in Net investment reserve 0 -34,221 -34,221 Changes in Cost of hedging reserve 0 58,487 58,487 Total 0 241,844 241,844 Changes Specification of hedging over effects over profit As at 1 As at profit and loss in 2022 January 31 Dec and loss Changes in net accrued interest 691 5,958 5,267 Amortization of swap cost reclassified from hedging reserve to interest cost -1,279 -3,124 -1,845 Total 3,422 Financial contracts Fish Pool 2024 Average volume- Volume weighted Market NOK 1,000 Type (1,000) price per kg value Fish Pool contracts Sale 2,260 91.3 -15,811 Fish Pool contracts Buy 5,700 90.9 40,630 Carrying amount at 31 December 2023 24,819 2023 Average volume- Volume weighted Market NOK 1,000 Type (1,000) price per kg value Fish Pool contracts Sale 1,430 65.3 6,082 Carrying amount at 31 December 2022 6,082 In 2023, a net profit of NOK 50.1 million (net loss of NOK 307.0 million in 2022) was realised on Fish Pool contracts . Gains and losses are recognised in the operating result. In 2023, unrealised changes in the fair value of Fish Pool contracts amounted to a net gain of NOK 18.7 million. Unrealised changes in the fair value of Fish Pool contracts amounted in 2022 to a net gain of NOK 91.3 million, of which NOK 69.7 was through fair value adjustment and NOK 21.5 was classified as other financial income . Financial Statement and Results Notes to the Financial Statements for 2023 158 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.10 Cash & cash equivalents NOTE 3.10 Cash & cash equivalents NOK 1,000 31.12.2023 31.12.2022 A total of NOK 164.2 million (2022: NOK 154.6 million) in restricted tax withholdings is included in the Cash and cash equivalents, unrestricted funds 621,103 2,558,078 Cash and cash equivalents, restricted funds 164,169 154,629 Total cash and cash equivalents at 31 December 785,271 2,712,707 item cash and cash equivalents. Financial Statement and Results Notes to the Financial Statements for 2023 159 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.11 Interest-bearing liabilities NOTE 3.11 Interest-bearing liabilities Non-current interest-bearing liabilities (NOK 1,000) 31.12.2023 31.12.2022 Non-current interest bearing liabilities 9,258,965 17,830,132 Green bond 3,500,000 3,500,000 Amortised cost -89,919 -32,853 Total 12,669,046 21,297,279 Next year's instalment on non-current interest bearing liabilities -457,820 -2,947,307 Total 12,211,226 18,349,972 Lease liabilities 1,845,494 1,425,297 Next year's instalment on lease liabilities -343,753 -273,081 Total 1,501,741 1,152,216 Total carrying amount at 31 December 13,712,967 19,502,188 Current interest bearing liabilities 2023 2022 Bank overdraft 1,222,922 494,814 Next year's instalment on non-current interest bearing liabilities 457,820 2,947,307 Current interest bearing liabilities ex. lease liabilities 1,680,742 3,442,121 Next year's instalment on lease liabilities 343,753 273,081 Total carrying amount at 31 December 2,024,495 3,715,203 Total interest-bearing liabilities 15,737,462 23,217,390 Cash and cash equivalents 785,271 2,712,707 Lease liabilities 1,845,494 1,425,297 Net interest-bearing debt 13,106,697 19,079,386 Total interest-bearing liabilities 2023 2022 Unused credit facilities 8,740,369 6,476,426 Unused bank overdraft 1,013,858 1,657,387 Total unused drawing rights 9,754,227 8,133,813 The fair value of borrowings are not materially different from their carrying amounts since the interest payable on the borrowings is either close the current market rates or the borrowings are of short-term nature. Next year's instalments on bank loans and lease agreements are classified as current liabilities in the balance sheet. See Note 4.1 for details of the maturity profile of the Group's liabilities. In 2021 and 2022 the Group entered into a cross-currency interest swap and interest rate swaps to reduce the risk related to floating interest rate. These contracts are established with the purpose to reduce the interest rate risk related to long-term loan. See note 3.9 "Hedging activities and derivatives" and note 4.1 "Financial risk management" for further details regarding the swaps. Financial Statement and Results Notes to the Financial Statements for 2023 160 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.11 Interest-bearing liabilities As at 31 December 2023 per currency NOK 1,000 NOK EUR JPY USD GBP Other Total Non-current interest bearing 11,595,839 615,387 0 0 0 0 12,211,226 liabilities Lease liabilities 1,804,234 0 0 0 0 41,261 1,845,494 Current interest- bearing liabilities 1,467,156 75,670 75,554 38,978 18,176 5,207 1,680,742 Total interest- bearing debts 14,867,229 691,057 75,554 38,978 18,176 46,468 15,737,462 Cash and cash 607,284 47,460 36,704 59,851 13,116 20,857 785,271 equivalents Lease liabilities 1,804,234 0 0 0 0 41,261 1,845,494 Net interest- bearing debts 12,455,711 643,597 38,851 -20,873 5,059 -15,650 13,106,697 As at 31 December 2022 per currency NOK 1,000 NOK EUR JPY USD GBP Other Total Non-current interest bearing 17,804,959 545,013 0 0 0 0 18,349,972 liabilities Lease liabilities 1,380,072 7,567 0 0 0 37,658 1,425,297 Current interest- bearing liabilities 3,176,402 111,144 2,931 78,988 39,726 32,931 3,442,121 Total interest- bearing debts 22,361,433 663,723 2,931 78,988 39,726 70,589 23,217,390 Cash and cash 2,764,389 -80,665 -53,538 59,548 5,813 17,161 2,712,707 equivalents Lease liabilities 1,380,072 7,567 0 0 0 37,658 1,425,297 Net interest- bearing debts 18,216,972 736,822 56,469 19,440 33,914 15,770 19,079,386 Financial Statement and Results Notes to the Financial Statements for 2023 161 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.11 Interest-bearing liabilities Financing activities - changes in liability at 31 December 2023: Non-cash generating effects Change in next Cash flow from year's instalments 31.12.22 financing activities Currency effects on long-term debts Other effects 31.12.23 Non-current debts 18,349,972 -8,660,255 39,596 2,489,487 -7,575 12,211,226 Current debts to credit institutions 3,442,121 713,521 3,310 -2,489,487 11,276 1,680,742 Total debts to credit institutions 21,792,093 -7,946,734 42,907 0 3,701 13,891,967 Non-current and current lease liabilities 1,425,297 -321,096 2,501 0 738,792 1,845,494 Total interest-bearing debts 23,217,390 -8,267,829 45,408 0 742,493 15,737,462 Financing activities - changes in liability at 31 December 2022: Non-cash generating effects Change in next Cash flow from Changes through year's instalments 31.12.21 financing activities business combinations Currency effects on long-term debts Other effects 31.12.22 Non-current debts 4,906,560 7,191,840 9,008,620 28,242 -2,785,290 0 18,349,972 Current debts to credit institutions 571,274 -127,923 211,704 1,742 2,785,290 0 3,442,121 Total debts to credit institutions 5,477,834 7,063,917 9,220,324 29,983 0 0 21,792,093 Non-current and current lease liabilities 967,166 -229,333 484,370 3,771 0 199,323 1,425,297 Total interest-bearing debts 6,445,000 6,834,585 9,704,694 33,754 0 199,323 23,217,390 For details regarding change in subsidiaries see Note 4.5. Interest-bearing debt in more detail In August 2023, SalMar entered into a new senior unsecured credit facility agreement, totalling NOK 16,000 million, with the intention of making it sustainability linked. The agreement comprises a 3+1+1 year term loan with a total of NOK 6,000 million, a 5+1+1 year rolling credit facility of NOK 10,000 million, and a NOK 3,000 million in accordion option. The facilities have an interest rate based on 3-months NIBOR plus a margin. The new senior unsecured credit facility is a syndicated agreement that consists of 5 banks composed in two tiers, each tier with various share of the total facility. SalMar has annually renewable multicurrency cash pooling arrange- ments limited to NOK 1,600 million. As at 31 December 2023, the Group had drawn NOK 1,223 million on this arrangement (2022: no drawdown). Deposits and drawdowns in various currencies relating to the group account scheme are recognised net in the Group’s financial statements. With effect from 22 April 2021, SalMar ASA issued an unsecured green bond totalling NOK 3,500 million. No installments on the loan are payable during the period of the agreement, which matures on 22 January 2027. The bond carries an interest rate at 3-months NIBOR + 1.35 % per annum, due quarterly. The loan is capitalised at amortised cost using the effective interest rate method. The loan's net book value as at 31 December 2023 is NOK 3,475 million. The bond loan is listed on the Oslo Stock Exchange under the ticker SALM01 ESG. During November 2023, Arnarlax Ehf, the groups subsidiary in Iceland completed a refinancing process totalling facilities of 95 MEUR. The facilities consist of a term loan of 30 MEUR, a revolving facility of 65 MEUR and an additional overdraft facility of 5 MEUR. The current Financial Statement and Results Notes to the Financial Statements for 2023 162 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.11 Interest-bearing liabilities facility agreement is valid until November 2026 with a possibility of two years extension. Per 31.12.2023 there were no drawdown on the overdraft facility. The covenants require an equity ratio above 35 per cent and profit requirement that requires that the Compa- ny’s 12-month rolling interest coverage ratio must not be lower than 4.0:1. In addition, the Company’s NIBD / 12-month rolling EBITDA should not exceed 6.0:1 each relevant period expiring on or prior to 31 December 2024 and not exceed 4.0:1 each relevant period expiring thereafter. In November 2023, the subgroup SalMar Aker Ocean entered into a new credit facility agreement, comprising of a term loan of NOK 200 million and an annually renewable overdraft facility of NOK 250 million. The term loan is a bullet loan with termination date 27 November 2026. Per 31.12.2023 there were no drawdown on the overdraft facility. The covenants are based on standard ratios and has financial requirements of an equity ratio above 40 per cent. Financial covenants The most important financial covenants for the long-term financing of SalMar ASA are, respectively, a solvency requirement, which stipu- lates that the Group’s recognised equity ratio shall exceed 30 %, and a profitability requirement, which stipulates that the Group’s interest coverage rate (EBITDA/net financial expenses) shall not fall below 3.0. The green bond has a financial covenant requiring an equity ratio of 30 % in the agreement period. The financing schemes of Arnarlax Ehf and SalMar Aker Ocean are independent from SalMar ASA. Both SalMar ASA, Arnarlax Ehf and SalMar Aker Ocean were in compliance with all the above-mentioned covenants as of 31 December 2023. Subsidiaries with individual financial agreements Vikenco has an overdraft facility capped at NOK 50 million, of which there was no drawdown as at 31. December 2023. In addition, the company has two instalment loans with a carrying amount of respec- tively NOK 178 million and NOK 58 million. Osan Settefisk AS has a term loan with net carrying amount at 31 December 2023 of NOK 414 million (2022: NOK 445 million) and an overdraft facility agreement of NOK 15 million, of which there was no drawdown as at 31. December 2023. Refsnes Laks AS, has a term loan with net carrying amount at 31 December 2023 of NOK 48.3 million (2022: 0), the loan matures in June 2025. Supply Chain Financing The Group has entered into a supply chain financing agreement (SCF), meaning that some vendors will indirectly offer extended credit terms to the company through a separate agreement with the Group's bank. The vendors sell their trade receivables to the bank in order to receive payment immediately. Payment terms under the SCF agreement are in line with industry practice. The transaction is still between the company and its suppliers, and are therefore classified as trade pay- ables, and changes in trade payables related to the SCF agreement is classified as cash flow from operating activities in the statement of cash flow. As at 31 December 2023 the carrying amount of the financed amount was NOK 2,562.2 million (31 December 2022: NOK 1,672.7 million), and of this NOK 2,532.3 million was paid to the vendors. Receivable Purchase Agreement SalMar has entered into an agreement with a financial institution for transferred receivables that meet certain predefined criteria. See Note 3.7 for further details of this arrangement. Lease liabilities See Note 3.4 for further details of the Group’s capitalised lease liabilities. Financial Statement and Results Notes to the Financial Statements for 2023 163 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.12 Mortgage and guarantees NOTE 3.12 Mortgage and guarantees Liabilities secured by mortgage (NOK 1,000) 31.12.2023 31.12.2022 Non-current interest bearing debt * 1,112,205 14,882,825 Current interest bearing debt * 570,153 3,442,121 Lease liabilities 1,845,494 1,425,297 Total debt secured by mortgages and pledges at 31 December 3,527,852 19,750,243 ' During the third quarter in 2023, SalMar entered into a new senior unsecured credit facility agreement totalling NOK 16 billion. The non-current and current interest bearing debt that is secured by mortgage is represented by Group companies with independent financing schemes. See Note 3.11 for further information. Assets pledged as security for debt (NOK 1,000) 31.12.2023 31.12.2022 Licences 3,438,018 14,875,519 Property, plant and equipment and right-to-use assets 4,512,098 12,517,825 Biological assets and other inventory 1,576,980 11,754,721 Trade receivables 632,737 1,414,135 Total assets pledged as security at 31 December 10,159,834 40,562,200 Financial Statement and Results Notes to the Financial Statements for 2023 164 Financial Statement and Results Notes to the Financial Statements for 2023 Note 3.13 Current liabilities NOTE 3.13 Current liabilities Accounting policies Onerous contacts Physical fixed-price sales contracts whose price is less than the price used as the basis for adjusting the fair value of the biomass are recognised as liabilities in the financial statements. The amount recognised as a liability is the difference between the market price at the balance sheet date plus costs to sell and the contract price. Changes in provisions are recognised in a separate line in the statement of profit and loss and are included in the operational profit . Other current liabilities (NOK 1,000) 31.12.2023 31.12.2022 Salaries and vacation pay due 214,380 207,510 Derivatives 0 26,924 Accruals for clean-up cost 304,077 224,173 Accrued interest cost 53,595 117,462 Other accrued expenses 401,053 515,156 Accruals for production tax 83,465 18,805 Contingent liability from business combination 55,125 55,125 Provisions for onerous contracts 342,202 104,799 Total carrying amount at 31 December 1,453,897 1,269,954 Provisions related to onerous contracts is increased by NOK 237.3 million (2022: Provision decreased by NOK 126.3 million in 2022, recognised in operating profit) . There is a contingent liability related to a previous business combination in Salmar Farming AS, related to merged-in company SalMar Namdal AS.. As part of the purchase agreement with the previous owners of MNH Holding AS, a contingent consideration was agreed. The consideration is dependent on licence volumes for Fiskeldi Austfjarda and is measured at fair value over the result . Financial Statement and Results Notes to the Financial Statements for 2023 165 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.1 Financial risk management Part 4 Other Notes NOTE 4.1 Financial risk management Financial risk Through its activities, the Group is exposed to various kinds of financial risk: market risk, credit risk and liquidity risk. The Group management oversees the management of these risks and draws up guidelines for dealing with them. The Group makes use of financial derivatives to hedge against certain risks. The Board of Directors has defined a financial risk appetite that sets overarching limits. The Group has drawing facilities on a syndicate of banks, which ensure sufficient flexibility both operationally and with respect to the financ- ing of investments in SalMar's operations. In August 2023, SalMar entered into a new senior unsecured credit facility agreement, with the intention of making it sustainability linked. The agreement includes NOK 3,000 million in accordion option and is a syndicated agreement that consists of 5 banks composed in two tiers, each tier with various share of the total facility. In 2021 the Group issued a green bond to secure further sustainable growth. In addition, the company has financial instruments, such as trade receivables, trade payables, etc., which are directly related to day-to-day business operations. The two subgroup's, Arnarlax Ehf and SalMar Aker Ocean, have inde- pendent financing schemes. In addition, Vikenco, Osan Settefisk AS and Refsnes Laks AS are subsidiaries with individual financial agreements. It is the Group’s policy that no trading in derivatives for speculative purposes may be undertaken. Market risk Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in mar- ket interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with floating interest rates. The risk is partly reduced by the opposite effect on cash equivalents which earn floating interest. With effect from 4 February 2022, SalMar ASA entered into fixed rate interest swap contracts with a total principal of NOK 2,250 mil- lion. 750 million has a duration of 7 years starting 22 April 2022, 750 million has a duration of 7 years starting 22 January 2025, and 750 million has a duration of 10 years starting 22 January 2024. The interest swap contracts are established with the purpose to reduce the interest rate risk related to long-term loan. In 2021 the Group has entered into a to cross-currency interest swap and a interest swap to manage the interest rate. For more details regarding the swaps see note 3.9. Interest rate sensitivity Given the financial instruments in effect on 31 December 2023, after the impact of hedge accounting, an increased interest rate of 1.0 per cent would reduce the Group's profit by net NOK 130.9 mil- lion (2022: reduced profit by NOK 242.2 million), all other variables remaining constant. The effect related to the hedging instruments over OCI would rise by NOK 19.3 million given an increase in the interest rate of 1 % (2022: 1 % rise would lead to a positive effect of NOK 19.4 million). See note 3.11 for more information regarding interest-bearing debt. Foreign exchange risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities and the Group’s net investments in the operations on Iceland. The Group operates internationally, and is exposed to foreign exchange risk in several currencies. This risk is particularly relevant with respect to the USD, EUR, GBP, CAD and JPY. The foreign exchange risk associated with revenues and assets denominated in foreign currencies is partly hedged through the use of forward contracts and currency accounts. The use of forward currency contracts is described in Note 3.9. The foreign exchange risk associated with the operations at Iceland is hedged by the cross-currency interest swap described in section "Interest rate risk". The swap hedges the full carrying value of the net investment. Foreign currency sensitivity Given the financial instruments in effect on 31 December 2023, a weakening of 10 per cent of the NOK would increase the Group's profit before tax by NOK 940.0 million (2022: NOK 454.6 million). The whole effect would go through the profit and loss in 2024 as all material financial instruments fall due within the end of 2024 . Financial Statement and Results Notes to the Financial Statements for 2023 166 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.1 Financial risk management The following table demonstrate the impact on the Group's profit before tax related to a reduction in the exchange rate of 10 per cent: NOK 1,000 31.12.2023 31.12.2022 EUR -62,165 -12,300 JPY 3,307 -3,380 GBP -3,198 -159 CAD -5,049 -3,353 USD -66,644 -45,880 The Group’s exposure to foreign currency changes for all other currencies is not material . Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities, primarily from trade receivables. The Group's policy is to credit insure material trade receivables, and losses due to bad debts have historically been low. The Group has guidelines to ensure that sales are made only to customers that have not previously had material payment problems, and where outstanding balances do not exceed fixed credit limits. An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. Credit risk relating to the Group's cash holding is deemed low. Gross credit risk on the reporting date equals the Group's total receiv- ables on the same date. See Note 3.7 . Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they are due. Cash flow forecasts are prepared on a regular basis and the Finance Dept. monitors rolling forecasts for the Group’s liquidity requirements to ensure that the Group has suffi- cient cash equivalents to meet operational liabilities, as well as at all times having adequate flexibility in the form of unused credit facilities (see Statement of Cash Flows), such that the Group does not infringe borrowing limits or specific borrowing conditions. The Group’s objective is to have sufficient cash, cash equivalents or medium-term credit facilities to meet its borrowing requirements in the short term. See Note 3.11 for details of the Group’s available credit facilities. The table below details the Group’s non-derivative financial liabilities classified by maturity structure. The figures presented in the table are undiscounted contractual cash flows. Maturity structure for financial liabilities at 31 December 2023 Maturity Total 2024 2025 2026 2027 2028 After 2028 Long-term debt 12,669,046 426,203 40,322 6,576,430 3,719,090 1,719,333 187,667 Interest on long-term debt 2,330,999 742,145 737,028 544,090 231,388 64,898 11,449 Lease liabilities 1,845,494 343,752 275,618 221,630 178,757 144,631 681,106 Interest on lease liabilities 374,540 111,717 93,065 58,214 46,080 35,223 30,239 Short-term credit facilities 46,745 46,745 0 0 0 0 0 Interest on short-term debt 803 803 0 0 0 0 0 Trade payables 3,965,936 3,965,936 0 0 0 0 0 Total liabilities 21,233,563 5,637,302 1,146,033 7,400,365 4,175,316 1,964,086 910,461 Maturity structure for financial liabilities at 31 December 2022 Maturity Total 2023 2024 2025 2026 2027 After 2027 Long-term debt 21,297,279 2,947,307 12,147,649 2,506,681 9,646 3,515,329 170,667 Interest on long-term debt 1,706,433 1,000,633 301,477 217,970 158,975 16,666 10,712 Lease liabilities 1,425,297 273,081 209,221 162,488 127,947 102,132 550,427 Interest on lease liabilities 323,310 65,583 57,880 56,244 51,393 47,624 44,587 Short-term credit facilities 494,814 494,814 0 0 0 0 0 Interest on short-term debt 70,908 70,908 0 0 0 0 0 Trade payables 3,337,649 3,337,649 0 0 0 0 0 Total liabilities 28,655,690 8,189,975 12,716,227 2,943,383 347,961 3,681,752 776,394 Fina ncial Statement and Results Notes to the Financial Statements for 2023 167 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.1 Financial risk management Maturity The Group's trade payables are normally at net 30 payment terms, except for payables related to the purchase of feed, which has a longer credit time. For a description of the maturity structure for the Group's long-term debt, see Note 3.11. Capital structure and equity The objective of the Group’s capital management is to safeguard the Group’s continued operations in order to secure a return on investment for shareholders and other stakeholders, and maintain an optimal capital structure for reducing capital costs. By ensuring a good debt to-equity ratio the Group will support its business operations, and thereby maximise the value of the Group’s shares. To further focus on the objective to maximise the value of the Group's shares, reference is made to the stock exchange announcement on 23 October 2023 regarding the general meeting of SalMar ASA ("SalMar") resolving to reduce SalMar's share capital by NOK 3,275,000 from 36,284,730 to NOK 33,009,730 by cancelling of 13,100,000 own treasury shares. See Note 4.2 and 4.3 for further details. The Group manages and makes changes to its capital structure in response to an ongoing assessment of the financial conditions under which the business operates, and its short and medium-term outlook, including any adjustment in dividend pay-outs, buyback of treasury shares, capital reduction or issue of new shares. No changes were made in the guidelines covering this area in 2023. The company monitors its capital management on the basis of the covenants stipulated. These are based on equity ratio, interest cov- erage ratio and the ratio of net interest-bearing debt to EBITDA. See Note 3.11 for further details. As at 31 December 2023, the Group had an equity ratio of 43.3 per cent (31 December 2022: 38.6 per cent). At the close of 2023, the Group's net interest-bearing debt stood at NOK 13,106.7 million (2022: NOK 19,079.4 million) See Note 3.11 for further details of the Group's net interest-bearing debt. Financial Statement and Results Notes to the Financial Statements for 2023 168 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.2 Share capital and shareholders NOTE 4.2 Share capital and shareholders At 31 December 2023, the parent company's share capital comprised: Number of NOK 1,000 shares Face value Book value Ordinary shares 132,038,920 0.25 33,009,730 There are no current limitations on voting rights or trade limitations related to the SalMar share. On 13 December 2023, SalMar ASA's share capital was decreased by 13,100,000 shares (nominal value of NOK 0.25 per share), from 145,138,920 shares to 132,038,920 shares. The share capital was thus decreased by a total of NOK 3.275 million, from NOK 36.285 mil- lion to NOK 33.010 million. As at 31 December 2023, SalMar ASA owned 278,854 treasury shares, a reduction by 13,427,392 shares, from 13,706,246 treasury shares as at 31 December 2022. Shareholders Overview of the largest shareholders 31.12.2023 Number of shares Shareholding Voting share KVERVA INDUSTRIER AS 59,934,476 45.39 % 45.49 % FOLKETRYGDFONDET 5,787,976 4.38 % 4.39 % State Street Bank and Trust Comp 2,076,996 1.57 % 1.58 % TERBOLI INVEST AS 1,425,394 1.08 % 1.08 % LIN AS 1,337,685 1.01 % 1.02 % JPMorgan Chase Bank, N.A., London 1,335,830 1.01 % 1.01 % HASPRO AS 1,330,830 1.01 % 1.01 % FRØY KAPITAL AS 1,093,815 0.83 % 0.83 % CACEIS Bank 1,087,941 0.82 % 0.83 % State Street Bank and Trust Comp 1,087,715 0.82 % 0.83 % VERDIPAPIRFONDET ALFRED BERG GAMBA 1,055,226 0.80 % 0.80 % NILS WILLIKSEN AS 1,018,473 0.77 % 0.77 % CACEIS Bank 923,297 0.70 % 0.70 % PARETO AKSJE NORGE VERDIPAPIRFOND 916,400 0.69 % 0.70 % JPMorgan Chase Bank, N.A., London 910,109 0.69 % 0.69 % CLEARSTREAM BANKING S.A. 861,574 0.65 % 0.65 % JPMorgan Chase Bank, N.A., London 844,806 0.64 % 0.64 % Bank Pictet & Cie (Europe) AG 815,145 0.62 % 0.62 % ANDVARI AS 810,468 0.61 % 0.62 % State Street Bank and Trust Comp 798,063 0.60 % 0.61 % Total 20 largest shareholders 85,452,219 64.72 % 64.85 % Total other shareholders 46,586,701 35.28 % 35.15 % Total number of shares 31.12.2023 132,038,920 100.00 % 100.00 % Financial Statement and Results Notes to the Financial Statements for 2023 169 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.2 Share capital and shareholders Shares owned by Board Members and Senior Executives: Name Number of shares Shareholding Gustav Witzøe Chair of the Board * Leif Inge Nordhammer Board Member ** Morten Loktu Board Member 1,000 0.00 % Arnhild Holstad Board Member 3,346 0.00 % Ingvild Kindlihagen Board Member - Employees representative 46 0.00 % Frode Arntsen CEO 6,962 0.01 % Ulrik Steinvik CFO *** Roger Bekken COO Farming 14,509 0.01 % Simon A. Søbstad COO Sales & Industry 604 0.00 % Runar Sivertsen Chief Strategy Officer 4,509 0.00 % Eva Haugen Director Quality Management/HSE 7,900 0.01 % Arthur Wisniewski Director Human Resource Management 2,772 0.00 % * Owns shares indirectly through Kvarv AS, the parent company in the Kverva Group. Kvarv AS directly, and indirectly via its subsidiary Kverva AS, owns 93.05 per cent of the shares in Kverva AS, which owns 100 per cent of the shares in Kverva Industrier AS. Kverva Industrier AS owns 45.39 per cent of the shares in SalMar ASA and a voting share of 45.49 per cent. Gustav Witzøe has a voting share of 80 per cent and has a 1 per cent shareholding in Kvarv AS through his ownership of A-shares in the company. ** Owns, directly and indirectly, 1.47 per cent of the shares in SalMar ASA. Leif Inge Nordhammer owns 99.1 per cent of the shares in LIN AS. LIN AS directly owns 1.01 per cent of the shares in SalMar ASA. In addition, LIN AS owns 0.45 per cent of the shares in the company though a 1 per cent shareholding in Kverva AS, which, through Kverva Industrier AS, owns 45.39 per cent of the shares in SalMar ASA and has a corresponding 45.49 per cent voting share. *** Owns directly and indirectly 0.09 per cent of the shares in SalMar ASA. Ulrik Steinvik owns 20,121 shares directly and indirectly through personal related parties, he also owns 100 per cent of the shares in Nordpilan AS. Nordpilan AS owns 0.17 per cent of the shares in Kverva AS, which owns 100 per cent of the shares in Kverva Industrier AS. Kverva Industrier AS owns 45.39 per cent of the shares in SalMar ASA and has a corresponding 45.49 per cent voting share. Shares held directly and indirectly through personal related parties . Financial Statement and Results Notes to the Financial Statements for 2023 170 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.3 Earnings per share Board authorisations Authorisations granted to the Board are normally time limited and are valid only up until the next AGM in 2024 and no later than 30 June 2024. The Board of Directors has been granted the following authorisations which may impact the share capital at 31 December 2023: To increase the company’s share capital limited to NOK 1,814.236.50 through the issue of up to 7,256,946 shares to finance investments and the acquisition of businesses through cash issues and contribu- tions in kind. To issue convertible loans for up to NOK 3,000,000,000 for the purpose of enabling SalMar, at short notice, to use such financial instruments as part of its overall financing requirement. In connection with the conversion of loans raised pursuant to this authorisation, SalMar’s share capital may be increased by up to NOK 1,814,236.50, though with account taken of any capital increases undertaken pur- suant to the authorisation to increase SalMar’s share capital, such that the total capital increase for both authorisations combined may not exceed 5 per cent of the share capital. It follows from the purpose of the authorisations that the Board may need to waive existing shareholders’ preference rights. An authorisation to acquire own shares, cf. the Public Limited Lia- bility Companies Act Section 9 4, for up to 14,513,892 shares with an aggregate par value of NOK 3,628,473. The rationale for the Board’s proposal was that such arrangement would amongst other things give the Board an extended possibility to utilise mechanisms for distribution of capital to SalMar’s shareholders and to facilitate an adequate capital structure of SalMar. In addition the Board can buy back the Company's own shares in order to meet its obligation under its share-based incentive schemes. The amount payable per share could be in the range between NOK 1 and NOK 1,000 per SalMar Share. Exercise of such authorisation was made subject to principles of equal treatment of shareholders. To ensure that SalMar’s majority owner’s, Kverva Industrier AS, proportionate shareholding remained equal it was set in place an arrangement whereby any shares acquired in the market would be cancelled through a subsequent share capital decrease and that a corresponding part of Kverva Industrier AS’ shares would be redeemed. Dividend The Board is proposing payment of a dividend of NOK 35 per share, totalling NOK 4,611.6 million, as at 31 December 2023. No dividend is paid on the company's treasury shares. For the 2022 financial year, a dividend of NOK 20 per share, total- ling NOK 2,628.7 million, was paid out by SalMar ASA. NOTE 4.3 Earnings per share NOK 1,000 2023 2022 Profit for the year attributable 3,202,756 3,311,955 to owners of SalMar ASA Ordinary shares as at 01.01 145,138,920 117,799,999 Treasury shares as at 01.01 13,706,246 102,361 Contributions of equity - increase in number of shares 0 27,338,921 Effect of treasury shares 30,000 -30,000 borrowed from Kverva Effect of treasury shares after acquisition of NTS ASA 0 -13,691,960 Effect of cancellation 13,100,000 0 of treasury shares Effect of treasury shares in acquisition of company 209,402 0 Effect of treasury shares 87,990 118,075 awarded to employees Ordinary shares outstanding 131,760,066 131,432,674 as at 31.12 Weighted average number of ordinary shares for basic EPS 131,452,354 119,800,565 Effects of dilution from share options 180,589 178,240 Weighted average number of ordinary shares adjusted 131,632,942 119,978,805 for the effect of dilution Earnings per share Basic 24.36 27.64 Diluted 24.33 27.60 Financial Statement and Results Notes to the Financial Statements for 2023 171 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.4 Group companies NOTE 4.4 Group companies The consolidated financial statements for 2023 includes the following subsidiaries: Shareholding Company Owner Country Registered office 31.12.2023 SalMar Oppdrett AS SalMar Farming AS Norway Kverva 100.00 % SalMar Settefisk AS SalMar ASA Norway Kverva 100.00 % SalMar Smolt AS SalMar Settefisk AS Norway Kverva 100.00 % SalMar Farming AS SalMar ASA Norway Kverva 100.00 % Øylaks MTB AS SalMar Farming AS Norway Midsund 49.00 % Hitramat Farming AS SalMar ASA Norway Kverva 51.00 % Nor Seafood AS SalMar ASA Norway Botnhamn 82.49 % Nekton Havbruk AS SalMar Farming AS Norway Kverva 51.00 % Refsnes Laks AS SalMar Farming AS Norway Kverva 45.00 % SalMar Aker Ocean AS SalMar ASA Norway Kverva 85.00 % Ocean Farming AS SalMar Aker Ocean AS Norway Kverva 85.00 % Mariculture AS SalMar Aker Ocean AS Norway Kverva 85.00 % Arctic Offshore Farming AS SalMar Aker Ocean AS Norway Kverva 85.00 % Osan Settefisk AS SalMar Farming AS Norway Kolvereid 66.00 % MNH Rederi AS SalMar Farming AS Norway Rørvik 100.00 % SalmoSea AS SalMar Farming AS Norway Rørvik 74.31 % Icelandic Salmon AS SalMar ASA Norway Kverva 52.48 % Arnarlax Ehf Icelandic Salmon AS Iceland Bildudalur 52.48 % Icelandic Salmon Ehf Arnarlax Ehf Iceland Talknafjørdur 52.48 % Fjallalax Ehf Arnarlax Ehf Iceland Bildudalur 52.48 % Vikenco AS SalMar AS Norway Aukra 51.00 % SalMar Japan KK SalMar AS Japan Japan 100.00 % SalMar Singapore PTE Ltd. SalMar AS Singapore Singapore 100.00 % SalMar Vietnam Co., Ltd SalMar AS Vietnam Ho Chi Minh City 100.00 % SalMar-Tunet AS SalMar ASA Norway Kverva 100.00 % * Through shareholders agreement, SalMar has established control and has the power to affect the return from the involvement in Øylaks MTB AS. For further information, see Note 4.5 ** Through shareholders agreement, SalMar has established con- trol and has the power to affect the return from the involvement in Refsnes Laks AS. Disposal of Group companies. On 5 September 2023 the sale of the Group company Salmonor Settefisk AS was completed. The total consideration net of cash in the company was NOK 53.8 million. As a result of the transaction, there is recognised a gain of NOK 15.4 million included in other oper- ating income. On 14 August 2023 the sale of SalMars entire ownership stake in Frøy AS, representing approximately 72.11 per cent of the shares in the company, was completed. See Note 4.7 for further information. Financial Statement and Results Notes to the Financial Statements for 2023 172 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.5 Business combinations NOTE 4.5 Business combinations and other investments in group companies 2023 – Business combinations and other investments in group companies Business combinations With the exception of a business combination in Frøy AS, there have not been any acquisition in the group in 2023. Please see note 4.7, Discontinued operations for more information about the business combination in Frøy. Acquisition of company not considered to constitute a business With effect from 28 December 2023, the Group acquired 49 per cent of the shares in Øylaks MTB AS. Through shareholder agreements, SalMar has established control and the company is consolidated into the SalMar Group from the time of acquisition. Øylaks MTB AS owns one licence for the production of Atlantic salmon. The licence is oper- ated by SalMar. Except from owning the licence, there are no other activity in the company. The activity carried out in the company is therefore not considered to constitute a business. The total consid- eration for the 49 per cent interest was NOK 125.3 million, consisting of 209,402 consideration shares valued at NOK 116.9 million and NOK 8.4 million to be paid in cash. The fair value of the salmon licence allocated at the date for purchase was NOK 255.7 million, see Note 3.1 for further information. 2022 – Business combinations Acquisition and merger of NTS ASA and Norway Royal Salmon ASA (NRS) On 17 March 2022, SalMar made a voluntary tender offer to acquire all outstanding shares in NTS. The acceptance period for the offer was from 18 March to 29 April 2022. The voluntary offer was conditional on amongst other things approval by the competition authorities in both Norway and the EU. At the end of the acceptance period, 52.69 per cent of NTSs shareholders, corresponding to 66,235,009 shares and votes in NTS, had accepted the offer. At 31 December 2022, SalMar owned 92.93 per cent of the shares in NTS. See note 4.6 for further information related to the transaction. The rationale behind the acquisition was to increase value creation in the regions where the companies operate and enable the realization of synergies between the companies. The companies have several overlapping industrial activities in all the areas in which they operate, and the transactions contribute to a more efficient utilization of their resources. This will enable improved utilization of Maximum Allowa- ble Biomass (MAB) and site portfolios, improved utilization of smolt, harvesting, and processing facilities. In parallel with the voluntary offer, a merger plan between SalMar and Norway Royal Salmon (NRS) with SalMar as the acquiring entity was entered into. The merger plan was approved by both companies’ general meetings on 30 June 2022. The merger was, among other things, conditional on that all conditions for the completion of the offer for had been met or waived. The transactions were approved by the Norwegian Competition Authority on 15 July 2022. The European Commission granted its final approval on 31 October 2022. In connection with the clearance by the European Commission, SalMar undertook a commitment to divest the shares in Arctic Fish Holding AS, assumed by SalMar at the time of completion of the merger. SalMar undertook, with some exceptions, not to exercise any influence or control over Arctic Fish in the period from completion of the merger until a disposal was completed. The shares represented approximately 51.28 per cent of the shares and votes in Arctic Fish. The sales transac- tion of the shares was completed on 29 December 2022, with a total contribution net of transaction cost amounted to NOK 1,860 million. The merger with NRS was completed on 7 November 2022. The share- holders of NRS received a merger consideration consisting of a cash consideration of NOK 3,104 million, and a total share consideration of NOK 5,884 million. The share consideration consisting of 17,851,550 shares valued at a share price of NOK 329.60 which represents the share price at the time of completion of the merger. In accordance with the merger plan, NRS completed immediately prior to the merger the agreed acquisition of SalmoNor from NTS, with settlement in cash and NRS shares. Total cash consideration in the transaction was NOK 1,713 million. Of the total consideration under the merger NOK 2,380 million of the merger cash consideration was paid to NTS, in addition NTS received 13,691,960 of the total 17,851,550 consideration shares. Further, the cash consideration of NOK 1,713 million was paid from NRS to NTS in connection with the acquisition of 100 per cent of the shares in SalmoNor. The total cash consideration to NTS is as such NOK 4,093 million. In addition, NTS will own 13,697,303 SalMar shares. The SalMar shares owned by NTS were valuated to NOK 4,513 million at the time of the merger. The shares are treated as treasury shares in the SalMar group, where NOK 2,378 million reduces the equity attributable to shareholders in SalMar, and NOK 2,135 reduces the non-controlling interest at the date of acquisition . Financial Statement and Results Notes to the Financial Statements for 2023 173 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.5 Business combinations The voluntary offer was completed 10 November 2022. The total cash consideration payable in the transaction was NOK 1,807 million, and total share consideration amounts to NOK 3,215 million. The share consideration consisted of total of 9,487,371 new SalMar shares valuated at a share price of NOK 338.87 which represent volume-weighted average price the last 3 trading days before 31 October 2022. From the time of completion of the offer, SalMar achieved control over NTS. Upon completion of the offer, NRS was merged into SalMar and SalMar has assumed all assets, rights and obligations in NRS. For accounting purposes, the transactions was treated as a business combination and the companies was consolidated into the SalMar group with effect from 1 November 2022. Shares in SalMar owned by NTS was, as mentioned above, treated as treasury shares in the SalMar Group. The Group elected to measure the non-controlling interests in the acquiree at fair value. Total acquisition and merger costs of NOK 82.2 million was in 2022 recognised as other operating expenses in the income statement. The starting point for the transactions was the voluntary offer made for all outstanding shares in NTS on 17 March 2022, as well as the subsequent decision to merge SalMar and NRS. The merger was con- ditional on the offer being completed and this has been the starting point for valuation assessments of assets and liabilities resolutions associated with the offer and the merger. For technical reasons, the transactions were completed sequentially with some days in between. For accounting purposes, the total consideration for the offer and the merger was the basis for the purchase price allocation. The fair values of the identifiable assets and liabilities of NTS Group and NRS Group as at the date of acquisition and merger was as follows: Acquisition's effect on the Fair value recognised balance sheet (NOK 1,000) on acquisition Assets Licences 7,265,892 Property, plant & equipment 12,485,211 Right-of-use assets 1,058,557 Biological assets and other inventory 3,488,894 Investment in associates 1,145,505 Investment in SalMar shares (treasury shares) 4,512,870 Other financial investments 2,025,600 Trade receivables and other current receivables 824,274 Cash and cash equivalents 3,296,943 Total identifiable assets at fair value 36,103,746 Liabilities Deferred tax liabilities 2,209,785 Interest-bearing liabilities 14,199,097 Trade payables 1,085,716 Other current liabilities 416,228 Total identifiable liabilities at fair value 17,910,826 Total identifiable net assets at fair value 18,192,920 Non-controlling interest measured at fair value -6,268,346 Goodwill 2,085,214 Total consideration 14,009,788 Purchase consideration Acquisition NTS Merger NRS Total Shares issued 3,214,959 5,883,871 9,098,830 Cash consideration 1,807,393 3,103,565 4,910,958 Total consideration 5,022,352 8,987,436 14,009,788 Financial Statement and Results Notes to the Financial Statements for 2023 174 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.5 Business combinations The goodwill of NOK 2,085 million comprises both of the value of expected synergies arising from the acquisition which is not separately recognised with NOK 1,296 million, and technical goodwill of NOK 789 million recognised due to deferred tax on the excess value identified for licences computed with statutory tax rate in Norway of 22 %. Goodwill is allocated to the segments Farming Central Norway and Farming Northern Norway. Goodwill is not deductible for income tax purposes. From the date of acquisition the companies in NTS and NRS contributed NOK 1,405.1 million of revenue and a operational EBIT with NOK 208.9 million. The profit before tax from continuing operations of the Group has been negatively affected with NOK 188.3 million from the acquired companies in the period. If the combination had taken place at the beginning of the year, revenue from continuing operations would have been NOK 26,702.8 million, operational EBIT NOK 5,067.7 million and profit before tax from continuing operations for the Group would have been NOK 5,864.8 million. Eldisstødin Isthor Ehf (Isthor) With effect from 17 August 2022, the Group acquired 50 % of the shares in the smolt facility Isthor in Iceland. The transaction was approved by the Icelandic Competition Authorities. Prior to the transaction SalMar Group indirectly owned 25.51 % of the shares in Isthor through SalMars 51.02 % ownership in Icelandic Salmon AS. Icelandic Salmon AS owns 100 % of the shares in Arnarlax Ehf, which owns the shares in Isthor. After the transaction, Arnarlax Ehf owns 100 % of the shares in Isthor. The Group's holdings prior to the acquisition date, was remeasured at fair value at the time control was obtained. The fair value of the equity interest was NOK 107.2 million, and a gain of NOK 90.8 million was in 2022 recognised as other financial items in the profit or loss. After the transaction the Group owns 100 % of the shares in Isthor. The purpose of the transaction was to increase the flexibility in size of smolt and increased number of smolt supporting the compa- ny's growth plans. For accounting purposes, the transaction are treated as a business combination with effect from the acquisition date. No material external transaction costs were incurred in the connection with the acquisition. As part of the acquisition agreement, the Group repaid to the former owners a liability amounting to NOK 43.4 million. The fair values of the identifiable assets and liabilities of Isthor as at the date of acquisition was as follows: Acquisition's effect on the balance sheet (NOK 1,000) Fair value recognised on acquisition Property, plant & equipment 196,657 Current assets 533 Deferred tax -12,307 Non-current liabilities -48,576 Other current liabilities -14,105 Net identifiable assets and liabilities 122,201 Goodwill 155,952 Fair value of intercompany long-term liability -63,806 Fair value of the investment at the time of acquisition -107,174 Cash consideration 107,173 Financial Statement and Results Notes to the Financial Statements for 2023 175 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.6 Non-controlling interests NOTE 4.6 Non-controlling interests Non-controlling interests relating to subsidiaries Non-controlling interests Non-controlling from business Non-controlling Non-controlling interests accumulated combination and Share of profit Equity transactions interests accumulated interests share of equity other investments allocated to non- OCI allocated to non- allocated to non- Other changes in non- share of equity 31 December 2023 shareholding 1 Jan in group companies controlling interests controlling interests controlling interests controlling interests 31 Dec Øylaks MTB AS 51.00 % 0 130,377 6,891 0 -5 0 137,263 Refsnes Laks AS 55.00 % 864,892 0 4,119 0 -50,050 0 818,961 Nekton Havbruk AS 49.00 % 101,973 0 14,166 0 -14,210 0 101,929 SalMar Aker Ocean AS 15.00 % 224,866 0 448 0 -2,029 206,246 429,531 Icelandic Salmon AS 47.52 % 1,210,182 0 49,172 84,595 656 -38,791 1,305,814 Hitramat Farming AS 49.00 % 54,214 0 11,185 0 -15,460 0 49,940 Vikenco AS 49.00 % 163,472 0 48,479 37,021 -39,216 0 209,756 NTS AS 0.00 % 64,139 0 0 0 0 -64,139 0 Frøy AS 0.00 % 1,974,134 0 81,283 0 -17,925 -2,037,492 0 Osan Settefisk AS 34.00 % 53,607 0 7,107 0 8 0 60,723 Nor Seafood AS 17.51 % 88,288 0 -4,382 0 0 0 83,907 SalmoSea AS 25.69 % -971 0 -19,046 0 0 0 -20,017 4,798,794 130,377 199,423 121,615 -138,232 -1,934,176 3,177,806 Arctic Offshore Farming AS With effect from 29 November 2023, the 100 per cent owned company Arctic Offshore Farming AS was sold from SalMar ASA to the 85 per cent owned subsidiary SalMar Aker Ocean AS. The transaction was part of the group's internal reorganization to consolidate the group's offshore investment under SalMar Aker Ocean. Apart from reallocation in equity where non-controlling ownership interests increases by NOK 206.2 million, the transaction has no accounting consequences for SalMar Group. The increase is recognised in the equity as a change in non-controlling interests, and where the equity attributable to shareholders of the parent are reduced accordingly. Øylaks MTB AS Through the acquisition of Øylaks MTB AS the non-controlling interest in the Group increased with NOK 130.4 million. The non-controlling interest are assessed at fair value and for accounting purposes recognised directly to equity. See Note 4.5 for further information. Icelandic Salmon AS On 11 November 2023 SalMar ASA has acquired a total for 450,000 shares in Icelandic Salmon AS priced at NOK 187 per share. Through the transaction SalMar increased its shareholding in the company from 51.02 per cent to 52.48 per cent. For accounting purposes, the transaction has been recognised as a change in non-controlling interests, with the NOK 84.15 million effect recognised directly to equity. Of the total amount of NOK 84.15, NOK 38.8 have an effect on non-controlling interest. 176 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.6 Non-controlling interests NTS Following the completion of the mandatory offer for to acquire all shares in NTS in December 2022, SalMar owned 92.93 per cent of the shares in the company. On 3 January 2023 SalMar publicly announced that they resolved to carry out a compulsory acquisition of all remaining shares in the company not owned by SalMar and with effect from 3 January 2023, SalMar became 100 per cent owner of all shares in NTS. The total consideration for the remaining shares was NOK 674.3 million. For accounting purposes, the effect of the transaction is recognised directly to equity. Of the total amount of NOK 674.3, NOK 683.5 have an effect on non-controlling interest. As a consequence of the transaction the non-controlling interest related to treasury shares owned by NTS amounting to NOK 319.2 mil- lion has reduced the equity attributable to shareholders in SalMar accordingly. Certain former minority shareholders that were subject to the com- Frøy On 14 August 2023 the sale of SalMar's entire ownership stake in Frøy AS, representing approximately 72.11 per cent of the shares in the company, was completed. As a consequence of the transaction, the non-controlling interest in Frøy AS, amounting to NOK 1,737.2 mil- pulsory acquisition have made a formal complaint and initiated legal proceedings about the redemption sum. lion, was derecognised at the time of the transaction. For accounting purposes, the effect of the transaction is recognised directly to the equity in the period. For further information, see note 4.7. Non-controlling Non-controlling Non-controlling interests accumulated Non-controlling Share of profit Equity transactions interests accumulated interests share of equity interests from allocated to non- OCI allocated to non- allocated to non- Other changes in non- share of equity 31 December 2022 shareholding 1 Jan business combination controlling interests controlling interests controlling interests controlling interests 31 Dec Refsnes Laks AS 55.00 % 823,237 0 63,655 0 -22,000 0 864,892 Nekton Havbruk AS 49.00 % 84,115 0 17,858 0 0 0 101,973 SalMar Aker Ocean AS 15.00 % 238,830 0 -17,390 0 3,426 0 224,866 Icelandic Salmon AS 48.98 % 960,678 0 188,180 61,143 181 0 1,210,182 Hitramat Farming AS 49.00 % 48,543 0 15,471 0 -9,800 0 54,214 Vikenco AS 49.00 % 97,425 0 71,223 14,424 -19,600 0 163,472 NTS ASA 7.07 % 0 2,534,089 3,231 0 -319,060 -2,154,122 64,139 Frøy ASA 32.99 % 0 3,588,977 65,583 -1,613 0 -1,678,813 1,974,134 Osan Settefisk AS 34.00 % 0 54,756 -1,149 0 0 0 53,607 Nor Seafood AS 17.51 % 0 91,368 -3,080 0 0 0 88,288 SalmoSea AS 25.69 % 0 -843 -128 0 0 0 -971 2,252,827 6,268,346 403,453 73,953 -366,854 -3,832,936 4,798,794 177 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.6 Non-controlling interests Acquisition and merger of NTS and NRS Through the acquisition and merger of NTS and NRS non-controlling interest in the Group increased with NOK 6,268.3 million. The increase in non-controlling interest consists of interests in NTS ASA, Frøy ASA, Osan Settefisk AS, Nor Seafood AS and SalmoSea AS. At the time of acquisition through the voluntary offer of NTS, SalMar acquired 52.69 per cent of the shares in the NTS. Through the merger between SalMar and NRS, became an owner of 13,697,303 SalMar share with at total value of MNOK 4,513 million at the time of the merger. The shares are treated as treasury shares in the SalMar group, where NOK 2,378 million reduces the equity attributable to share- holders in SalMar, and NOK 2,135 reduces the non-controlling interest at the date of acquisition. On 22 November 2022 SalMar announced that the settlement of the voluntary offer of NTS triggered an obligation to make a man- datory offer for all the remaining shares in NTS. With effect from 29 December 2022, the mandatory offer was completed. SalMar acquired additional 40.24 per cent of the shares in the company and owned 92.93 per cent of the shares in NTS after completion of the offer. The total consideration for the remaining shares was NOK 3,819 million. For accounting purposes, the effect of the transaction was recognised directly to equity in the period. The non-controlling interest related to treasury shares owned by NTS was reduced by NOK 1,816 million during the transaction and the equity attributable to shareholders in SalMar was reduced accordingly. On 31 December 2022 the non-con- trolling interest related to the treasury shares in NTS were reduced to NOK 319 million. At the time of acquisition NTS owned 72.11 per cent of the shares in Frøy which resulted in an indirect non-controlling interest of 62.01 per cent in the company. The acquisition of further 40.24 per cent of the shares in NTS, reduced the indirect non-controlling interest in Frøy to 32.99 per cent. Of the total consideration of NOK 3,836 million for 40.24 per cent of the NTS shares, MNOK 2,154 million reduced the non-controlling interest in NTS and MNOK 1,679 million reduced the non-controlling interest in Frøy. Mariculture AS With effect from 19 April 2022, SalMar Group has acquired 49 % of the shares in Mariculture AS. Mariculture AS is a subsidiary of SalMar Aker Ocean AS, which is owned 85.0 per cent of SalMar Group. After the transaction SalMar Aker Ocean AS owns 100.0 per cent of the shares in Mariculture AS. For accounting purposes, the effect of the transaction is recognised directly to equity in the period. 178 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.6 Non-controlling interests Subsidiaries with material non-controlling interests: The Group considers non-controlling interests in Icelandic Salmon Group, Refsnes Laks AS and SalMar Aker Ocean Group to be material. Further details relating to this companies are disclosed below. Frøy AS, with a material non-controlling interest, was classified as held for sale on 31 December 2022, and was subsequently sold during 2023. For further information relating to Frøy, see note 4.7 Discontinued Operations. Icelandic SalMar Aker Refsnes Salmon Ocean Group Laks AS Group NOK 1,000 2023 2023 2023 Income statement Operating revenues 172,891 636,642 1,871,256 Net profit/loss -72,079 7,490 97,280 OCI 0 0 167,996 Total comprehensive income -72,079 7,490 265,276 Total comprehensive income allocated 448 4,119 133,767 to non-controlling interests Dividend paid to non-controlling interests 0 -50,050 0 Statement of financial position as at 31 December Non-current assets 2,946,372 179,573 1,632,360 Current assets 712,843 424,723 1,096,581 Equity 1,927,920 264,869 1,764,555 Non-current liabilities 1,481,323 144,953 704,608 Current liabilities 249,972 194,473 259,777 Recognised excess value of licences 938,993 1,224,151 977,132 and goodwill - net after tax Share of equity allocated to shareholders of SalMar ASA 2,437,382 670,059 1,435,873 Share of equity allocated to non-controlling interests 429,531 818,961 1,305,814 Cash flows From operating activities -350,577 331,980 418,415 From investing activities -145,409 -36,074 -293,295 From financing activities 195,431 -59,459 -22,101 Net increase/decrease in cash and cash equivalents -300,555 236,447 103,019 Icelandic SalMar Aker Refsnes Salmon Ocean Group Laks AS Group NOK 1,000 2022 2022 2022 Income statement Operating revenues 32,460 481,065 1,595,176 Net profit/loss -115,931 115,736 382,821 OCI 0 0 124,980 Total comprehensive income -115,931 115,736 507,801 Total comprehensive income allocated -17,390 63,655 249,323 to non-controlling interests Dividend paid to non-controlling interests 0 -22,000 0 Statement of financial position as at 31 December Non-current assets 2,111,421 165,549 1,349,386 Current assets 500,039 341,076 1,161,909 Equity 1,498,137 333,123 1,557,542 Non-current liabilities 997,611 87,277 643,486 Current liabilities 115,713 86,225 310,267 Recognised excess value of licences - net after tax 0 1,238,690 913,155 Share of equity allocated to shareholders of SalMar ASA 1,273,271 706,921 1,260,516 Share of equity allocated to non-controlling interests 224,866 864,892 1,210,182 Cash flows From operating activities -7,797 96,231 152,550 From investing activities -398,640 -40,441 -285,624 From financing activities 203,557 -55,294 116,279 Net increase/decrease in cash and cash equivalents -202,881 496 -16,795 179 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.7 Discontinued operations NOTE 4.7 Discontinued operations Accounting policies The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense Through the acquisition of NTS in 2022, Frøy AS became a subsidiary of the SalMar group. SalMar owned 100 per cent of the shares in NTS, which owned 72.11 per cent of the shares in Frøy AS. On 13 January 2023, SalMar announced that, based on incoming interest regarding Frøy AS, the group decided to explore strategic alternatives with the aim of maximizing value for its shareholders. On 14 August 2023, it was announced that a transaction between NTS AS, Falcon Bidco AS, a company indirectly wholly owned by infrastructure funds managed by Goldman Sachs Asset Management, and Frøy AS was completed. Falcon Bidco AS acquired NTS' entire ownership stake in Frøy, and a cash consideration of NOK 76.50 per share was paid in the transaction, with proceeds from the sale amounting to NOK 4,764 million. Following the decision made by the SalMar board in December 2022 to explore the strategic alterna- tives, Frøy AS was classified as a disposal group held for sale and as a discontinued operation from the completion of the voluntary offer of all outstanding shares in NTS AS with effect from 1 November 2022, until the completion of the transaction 14 August 2023. The cash consideration from the sale of Frøy AS amounted to NOK 4,764 million. Cash in Frøy at the time of the transaction amounted to NOK 364 million. Total proceeds from the sale of Frøy AS net of cash amounted to NOK 4,400 million. Closing of the transaction where Frøy AS acquired 100 % of the shares of Marinus Aquaservice AS took place beginning of April and Marinus is included in Frøy AS's consolidated accounts from 01.04.2023. 01.01.2023– 01.11.2022– 14.08.2023 31.12.2022 Total operating revenues 1,227,552 379,102 Cost of goods sold 252,411 86,160 Salary and personnel expenses 402,026 111,174 Other operating expenses 234,441 71,121 EBITDA 338,674 110,647 Operating profit 338,674 110,647 Income from investments in associates and joint ventures 7,381 912 Net interest expenses -85,784 -14,811 Other financial items 59,142 -5,649 Profit from discontinued operation before tax 319,414 91,098 Income tax expense from the ordinary activities for the period 27,973 -16,273 Profit for the period from discontinued operations 291,440 107,372 Profit for the period from discontinued 365,154 0 operations, gain from sale Total profit from discontinued operations 656,594 107,372 Other comprehensive income: Items that may be reclassified to profit or loss in subsequent periods: Change in fair value of financial instruments, net after tax 0 -4,889 Total comprehensive income from discontinued operations 656,594 102,483 Profit for the period from discontinued operations 575,311 65,583 attributable to equity holders of SalMar ASA Earnings per share Diluted profit for the period from discontinued operations 4.37 0.52 Profit for the period from discontinued operations 4.38 0.52 180 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.7 Discontinued operations The major classes of assets and liabilities of Frøy AS as held for sale as at year end 2022 were as follows: ASSETS 31.12.2022 Non-current tangible assets 10,201,182 Right-of-use assets 489,144 Non-current financial assets 120,194 Total non-current assets 10,810,520 Inventory 14,966 Trade receivables 256,621 Other current receivables 70,997 Cash and cash equivalents 318,705 Total current assets 661,289 TOTAL ASSETS 11,471,809 LIABILITIES Deferred tax liability 919,073 Non-current interest-bearing liabilities 3,608,202 Non-current lease liabilities 314,340 Total non-current liabilities 4,841,615 Current interest-bearing liabilities 515,059 Current lease liabilities 91,177 Other current liabilities 164,594 Total current liabilities 770,830 TOTAL LIABILITIES 5,612,445 181 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.8 Related party transactions NOTE 4.8 Related party transactions The group's parent company is SalMar ASA. The ultimate parent company is Kvarv AS, which indirectly through the Kverva group based on a quali- tative assessment, is considered to have power over the company. There are several factors that support the conclusion, including the dispersed ownership of the remaining shares in SalMar ASA. See note 4.2 for further details. Transactions with related parties in 2023 (NOK 1,000) Sales Purchases Receivables Liabilities Associates of the SalMar Group 303,535 85,543 10,112 45 Companies controlled by the parent company Kverva AS 2,286,780 569,302 180,147 20,018 Associates of the parent company Kverva AS 84,226 26,954 20,118 1,225 Transactions with related parties in 2022 (NOK 1,000) Sales Purchases Receivables Liabilities Associates of the SalMar Group 215,388 100,735 30,428 10,990 Companies controlled by the parent company Kverva AS 2,060,367 455,541 248,893 16,929 Associates of the parent company Kverva AS 56,183 22,296 3,135 9 Transactions between the Group and related parties are undertaken at market terms and conditions. In addition, dividends have been received from associates (see Note 3.5), while benefits have been paid to members of the Board and senior executives (see Note 2.3). 182 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.9 Climate risk NOTE 4.9 Climate risk In 2023, SalMar conducted its annual assessment of climate risk for all its operations across the value chain from roe to plate and accompanying suppliers to the value chain. The assessment is aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework and evaluates both risks and opportunities and associated physical and transitional implications to SalMar’s financial position. Some key findings include: • SalMar’s assets running on fossil fuels, e.g., work boats, company cars, etc. are sensitive to SalMar’s climate ambitions and external pressure to quickly transition to zero-emission fuels. • Carbon taxation could have material financial implications on SalMar if introduced on imported and/or exported products. • Increased frequency of acute physical events like heatwaves and floods can affect the crops necessary to grow some of SalMar's feed ingredients. Reduced availability of feed ingredients contributes to increased costs on what is already SalMar's largest operational expenditure. • The low carbon footprint of salmon farming relative to other protein sources puts salmon in pole position to withstand CO2-efficiency regulations and presents an attractive option for climate-aware consumers. Central bodies like the Food and Agriculture Organization of the United Nations (FAO) states that the seafood industry will play an important role in achieving the UN's Sustainable Development Goals, given its high nutritional output and low footprint. In conclusion, there are currently no indicators of potential climate risks having a material impact of the carrying amount of SalMar's assets, or have material impact on SalMar's activities and the expected future cash flows. However, this remains an important matter to continue to assess in the coming years. NOTE 4.10 Allegations of price collusion and events occurring after the reporting period On 6 February 2019, the European Commission launched an investiga- tion of the SalMar ASA and several other producers of farmed Norwe- gian Atlantic salmon, concerning alleged anti-competitive conduct. Per 31 December 2023 the investigation was ongoing and SalMar did not have insight in the European Commission's view. On 25 January 2024 the European Commission issued a Statement of Objections in the case. The Commission's preliminary assessment is that there may have occurred a breach of EU competition law in the period 2011–2019, related to spot sales into the EU of fresh, whole salmon farmed in Norway. The Statement of Objections does not include calculation of a potential fine. SalMar's potential economic liability therefore remains uncertain. SalMar strongly disagrees with the Commission's preliminary assessment and is accounting for SalMar's view in a thorough reply to the Commission. Following the European Commission's investigation, complaints were filed against SalMar ASA, as one of several Norwegian salmon pro- ducers, before a Federal Court in Toronto on 11 October 2019 and 3 January 2020. The cases were consolidated. Lawsuits were also filed before local courts in Vancouver and in Quebec but put on hold pending a decision in the Federal Court. The cases all concern the same allegation of anti-competitive conduct. In 2023 SalMar entered a collective settlement agreement, which was finally approved by the Federal Court 9 February 2024. The settlement was entered purely for commercial reasons and due to the costs associated with litigation. The settlement effectively concludes the Canadian lawsuits. In addition, in February 2024 a group of UK supermarkets issued claims for damages against SalMar ASA as one of several salmon producers, alleging anti-competitive conduct. SalMar rejects these allegations and strongly believes that the claims lack merit. The case is in an early phase and SalMar understands that the claims have been issued at this stage to interrupt a limitation period. SalMar will take appropriate measures in following up and defending the claims. 183 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.11 Alternative performance measures NOTE 4.11 Alternative performance measures The SalMar Group prepares its financial statements in accordance with International Financial Reporting Standards (IFRS). In addition, management has established alternative performance measures (APMs) to provide useful and relevant information to users of the financial statements. APMs have been estab- lished to provide greater understanding of the company's underlying performance, and do not replace the consolidated financial statement prepared in accordance with IFRS. The performance parameters have been reviewed and approved by the Group's management and Board of Directors. APMs may be defined and used in other ways by other companies. The APMs are deduced from the performance measures defined in IFRS. The figures are defined below and calculated in a consistent manner. They are presented in addition to other performance measures, in keeping with the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority (ESMA). Operational EBIT Operational EBIT is an APM used by the Group. The relationship between Operational EBIT and operating profit/loss is presented in the table below. The difference between Operational EBIT and operating profit/ loss relates to provisions for production tax and onerous contracts, and items which are classified in the financial statements on the line for fair value adjustments. These items are market value and fair value assessments linked to assumptions about the future. Operational EBIT shows the underlying operation and the results of transactions undertaken in the period. NOK 1,000 2023 2022 Operating profit/loss 8,509,224 4,738,158 Production tax 208,374 85,232 Onerous contracts 237,346 -126,330 Fair value adjustment: Change in fair value of the biological assets -1,571,116 -446,150 Change in fair value adjustment due to business 722,809 283,398 combination - included in cost of goods sold Change in unrealised Fish Pool contracts -18,737 -69,737 Operational EBIT 8,087,900 4,464,571 Operational EBITDA Operational EBITDA is another alternative performance measure used by the Group. EBITDA is opera- tional EBIT plus depreciation, write-downs and amortization. NOK 1,000 2023 2022 Operational EBIT 8,087,900 4,464,571 Depreciation and write-downs 1,452,230 1,037,695 Operational EBITDA 9,540,130 5,502,266 Operational EBIT/kg gw and Operational EBITDA/kg gw Operational EBITDA and operational EBIT per kg gutted weight is defined as a key performance parameter for SalMar. The performance parameter is used to assess the profitability of the goods sold and the Group's operations. The performance parameter is expressed per kg of harvested volume. Fish Fish Farming Farming Central Northern Icelandic SalMar SalMar 2023 Norway Norway Salmon Aker Ocean Group Volume harvested (tonnes) 141,139 92,777 17,919 2,267 254,102 Operational EBITDA (NOK 1,000) 5,269,225 3,764,615 333,360 17,522 9,540,130 EBITDA/kg gw (NOK) 37.3 40.6 18.6 7.7 37.5 Operational EBIT (NOK 1,000) 4,612,426 3,402,021 230,199 -52,572 8,087,900 EBIT/kg gw (NOK) 32.7 36.7 12.8 -23.2 31.8 Fish Fish Farming Farming Central Northern Icelandic SalMar SalMar 2022 Norway Norway Salmon Aker Ocean Group Volume harvested (tonnes) 114,139 63,392 16,139 0 193,670 Operational EBITDA (NOK 1,000) 4,082,088 2,712,226 441,415 -48,708 5,502,266 EBITDA/kg gw (NOK) 35.8 42.8 27.4 0 28.4 Operational EBIT (NOK 1,000) 3,599,217 2,525,754 365,943 -154,769 4,464,571 EBIT/kg gw (NOK) 31.5 39.8 22.7 0 23.1 184 Financial Statement and Results Notes to the Financial Statements for 2023 Financial Statement and Results Notes to the Financial Statements for 2023 Note 4.11 Alternative performance measures Net interest-bearing debt (NIBD) and net interest-bearing debt including leasing liabilities Net interest-bearing debt is an alternative performance measure used by the Group. The performance measure is used to express the Group's working capital and is an important performance measure for investors and other users, because it the shows net borrowed capital used to finance the Group. Net interest-bearing debt is defined as long-term and short-term debt to credit institutions, less cash & cash equivalents. Leasing liabilities under IFRS 16 are not included in the calculation of net inter- est-bearing debt. To highlight total interest bearing debt including leasing liabilities, this is presented as a separate measure. NOK 1,000 31.12.2023 31.12.2022 Long-term debt to credit institutions 12,211,226 18,349,972 Short-term debt to credit institutions 1,680,742 3,442,121 Cash & cash equivalents -785,271 -2,712,707 Net interest-bearing debt (NIBD) 13,106,697 19,079,386 Lease liabilities 1,845,494 1,425,297 NIBD incl. lease liabilities 14,952,191 20,504,683 Cash flow per share - diluted NOK 1,000 2023 2022 Cash flow from operating activities 8,975,477 4,222,818 Average no. of shares outstanding (diluted) 131,633 119,979 in the period (1,000 shares) Diluted cash flow per share (NOK) 68.19 35.20 NIBD incl. lease liabilities / EBITDA NIBD incl. lease liabilities / EBITDA is an APM used by the Group to measure leverage. The figure is arrived at by dividing NIBD incl. lease liabilities at the end of the period with EBITDA for the last 12 months. Adjusted earnings per share The Group uses adjusted earnings per share to reflect earnings excluding implementa- tion effect resource rent tax and net fair value adjustments. The key figure is arrived at by dividing the profit for the period adjusted for onerous contracts, fair value adjustments and changes in deferred taxes by the average number of shares outstanding (diluted) in the period. NOK 1,000 2023 2022 Profit for the period attributable to shareholders in SalMar ASA 3,202,756 3,311,955 Onerous contracts ) 237,346 -126,330 Fair value adjustment ) -1,589,853 -515,887 Fair value adjustment included in cost of goods 722,809 283,398 sold due to business combination *) Calculated tax effect of adjustments ) -243,361 78,940 Resource rent tax - implementation effect (deferred tax) ) 2,079,987 0 Adjusted profit for the period attributable to shareholders in SalMar ASA ) 4,409,683 3,032,076 Average no. of shares outstanding (diluted) 131,633 119,979 in the period (1,000 shares) Adjusted earnings per share 33.50 25.27 ) The adjustments made to the profit for the period attributable to shareholders in SalMar ASA in the table above, are inclusive of non-controlling interest. ) Calculated tax rate 22 % for Onerous contracts, Fair value adjustment and Fair value adjustment included in cost of goods sold due to business combination. For 2023 the calculated change in deferred resource rent tax on fair value adjustment has been added. 185 Financial Statement and Results Annual Financial Statements of SalMarASA Financial Statement and Results Annual Financial Statements of SalMarASA Note 4.11 Alternative performance measures Annual Financial Statements of SalMarASA 2023 Financial Statement and Results Annual Financial Statements of SalMarASA Financial Statement and Results Annual Financial Statements of SalMarASA 186 Financial Statement and Results Annual Financial Statements of SalMarASA Financial Statement and Results Annual Financial Statements of SalMarASA Annual Financial Statements SalMarASA 2023 Statement of Profit or Loss NOK1,000 Operating revenue and expenses Note 2023 2022 Operating revenue 2, 7 836,826 1,487,791 Total operating revenue 836,826 1,487,791 Cost of goods sold 7 -419,990 -1,409,110 Salary and personnel expenses 3, 4 -129,058 -94,044 Depreciation and amortisation 9, 10 -9,537 -4,887 Write-downs 10 -1,090 0 Other operating expenses 5, 7 -119,907 -285,712 Total operating expenses -679,583 -1,793,753 Operating profit/ loss 157,243 -305,962 Financial items Income from investments in group companies 6, 7 4,944,737 3,031,955 Income from investments in associated companies 6 10,060 0 Interest income 6, 7 1,212,624 358,143 Interest expenses 6, 7 -1,250,567 -302,741 Other financial items 6 -128,300 85,053 Net financial items 4,788,553 3,172,409 Profit before tax 4,945,797 2,866,448 Income tax expense 8 -903,735 -81,377 Profit for the year 4,042,062 2,785,071 Allocated to: Dividend 18 4,611,602 2,628,653 Transferred from (-) /to(+) retained earnings 1,983,803 156,417 Transferred from (-) /to(+) other paid-in equity -392,468 0 Transferred from (-) /to(+) share premium -2,160,876 0 Total allocated 4,042,062 2,785,071 187 Financial Statement and Results Annual Financial Statements of SalMarASA Financial Statement and Results Annual Financial Statements of SalMarASA Balance Sheet NOK1,000 Assets Note 31.12.2023 31.12.2022 Non-current assets Intangible assets 9 11,182 14,040 Property, plant and equipment 10 35,146 8,868 Investments in subsidiaries 11 6,763,064 13,772,615 Investments in associates and joint ventures 12 1,452,136 1,447,287 Intercompany non-current receivables 13 16,501,597 13,805,920 Other non-current receivables 14, 15 145,086 266,182 Other non-current financial assets 2,065 152 Total non-current assets 24,910,277 29,315,064 Current assets Inventory 0 100,605 Trade receivables 16 4,870 281,295 Intercompany current receivables 13 4,852,636 6,260,987 Other current receivables 56,265 24,926 Other financial instruments 15 0 9,792 Cash and cash equivalents 17 15,557 1,411,280 Total current assets 4,929,328 8,088,886 Total assets 29,839,605 37,403,949 188 Financial Statement and Results Annual Financial Statements of SalMarASA Financial Statement and Results Annual Financial Statements of SalMarASA Balance Sheet (continued) NOK1,000 Equity and liabilities Note 31.12.2023 31.12.2022 Equity Share capital 18 33,010 36,285 Treasury shares -70 -4 Share premium 10,016,688 12,182,189 Other paid-in equity 0 343,902 Total paid-in equity 10,049,628 12,562,373 Retained Earnings 0 2,336,919 Total retained earnings 0 2,336,919 Total equity 10,049,628 14,899,292 Non-current liabilities Pension liabilities 4 0 10,161 Deferred tax liabilities 8 41,204 56,561 Non-current financial liabilities 15 12,898 0 Non-current interest bearing debt 19, 20 11,111,053 17,267,373 Total non-current liabilities 11,165,156 17,334,094 Current liabilities Current interest bearing debt 19, 20 1,043,816 423,354 Trade payables 12,174 414,137 Tax payable 8 919,410 0 Dividend 18 4,611,602 2,628,653 Public duties payable 20,229 55,945 Intercompany current liabilities 13 1,941,307 1,375,382 Other current liabilities 76,283 273,092 Total current liabilities 8,624,820 5,170,563 Total liabilities 19,789,977 22,504,658 Total Equity and Liabilities 29,839,605 37,403,949 Frøya, 12 April 2024 Gustav Witzøe Chair of the Board Margrethe Hauge Vice-Chair of the Board Morten Loktu Board Member Arnhild Holstad Board Member Leif Inge Nordhammer Board Member Ingvild Kindlihagen Board Member Employee representative Frode Arntsen CEO Hans Stølan Board Member Employee representative 189 Financial Statement and Results Annual Financial Statements of SalMarASA Financial Statement and Results Annual Financial Statements of SalMarASA NOK 1,000 Note Share capital Treasury shares Share premium Other paid-in equity Retained Earnings Total equity Equity 31.12.2022 36,285 -4 12,182,189 343,902 2,336,919 14,899,292 Profit for the year 0 0 -2,160,876 -392,468 6,595,406 4,042,062 Gain on cash flow hedges, net of tax 15 0 0 0 0 4,033 4,033 Dividend 18 0 0 0 0 -4,611,602 -4,611,602 Merger with NTS AS - effect of treasury shares 21 0 -3,423 0 0 -4,509,447 -4,512,870 Merger with NTS AS 21 0 0 0 0 55,412 55,412 Share capital reduction 21 -3,275 3,275 0 0 0 0 Sales of treasury shares 0 8 -4,626 0 16,163 11,544 Acquisition of shares with settlement in treasury shares 0 52 0 4,073 112,763 116,888 Share-based payment, release 3 0 22 0 -22 0 0 Share-based payment, expensed 3 0 0 0 43,750 0 43,750 Share-based payment, tax effect 3 0 0 0 765 0 765 Remeasurement gain/ loss on defined benefit plans, net of tax 4 0 0 0 0 552 552 Other changes 0 0 0 0 -199 -199 Equity 31.12.2023 33,010 -70 10,016,688 0 0 10,049,628 Statement of changes in equity NOK 1,000 SalMarASA was merged with NTSAS with effect from 13 Decem- ber2023. For accounting purposes, the merger is accounted for with group continuity with effect from 1 January 2023. See Note 21 for further details. See Note 18 for information regarding share capital reduction and dividend in the year. See Note 15 for further information regarding cash flow hedges. A share-based remuneration scheme has been established for senior executives and other key personnel. See Note 3 for further details. With effect from 28 December2023, SalMar FarmingAS acquired 49percent of the shares in Øylaks MTBAS. The consideration for the 49percent interest was partially settled with shares from SalMarASA, a total of 209,402 shares valued at NOK116.9million. A total of NOK116.9million are recognised as intercompany non-current receiv- ables against SalMar FarmingAS. See further information in Note 13. 190 Financial Statement and Results Annual Financial Statements of SalMarASA Financial Statement and Results Annual Financial Statements of SalMarASA Statement of Cash flows NOK 1,000 NOK 1,000 Note 2023 2022 Cash flows from operating activities Profit before tax 4,945,797 2,866,448 Tax paid in the period 8 0 -493,505 Tax paid in the period from merged company 8 -84,462 0 Income from investments in group companies 6 -4,944,737 -3,031,955 Income from investments in associated companies 6 -10,060 0 Net interest expenses 6 37,943 -55,402 Depreciation and amortisation 9, 10 9,537 4,887 Write-downs 10 1,090 0 Gains/losses on sale of non-current assets -701 0 Share-based payment, expensed 3 8,774 8,700 Change in trade receivables 13 -109,149 -61,552 Change in trade payables 13 -161,099 -200,138 Change in inventory 100,605 42,111 Change in other accruals -149,879 -37,604 Net cash flows from operating activities -356,340 -958,010 Cash flows from investing activities Receipts from disposal of property, plant and equipment 10 3,383 0 Purchase of property, plant & equipment 10 -997 -1,881 Purchase of intangible assets 9 -1,630 -9,209 Net payments related to loans to others 33,002 0 Net payments related to loans to group companies 7 1,626,341 -1,856,642 Receipts of group contributions and dividends from subsidiaries 7 3,639,639 2,371,315 Receipts of dividends from associated companies 6 10,060 0 Receipts from disposal of other investments 22 4,744,886 1,859,913 Cash consideration related to merger, net of cash 21 108,488 -3,128,248 Payments for other investments in subsidiaries 11, 21 -758,474 -5,667,573 Increase of share capital in group companies 22 -1,114,069 -55,000 Net interest income from group companies 6 867,168 308,621 Other interest income related to investment activities 1,272 1 Net cash flows from investing activities 9,159,069 -6,178,702 191 Financial Statement and Results Annual Financial Statements of SalMarASA Financial Statement and Results Annual Financial Statements of SalMarASA NOK 1,000 Note 2023 2022 Cash flows from financing activities Repayments on long-term debts -14,510,119 -158,835 Proceeds from long-term debts 7,198,786 11,334,168 Change in overdraft facility 620,462 -107,509 Contributions of equity net of transaction cost 0 -305 Dividend paid 18 -2,628,653 -2,353,953 Interest paid 6 -878,929 -177,275 Net cash flows from financing activities -10,198,453 8,536,292 Net change in cash and cash equivalents -1,395,723 1,399,579 Cash and cash equivalents 01.01 1,411,280 10,814 Cash and cash equivalents 31.12 15 15,557 1,410,394 Unused drawing rights 19 8,819,806 6,900,000 Statement of Cash flows, continued NOK 1,000 192 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASAFinancial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Notes to the Financial Statements for 2023, SalMarASA Note 1 General information and accounting policies 187 Note 2 Operating revenue 189 Note 3 Salary and personnel expenses 190 Note 4 Pension cost 190 Note 5 Auditors fees 191 Note 6 Financial items 191 Note 7 Intercompany transactions – revenue and cost 192 Note 8 Tax 192 Note 9 Intangible assets 193 Note 10 Property, plant and equipment 194 Note 11 Subsidiaries 195 Note 12 Associates and joint ventures 195 Note 13 Intercompany transactions - receivables and liabilities 196 Note 14 Other non-current receivables 196 Note 15 Derivatives 196 Note 16 Trade and other receivables 198 Note 17 Cash and cash equivalents 199 Note 18 Share capital and shareholders information 199 Note 19 Non-current interest bearing debt 200 Note 20 Security pledges and contingent liabilities 201 Note 21 Acquisition of remaining shares and merger of NTS AS 202 Note 22 Divestment of subsidiaries 202 Note 23 Financial risk 203 Note 24 Allegations of price collusion and events occurring after the reporting period 203 193 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 1 General information and accounting policies NOTE 1 General information and accounting policies The annual financial statements have been prepared in accordance with the Norwegian Accounting Act of 1998 and Generally Accepted Accounting Principles in Norway (NGAAP). The accounting policies described below are applied only to the parent company SalMarASA. The financial statement for SalMar Group have been prepared in accordance to International Financial Reporting Standards (IFRS). SalMarASA was merged with NTSAS with effect from 13 Decem- ber2023. For accounting purposes, the merger is accounted for with group continuity with effect from 1 January 2023. From this time, SalMarASA has assumed all assets, rights and obligations in NTSAS. For tax purpose the merger is carried out with full tax continuity in accordance with the Norwegian Tax Act. Use of estimates Preparation of the financial statements in accordance with NGAAP requires management to make estimates and assumptions which affect the value of assets and liabilities recognised in the Balance Sheet as well as income and expenses in the Statement of profit and loss for the financial year. Estimates and their underlying assumptions are based on past experience and other factors deemed relevant and probable at the time they are made. Estimates are reviewed continuously and final values and results may differ from these esti- mates. Changes in accounting estimates are accounted for in the period in which the changes occur. Classification and valuation of balance sheet items Assets intended for long-term ownership or use are classified as non-current assets. Assets related to the normal operating cycle are classified as current assets. Receivables are classified as current assets if they are expected to be repaid within 12 months of the transaction date. Similar criteria are applied to liabilities. Current assets are valued at the lower of cost and fair value. Cur- rent liabilities are recognised in the balance sheet at nominal value. Non-current assets are valued at historical cost. Property, plant and equipment whose value will deteriorate is depreciated on a straight- line basis over the asset’s estimated useful life. Non-current assets are written down to fair value where this is required by accounting rules. Revenues Services are recognised in revenue as they are delivered. Revenues from sales of goods is recognised when control of the goods is transferred to the customer at an amount that reflects the consid- eration to which the group expects to be entitled in exchange for these goods. This is typically when the goods are picked up by the carrier or on delivery to a terminal or the customer. This depends on the delivery conditions and varies from customer to customer. The normal credit period is 30 days net. Revenues are recognised at the value of the consideration at the transaction date. Receivables Trade and other receivables are recognised at their nominal value, less a provision for expected bad debts. Provisions for bad debts are made on the basis of an individual assessment of the receivable concerned. Property, plant and equipment Property plant & equipment are capitalised at historic cost and depreci- ated over the asset's expected economic life. Direct maintenance costs are recognised in operating expenses as they arise, while upgrades or improvements are added to the asset's cost price and depreciated in line with the asset concerned. Impairments are recognised when its carrying amount exceeds its recoverable amount. The recoverable amount is the higher of net sales value and value in use. Value in use is the present value of the future cash flows the asset will generate. Subsidiaries, associated company and joint ventures Subsidiaries, associates and joint ventures are measured at cost in the statutory accounts. The investment is evaluated at acquisition cost less any impairment. An impairment loss is recognised if the impair- ment is not considered to be temporary and is required pursuant to generally accepted accounting principles. Impairments are reversed when the basis for the impairment no longer applies. Dividends and Group contributions are recognised in the same year as they are proposed in the subsidiary’s financial statements. If divi- dends/ Group contributions materially exceed retained earnings after acquisition, the excess amount is regarded as a reimbursement of invested capital and is deducted from the recorded cost in the balance sheet. Dividends and group contributions received are recognised as other financial income. Pensions The company’s pension schemes are according to the requirements of the Mandatory Occupational Pensions Act. The company operates a defined contribution pensions scheme for its employees. The com- pany pays contributions to a privately held insurance plan and has no further payment obligation once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Social security costs are charged based on the contribution paid. After the merger with Norway Royal Salmon in 2022, SalMar also has a defined benefit scheme which entitles the 11 members of the scheme to defined future benefits. These are mainly depend- ent on the number of years of entitlement, level of salary upon reaching retirement age and the size of the pension benefits paid by the National Insurance Scheme. The liability is funded through an insurance company. 194 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 1 General information and accounting policies Interest and currency swaps The company has entered into interest rate swap agreements to reduce the risk associated with the company's floating rate loans. The swap agreements satisfy the requirements for hedge accounting, and are classified as cash flow hedges. The swap agreements are recognised at fair value in the balance sheet and changes in fair value are accounted for in comprehensive income. The effectiveness of the hedge is measured at the end of each period, any ineffective part will be entered as a financial item in the result. The company has also entered into a cross-currency interest rate swap to reduce the interest rate risk and the currency risk linked to the subsidiary in Iceland. This instrument does not qualify for hedge accounting, and changes in fair value are recognised as other financial items in the profit or loss statement. Share-based payment - Restricted Share Unit Plan (RSU) The company has a share-based incentive scheme, under which the company receives services from employees in return for Restricted Share Units (RSUs). The fair value of the services received by the com- pany from the employees in return for the RSU granted is recognised as an expense, with a corresponding increase in paid-in equity. The total amount expensed over the vesting period is determined on the basis of fair value on the date the RSUs are granted and the number of RSUs that are expected to vest. Fair value includes the effect of any vesting conditions, but does not take account of any vesting conditions which are not market conditions. However, vesting conditions which are not market condi- tions affect the number of RSUs expected to accrue. The total cost is recognised over the vesting period. On the reporting date, the company revises its estimate of the number of RSUs that are expected to vest. The effect of the change from the original estimate is recognised by means of a corresponding adjustment in equity. The value of the RSUs relating to employees in subsidiaries is recognised as an investment in subsidiaries. Tax Income tax expense in the financial statements includes tax payable and the change in deferred tax for the period. Tax relating to equity transactions is recognised directly in equity. Deferred tax/tax assets are calculated at 22 percent on all temporary differences between the book value and tax value of assets and liabilities, and loss carried forward at the end of the reporting period. Taxable and deductible temporary differences that reverse or may reverse in the same period are offset. Deferred tax assets are recognised when it is probable that the company will have adequate profit for tax purposes in subsequent periods to utilise the tax asset. Statement of Cash Flows The cash flow statement has been prepared according to the indirect method. Cash and cash equivalents include cash, bank deposits and other short-term highly liquid investments which entail no appreciable exchange rate risk, and which mature within three months of the purchase date. 195 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 2 Operating revenue NOTE 2 Operating revenue The parent company SalMarASA is a holding company, which primarily provides administrative services to group companies. Through the merger with Norway Royal SalmonASA on 7 November 2022 the sales business in former NRSASA was included in SalMarASA. With effect from 28th of February 2023 the sales office for former NRSASA in Kristiansand was sold. With effect from 1 March 2023 the sales activities in SalMar took place through the legal entity SalMarAS and all sales activities in SalMarASA ceased from the same time. The sale of the sales office had no significant effect on the statement of profit or loss or the balance sheet. NOK 1,000 2023 2022 Revenue intercompany services 410,762 105,292 Revenue intercompany sale of goods 19,276 0 Revenue from sale of goods 394,439 1,381,946 Other intercompany revenue 10,184 0 Other revenues 2,166 552 Total 836,826 1,487,791 Geographic breakdown of sales revenues from sales of goods (NOK 1,000) 2023 2022 Norway 34,629 181,376 Europe 257,923 983,973 Asia 118,706 181,707 Other countries 2,457 34,891 Total 413,714 1,381,946 Breakdown of sales revenues from sales of goods by currency (NOK 1,000) 2023 2022 CHF 2,174 2,167 EUR 232,045 857,229 GBP 24,037 87,104 JPY 405 4,249 NOK 44,857 259,676 SEK 571 4,670 USD 109,627 166,851 Total 413,714 1,381,946 196 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA NOTE 3 Salary and personnel expenses Salary and personnel expenses (NOK 1,000) 2023 2022 Salaries and other short-term employee benefits 87,124 58,781 Social security expenses 18,621 9,999 Pension expenses -4,186 3,683 Share-based payment 8,774 8,700 Other benefits and personnel expenses 18,725 12,880 Total 129,058 94,044 Average number of full-time equivalents employed during the financial year 55 47 Benefits paid to senior executives and the board of directors See Note 2.3 to the consolidated financial statements for details of the remuneration paid to senior executives and the board of directors and Note 2.4 to the consolidated financial statements for details related to outstanding RSUs for members of the senior executives. Share-based payment - Restricted Share Unit Plan (RSU) The share-based payment scheme (RSU) comprises annual allocations by the Board of Directors to the senior executives and other key personnel. The award for 2023 was made on 19 December2023. In connection with this, 27 employees were granted 31,601 RSUs with respect to company shares. In the corresponding award in 2022, 20 employees was granted a total of 37,202 RSUs. The RSUs accrue over a period of three years, with 1/3 vesting annually. The fair value of the cost to SalMarASA is calculated on the date the award is made and recognised over the vesting period. The cost in 2023 was NOK8.8million (2022: NOK8.7million). A provision for social security tax has been made with respect to this cost. See Note 2.4 to the consolidated financial statements for further details of SalMar's share-based incentive scheme. NOTE 4 Pension cost SalMarASA has a defined contribution plan that is in accordance with the legal requirements in Norway. Premiums paid with respect to the defined-contribution scheme are expensed as incurred. In 2023, NOK3.6million in pension contributions were recognised in expenses. The scheme includes 58 people. SalMarASA also have a defined benefit scheme from the merger of Norway Royal Salmon. Members in the scheme are reduced during the year and there was recognised a gain of NOK9.5million related to the settlement. Specification of the pension cost for the Group under the defined benefit scheme: NOK 1,000 2023 01.11.2022– 31.12.2022 Current service cost 722 715 Interest cost 56 59 Payroll tax 112 109 Administration cost 17 0 Net pension costs service – defined benefit scheme 907 883 Settlement/ curtailment -9,524 0 Net pension costs service – defined benefit scheme net of settlement/ curtailment -8,617 883 See Note 2.5 to the consolidated financial statements for further details related to the defined benefit scheme. Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 3 Salary and personnel expenses 197 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 5 Auditors fees NOTE 5 Auditors fees Auditor EY Breakdown of auditor's fee (NOK 1,000) 2023 2022 Audit services 1,650 1,137 Other certification services 759 1,380 Tax advisory services 1,182 357 Other non-audit fees 29 321 Total 3,620 3,194 The fees are ex. VAT Auditor Others Breakdown of auditor's fee (NOK 1,000) 2023 2022 Audit services 909 507 Other certification services 0 5 Tax advisory services 0 0 Other non-audit fees 34 123 Total 944 635 NOTE 6 Financial items Financial income and expenses (NOK 1,000) 2023 2022 Group contributions 4,117,943 571,755 Dividends from group companies 16,091 2,460,200 Gain and loss on disposal of subsidiaries 810,703 0 Income from investments in group companies 4,944,737 3,031,955 Dividends from associated companies 10,060 0 Interest income group companies 1,189,768 353,617 Other interest income 22,857 4,526 Total interest income 1,212,624 358,143 Interest expense group companies -322,599 -44,996 Other interest expense -927,968 -257,745 Total interest expense -1,250,567 -302,741 Change in fair value - other financial instruments -117,022 87,218 Other financial items -11,278 -2,165 Total other financial items -128,300 85,053 Net financial items 4,788,553 3,172,409 Gain and loss on disposal of subsidiaries is related to sales transactions of FrøyAS and Arctic Offshore FarmingAS. See Note 21 and Note 22 for further information. 198 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 7 Intercompany transactions – revenue and cost NOTE 8 Tax SalMarASA was merged with NTS AS with effect from 13 December 2023. For accounting purposes, the merger is accounted for with continuity with effect from 1 January 2023. From this time, SalMarASA has assumed all assets, rights and obligations in NTS AS. For tax purpose the merger is carried out with full tax continuity in accordance with the Norwegian Tax Act. Specification of this year's tax expense (NOK 1,000) 2023 2022 Tax payable 919,410 0 Change in deferred tax -15,675 80,833 Adjustment of previous year taxes 0 544 Total income tax expense in the statement of profit and loss 903,735 81,377 Basis for tax payable (NOK 1,000) 2023 2022 Profit before tax 4,945,797 2,866,448 Dividends recognised in profit and loss -26,151 -2,460,200 Gain or loss on realisation of shares in subsidiaries -810,703 0 Profit before tax in NRS ASA for the period 1 January till 31 October 0 -226,337 Other permanent differences -1,397 -38,824 Other permanent differences with tax effect against equity 708 12,962 Change in temporary differences 72,024 -119,190 Utilisation of previously unrecognised tax losses -1,140 -34,859 Taxable profit 4,179,138 0 Tax payable in the Balance sheet (NOK 1,000) 2023 2022 Tax payable on this year's profit 919,410 0 Tax payable 919,410 0 NOTE 7 Intercompany transactions – revenue and cost Group internal revenue and cost (NOK 1,000) 2023 2022 Revenue intercompany services 410,762 105,292 Revenue intercompany sale of goods 19,276 29,523 Other intercompany revenue 10,184 0 Revenue from group companies 440,222 134,815 Cost of goods sold -59,879 -780,266 Other costs -7,857 0 Group contributions 4,117,943 571,755 Dividends from group companies 16,091 2,460,200 Income from investments in group companies 4,134,033 3,031,955 Interest income group companies 1,189,768 353,617 Interest expense group companies -322,599 -44,996 Net interest income group companies 867,168 308,621 199 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Specification of temporary differences (NOK 1,000) 2023 2022 Non-current assets -18,316 -2,456 Derivatives 129,905 241,756 Current assets -5,602 -5,909 Other differences 81,307 23,704 Total basis for deferred tax 187,293 257,095 Deferred tax liabilities (+) / deferred tax assets (-) 41,204 56,561 Change in carrying amount of net deferred tax (NOK 1,000) 2023 2022 Deferred tax liability (+)/ deferred tax assets (-) at 1 January 56,561 3,771 Change in deferred tax liability -15,675 80,833 Deferred tax assets associated with merger -210 -51,992 Deferred tax liability associated with equity transactions 528 30,328 Adjustment for deferred tax assets related to prior year 0 -6,379 Deferred tax liabilities (+) / deferred tax assets (-) at 31 December 41,204 56,561 Reconciliation between nominal and effective tax rates (NOK 1,000) 2023 2022 Profit before tax 4,945,797 2,866,448 Tax calculated with nominal tax rate 1,088,075 630,618 Dividends and gain/ loss on realisation of shares in subsidiaries -184,108 -541,244 Other permanent differences -232 -8,541 Adjustment of previous year taxes 0 544 Total income tax expense in the statement of profit and loss 903,735 81,377 Effective tax rate 18.3% 2.8% NOTE 9 Intangible assets 2023 – NOK 1,000 Intangible assets Acquisition cost at 1 January 2023 16,369 Additions 1,630 Acquisition cost at 31 December 2023 17,999 Accumulated depreciation & write-downs at 1 January 2023 2,329 Depreciation in the year 4,488 Accumulated depreciation & write-downs at 31 December 2023 6,817 Carrying amount at 31 December 2023 11,182 Economic lifetime 3–5 years Depreciation method Linear 2022 – NOK 1,000 Intangible assets Acquisition cost at 1 January 2022 7,160 Additions 9,209 Acquisition cost at 31 December 2022 16,369 Accumulated depreciation & write-downs at 1 January 2022 0 Depreciation in the year 2,329 Accumulated depreciation & write-downs at 31 December 2022 2,329 Carrying amount at 31 December 2022 14,040 Economic lifetime 3–5 years Depreciation method Linear Capitalised other intangible assets are implementation cost related to cloud based arrangements. Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 9 Intangible assets 200 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 10 Property, plant and equipment NOTE 10 Property, plant and equipment 2023 – NOK 1,000 Land and buildings Equipment and fixtures Total Acquisition cost at 1 January 2023 3,573 39,780 43,353 Additions 18 980 997 Additions through merger 40,706 4,407 45,113 Disposals 0 -4,277 -4,277 Acquisition cost at 31 December 2023 44,297 40,889 85,187 Accumulated depreciation & write-downs at 1 January 2023 171 34,314 34,485 Additions through merger 10,986 2,571 13,557 Depreciation in the year 1,536 3,512 5,049 Disposals 0 -4,140 -4,140 Write-down in the year 27 1,064 1,090 Accumulated depreciation & write-downs at 31 December 2023 12,720 37,320 50,040 Carrying amount at 31 December 2023 31,577 3,569 35,146 Economic lifetime 17 years/Indefinite 5 –10 years Depreciation method Linear Linear Annual lease of uncapitalised operating assets 9,786 0 9,786 2022 – NOK 1,000 Land and buildings Equipment and fixtures Total Acquisition cost at 1 January 2022 3,558 37,914 41,472 Additions 15 1,865 1,881 Acquisition cost at 31 December 2022 3,573 39,780 43,353 Accumulated depreciation & write-downs at 1 January 2022 171 31,756 31,927 Depreciation in the year 0 2,558 2,558 Accumulated depreciation & write-downs at 31 December 2022 171 34,314 34,485 Carrying amount at 31 December 2022 3,402 5,467 8,868 Economic lifetime Indefinite 5 –10 years Depreciation method Linear Linear Annual lease of uncapitalised operating assets 6,124 0 6,124 201 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 11 Subsidiaries NOTE 11 Subsidiaries Company (NOK 1,000) Registered office % of ownership interest Carrying amount 2023 % of ownership interest Carrying amount 2022 SalMar Settefisk AS Kverva 100.0% 223,745 100.0% 224,057 SalMar Farming AS Kverva 100.0% 3,252,425 100.0% 489,375 SalMar AS Kverva 100.0% 1,199,631 100.0% 1,200,165 SalMar Tunet AS Kverva 100.0% 7,400 100.0% 7,400 Hitramat Farming AS Hitra 51.0% 28,785 51.0% 28,785 SalMar Aker Ocean AS Kverva 85.0% 951,471 85.0% 952,517 Icelandic Salmon AS Kverva 52.48% 744,199 51.02% 660,049 Nor Seafood AS Senja 82.49% 355,409 82.49% 355,409 NTS AS Rørvik 92.93% 8,882,532 SalMar Finnmark AS Alta 100.0% 972,325 Arctic Offshore Farming AS Kverva 100.0% 0 Total 6,763,064 13,772,615 Investments in subsidiaries are recognised according to the cost method and yearly tested for impairment. The ownership share listed above are equal to the voting rights for each company. SalMarASA was merged with NTSAS with effect from 13 December2023. See Note 21 for further details. SalMar FinnmarkAS was merged with SalMar FarmingAS with effect from 9 November 2023. On 11 November 2023 SalMarASA has acquired a total for 450,000 shares in Icelandic SalmonAS with at total consideration of NOK84.15million. Through the transaction SalMarASA increased its shareholding in the company from 51.02 percent to 52.48 percent. With effect from 29 November 2023, the 100 percent owned company Arctic Offshore FarmingAS was sold from SalMarASA to SalMar Aker OceanAS. See Note 22 for further information. NOTE 12 Associates and joint ventures Investments in associates and joint ventures are recognised in accordance with the cost method. Company (NOK 1,000) Registered office % of ownership interest Carrying amount 2023 Carrying amount 2022 Norskott Havbruk AS Bergen 50.0% 468,287 468,287 Wilsgård Fiskeoppdrett AS Torsken 37.5% 559,000 559,000 Hellesund Fiskeoppdrett AS Høvåg 33.5% 420,000 420,000 Skamik AS Ottersøy 24.9 % 4,850 0 Total 1,452,136 1,447,287 With effect from 01.01.2023, SkamikAS were recognised as associates in SalMarASA following the merger with NTSAS. See further information in note 21. Company (NOK 1,000) Recognised dividend Total equity in latest annual financial statements Profit for the year in latest annual financial statements Norskott Havbruk AS 0 2,152,190 -335,406 Wilsgård Fiskeoppdrett AS 0 883,279 214,531 Hellesund Fiskeoppdrett AS 10,600 737,201 120,146 Skamik AS 0 29,512 9,465 202 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 13 Intercompany transactions - receivables and liabilities NOTE 13 Intercompany transactions - receivables and liabilities Group internal receivables and liabilities (NOK 1,000) 31.12.2023 31.12.2022 Intercompany non-current receivables 16,501,597 13,805,920 Trade receivables 734,693 306,927 Group financing receivables 0 2,932,306 Group contributions 4,117,943 571,755 Dividends from group companies 0 2,450,000 Intercompany current receivables 4,852,636 6,260,987 Trade payables 497,162 254,454 Group financing payables 1,444,144 1,120,929 Intercompany current liabilities 1,941,307 1,375,382 In the intercompany non-current receivables a contingent asset of NOK949.6million is included. The contingent assets is the estimated consideration from the sale of the shares in Arctic Offshore Farm- ingAS to SalMar Aker OceanAS. See Note 22 for further information. NOTE 14 Other non-current receivables NOK 1,000 31.12.2023 31.12.2022 Market value of derivatives 142,803 231,964 Other non-current receivables 2,283 34,218 Total 145,086 266,182 Other non-current receivables included a loan to Gyda EHF with a carrying amount of NOK34.1million at 31December2022. The loan was a seller's credit arise from sale of a tranche of shares in Icelan- dic SalmonAS in 2019 with the total amount of NOK35.7million. The loan, including interest was repaid in 2023. NOTE 15 Derivatives Forward currency contracts: The company had no forward exchange contracts at the end of 2023, as the sale office for former NRSASA was sold during the year. See Note 2 for further information. Forward currency contracts with changes in market value over profit and loss in 2022 (NOK 1,000) Currency amount Average volume- weighted hedging rate Carrying amount 31.12.2022 Forward Sale EUR 18,467 10.2 -4,991 Forward Sale GBP 912 12.018 150 Forward Sale USD 15,657 10.79 14,633 Total 9,792 All forward currency contracts matured in 2023. Financial contracts with Fish Pool The company has not traded any contracts during the year, and had no positions with Fish-pool per 31.12.2023. In 2022 there were realised a net loss of NOK13.4million and recognised a unrealised gain of NOK13.3million on Fish Pool contracts. The company had no positions with Fishpool per 31.12.2022. 203 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Interest and currency derivatives Interest derivatives with changes in value through equity (NOK 1,000) Nominal value hedge instruments (NOK 1,000) Book value hedge object (NOK 1,000) Hedging efficiency Carrying amount 31.12.2023 Market value excl. Interest, (Cash flow hedge reserve) 2,250,000 2,250,000 100% 139,058 Accrued net interest 3,745 Sum non-current financial assets 142,803 Cross Currency Interest Rate Swaps with change in value through profit and loss (NOK 1,000) Nominal value hedge instruments (NOK 1,000) Carrying amount 31.12.2023 Market value excl. Interest 1,000,000 -17,291 Accrued net interest 4,393 Sum non-current financial liability -12,898 Specification of Cash flow hedge reserve in the equity 2023 As of 1 January As of 31 Dec Changes over equity Changes in Cash flow hedge reserve 133,887 139,058 5,171 Tax -29,455 -30,593 -1,138 Total 104,432 108,465 4,033 Interest derivatives with changes in value through equity (NOK 1,000) Nominal value hedge instruments (NOK 1,000) Book value hedge object (NOK 1,000) Hedging efficiency Carrying amount 31.12.2022 Market value excl. Interest, (Cash flow hedge reserve) 2,250,000 2,250,000 100% 133,887 Accrued net interest 1,780 Sum 135,667 Cross Currency Interest Rate Swaps with change in value through profit and loss (NOK 1,000) Nominal value hedge instruments (NOK 1,000) Carrying amount 31.12.2022 Cross Currency Interest Rate Swaps 1,000,000 92,597 Accrued value of net interest 3,701 Sum 96,297 Total non-current financial assets 231,964 Specification of Cash flow hedge reserve in the equity 2022 As of 1 January As of 31 Dec Changes over equity Changes in Cash flow hedge reserve 0 133,887 133,887 Tax 0 -29,455 -29,455 Total 0 104,432 104,432 The company has entered into fixed rate interest swap contracts with a total principal of NOK2,250mil- lion. 750million has a duration of 7 years starting 22 April 2022, 750million has a duration of 10 years starting 22 January 2024, and 750million has a duration of 7 years starting 22 January 2025. The interest swap contracts are establish with the purpose to reduce the interest rate risk related to long-term loan. The cross currency interest rate swap agreement where NOK1.000million of the bond loan was swapped to EUR 98.335million with fixed rates, hedges NOK1.000million of the bond loan, and the currency risk linked to the investment in the group company Icelandic SalmonAS. The agreement expires in January 2027. Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 15 Derivatives 204 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 16 Trade and other receivables NOTE 16 Trade and other receivables NOK 1,000 31.12.2023 31.12.2022 Trade receivables 11,672 286,060 Provisions for bad debts -6,802 -4,765 Total trade receivables at 31 December 4,870 281,295 NOK 1,000 31.12.2023 31.12.2022 Provisions for bad debt 1 Jan 4,765 0 Provisions for bad debts 31 Dec 6,802 4,765 Change in provisions for bad debts during the period 2,038 4,765 Actual bad debts 2,482 -1,548 Provisions for bad debts acquired through merger with NRS ASA 0 6,591 Change in provisions for bad debts 2,038 -1,827 Bad debts charged to expenses during the period 4,520 3,217 Trade receivables had the following maturity profile Not due <30 d 30–45d 45–90d >90d Total 31.12.2023 50 75 0 2,329 9,218 11,672 31.12.2022 112,860 147,912 17,493 829 6,965 286,060 Transferred receivables During the year, SalMarASA terminated the receivables purchase agreement and there are no outstanding balance with the bank in this regard. Expected insurance settlement has been taken in to account when provision for bad debts has been calculated. 205 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 17 Cash and cash equivalents NOTE 17 Cash and cash equivalents Cash and cash equivalents (NOK 1,000) 31.12.2023 31.12.2022 Cash at bank 520 1,392,390 Restricted cash - withholding tax 13,789 17,663 Other restricted cash 1,248 1,227 Cash and cash equivalents 15,557 1,411,280 NOTE 18 Share capital and shareholders information Share capital and number of shares 31.12.2023 (NOK 1,000) Total number of shares Nominal value Total share capital Ordinary shares 132,038,920 0.25 33,010 As of 31December2023, SalMarASA has 132,038,920 shares with a nominal value of NOK0.25 per share. All shares issued by the Com- pany are fully paid. There is one class of shares and all shares have the same rights. As of 31December2023, SalMarASA owned 278,854 treasury shares. See Note 4.2 to the consolidated financials statements for a list of the company's largest shareholders and the shareholdings of senior executives. Share capital reduction in connection with intra- group merger On 13 December2023, SalMarASA's share capital was decreased by 13,100,000 shares (nominal value of NOK0.25 per share), from 145,138,920 shares to 132,038,920 shares. The share capital was thus decreased by a total of NOK3,275million, from NOK36,285mil- lion to NOK33,010million. For further information regarding the intra-group merger with NTS, please see note 21. Dividend Provision has been made for a dividend payment of NOK35.00 per share, totalling NOK4,611.6million, as at 31December2023. No provision is made with respect to treasury shares 206 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 20 Acquisition and merger of NTS ASA and NRS ASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA NOTE 19 Non-current interest bearing debt Non-current interest bearing debt NOK 1,000 31.12.2023 31.12.2022 Green bond 3,500,000 3,500,000 Non-current loan 6,000,000 12,734,567 Non-current revolver credit facility 1,700,000 1,100,000 Amortised cost -88,947 -67,194 Total non-current interest bearing debt 11,111,053 17,267,373 Maturity profile - non-current interest bearing debt NOK 1,000 2024 2025 2026 2027 2028 Total Green bond 0 0 0 3,500,000 0 3,500,000 Non-current loan 0 0 6,000,000 0 0 6,000,000 Non-current revolver credit facility 0 0 0 0 1,700,000 1,700,000 Amortised cost -31,374 -31,709 -25,864 0 0 -88,947 Total -31,374 -31,709 5,974,136 3,500,000 1,700,000 11,111,053 In August 2023, SalMar entered into a new senior unsecured credit facility agreement, totalling NOK16,000million, with the intention of making it sustainability linked. The agreement comprises a 3+1+1 year term loan with a total of NOK6,000million, a 5+1+1 year rolling credit facility of NOK10,000million, and a NOK3,000million in accordion option. The new senior unsecured credit facility is a syndicated agreement that consists of 5 banks composed in two tiers, each tier with various share of the total facility. With effect from 22 April 2021, SalMarASA issued an unsecured green bond totalling NOK3,500mil- lion. No installments on the loan are payable during the period of the agreement, which matures on 22 January 2027. The bond carries an interest rate at 3-months NIBOR + 1.35% per annum, due quarterly. The loan is capitalised at amortised cost using the effective interest rate method. The bond loan is listed on the Oslo Stock Exchange under the ticker SALM01 ESG. SalMar has annually renewable multicurrency cash pooling arrangements limited to NOK1,600million. As of 31December2023, the Group had drawn down NOK1,080million (2022: 0) on these arrangements. Deposits and drawdowns in various currencies relating to the group account scheme are recognised net in the Group’s financial statements. Financial covenants The new senior unsecured credit facility agreement features improved terms compared to previous facilities and includes covenants of an equity ratio above 30 percent and interest cover exceeding 3.0. The green bond has a financial covenant requiring an equity ratio of 30% in the agreement period. SalMar was in compliance with all of the above-mentioned covenants as of 31December2023. 207 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 20 Security pledges and contingent liabilities NOTE 20 Security pledges and contingent liabilities Carrying amount of interest bearing debt secured by mortgages and pledges: NOK 1,000 31.12.2023 31.12.2023 Non-current interest bearing debt 0 13,834,567 Current interest bearing debt 0 423,354 Total 0 14,257,923 During the third quarter in 2023, SalMar entered into a new senior unsecured credit facility agreement, hence there are no debt secured by mortgages as at 31.12.2023. Carrying amount of assets pledged as security for recognised debt: NOK 1,000 31.12.2023 31.12.2022 Property, plant and equipment 0 8,868 Investments in subsidiaries 0 13,772,615 Trade receivables 0 281,295 Current and non-current receivables 0 20,066,907 Total 0 34,129,687 SalMarASA has issued a guarantee in the amount of NOK95million with respect to a long-term loan to SalMarAS. The loan has been granted by Innovasjon Norge. SalMarASA has issued a guarantee to Frøya IndustrieiendomAS with respect to any and all amounts which SalMarAS has an obligation to pay Frøya IndustrieiendomAS under the terms of a lease, with supplementary agreement, between SalMarAS and Frøya IndustrieiendomAS. The guarantee is valid during the leasing period, as specified in the lease, plus three months. SalMarASA has issued a guarantee to KLP Eiendom TrondheimAS in the amount of NOK1.6million. The guarantee has been issued as security for SalMarASA's office rental liabilities and is valid during the rental period. SalMarASA has issued a guarantee to HENTAS in the amount of NOK544.1million. The guarantee has been issued as security for SalMarAS's liabilities to the creditor in respect to an engineering, procurement and construction contract for a new harvesting and processing plant - InnovaNor. 208 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 21 Acquisition of remaining shares and merger of NTS AS NOTE 21 Acquisition of remaining shares and merger of NTS AS Compulsory acquisition of all remaining shares in NTS AS Through a voluntary offer to acquire all outstanding shares in NTSAS, and a following mandatory offer to acquire the remaining shares, SalMarASA owned 92.93 percent of the shares in NTSAS as at 31December2022. The total consideration for the investment was NOK8,882.5million including transaction cost of NOK41.6million. On 3 January 2023 SalMar publicly announced that they resolved to carry out a compulsory acquisition of all remaining shares in the company not owned by SalMar and with effect from 3 January 2023, SalMar became 100 percent owner of all shares in NTSAS. The total consideration for the remaining shares was NOK674.3million. Certain former minority shareholders that were subject to the compulsory acquisition have made a formal complaint and initiated legal proceedings about the redemption sum. Merger of NTS AS On 13 December2023 SalMarASA was merged with NTSAS. For accounting purposes, the merger are accounted for with group continuity with effect from 1 January 2023. From this time, SalMarASA has assumed all assets, rights and obligations in NTSAS. For tax purpose the merger is carried out with full tax continuity in accordance with the Norwegian Tax Act. At the time of merger NTSAS hold 13,691,960 shares in SalMarASA with a carrying amount of NOK4,512.9million witch is accounted for as treasury shares in SalMarASA. NTSAS also owned 72.11 percent of the shares in FrøyASA with a carrying amount of NOK1,262.2mil - lion. In addition as a consequence of the merger with NTSAS the group acquisition effect related to FrøyASA is added to the carrying amount with a net effect of NOK2,507.5million. SalMars total carrying amount of the shares in FrøyASA was after the merger NOK3,769.7million. NOTE 22 Divestment of subsidiaries Frøy AS On 14 August 2023 the sale of SalMars entire ownership stake in Frøy, representing 72.11 percent of the shares in FrøyAS, was completed. A cash consideration of NOK76.50 per share was paid in the transaction, with proceeds from the sale amounting to NOK4,764million. The gain for SalMarASA from the transaction amounted to NOK975.2million net of transaction cost. The gain are included in income from investments in group companies. See Note 6 for further information. Arctic Offshore Farming AS With effect from 29 November 2023, the 100 percent owned company Arctic Offshore FarmingAS was sold from SalMarASA to the 85 percent owned subsidiary SalMar Aker OceanAS. The transaction was part of the group's internal reorganization to consolidate the group's offshore investment under SalMar Aker OceanAS. Before the sale SalMarASA carried out a capital contribution in Arctic Offshore FarmingAS with a total amount of NOK1,114.1million. Settlement of the shares is an earn-out agreement where the consider- ation is depended on certain conditions being met. At the time of the transaction the consideration was estimated to NOK949.6million. The consideration is recognised in the balance sheet as a contingent assets and classified as intercompany non-current receivables. See Note 13 for further information. SalMarASAs loss related to the transaction of NOK164.5million are included in income from investments in group companies. See Note 6 for further information. 209 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 23 Financial risk NOTE 23 Financial risk See Note 4.1 to the consolidated financial statements for further details concerning the management of the company and the Group's financial market risk. NOTE 24 Allegations of price collusion and events occurring after the reporting period See Note 4.10 to the consolidated financial statements for further details concerning the allegations of price collusion including events occurring after the reporting period related to this issue. 210 Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Financial Statement and Results Notes to the Financial Statements for 2023, SalMarASA Note 4.11 Alternative performance measures 211 Financial Statement and Results Statement by the Board of Directors and CEOFinancial Statement and Results Statement by the Board of Directors and CEO Statement by the Board of Directors and CEO We confirm, to the best of our knowledge, that: We confirm, to the best of our knowledge, that: The Group financial statements for the period from 1 January to 31 December 2023 have been prepared in accordance with IFRS, as adopted by the EU. The financial statements of SalMar ASA for the period from 1 January to 31 December 2023 have been prepared in accor- dance with Norwegian Accounting Act and accounting stan- dards and practices generally accepted in Norway. The financial statements give a true and fair view of the Group and the Company’s consolidated assets, liabilities, financial position and results of operations. The Report of Board of Directors provides a true and fair view of the development and performance of the business and the position of the Group and the Company, together with a description of the key risks and uncertainty factors that the Group and the Company is facing. Frøya, 12 April 2024 The Board of Directors of SalMarASA Gustav Witzøe Chair of the Board Margrethe Hauge Vice-Chair of the Board Morten Loktu Board Member Arnhild Holstad Board Member Leif Inge Nordhammer Board Member Ingvild Kindlihagen Board Member Employee representative Frode Arntsen CEO Hans Stølan Board Member Employee representative 212 Financial Statement and Results Independent Auditor’s ReportFinancial Statement and Results Independent Auditor’s Report Independent Auditor’s Report To the Annual Shareholders’ Meeting of SalMarASA Report on the audit of the financial statements Opinion We have audited the financial statements of SalMar ASA (the Company) which comprise the financial statements of the Company and the consolidated financial statements of the Company and its subsidiaries (the Group). The financial statements of the Company comprise the balance sheet as at 31 December 2023 and the state- ment of profit or loss, statement of cash flows and statement of changes in equity for the year then ended and notes to the financial statements, including a summary of significant accounting policies. The consolidated financial statements of the Group comprise the balance sheet as at 31 December 2023, the statement of profit or loss, statement of other comprehensive income, statement of cash flows and statement of changes in equity for the year then ended and notes to the financial statements, including material accounting policy information. In our opinion • the financial statements comply with applicable legal requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2023 and its financial performance and cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, • the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2023 and its financial performance and cash flows for the year then ended in accordance with IFRS Accounting Standards as adopted by the EU. Our opinion is consistent with our additional report to the audit committee. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company and the Group in accordance with the requirements of the relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical respon- sibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 11 years from the election by the general meeting of the shareholders on 5 June 2013 for the accounting year 2013 (with a renewed election in 2018). Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for 2023. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s respon- sibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the pro- cedures performed to address the matters below, provide the basis for our audit opinion on the financial statements. 213 Financial Statement and Results Independent Auditor’s ReportFinancial Statement and Results Independent Auditor’s Report Valuation of biological assets Basis for the key audit matter The Group measures biological assets at fair value less costs to sell in accordance with IAS 41 and IFRS 13. At 31 December 2023 the biological assets amounted to NOK 13,264.7 million. The difference between the fair value of the biological assets and the related cost is recognized as a fair value adjustment. In 2023, the recognized fair value adjustment amounted to NOK 1,571.1 million. The fair value adjustment included in the carrying amount was NOK 4,760.8 million. For fish in sea the fair value less costs to sell was calculated using a model based on a net present value methodology. This is calculated based on assumptions of biomass volumes, quality, market prices at the harvest dates, remaining expenses to produce, harvest and sell the biomass and time in sea until harvest mature. The market prices are based on observable forward prices for the period when harvesting is expected. The fair value of biological assets was a key audit matter due to the significant amount, the level of judgements involved in the valuation and the assumptions used in the calculation. Our audit response We evaluated the valuation and the model against the requirements in IAS 41, IFRS 13 and industry practice. We observed the routines and tested controls related to the calculation of the fair value adjustment of the biomass. We compared the prices applied against observable market prices at the expected harvesting dates. In addition, we evalu- ated the estimated remaining expenses to produce the harvest mature fish, including assumptions on size distribution of the biomass, time in sea until harvest mature, mortality and quality of the live fish in sea. Furthermore, we evaluated the historical accuracy in prior peri- ods’ estimates and the sensitivity analysis of changes in expected prices, biomass and discount rate. We recalculated the model used to calculate fair value for the relevant weight classes. We refer to note 1.7, note 2.9 and note 3.6 to the consolidated financial statements. Other information Other information consists of the information included in the annual report other than the financial statements and our auditor’s report thereon. Management (the board of directors and chief executive officer) is responsible for the other information. Our opinion on the financial statements does not cover the other information, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our respon- sibility is to read the other information, and, in doing so, consider whether the board of directors’ report, the statement on corporate governance and the statement on corporate social responsibility contain the information required by applicable legal requirements and whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that the other information is materially inconsistent with the financial statements, there is a material mis- statement in this other information or that the information required by applicable legal requirements is not included in the board of directors’ report, the statement on corporate governance or the statement on corporate social responsibility, we are required to report that fact. We have nothing to report in this regard, and in our opinion, the board of directors’ report, the statement on corporate governance and the statement on corporate social responsibility are consistent with the financial statements and contain the information required by appli- cable legal requirements. Responsibilities of management for the financial statements Management is responsible for the preparation of the financial state- ments of the Company that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation of the consolidated financial statements of the Group that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU. Management is responsible for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or the Group, or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assur- ance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 214 Financial Statement and Results Independent Auditor’s ReportFinancial Statement and Results Independent Auditor’s Report As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the board of directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse con- sequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 215 Financial Statement and Results Independent Auditor’s ReportFinancial Statement and Results Independent Auditor’s Report Report on other legal and regulatory requirement Report on compliance with regulation on European Single Electronic Format (ESEF) Opinion As part of the audit of the financial statements of SalMar ASA we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name salmarasa-2023-12-31-en.zip, have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial statements. In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF Regulation. Management’s responsibilities Management is responsible for the preparation of the annual report in compliance with the ESEF Regulation. This responsibility comprises an adequate process and such internal control as management deter- mines is necessary. Auditor’s responsibilities Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material respects, the financial statements included in the annual report have been prepared in accordance with the ESEF Regulation. We conduct our work in accordance with the International Standard for Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial information”. The standard requires us to plan and perform procedures to obtain reasonable assurance about whether the finan- cial statements included in the annual report have been prepared in accordance with the ESEF Regulation. As part of our work, we perform procedures to obtain an understanding of the company’s processes for preparing the financial statements in accordance with the ESEF Regulation. We test whether the financial statements are presented in XHTML-format. We evaluate the com- pleteness and accuracy of the iXBRL tagging of the consolidated financial statements and assess management’s use of judgement. Our procedures include reconciliation of the iXBRL tagged data with the audited financial statements in human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Trondheim, 12 April 2024 Ernst & YoungAS Christian Ronæss State Authorised Public Accountant (Norway) 216 Financial Statement and Results Independent Auditor’s ReportFinancial Statement and Results Independent Auditor’s Report To the Board of Directors of SalMarASA Independent Accountant’s Assurance Report Scope We have been engaged by SalMar ASA to perform a limited assurance engagement, as defined by International Standards on Assurance Engagements, here after referred to as the engagement, to report on SalMar ASA’s sustainability reporting as defined and specified in the SalMar ASA’s GRI Index (see the document GRI content index 2023 on page 70 in SalMar ASA’s Annual report) (the “Subject Matter”) as for the year then ended. Other than as described in the preceding paragraph, which sets out the scope of our engagement, we did not perform assurance proce- dures on the remaining information included in the Annual report, and accordingly, we do not express a conclusion on this information. Criteria applied by SalMarASA In preparing the Subject Matter, SalMar ASA applied the relevant cri- teria from the Global Reporting Initiative (GRI) sustainability reporting standards as well as its own defined published criteria (the “Criteria”). The Criteria can be accessed at globalreporting.org and are available to the public. SalMar ASA has also applied relevant criteria from the reporting standards of the Global Salmon Initiative (GSI). Such Criteria were specifically designed for companies and other organizations that want to report their sustainability impacts in a consistent and credible way. As a result, the Subject Matter information may not be suitable for another purpose. SalMarASA’s responsibilities The Board of Directors and Group Chief Executive Officer (manage- ment) are responsible for selecting the Criteria, and for presenting the Subject Matter in accordance with that Criteria, in all material respects. This responsibility includes establishing and maintaining internal controls, maintaining adequate records and making estimates that are relevant to the preparation of the Subject Matter, such that it is free from material misstatement, whether due to fraud or error. EY’s responsibilities Our responsibility is to express a conclusion on the presentation of the Subject Matter based on the evidence we have obtained. We conducted our engagement in accordance with the International Standard for Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (‘ISAE 3000’). This standard requires that we plan and perform our engagement to obtain limited assur- ance about whether, in all material respects, the Subject Matter is presented in accordance with the Criteria, and to issue a report. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risk of material misstate- ment, whether due to fraud or error. We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusion. Our Independence and Quality Control We are independent of the Company and the Group in accordance with the requirements of the relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. EY also applies International Standard on Quality Management 1, Qual- ity Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services engagements, which requires that we design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Description of procedures performed Procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained if a reasonable assurance engagement had been performed. Our procedures were designed to obtain a limited level of assurance on which to base our conclusion and do not provide all the evidence that would be required to provide a reasonable level of assurance. Although we considered the effectiveness of management’s internal controls when determining the nature and extent of our procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT systems. A limited assurance engagement consists of making enquiries, primar- ily of persons responsible for preparing the Subject Matter and related information and applying analytical and other appropriate procedures. 217 Financial Statement and Results Independent Auditor’s ReportFinancial Statement and Results Independent Auditor’s Report Our procedures included: • Interviews with key personnel to understand the business and the reporting process • Interviews with key personnel to understand the process for collecting, collating and reporting the Subject Matter during the reporting period • Test on a sample basis the calculation Criteria against the methodologies outlined in the Criteria • Analytical review procedures of the data • Comparison, on a sample basis, of data with the underlying source information • Comparison of the presentation of the Subject Matter with the presentation requirements outlined in the Criteria. We believe that our procedures provide us with an adequate basis for our conclusion. We also performed such other procedures as we considered necessary in the circumstances. We have performed these procedures on the following indicators that also form the scope of our conclusion: GRI/GSI Custom GRI 303-5 Certification of marine ingredients in fish feed GRI 305-1 Certification of soya ingredients in fish feed GRI 305-2 Forage fish dependency ratio (FFDR) for fish meal GRI 305-3 Forage fish dependency ratio (FFDR) for fish oil GRI 305-4 Biological feed conversion ratio GRI 403-9 Share of secondary processing GRI 403-10 B-analysis benthic score ≤ 2 GSI Fish Mortality Fresh water intensity (liter per kg pro- duced) GSI Antibiotic Use GSI Wildlife interactions GSI Fish Escapes GSI Certifications Conclusion Based on our procedures and the evidence obtained, we are not aware of any material modifications that should be made to the Subject Matter as for the year then ended in order for it to be in accordance with the Criteria. Trondheim, 12 April 2024 Ernst & YoungAS Christian Ronæss State Authorised Public Accountant 218 Passion for Salmon SalMarASA Industriveien 51 N-7266 Kverva NORWAY Tel.: +47 72 44 79 00 www.salmar.no Design and layout Rosenborg Reklame Date published 19 April 2024

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