Annual / Quarterly Financial Statement • Aug 25, 2022
Annual / Quarterly Financial Statement
Open in ViewerOpens in native device viewer
First half 2022 results
Icelandic Salmon AS Industriveien 51 7266 Kverva - Norway
| This is Icelandic Salmon3 | |
|---|---|
| The history 6 | |
| Group management7 | |
| Highlights in the first half of 2022 8 | |
| Summary 9 | |
| Report for the first half of 202210 | |
| Operations, markets and strategy 12 | |
| Corporate matters 14 | |
| Outlook 15 | |
| Statement of the board of directors 16 | |
| Statements of Icelandic Salmon AS 17 | |
|---|---|
| Notes to the financial statements 23 |
Icelandic Salmon AS owns all shares and is the parent company of Arnarlax ehf., the largest fish farmer and producer of Atlantic salmon in Iceland. The parent company's shares are listed on Euronext Growth Oslo. In this report, the parent company and Arnarlax ehf. with subsidiaries are collectively referred to as "the Group" or "Icelandic Salmon". "Arnarlax" also refers to the brand under which the Group's operations and productions are marketed.
While the parent company is registered in Norway. Arnarlax ehf. has its headquarters in the Icelandic village Bíldudalur. It has been engaged in fish farming since 2010. The Group's farming facilities are strategically located in the beautiful Icelandic West Fjords of Iceland, a region that is well sheltered with stable and moderate sea temperatures and good tidal currents, creating favorable conditions for salmon farming.
The Group is considered a leading salmon farmer in Iceland, controlling the entire value chain from hatchery to sales.
| EUR million | H1 2022 | H1 2021 | FY 2021 |
|---|---|---|---|
| Operating revenue | 72.09 | 35.42 | 90.81 |
| Operational EBIT | 23.04 | 3.13 | 7.31 |
| Production tax | 0.55 | 0.12 | 0.31 |
| Fair value adjustments | 3.89 | 0.76 | -2.94 |
| Profit (loss) before tax | 25.51 | 2.96 | 2.60 |
| Net interest bearing debts | 28.32 | 29.02 | 42.69 |
| Equity ratio | 66% | 73% | 64% |
| Harvested volume from own production (tonnes) |
6,326 | 4,848 | 11,537 |
| Operational EBIT/kg. | 3,64 | 0,65 | 0,63 |
EUR million
Euros per kilogram gwe
Jun 30 2021 Jun 30 2022
Jun 30 2021 Jun 30 2022
Jun 30 2021 Jun 30 2022
Arnarlax, subsitiary of Icelandic Salmon AS, was founded in the year 2009 in Bíldudalur, a small Icelandic village inside a long fjord called Arnarfjörður. Bíldudalur is the hometown of the company's founders who knew that the area had excellent conditions for farming salmon. Today, the company is the Icelandic biggest aquaculture company. Modern salmon farming is relatively new in Iceland compared to our neighbours in the Faroe Islands, Scotland and Norway. The company's vision is "Sustainability – it's in our nature", so to be sustainable in every aspect of its operations and lead the way in terms of cost efficiency, biology and the development of the whole value chain for salmon farming in Iceland.
The Group successfully completed a private placement in the autumn of 2020 with the following listing on Euronext Growth. At the end of 2021, SalMar owned 51 per cent of the shares in the company. The company is fully intergrated with its own hatcheries, sea farms, harvesting plant and sales force. The natural conditions, with good quality seawater and temperatures on a pair with northern Norway, provide a sound basis for engaging is sustainable aquaculture in Iceland.
The company has its headquarters and harvesting plant in Bíldudalur in Iceland's West Fjords region, close to the The company has its headquarters and harvesting plant in Bíldudalur in Iceland's West Fjords region, close to the sea farms located in the surrounding fjords. In addition, the company has an office facility in Reykjavík. The Company also has four smolt facilities where one is in the West Fjords, and three on the south coast of Iceland, but the Company acquired full ownership of smolt facility Eldisstöðin Ísþór in August 2022.
The company strongly beleves in sustainable aquaculture production in Iceland.
The Group's senior management team consists of seven individuals which collectively possess unique industry competence and first-hand knowledge of fish farming in Iceland. The management works closely with Icelandic Salmon's largest owner, SalMar, one of the leading and most efficient producers of farmed salmon in the world. Arnarlax participates actively in developing local educational programs within aquaculture as well as running its own Arnarlax Academi developing leadership and company culture.
The Group management consist of the following members:
Bjørn Hembre CEO
Jónas Heiðar Birgisson CFO
Rolf Ørjan Nordli COO of Biology
Hannibal Hafberg COO of Harvest Plant
Kjersti Haugen CSO of Sales
Silja Baldvinsdóttir Quality Manager
Jón Garðar Jörundsson CBDO of Business Development
» Strong operational performance and continued stable biological performance has resulted in solid operational cost levels
CONDENSED CONSOLIDATED INTERIM STATEMENT FIRST HALF 2022 RESULTS ICELANDIC SALMON AS
8
Icelandic Salmon had operating revenues of EUR 72.09 for the first six months of the year, representing a 103.5 per cent increase from the previous year. In the period, increased market prices for salmon contributed to solid financial results alongside steady cost control and efficient production.
The Group's total own harvest for the period was 6.3 thousand tonnes. Biological performance was stable, with continued good growth and low mortality. The level of sea lice level remained low and delousing was not required. Another 5.3 thousand tonnes harvested for third party. Icelandic Salmon maintains the estimate of total own harvest for 2022 of 16.0 thousand tonnes of sustainable Icelandic salmon.
In response to strong market demand for sustainable Icelandic salmon, the Group continues to pursue its growth strategy. The conversion to smolt production of two facilities acquired in 2021 is underway and is expected to deliver 1.5 million smolts in 2023. Licenses for production are in place with a total of 1.0 thousand tonnes maximum allowed biomass.
In May 2022, the Group reached an agreement to purchase the remaining shares of the Eldisstöðin Ísþór smolt facility, providing Icelandic Salmon with full ownership of the facility. Approved by the Icelandic competition authorities in August, this strategic acquisition is expected to increase the Group's smolt capacity by approximately 2.0 million smolts in 2023 and expedite the Group's growth.
In spring 2022, Icelandic Salmon signed a letter of intent with the municipality of Vesturbyggð to build a new harvesting and processing plant in the southern part of Westfjords. This will enable the Group to do further planning on the project.
Reaching additional markets and gaining market share for sustainable Icelandic salmon is key to the Group's growth strategy. In the first six months of 2022, 23.5 per cent of the Group's sold volume was shipped to the US, an increase from 9.6 per cent in the same period last year. This positive development has improved sales, but importantly also contributed to lowering Icelandic Salmon's CO2 footprint. Today, Icelandic Salmon reaches countries across Europe, North America and Asia.
Demand for sustainable Icelandic salmon is increasing. Preparing to meet expected future demand, Icelandic Salmon has submitted two applications for an additional 10 thousand tonnes MAB (maximum allowed biomass) in Ísafjörður and 4.5 thousand tonnes for the Arnarfjörður license.
Icelandic Salmon AS (the "Company") is the sole owner and parent company of Arnarlax ehf., a company incorporated in Iceland. The Company and its subsidiaries are referred to as the "Group" or "Icelandic Salmon". All operational activities in the Group are performed through Arnarlax ehf. and its subsidiaries. One of the smolt facilities were owned 50/50 with another Icelandic fish farmer at end of second quarter 2022, but the company acquired remaining shares of the facility in August 2022 as disclosed in subsequent events.
This organisational structure enables the Group to operate a well-developed and fully integrated value chain, controlling all steps. The Group purchases eggs for its hatcheries, produces its own smolt, has seawater net pen production, operates a harvesting plant, and sells sustainable salmon in Europe, US/ Canada and the far East
The Company's shares are listed on Euronext Growth under the ticker ISLAX. The Group has licenses covering 25.2 thousand tonnes of maximum allowed biomass (MAB). They are all located in the southern part of the Icelandic Westfjords region.
The Group operates the only salmon harvesting facility in the Westfjords region, a key operational asset in the Group's value chain, with a total harvesting capacity of 30.0 thousand tonnes per year. In addition, the Group operates four smolt facilities and a sales department.
The Group generated consolidated operating revenues of EUR 72.09 million in the first half of 2022 compared with EUR 35.42 million for the same period last year, representing a 103.5 per cent increase.
Harvesting increased with 31 per cent from 4.8
thousand tonnes in the first half of 2021 to 6.3 thousand tonnes in the first half of 2022. Icelandic Salmon harvested 5.2 thousand tonnes in the first half of 2022 for third-party, compared with 5.6 thousand tonnes in the first half of 2021. The Group expects to harvest 16 thousand tonnes of its fish by the end of 2022.
The price of salmon (NASDAQ Salmon Index) Has had positive effect compared with the same period last year. The price of salmon remained high during the first half of the year. The Group benefitted from this and its strategic efforts in sales and marketing along with the new brand which launched in 2021, and a relatively low contract share.
Operational EBIT for the first six months of 2022 was EUR 23.04 million, up from EUR 3.13 million in the first half of 2021. This gives an operational EBIT per kilo of EUR 3.64. In the first six months of 2021, the Group had an EBIT per kilo of EUR 0.65.
Operating profit for the first six months of 2022 was EUR 26.04 million, including a positive EUR 3.89 million fair value adjustment (see note 4 to the Financial Statement for details). The operating profit for the first six months of 2021 was EUR 3.77 million, including a positive EUR 0.76 million in fair value adjustment.
Net financial items for the first six months was negative EUR 0.32 million compared with negative EUR 0.51 million for same period in 2021. Financial expenses changed from EUR 0.94 million in the first half of 2021 to EUR 1.031 million in 2022, and a net currency gain in the first six months of 2021 of EUR 0.35 million to a currency gain of EUR 0.65 million for the same period of 2022.
In the first six months of 2022, net cash flow from operating activities was positive EUR 25.63 million compared with EUR 2.03 million in the same period
in 2021.Strong operating results of the period is the main reason for the shift.
Net cash flow for investing activities was EUR 8.14 million in the first half of 2022, compared with EUR 6.76 million in the year before. The primary investment activities for the first six months of 2022 were in equipment for sea water operations and smolt capacity.
Net cash flow from financing activities was negative of EUR 2.51 million compared with positive EUR 4.13 million in the same period in the year before. New interest-bearing debt amounted to EUR 3.22 million. Cash and cash equivalents on 30 June 2022 was EUR 18.73 million, an EUR 14.99 million increase from 3.74 million at the end of last year.
Further details of cash flow can be found in Consolidated Statement of Cash Flow.
The Group's balance sheet on 30 June 2022 was at EUR 197.72 million, up with an increase of EUR 26.71 million from the end of the year 2021. Total equity was EUR 129.78 million at the end of the period. The equity ratio increased from 64 per cent at the end of 2021 to 66 per cent as a result of the increase in total assets.
Non-current assets increased from EUR 88.38 million to 92.04 million in the period. Current assets increased from EUR 82.63 million to EUR 105.68 million, an increase of EUR 23.05 million, with an increase in the value of the biological assets of EUR 6.41 million and increase of cash 14.99 million as the main reason. See further changes in biological assets in note 4 in section two.
Non-current liabilities increased from EUR 43.27 million from the end of the year 2021 to EUR 45.53 million as of the end of June 2022.
In the first half of 2022, the total harvest in Arnarlax facilities were 11.6 thousand tonnes. Icelandic Salmon harvested 6.3 thousand tonnes, while 5.3 thousand tonnes were harvested for third parties. The Group's operational EBIT per kilo was 3.64, compared with EUR 0.65 per kilo for its own harvest in the same period of 2021.
The positive development in EBIT per kilo results from numerous factors. The Group managed to increase the biological performance with low lice numbers, good growth rates and low mortality, resulting in overall steady cost levels in production. The most positive impact came from the high spot prices during the period. The increased proportion of export to the US by ship has also had a positive impact. Meanwhile, higher feed price contributed to increased production cost, while low activity in the harvesting plant towards the end of the quarter resulted in increased harvesting and well boat cost.
During the first half of 2022, the Group released smolt to sea. The 2022 generation, which is expected to be harvested in 2023 and 2024, has shown a positive development so far. Start harvesting of the 2021 generation is expected in November 2022. The Group expects to harvest a total of 16.0 thousand tonnes of own sustainable Icelandic salmon in 2022, compared with 11.5 thousand tonnes in 2021.
For Iceland as a whole, the export value of farmed fish increased by 26.8 per cent to EUR 60 million during a twelve-month period and represented 5 per cent of the country's total exports . Fish Farming has become one of the bigger industries in the Icelandic economy. Icelandic Salmon aims to further increase its production in the years to come.
The Group's investments in its new brand, Arnarlax – Sustainable Icelandic Salmon, successfully left its mark in the industry when accessing new markets. The quality of the product is being recognised as an important factor among customers, and the demand is rising.
At the start of 2022, Atlantic salmon was traded at EUR 6.58 per kilo to its highest level at EUR 12.93 (NASDAQ Salmon Index size 3-6) during the second quarter of the year. The salmon price is a known risk to the Group as its operations are based on the production and sale of salmon. The Group's profitability and cash flow are strongly correlated with fluctuating movements in the price of the product.
Access to high-quality roe and smolt with the right size and quality is crucial for continuing expansion of the Group's production and to achieve good performance in farming and optimal utilisation of the Group's licenses. Therefore, the Group's focus has been on smolt production and expansion to meet the Group's needs.
In 2021, the Group acquired two artic char facilities. Conversion to smolt production in those facilities is ongoing, and smolt production has started in one of the two facilities. Full operation at both facilities is expected before the middle of next year.
Along with two smolt facilities on the south coast and one in the Westfjords, the Group has operated a fourth smolt facility, Eldisstöðin Ísþór, with 50 per cent ownership. This facility is a key provider of smolt for the Group. In the period, Icelandic Salmon reached an agreement to purchase the remaining shares in this smolt facility, providing the group with full ownership. The transaction was formally approved by the Icelandic competition authorities in August. The acquisition will increase total smolt capacity by approximately 2.0 million smolts in 2023 and accelerate the Group's growth.
The capacity of the Group's harvesting facility in Bíldudalur is currently limited to 30.0 thousand tonnes per year. To address the future need for harvesting capacity as outlined in its strategy, the Group has been looking into options for a new harvesting facility along with a combined processing plant.
In the autumn of 2022, the Group signed a letter of intent with the municipality of Vesturbyggð to build a new harvesting and processing plant in Patreksfjörður in the Southern Part of the Westfjords. When built, it is expected that the new harvesting facility would provide the Group with lower harvesting costs, increase the flexibility of harvesting with better utilization of the Group's licenses and give more room for strategic decisions for further value-added production.
The letter of intent allows the Group to further prepare and do the necessary development and plans to move the project to the next stages.
Icelandic Salmon has a natural and sustainable concept of salmon farming in pristine Arctic waters, which has been promoted with the new brand. The Group has established strict quality standards whilst also aiming to be a low-cost producer. The Group can achieve this goal only through sustainable biological production and commits to farming fish conducive to their wellbeing.
Combining the best biological results with cost focus and optimal processes, the Group believes this enables Icelandic Salmon to be a cost-effective producer of farmed salmon in Iceland.
The Group recognises the importance of diversity and its corporate social responsibility as an employer, producer, supplier of healthy food, a user of the natural environment and administrator of financial and intellectual capital. Social responsibility is essential to the Group and incorporated into daily tasks. At the same time, the Group aims to minimize its operations' impact on the natural environment. It is important for the Group to create as much value locally with the lowest footprint possible.
In the first half of 2022, Icelandic Salmon continued to utilise the transport route to the US market by boat. The products have improved shelf life with super chill technology at Icelandic Salmon's harvesting facility, compensating for longer transport time. Transport by boat has significantly lower cost and less CO2 emissions than airfreight.
At the close of the first half of 2022, Icelandic Salmon AS had a total of 30,961,868 shares outstanding divided between 256 shareholders.
The Company's major shareholder, SalMar ASA, owned 51.02 per cent of the shares at the end of the period. The list of larger shareholders includes several prominent Icelandic citizens and companies. Gildi, one of the largest pension funds in Iceland and Stefnir, a leading Icelandic Asset Management group owned by Arion banki, were cornerstone investors when Icelandic Salmon was listed on the Merkur market (now Euronext Growth) in the fourth quarter of 2020. The 20 largest shareholders owned a total of 92.6 per cent of the shares. See further note 5 in section two.
The Company's shares price fluctuated between NOK 139 and NOK 160 in the first half of 2022. The closing price at the end of the period was NOK 155, compared with NOK 147 at the beginning of the year. This corresponds to an increase of five per cent.
No changes were made to the Groups board of directors or management within the period.
Through its activities, the Group is exposed to various kinds of market, operational and financial risks, including credit risk and liquidity risk. Management assesses these risks on an ongoing basis and draws up guidelines for dealing with them. The Group has raised bank loans to provide capital for investment in its business. In addition, the Group has financial instruments such as trade receivables, trade payables, etc., which are ascribable directly to dayto-day business operations.
The Russian attack on Ukraine in early 2022 has affected the Group's operations economically. While the Group has no assets in Russia, Belarus or Ukraine, nor any significant sales to those areas in the past years, the Group has been affected by the sanctions imposed following the war, most notably related to the price of raw materials such as fish feed, operations and logistics. Meanwhile, the market price for Atlantic salmon has remained strong, balancing the effect of the higher production and logistic cost. Overall, the geopolitical situation has had no significant negative impact on Icelandic Salmon's markets and opportunities. Management will continue to monitor the situation closely.
The Covid-19 pandemic and the various public health measures implemented worldwide have not directly affected the market of Icelandic Salmon products in the first half of 2022. However, Icelandic Salmon recognises that the situation may change and that it must be ready to face uncertainty.
High demand for Atlantic salmon resulted in high product prices in the first half of 2022. Compared to expectations at the beginning of the year, the prices were higher and remained high for longer period. Towards the end of the period, the prices have come down, and the forward prices indicate a further possible decrease. The forecast sales prices are still favourable compared with previous years.
As of August 2022, the indication for Fish Pool forward prices indicates an average price for Atlantic Salmon of EUR 7.50 per kilo for the second half of 2022 and EUR 8.46 per kilo for the first half of 2023.
With its overall positive view on the demand for Atlantic salmon, and for sustainable Icelandic salmon in particular, the Group will continue investing in growth projects and increase production. Acquisition of Eldisstöðin Ísþór smolt facility has been approved by the Icelandic Competition Authorities (ICA), and that will provide additional support to the Group's growth projects.
The Russian invasion of Ukraine and sanctions have disturbed many supply chains and impacted the price of raw materials. It is expected that the effect of that has not all been accounted for and that further unexpected changes in the price of raw materials may occur.
Icelandic Salmon maintains its estimated total harvest for 2022 of 16.0 thousand tonnes of Icelandic Salmon.
We declare that, to the best of our knowledge, the half-year financial statements for the period 1 January to 30 June 2022 have been prepared in accordance with IAS 34 – Interim Reporting and that the information contained therein provides an accurate and fair view of the Group's assets, liabilities, financial position, and overall results.
We further declare that, to the best of our knowledge, the half-year report provides a true and fair view of important events that have taken place during the accounting period and their impact on the half-year financial statements, as well as the most important risks and uncertainties facing the business in the forthcoming accounting period.
Bíldudalur, August 24th 2022
Kjartan Olafsson, Chairman of the Board
Trine Sæther Romuld, Member of the Board
Espen Weyergang Marcussen, Member of the Board
Leif-Inge Nordhammer, Member of the Board
Olav Andreas Ervik, Member of the Board
Bjørn Hembre, CEO
| Note | H1 2022 | H1 2021 | FY2021 | |
|---|---|---|---|---|
| Revenue from contracts with customers | 2 | 72,085 | 35,420 | 90,806 |
| Total operating revenue | 72,085 | 35,420 | 90,806 | |
| Cost of goods sold | 28,986 | 18,681 | 52,753 | |
| Salaries and personnel expenses | 8,291 | 5,745 | 12,180 | |
| Other operating expenses | 8,369 | 5,089 | 12,644 | |
| Depreciation | 3,395 | 2,775 | 5,915 | |
| Total operating expenses | 49,042 | 32,289 | 83,492 | |
| Operational EBIT | 9 | 23,044 | 3,131 | 7,314 |
| Production tax | 9 | (549) | (120) | (307) |
| Onerous Contracts | 7 | (337) | 0 | 0 |
| Fair value adjustments of biomass | 4, 9 | 3,885 | 755 | (2,937) |
| Operating profit | 26,042 | 3,766 | 4,070 | |
| Income from investments in joint ventures | (214) | (301) | 3 | |
| Financial items | ||||
| Financial income | 60 | 78 | 144 | |
| Financial expense | (1,031) | (939) 351 |
(1,969) 351 |
|
| Net currency gain | 649 | |||
| Net financial items | (321) | (510) | (1,474) | |
| Profit before tax | 25,507 | 2,955 | 2,600 | |
| Income Tax | 5,209 | 640 | 232 | |
| Net profit for the period | 20,298 | 2,315 | 2,367 | |
| Net profit for the period attributable to: | ||||
| Equity holders of the parent company | 20,298 | 2,315 | 2,367 | |
| Other comprehensive income | ||||
| Items which may subsequently be reclassified to profit or loss | ||||
| Translation differences related to joint venture | 92 | 77 | 88 | |
| Translation differences related to subsidiaries | 0 | 0 | (1) | |
| Other comprehensive income for the period | 92 | 77 | 87 | |
| Total comprehensive income for the period | 20,390 | 2,393 | 2,454 | |
| Total comprehensive income attributable to: | ||||
| Equity holders of the Parent company | 20,390 | 2,393 | 2,454 | |
| Earnings per share ("EPS"): | ||||
| Basic and diluted (EUR Per share) | 0,656 | 0,075 | 0,076 |
| Assets | Note | 30/6/2022 | 30/6/2021 | 31/12/2021 |
|---|---|---|---|---|
| Non-current assets | ||||
| Goodwill | 19,332 | 19,332 | 19,332 | |
| Licenses | 3 | 1,359 | 978 | 978 |
| Property, plant & equipment | 56,492 | 47,109 | 52,225 | |
| Lease assets | 8 | 7,205 | 5,646 | 5,827 |
| Investment in joint venture | 1,525 | 1,343 | 1,647 | |
| Other long-term receivables | 6,125 | 4,850 | 4,964 | |
| Deferred tax asset | 0 | 3,000 | 3,407 | |
| Total non-current assets | 92,038 | 82,259 | 88,380 | |
| Current assets | ||||
| Biological assets | 4 | 73,310 | 57,657 | 66,899 |
| Inventories | 4 | 4,026 | 3,532 | 2,538 |
| Trade receivables | 7,022 | 4,361 | 7,323 | |
| Other receivables | 2,590 | 2,427 | 2,126 | |
| Cash and cash equivalents | 18,731 | 2,453 | 3,744 | |
| Total current assets | 105,679 | 70,429 | 82,630 | |
| Total assets | 197,717 | 152,688 | 171,010 |
| Equity and liabilities | Note | 30/6/2022 | 30/6/2021 | 31/12/2021 | |
|---|---|---|---|---|---|
| Equity | |||||
| Share capital | 5 | 29,571 | 29,571 | 29,571 | |
| Share premium | 90,622 | 90,622 | 90,622 | ||
| Other paid-in equity | (1,006) | 359 | (1,089) | ||
| Other equity | 10,595 | (9,814) | (9,795) | ||
| Total equity | 129,782 | 110,738 | 109,309 | ||
| Liabilities | |||||
| Non-current liabilities | |||||
| Interest-bearing debt | 6 | 37,378 | 22,100 | 38,465 | |
| Lease liabilities | 6, 8 | 6,166 | 4,670 | 4,803 | |
| Deferred tax liability | 1,987 | 0 | 0 | ||
| Total non-current liabilities | 45,531 | 26,769 | 43,268 | ||
| Current liabilities | |||||
| Interest-bearing debt | 6 | 2,294 | 3,778 | 2,084 | |
| Lease liabilities | 6, 8 | 1,218 | 929 | 1,086 | |
| Trade payables | 10,229 | 5,708 | 9,699 | ||
| Provision for onerous contracts | 7, 9 | 337 | 0 | 0 | |
| Other current liabilities | 8,326 | 4,767 | 5,564 | ||
| Total current liabilities | 22,404 | 15,181 | 18,433 | ||
| Total liabilities | 67,935 | 41,950 | 61,701 | ||
| Total equity and liabilities | 197,717 | 152,688 | 171,010 |
Bíldudalur, August 24th 2022
Kjartan Olafsson, Chairman of the Board
Trine Sæther Romuld, Member of the Board
Espen Weyergang Marcussen, Member of the Board
Leif-Inge Nordhammer, Member of the Board
Olav Andreas Ervik, Member of the Board
Bjørn Hembre, CEO
| Statement of cash flow | Notes | H1 2022 | H1 2021 | FY 2021 |
|---|---|---|---|---|
| Cash flow from (to) operating activities: | ||||
| Profit before tax | 25,507 | 2,955 | 2,600 | |
| Deprecation | 3,395 | 2,775 | 5,915 | |
| Share of profit (loss) from joint ventures | 214 | 301 | (3) | |
| Share-based options adjustment | 83 | 72 | 209 | |
| Currency exchange and other items | (40) | 261 | 136 | |
| Financial expenses (debt/borrowings and leases) | 1,031 | 939 | 1,969 | |
| Interest income | (60) | (78) | (144) | |
| Change in fair value of biomass | 4 | (3,885) | (755) | 2,937 |
| Change in inventories and biomass recognised at cost | (4,015) | (2,286) | (13,470) | |
| Change in payables and receivables | 3,400 | (2,151) | (392) | |
| Net cash flow from (to) operating activities | 25,630 | 2,033 | (244) | |
| Cash flow from (to) investing activities: | ||||
| Proceeds from from sale of property, plant & equipment | 121 | 3 | 12 | |
| Purchase of property, plant & equipment | (6,965) | (5,157) | (12,886) | |
| Purchase of shares, net of cash received | 8 | (194) | (473) | (474) |
| Change in other long-term receivable | (1,105) | (883) | (1,000) | |
| Proceeds of interest income | 4 | 4 | 8 | |
| Purchase of licenses | 0 | (255) | (431) | |
| Net cash flow from (to) investing activities | (8,138) | (6,761) | (14,771) | |
| Cash flow from (to) financing activities: | ||||
| New interest-bearing debt | 6 | 3,222 | 7,000 | 25,171 |
| Repayment of interest-bearing debt | 6 | (4,125) | (1,692) | (4,826) |
| Payment of principal portion of lease liabilities | 6 | (590) | (307) | (785) |
| Paid interest (debt/borrowings and leases) | (1,011) | (870) | (2,233) | |
| Share based payments | 0 | 0 | (1,618) | |
| Net cash flow (to) from financing activities | (2,505) | 4,131 | 15,709 | |
| Net change in cash and cash equivalents | 14,987 | (598) | 694 | |
| Cash and cash equivalents as at 1 Jan | 3,744 | 3,050 | 3,050 | |
| Cash and cash equivalents as at period end | 18,731 | 2,453 | 3,744 |
| Other equity | ||||||
|---|---|---|---|---|---|---|
| 2021 Notes |
Share capital |
Share premium |
Other paid-in equity |
Translation differences |
Retained earnings |
Total equity |
| Equity as at 1 Jan 2021 | 29,571 | 90,622 | 288 | (1,219) | (11,084) | 108,178 |
| Net profit for the year | 0 | 0 | 0 | 0 | 2,367 | 2,367 |
| Other comprehensive income | ||||||
| Translation differences in subsiduaries and joint venture |
0 | 0 | 0 | 87 | 0 | 87 |
| Total comprehensive income for the year | 0 | 0 | 0 | 87 | 2,367 | 2,454 |
| Share-based payment, expensed | 0 | 0 | 209 | 0 | 0 | 209 |
| Share-based payment, release | 0 | 0 | (1,585) | 0 | (33) | (1,618) |
| Other changes | 0 | 0 | 0 | (178) | 265 | 87 |
| Other transations | 0 | (1,376) | (178) | 232 | (1,323) | |
| Equity as at 31 Dec 2021 | 29,571 | 90,622 | (1,089) | (1,310) | (8,485) | 109,309 |
| Other equity | ||||||
|---|---|---|---|---|---|---|
| 2022 | Share capital |
Share premium |
Other paid-in equity |
Translation differences |
Retained earnings |
Total equity |
| Equity as at 1 Jan 2022 | 29,571 | 90,622 | (1,089) | (1,310) | (8,485) | 109,309 |
| Net profit of the period | 0 | 0 | 0 | 0 | 20,298 | 20,298 |
| Other comprehensive income | ||||||
| Translation differences in subsiduaries and joint venture |
0 | 0 | 0 | 92 | 0 | 92 |
| Total comprehensive income of the period | 0 | 0 | 0 | 92 | 20,298 | 20,390 |
| Share-based payment, expensed | 0 | 0 | 83 | 0 | 0 | 83 |
| Other transations | 0 | 0 | 83 | 0 | 0 | 83 |
| Equity as at 30 June 2022 | 29,571 | 90,622 | (1,006) | (1,218) | 11,813 | 129,782 |
Icelandic Salmon AS (The "Company" or the "Parent")) is a limited liability company, incorporated in Norway and headquartered in Kverva. The address of its registered office is Industriveien 51, 7266 Kverva, Norway. The ultimate parent company is Kvarv AS. The Condensed Interim Financial Statements incorporate the financial statement of the Company and its subsidiaries collectively the "Group" or "Icelandic Salmon".
Icelandic Salmon is the leading salmon farmer in Iceland and the main operation of the Group is production, processing and sale of seafood and seafood-based products.
Subsidiaries are entities ultimately controlled by the Group. Control is achieved when the Company has power over the investee, is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary.
| Subsidiary | Office | 30/6/2022 | 30/6/2021 | 31/12/2021 | Company | Country |
|---|---|---|---|---|---|---|
| Arnarlax ehf, | Strandgata 1, 465 Bíldudalur |
100% | 100% | 100% | Icelandic Salmon AS |
Iceland |
| Fjallalax ehf, | Strandgata 1, 465 Bíldudalur |
100% | 100% | 100% | Arnarlax ehf, | Iceland |
These Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Accounting Standards, IAS 34 Interim Financial Reporting. The Condensed Consolidated Interim Financial Statements have been prepared on the historical cost bases excepted for biological assets, which is measured at fair value with gain and losses recognised in the Consolidated Statement of Other Comprehensive Income.
The same accounting policies and classification have been followed in these Condensed Consolidated Interim Financial Statements as were applied in the preparation of the Group´s Consolidated Financial Statements for the year ended 31 December 2021. A full description of all material accounting principles used in the most recent Consolidated Financial Statements is given in the Group's 2021 annual report, which is available on www.arnarlax.is. The Group has not early adopted any standards, interpretation or amendment with effective date after 1 January 2022. There are no new standards or amendments in short term perspective which have been issued, but are not yet effective, that are considered to have an impact on the Group. The Condensed Consolidated Interim Financial Statements are unaudited.
To increase the value of information disclosed in the notes to the Condensed Consolidated Interim Financial Statements, information disclosed are relevant and material. That means that information that are neighter relevant nor material for the reader are not disclosed.
Revenue recognised at point in time (sale of goods) and revenue recognised over time (other revenue) is as follows:
| Specifications of revenue: | H2 2022 | H1 2021 | FY2021 |
|---|---|---|---|
| Sales of goods | 66,581 | 31,106 | 81,628 |
| Other revenues | 5,504 | 4,314 | 9,177 |
| Revenue from contracts with customers | 72,085 | 35,420 | 90,806 |
The Group's revenue from contracts with customers has been disaggregated and presented in the table below:
| Group revenues by geographic market: | H2 2022 | % | H1 2021 | % | FY2021 | % |
|---|---|---|---|---|---|---|
| Europe, excl, Norway | 42,350 | 58,7% | 29,183 | 82,4% | 57,597 | 63,4% |
| USA | 16,438 | 22,8% | 3,105 | 8,8% | 12,464 | 13,7% |
| Norway | 5,394 | 7,5% | 1,052 | 3,0% | 16,110 | 17,7% |
| Other | 7,903 | 11,0% | 2,080 | 5,9% | 4,635 | 5,1% |
| Revenue from contracts with customers | 72,085 | 100,0% | 35,420 | 100,0% | 90,806 | 100,0% |
Intangible assets that are purchased individually are capitalised at acquisition cost. Intangible assets acquired in connection with the purchase of a business entity are capitalised at acquisition cost when the criteria for separate posting are met.
| Total |
|---|
| 0 |
| 978 |
| 978 |
| 0 |
| 978 |
| 381 |
| 1,359 |
At period ending 30.6.2022 the Group had recognised licenses amounting EUR 1.4 million ( Compared to 31.12.2021: 1.0 million, 30.06.2021: 1 million). The change of the current period is arising from business combination (see note 8)
| Book value of biological assets inventories | 30/06/2022 | 30/06/2021 | 31/12/2021 |
|---|---|---|---|
| Raw materials | 3,967 | 3,341 | 2,470 |
| Boxes | 60 | 20 | 67 |
| Finished Products | 0 | 171 | 0 |
| Total other inventories | 4,026 | 3,532 | 2,538 |
| Biological assets | 73,310 | 57,657 | 66,899 |
| Total biological assets and other inventories | 77,336 | 61,189 | 69,437 |
Raw materials comprise mainly feed for smolt and marine-phase fish production. It also includes raw materials for use in processing, as well as packaging. Stocks of biological assets are associated with farming activities on land and at sea, and comprise roe, fry, smolt, arctic char and fish held at sea farm.
Finished Products comprises whole salmon, fresh and frozen, as well as processed salmon products. At end of H1 2022, finished goods was in in transit to customers compaired to EUR 0.2 million for the corresponding period for 2021.
Cost of finished products recognised as an expense in respect of write-downs of inventory to net realisable value.
| H1 2022 | H1 2021 | FY2021 | |
|---|---|---|---|
| Write downs within period | 0 | 95 | 95 |
Fair value adjustments are part of the Group's operating profit/loss, but changes in fair value are presented on a separate line to provide a greater understanding of the Group's profit/loss on sold goods.
| Fair Value | H1 2022 | H1 2021 | FY2021 |
|---|---|---|---|
| Change in fair value of the biomass | 3,885 | 755 | (2,937) |
| Recognised fair value adjustments | 3,885 | 755 | (2,937) |
| Book value of biological assets recognised at fair value |
30/06/2022 | 30/06/2021 | 31/12/2021 |
|---|---|---|---|
| Biological assets held at sea farms at cost | 58,045 | 44,147 | 57,127 |
| Fair value adjustment of biological assets | 9,680 | 9,487 | 5,795 |
| Total biological assets held at sea by fair value | 67,725 | 53,634 | 62,922 |
| Roe, fry, smolt and arctic char fish at cost | 5,585 | 4,023 | 3,977 |
| Total biological assets | 73,310 | 57,657 | 66,899 |
| Change in the book value of biological assets held at sea farm carried at fair value |
30/06/2022 | 30/06/2021 | 31/12/2021 |
|---|---|---|---|
| Biological assets held at sea farm 1 Jan | 62,922 | 49,211 | 49,211 |
| Increase resulting from production/purchase | 26,191 | 22,239 | 61,648 |
| Reduction resulting from sale/harvesting | (23,720) | (18,529) | (44,959) |
| Reduction resulting from incident-based mortality | (1,552) | (42) | (42) |
| Net fair value adjustment | 3,885 | 755 | (2,937) |
| Biological assets held at sea farm at end of period | 67,725 | 53,634 | 62,922 |
Incident-based mortality is recognised at sites where a single incident leads to a 3 per cent mortality rate in one period, or a mortality rate over several periods in excess of 5 per cent.
The assessment relates to the number of fish and is carried out at site level. The Group had one incident in Q1 2022 that resulted in incident-based mortality as defined above. The total net effect on the Group's operating profit at cost was EUR 1.4 million. The corresponding numbers for 2021 was one incident and effect on Group's operating profit at cost of EUR 41.5 thousand.
The discount rate at end of first half 2022 was 5.0 per cent per month, which reflects the biomass capital cost, risk and synthetic license fees and site rental charges. The discount rate was changed from end of year 2021 from 4,0 per cent and is based on increased margin that should give a higher contribution to the owner of the licenses and higher expectations of profitability in the industry.
The calculation is based on following forward prices:
| Expected harvesting period: | Forward price 30/6/2022 |
Forward price 30/06/2021 |
Forward price 31/12/2021 |
|---|---|---|---|
| Q3-2021 | 5,41 | ||
| Q4-2021 | 5,90 | ||
| Q1-2022 | 6,14 | 6,80 | |
| Q2-2022 | 6,27 | 6,73 | |
| Q3-2022 | 7,84 | 5,23 | 5,53 |
| Q4-2022 | 7,52 | 5,60 | 6,08 |
| Q1-2023 | 8,14 | 5,86 | 6,32 |
| Q2-2023 | 8,14 | 6,34 | |
| Q3-2023 | 6,84 | 5,29 | |
| Q4-2023 | 7,04 | ||
| Q1-2024 | 6,88 |
As at 30 June 2022, The Company's share capital comprised:
| No, | Face value | Share capital in EUR | |
|---|---|---|---|
| Ordinary shares | 30,961,868 | 0,96 | 29,571,137 |
The Company's 20 largest shareholders as at 30 June 2022 were:
| No, | Shareholding | |
|---|---|---|
| SalMar ASA | 15,798,152 | 51,02% |
| J,P, Morgan SE | 2,465,774 | 7,96% |
| Íslandsbanki hf, | 2,320,643 | 7,50% |
| Gyda ehf, | 1,000,000 | 3,23% |
| Holta Invest AS | 938,314 | 3,03% |
| Pactum Vekst AS | 825,862 | 2,67% |
| MP Pensjon PK | 619,706 | 2,00% |
| Canomaro Shipping AS | 599,661 | 1,94% |
| Nima Invest AS | 562,198 | 1,82% |
| Clearstream Banking S,A, | 526,090 | 1,70% |
| State Street Bank and Trust Comp | 515,000 | 1,66% |
| Kristians and AS | 470,000 | 1,52% |
| Haganes AS | 319,646 | 1,03% |
| Hortulan AS | 300,000 | 0,97% |
| VPF DNB Norge Selektiv | 261,590 | 0,84% |
| Verdipapirfondet Pareto Investment | 243,400 | 0,79% |
| Verdipapirfondet DNB SMB | 233,524 | 0,75% |
| DNB Nor Bank ASA | 227,616 | 0,74% |
| Alden AS | 218 | 0 |
| Lithinon AS | 212 | 0 |
| Total 20 largest shareholders | 28,656,833 | 92,56% |
| Total other shareholders | 2,305,035 | 7,44% |
| Total no, of shares | 30,961,868 | 100,00% |
| Name | Title | Shares | Shareholding |
|---|---|---|---|
| Kjartan Ólafsson * | Chairman of the board | 1,000,000 | 3,23% |
| Trine Sæther Romuld *** | Boardmember | *** | |
| Olav Andreas Ervik *** | Boardmember | *** | |
| Leif Inge Nordhammer *** | Boardmember | *** | |
| Espen Marcussen **** | Boardmember | **** | |
| Bjørn Hembre ** | CEO | 32,900 | 0,11% |
| Rolf Ørjan Nordli *** | COO SeaWater | *** |
Shares owned by members of the board and directors.
* Kjartan Ólafsson owns indirectly through Gyda ehf, Kjartan Ólafsson owns 100 per cent of the shares in Berg Fjárfesting ehf, which own 100 per cent of the shares in Gyda ehf.
** Bjørn Hembre owns indirectly through IVMA AS which is one of minority stakeholders in Icelandic Salmon AS, Bjørn Hembre owns 100 per cent of the shares in IVMA AS.
*** Trine Sæther Romuld, Olav Andreas Ervik, Leif Inge Nordhammer and Rolf Ørjan Nordli: all indirectly own shares through minority stakes in SalMar ASA.
**** Espen Marcussen indirectly owns hares through a minoirty stake in Pactum Vekst AS.
| Long-term interest-bearing debt | 30/06/2022 | 30/06/2021 | 31/12/2021 |
|---|---|---|---|
| Debt to credit institutions | 39,481 | 23,743 | 40,549 |
| Classified as current liabilities | (2,104) | (1,644) | (2,084) |
| Total non-current interest-bearing debt | 37,378 | 22,100 | 38,465 |
| Lease liabilities | 7,384 | 5,599 | 5,889 |
| Classified as current liabilities | (1,218) | (929) | (1,086) |
| Non-current lease liabilities | 6,166 | 4,670 | 4,803 |
| Total non-current interest-bearing liabilities | 43,544 | 26,769 | 43,268 |
| Current interest-bearing liabilities | |||
| Debt to credit institutions | 190 | 2,134 | 0 |
| Long-term interest-bearing debt classified as current | 2,104 | 1,644 | 2,084 |
| Total debt to credit institutions | 2,294 | 3,778 | 2,084 |
| Current lease liablities | 1,218 | 929 | 1,086 |
| Total current interest-bearing debt | 3,513 | 4,707 | 3,170 |
The Company has a solvency requirement which means that the book equity ratio must be above 35 per cent and profit requirement that requires that the Company's 12-month rolling interest coverage ratio must not be lower than 3.5:1. In addition, the Company's NIBD / 12-month rolling EBITDA should not exceed 6.5:1. The Company was in compliance with these covenants as at 30 June 2022.
| 1 January 2022 |
New borrowings |
Repayment of borrowings |
Current portion of long-term liabilities |
Other changes |
30 June 2022 |
|
|---|---|---|---|---|---|---|
| Non-current interest-bearing debt to credit institutions |
38,465 | 2,971 | (3,563) | (563) | 68 | 37,378 |
| Current interest-bearing debt to credit institutions |
2,084 | 252 | (563) | 311 | 19 | 2,103 |
| Total liabilities from financing |
40,549 | 3,222 | (4,125) | (252) | 87 | 39,481 |
| 1 January 2022 |
New leases recoginsed |
Cash flows | Current portion of long-term leases |
30 June 2022 |
|
|---|---|---|---|---|---|
| Non-current lease liabilities | 4,803 | 2,086 | 0 | (722) | 6,167 |
| Current lease liabilities | 1,086 | 0 | (590) | 722 | 1,218 |
| Total lease liabilities from financing |
5,889 | 2,086 | (590) | 0 | 7,385 |
Of the total amount of leases there are three lease agreements for feed barge, service boat and lease of a land at Hallkellsholar that comprise 6.1 million or 83% of lease assets.
A provision is recognised when, and only when, the Group has a constructive obligation (legal or self-imposed) deriving from an event which has occurred, and it is probable (more likely than not) that a financial settlement will take place as a result of that liability, and the amount in question may be reliably quantified Provisions are reviewed on each reporting date, and the level reflects a best estimate of the liability concerned.
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 provision in the Consolidated Statement of Financial Position. The amount recognised as a liability is the difference between the market price at the end of the reporting period plus costs to sell and the contract price. Changes in provisions are recognised in a separate line in the Consolidted Statement of Comprehensive Income and are included in the operational profit.
Provision related to onerous contracts was EUR 0.4 million for H1 2022. The effect is recognised as separte line in the Condensed Consolidated Interim Statement of Comprehensive Income with with contra entry to current liablities. No provision of onerous contracts was recognised in the year 2021.
Arnarlax signed a contract on 11 May 2021 for the acquisition of all shares in Fjallalax ehf, for a cash consideration of ISK 109,6 million (EUR 0,67 million). Of that amount, EUR 0,47 million was paid on 11 June 2021 which is defined as the acquisition date and EUR 0,2 million in end of January 2022. The below is the fair value of assets and liabilities acquired based on final purchase price allocation.
| Fjallalax ehf's assets acquired | |||
|---|---|---|---|
| and liabilities recognised at the date of acquisition: |
Book value | Adjustment to fair value |
Fair value |
| Biomass - Arctic Char | 41 | 0 | 41 |
| Lease Assets | 365 | 0 | 365 |
| Trade and other receivables | 26 | 0 | 26 |
| Licenses | 0 | 928 | 928 |
| Equipments and Machinery | 18 | 0 | 18 |
| Deferred tax liability | 0 | (186) | (186) |
| Lease liabilities | (338) | 0 | (338) |
| Trade and other payables | (159) | 0 | (159) |
| Current portion of lease liablity | (27) | 0 | (28) |
| Net identifiable assets and liabilities | (75) | 743 | 667 |
| Cash consideration | 667 |
(MAST) granted a 100-tonnes operating license for salmon and artic char production at the Hallkellshólar facility. Simitanuasly Fjallalax ehf, entered a non-cancellable lease agreement for the land. The lease term is 27 years, resulting in an increase of lease liability of EUR 1,9 million with corresponding entry to right-of-use assets.
See Subsequent event (note 10).
The Group prepares its financial statements in accordance with International Financial Reporting Standards (IFRS). In addition, management has established alternative performance parameters (APMs) to provide useful and relevant information to users of its financial statements. Alternative performance parameters have been established to provide greater understanding of the Company's underlying performance, and do not replace the Consolidated Financial Statements prepared in accordance with IFRS. The performance parameters have been reviewed and approved by the Group's management and Board of Directors. Alternative performance parameters may be defined and used in other ways by other companies.
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 fair value adjustments of biomass are classified in separate lines in the Condensed Consolidated Interim Financial Statements. 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.
| H1 2022 | H1 2021 | FY 2021 | |
|---|---|---|---|
| Operating profit | 26,042 | 3,766 | 4,070 |
| Production tax | 549 | 120 | 307 |
| Onerous Contracts | 337 | 0 | 0 |
| Fair value adjustments of biomass | (3,885) | (755) | 2,937 |
| Operational EBIT | 23,044 | 3,131 | 7,314 |
The production tax represents resource tax in Iceland. It reduces profits by EUR 0.5 million in H1 2022 compared to EUR 0.1 million in H1 2021 and 0.3 million for the year 2021.
Operational EBIT per kg gutted weight (GW) is defined as a key performance parameter for the Group. 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.
| H1 2022 | H1 2021 | FY 2021 | |
|---|---|---|---|
| Operational EBIT | 23,044 | 3,131 | 7,314 |
| Harvested volume (tonnes) | 6,326 | 4,848 | 11,537 |
| Operational EBIT per kg gutted weight | 3,64 | 0,65 | 0,63 |
Net interest bearing debt is an alternative performance measure used by the Group. The performance measure is used to epress the Groups's working capital, and is an important performance mearsure for investors and other users, beauce it 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 and cash equivalents. Lease liabilities under IFRS 16 are not included in the calculation of interest-bearing debt.
| 30/6/2022 | 30/6/2021 | 31/12/2021 | |
|---|---|---|---|
| Non-current interest-bearing debt | 37,378 | 22,100 | 38,465 |
| Current interest bearing debt | 2,294 | 3,778 | 2,084 |
| Cash and cash equivalents | (18,731) | (2,453) | (3,744) |
| Net interest bearing debt (NIBD) | 20,941 | 23,424 | 36,805 |
The Company's fully owned subsidiary, Arnarlax, signed a Share Purchase Agreement (SPA) on 25th of May for the remaining 50% of shares in its joint venture, Eldisstöðin Ísþór hf. The transaction was subject to approval from the Icelandic Competition Authorities (ICA) and certain other closing conditions. The ICA approved the acquistion on 2nd of August and all other closing condision was closed on 17 of August, which is the acquisition date. With this acquisition the Group takes another important step in its strategy of increasing smolt weight, allowing increased MAB license utilisation while reducing production time in sea and thereby biological risk. The acquistion acquisitiondate fair value of the total consideration is approximately 10,6 million.
With the acquisition the Company is getting control over its joint venture and therefore in accordance with IFRS the Company will remeasure its 50% equity interest held before the acquistion to fair value. The remeasurement will result in a fair value gain of approximately 9 million recognised in the Consolidated Statement of Comprehensive Income in Q3 2022. A full Purchase Price allocation according to IFRS is in progress and will be dislosed as part of Q3 2022 reporting.
Following the acquisition of Eldisstöðin Ísþór, the management agreed to purchase part of remaining biomass owned by previous owner within the facility. With the purchase the Company become sole owner of the biomass in the facility as from acquisition date.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.