Annual Report • Feb 17, 2022
Annual Report
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Alfabygget N-5392 Storebø NORWAY
www.auss.no
The figures include 50% of revenue, EBITDA and net interest-bearing debt from the Pelagia Holding Group. EBITDA before fair value adjustment related to biological assets NIBD is net interest-bearing debt to institutions where the main activity is financing
Group operating revenue in Q4 2021 totalled NOK 7,028 million, compared with NOK 5,746 million in Q4 2020.
Group EBIDTA in Q4 2021 totalled NOK 1,307 million compared with NOK 859 million in Q4 2020.
The strong earnings growth is a result of a good level of activity in the quarter, strong demand for seafood and better prices realised for the Group's products compared with Q4 2020.
EBIT before fair value adjustment related to biological assets was NOK 903 million in Q4 2021, compared with NOK 464 million in Q4 2020.
Fair value adjustment related to biological assets in Q4 2021 was positive and totalled NOK 246 million. The corresponding figure in Q4 2020 was negative at NOK -704 million.
EBIT after fair value adjustment related to biological assets in Q4 2021 was NOK 1,149 million, compared with a negative figure of NOK -240 million in Q4 2020.
The largest associates are Norskott Havbruk AS and Pelagia Holding AS. Income from associates in Q4 2021 totalled NOK 85 million (Q4 2020: NOK 140 million). The weaker earnings in the quarter were impacted in particular by weak biological performance in Norskott Havbruk's subsidiary Scottish Sea Farms Ltd, as well as transaction costs related to Scottish Sea Farms Ltd's acquisition of Grieg Seafood Hjaltland UK. The Group's associates have generated good results over time, are significant enterprises in their segments and represent substantial values for Austevoll Seafood ASA. Please refer to note 5 for more detailed information on associates.
The Group's net interest expense in Q4 2021 totalled NOK 71 million (Q4 2020: NOK 67 million). Net other financial expenses in the quarter totalled NOK 10 million (Q4 2020: income of NOK 7 million).
The Group reported profit before tax in the quarter of NOK 1,154 million (Q4 2020: loss of NOK 160 million). Profit after tax was NOK 909 million (Q4 2020: loss of NOK 108 million).
The Group's activities are classified according to the following operating segments: Lerøy Seafood Group ASA (Europe), Austral Group S.A.A (Peru), Foodcorp Chile S.A (Chile), Br. Birkeland AS (Norway), Br. Birkeland Farming AS (Norway) and the joint venture Pelagia Holding AS (Europe).
LSG's operations comprise farming, wild catches (Lerøy Havfisk and LNWS), VAP and Sales & Distribution. LSG's farming operations comprise three farming regions in Norway: Lerøy Aurora in Troms and Finnmark, Lerøy Midt in Nordmøre/ Trøndelag, and Lerøy Sjøtroll in Vestland.
In Q4 2021, LSG reported revenue of NOK 6,529 million (Q4 2020: NOK 5,171 million) and EBITDA before fair value adjustment related to biological assets of NOK 1,224 million (Q4 2020: NOK 750 million).
Strong demand for seafood, better prices realised for the Group's main products and an improvement in underlying operations were important factors driving the significant earnings improvement in all segments compared with the same period in 2020.
LSG's harvest volume for salmon and trout, gutted weight, was 51,332 tonnes in Q4 2021. This is an increase from Q4 2020, when the harvest volume was 48,349 tonnes.
The demand for Norwegian salmon and trout has been significantly impacted by restrictions relating to COVID-19. As with previous demand shocks, the market for salmon and trout has shown considerable flexibility. Large volumes have found their way to consumers, with grocery stores/retail having taken larger shares at the expense of the HoReCa sector. With the gradual reduction of COVID-related restrictions, demand in the second half of 2021 again reached historic highs in terms of both value and volume. Price development was extremely positive through the fourth quarter, and this positive trend has continued into 2022, with demand and prices both significantly higher than at this point in 2021.
The average price for salmon in Q4 2021, measured according to NSI (sales price FCA Oslo), was NOK 59.7/kg, compared with NOK 54.7/kg in Q3 2021 and NOK 43.4/kg in Q4 2020. This represents a price increase of NOK 5.0/kg compared with Q3 2021 and NOK 16.0/kg compared with Q4 2020. The volume of salmon exported from Norway was 11% higher in Q4 2021 than in Q4 2020, which is evidence of a strong market.
Norwegian trout exports increased in volume by around 20% in 2020. This strong volume growth, combined with the COVID-19 restrictions, had a very negative impact on prices throughout 2020. The growth in volume has flattened out throughout 2021. This led to much better equilibrium in the trout market, and prices realised in Q4 2021 were significantly up on the same period in 2020.
For Lerøy Sjøtroll, 42% of the harvest volume in Q4 2021 was trout. Measures implemented and substantial investments made in recent years have had a positive effect, as is apparent from the significantly higher share of superior trout being produced. The Group's prices realised for trout in Q4 2021 were almost the same as for salmon.
The contract share for salmon in Q4 2021 was 29%.
The Group's release from stock costs in Q4 2021, including the new production fee of NOK 0.4/kg, were lower than in Q3 2021 but higher than in Q4 2020.
As expected, the Group's release from stock costs were lower in the second half of 2021 than in the first half. The reduction was less than originally expected because of slightly lower production in the sea and higher prices for most input factors. This was seen most clearly in the case of feed, which alone increased release from stock costs by around NOK 1.0/ kg in Q4 2021 compared with Q4 2020.
The Group has a clear ambition to continue improving its operational efficiency and is therefore confident of improving its competitiveness through 2022 and beyond. Nevertheless, the expectation of higher prices for key input factors will have a negative impact on the cost profile and, despite operational efficiency improvements, release from stock costs could still be higher overall in 2022 than in 2021.
As expected, Lerøy Aurora experienced a significant reduction in release from stock costs in Q4 2021 compared with the first three quarters, but they were still higher than in the same period of 2020. Once again in 2021, Lerøy Aurora faced significant challenges relating to winter ulcers. A number of measures have been introduced, some of which will not be fully effective until 2023. At present, the number of quality downgrades is expected to be lower in 2022 than in 2021, but some fish cohorts will be harvested at sub-optimal average weights in the first half of 2022. This will mean better prices realised for the current year and, other things equal, lower costs per kilo of harvested fish in Lerøy Aurora. Volumes in the first half of 2022 will be low, meaning higher release from stock costs in the first half of 2022 than the second. Lerøy Aurora estimates a harvest volume in the region of 40,000 GWT in 2022.
As expected, release from stock costs in Lerøy Midt in Q4 2021 were down significantly on Q3 2021. A number of locations due for harvest in the first quarter have performed extremely well. Given the expected price increase for input factors, release from stock costs for the year as a whole are expected to be higher in 2022 than 2021. The company estimates a harvest volume in the region of 71,000 GWT in 2022.
As previously communicated, the growth in Lerøy Sjøtroll from mid-Q3 2021 was slightly lower than expected, which meant the cost reduction was also slightly lower than expected. Release from stock costs in the fourth quarter were roughly in line with the third quarter. The measures implemented and the investments made in Lerøy Sjøtroll are gradually starting to deliver positive effects. Taking this as a starting point, release from stock costs in 2022 are expected to be on par with 2021. Lerøy Sjøtroll estimates a harvest volume in the region of 74,000 GWT in 2022.
The wholly owned subsidiary Lerøy Havfisk's primary business is wild catches of whitefish. Lerøy Havfisk has licence rights to harvest just above 10% of the total Norwegian cod quotas in the zone north of 62 degrees latitude, corresponding to approximately 30% of the total quota allocated to the trawler fleet. Lerøy Havfisk also owns several processing plants, which are mainly leased out to its sister company Lerøy Norway Seafoods (LNWS) on longterm contracts. Lerøy Havfisk's trawler licences stipulate an operational obligation for these processing plants.
Lerøy Havfisk had 10 trawlers in operation in Q4 2021. The catch volume in Q4 2021 was 17,119 tonnes compared with 12,619 tonnes in Q4 2020. The increased catch for the quarter was partly driven by higher quotas for 2021 than 2020 but also by the fact that the company had planned a different catch pattern through the year.
In 2021, the authorities made it possible to transfer up to 15% of the cod quota to 2022, measured by vessel. The prices for haddock and saithe continue to show good development, increasing significantly in the fourth quarter. The company prioritised catches of these species in the quarter. Approximately 5% of Lerøy Havfisk's cod quota – around 1,350 tonnes – was therefore transferred to 2022. The coastal fleet also transferred quota from 2021 to 2022, making it likely that the decrease in the volumes of cod caught in Norway in 2022 will be smaller than the reduction in the quota.
The price level, and variations therein, in 2020 and 2021 were impacted by restrictions linked to the COVID-19 pandemic. Prices for cod were slightly lower in 2021 than in 2020, improved significantly in Q4 2021. Prices for cod were up around 16% on Q4 2020, while prices for haddock and saithe increased by 22% and 32% respectively. Higher catch volumes and higher prices realised for the main species are the main drivers for the higher catch value in Q4 2021 compared with Q4 2020. At the same time, profitability is being negatively affected by higher costs, particularly bunker costs. The higher bunker costs are linked to more working days in Q4 2021 than in Q4 2020 and higher bunker prices. Bunker prices were 34% higher in Q4 2021 than in Q4 2020. In total, bunker costs increased by NOK 28 million compared with the same quarter of 2020.
LNWS's primary business is processing wild-caught white fish. The company has use of 12 processing plants and purchasing stations in Norway, five of which are leased from Lerøy Havfisk.
Processing whitefish in Norway has been extremely challenging for several years. Earnings came under severe pressure in the fourth quarter from the rising raw material prices for cod and other whitefish. Nevertheless, earnings in Q4 2021 were up on Q4 2020, and earnings for full-year 2021 were substantially higher than for 2020. This can be explained by operational improvements and significantly better access to raw materials than in 2020.
The Group will continue to devote substantial resources to its long-term efforts to improve the competitiveness of the whitefish industry but, other things equal, the price level at the start of 2022 makes conditions more challenging for the onshore industry. Over time, the Group has implemented organisational changes and made significant investments in facilities, which we believe will deliver sustainable earnings for the onshore industry.
In total, Lerøy Havfisk and LNWS reported EBIT of NOK 73 million in Q4 2021, compared with NOK -10 million in the same period of 2020.
Investigation by the competition authorities in the EU and USA On 20 February 2019, the EU's competition authorities ("the Commission") initiated investigations relating to suspected restrictive practices involving collaboration on the salmon market. The US Department of Justice (DOJ) started an investigation into the Norwegian salmon industry in November 2019. Lerøy Seafood Group ASA is one of the companies involved in these matters. In the wake of the European Commission's ongoing investigations, several Norwegian-owned aquaculture companies, including Lerøy Seafood Group, are being sued by customers in the USA and Canada. Please refer to the Group's annual report 2020 for more information.
For further information, please refer to LSG's report and presentation for Q4 2021.
Austral Group S.A.A. (Austral) is involved in fishing, production of fishmeal and fish oil and consumer products. Austral holds 6.98% of the total quota for anchoveta in Central/North Peru, and just under 4% of the quota in South Peru. In addition, the company has fishing rights for horse mackerel and mackerel. Anchoveta is used to produce fishmeal and oil, while horse mackerel/mackerel is fished for consumer products. The main fishing seasons for anchoveta in Central/North Peru are from April to July and November to January. Fishmeal and fish oil are produced in four factories, located in Coishco, Chancay, Pisco and Ilo. The company also produces consumer products in facilities that share premises with the fishmeal and fish oil factories in Coishco and Pisco.
The second fishing season in Peru started on 15 November, with a total quota of 2.05 million tonnes. The equivalent season in 2020 started on 12 November, with a total quota of 2.78 million tonnes.
Austral has had a good level of activity in the quarter and completed the season efficiently, despite challenging conditions because of COVID-19. The company's share of the total quota for the season was 143,000 tonnes. By the end of December 2021, Austral had caught 100% of its allocated quota for the season. In the corresponding season in 2020, the company reported catches of 166,600 tonnes, of which 125,200 tonnes were caught in Q4 2020 and the remaining 41,400 tonnes in January 2021.
The company's purchases of anchoveta from third parties in both the central/north zone and the fisheries zone in the south totalled 69,900 tonnes. In Q4 2020, 40,400 tonnes of anchoveta was purchased from third parties.
Operating revenue in Q4 2021 totalled NOK 270 million (Q4 2020: NOK 259 million) and EBITDA was NOK 101 million (Q4 2020: NOK 115 million).
Sales volumes for fishmeal and fish oil in the fourth quarter totalled 15,800 tonnes, up from 11,100 tonnes in the same quarter of 2020. The company's prices realised for fishmeal and fish oil in Q4 2021 were up 12% and 5% respectively on Q4 2020. Fishmeal represented 99% of total sales volume in the fourth quarter of the year, whereas the corresponding figure in Q4 2020 was 58%.
Peru is usually the world's largest producer of fishmeal and fish oil. Production volumes in Peru therefore have a significant influence on global prices for fishmeal and fish oil.
The rate of COVID-19 infections has been decreasing since May 2021. National restrictions remain in place in the wake of the COVID-19 outbreak. In common with other parts of the world, Peru experienced a new wave of infections at the end of 2021. The company is maintaining its comprehensive safety routines, which include compliance with regulations laid down by the authorities, testing routines and implementation/ facilitation of quarantine. The COVID-19 outbreak has caused and continues to cause increased uncertainty, increased costs relating to input factors and compliance with statutory regulations, and significantly lower predictability than normal.
Foodcorp Chile S.A. (FC) is involved in fisheries, production of consumer products and production of fishmeal and fish oil. FC's quota therefore now corresponds to 8.6% of the horse mackerel quota established for the fleet to which FC's vessels belong. FC also has a quota for sardine/anchoveta.
All FC's shore-based industrial activities are located in the same building in the coastal town of Coronel.
The main season for horse mackerel fishing is from December to July. The main season for sardine/anchoveta fishing is divided into two periods. The first season starts in March and ends in July/August. The second season normally starts in October/November and lasts until the end of December.
As normal, the company completed its main season in the first half of 2021. The level of activity was therefore low in the second half of 2021. In the fourth quarter, the company caught its remaining quota of 4,000 tonnes of horse mackerel (Q4 2020: 100 tonnes). The company also carried out annual maintenance work on vessels and factories during the quarter.
The company's own quota (including leased quota) for horse mackerel was just under 40,000 tonnes in 2021 (2020: 34,600 tonnes). The company purchased an additional catch volume of 31,800 tonnes of horse mackerel (2020: 28,500 tonnes) from third parties, which was caught by FC's own vessels. The total quota, including catch volume purchased from third parties, therefore amounted to 71,800 tonnes in 2021, up from approx. 63,100 tonnes in 2020. The increase in Chile's catch volume is a reflection of fisheries administration in recent years, which has resulted in a positive development in the marine biomass. This positive development in marine resources means the quota for 2022 has been increased by 15% compared with the quota for 2021.
In Q4 2021, operating revenue was NOK 75 million (Q4 2020: NOK 69 million) and EBITDA was NOK -35 million (Q4 2020: NOK -41 million).
Sales of frozen products totalled 3,300 tonnes in Q4 2021, up from 533 tonnes in the same quarter of 2020. Demand for frozen products was good, and the company's prices realised in the quarter were significantly higher than in Q4 2020.
The authorities in Chile, as in Peru, still have national restrictions to combat the COVID-19 pandemic. Chile also experienced a new wave of infections at the end of 2021. The company is maintaining its comprehensive safety routines, including compliance with regulations laid down by the authorities, testing routines and implementation/facilitation of quarantine. The COVID-19 outbreak has caused and continues to cause increased uncertainty, increased costs relating to input factors and compliance with statutory regulations, and significantly lower predictability than normal.
The BRBI segment reported operating revenue of NOK 61 million in Q4 2021 (Q4 2020: NOK 126 million). EBITDA amounted to NOK 9 million (Q4 2020: NOK 69 million).
The fall in revenue and earnings is mainly explained by the mackerel catch being brought forward. The mackerel season for the Norwegian fishing fleet started earlier in 2021 than in 2020. BRBI's two pelagic vessels caught the main share of their mackerel quota for the year in Q3 2021. In 2020, the mackerel quota was mainly caught in the fourth quarter. Mackerel is the species with the highest prices of all the quotas allocated to the vessels. In Q4 2021, the vessels caught their remaining quotas of herring.
The company's snow crab vessel completed fisheries for the year on 1 July 2021, by when they had caught the total volume of their snow crab quota for 2021. The vessel underwent comprehensive repairs and maintenance during the second half of the year.
In September 2021, BRBI purchased a second-hand fishing vessel to replace the "Northguider", which sank off the coast of Spitzbergen in December 2018. The vessel has been undergoing conversion/installation of factory, which was completed at the end of January 2022. The vessel is expected to start up snow crab fishing in mid-February.
The BFARM segment reported operating revenue of NOK 97 million in Q4 2021 (Q4 2020: NOK 110 million). EBITDA before fair value adjustment related to biological assets in Q4 2021 was NOK 9 million (Q4 2020: NOK -33 million).
The company's harvest volume was 1,774 tonnes in Q4 2021, down from 2,568 tonnes in Q4 2020. The company sells all its salmon to independent exporters on the spot market, and 54% of the volume in the quarter was harvested in October, when spot prices were low compared with those in the middle of the quarter and later. The company struggles with persistently high production costs.
In the consolidated financial statements, Pelagia Holding AS (Pelagia) is defined as a joint venture and accounted for by the equity method.
In note 4 Segments, Pelagia is consolidated using the so-called "proportionate consolidation method", in accordance with AUSS's 50% shareholding.
The figures for Pelagia in this section reflect 100% of the company's financial and operational figures.
Pelagia increased its 50% shareholding to become the 100% owner of Hordafor AS on 1 July 2021. In the financial statements, Hordafor AS is reported as a subsidiary from and including the date of the transaction. The comparative figures for the third and fourth quarters in 2020 have not been restated.
As mentioned in the previous report, the earlier start-up of the mackerel season for the Norwegian fishing fleet in 2021, compared with previous years, naturally resulted in a lower volume of raw materials for production of fish for consumers in Q4 2021 than in Q4 2020. Receipt of raw materials for the production of fishmeal, FPC and oil in Q4 2021 was just under 10,000 tonnes lower than in Q4 2020.
Revenue for Pelagia in the quarter was NOK 2,882 million
(Q4 2020: NOK 3,136 million) and EBITDA was NOK 350 million (Q4 2020: NOK 271 million).
The sales volume for frozen products in the quarter was 109,600 tonnes, down from 123,200 tonnes in the same quarter in 2020. The fall in sales volume reflects the early start-up of the mackerel season as well as the good sales volumes already achieved for frozen mackerel in the third quarter. Sales of fishmeal/FPC and fish oil in the quarter totalled 35,600 tonnes, down from 55,600 tonnes in Q4 2020.
The volume of raw materials received for consumer products in the quarter was 162,000 tonnes, compared with 200,000 tonnes in Q4 2020. Total receipt of raw materials in Pelagia for fishmeal/ FPC and fish oil production was approx. 193,000 tonnes in Q4 2021, compared with approx. 202,000 tonnes in Q4 2020.
Cash flow from operating activities for Q4 2021 was strong at NOK 844 million (Q4 2020: NOK 706 million). Cash flow from investing activities in Q4 2021 was NOK -694 million, compared with NOK -308 million in Q4 2020. As well as investments in fixed assets, the Group's liquidity was affected by LSG's share of the capital increase in the associate Norskott Havbruk AS. This capital increase was implemented in connection with the acquisition in December of Grieg Seafood Hjaltland UK by Norskott Havbruk AS' subsidiary Scottish Sea Farms. The Group's share of the capital increase amounted to NOK 305.5 million. Cash flow from financing activities for Q4 2021 was NOK -271 million (Q4 2020: NOK -93 million).
The Group's cash and cash equivalents are significant and totalled NOK 5,251 million at the end of Q4 2021, compared with NOK 4,463 million at the end of Q4 2020.
The Group reported operating revenue of NOK 26,633 million in 2021 (2020: NOK 22,447 million). EBITDA before fair value adjustment related to biological assets in 2021 was NOK 4,810 million (2020: NOK 3,675 million).
EBIT before fair value adjustment related to biological assets in 2021 was NOK 3,218 million (2020: NOK 2,159 million). The fair value adjustment related to biological assets for the year was positive at NOK 1,114 million in 2021. The corresponding value adjustment related to biological assets in 2020 was negative at NOK -954 million.
EBIT after fair value adjustment related to biological assets in 2021 was NOK 4,332 million (2020: NOK 1,205 million).
Income from associates in 2021 totalled NOK 393 million (2020: NOK 250 million). Profit from associates in 2021 includes a one-off gain of NOK 70 million as a result of a so-called step acquisition.
The Group's net interest expense in 2021 totalled NOK 284 million (2020: NOK 295 million).
Profit before tax and fair value adjustment related to biological assets for 2021 was NOK 3,255 million, compared with NOK 2,037 million in 2020.
Profit after tax in 2021 totalled NOK 3,436 million (2020: NOK 823 million).
Cash flow from operating activities in 2021 was strong at NOK 4,557 million (2020: NOK 2,944 million). Tax payable in 2021 totalled NOK 447 million compared with NOK 494 million in 2020. Cash flow from investing activities in 2021 was NOK -1,650 million (2020: NOK -1,403 million). The largest individual investment was the post-smolt facility at Lerøy Midt, alongside LSG's acquisitions in Denmark and the UK through Norskott Havbruk AS, as detailed above. Cash flow from financing activities in 2021 was NOK -2,128 million (2020: NOK -1,326 million). Of this, a figure of NOK 1,335 million was dividends from the Group, whereas the corresponding figure in 2020 was NOK 983 million. The subsidiary, Lerøy Seafood Group ASA, issued three new senior unsecured green bonds of NOK 500 million in the autumn of 2021, totalling NOK 1,500 million. These bonds fall due five, six and ten years after issuance respectively.
Net change in cash for the Group in 2021 was NOK 779 million (2020: NOK 215 million).
The Group's cash and cash equivalents at the end of 2021 totalled NOK 5,251 million, compared with NOK 4,463 million at the end of 2020.
The Group's statement of financial position at 31 December 2021 showed a total of NOK 43,781 million, compared with NOK 39,741 million at 31 December 2020. Some Group companies have a functional currency other than the Norwegian krone. Changes in foreign exchange rates will therefore result in periodic changes in the amounts in the Group's statement of financial position, due to translation to Norwegian krone.
The Group is financially sound with book equity at 31 December 2021 of NOK 25,187 million, equivalent to an equity ratio of 58%. At 31 December 2020, book equity for the Group was NOK 22,991 million, also representing an equity ratio of 58%.
At 31 December 2021, the Group had net interest-bearing debt excluding right-of-use liabilities other than to credit institutions totalling NOK 4,019 million, compared with NOK 4,651 million at 31 December 2020. The Group's net interest-bearing debt including right-of-use liabilities other than to credit institutions was NOK 5,663 million at 31 December 2021, compared with NOK 5,942 million at 31 December 2020.
The Group and parent company's financial position is very strong. The Board of Directors considers it important that the Group, through its operations, retains the confidence of participants in the various capital markets. The Group has and shall continue to have significant financial flexibility to allow it to finance further organic growth, carry out strategic acquisitions and sustain the company's dividend policy.
At 31 December 2021, the parent company Austevoll Seafood ASA had cash and cash equivalents of NOK 435 million and net interest-bearing debt of NOK 136 million. The parent company has a long-term NOK 600 million credit facility, of which NOK 590 million remained unutilised at 31 December 2021.
The Group's risk exposure is described in the Annual Report 2020. The Group's activities are essentially global and will always be impacted to varying degrees by developments in the global economy. In light of the turmoil in the global economy in recent years, including trade barriers and geopolitical risk, the general consensus is that macroeconomic uncertainty is still greater than what was previously considered normal. The Group's risk profile covers pandemics, of which the COVID-19 outbreak is an example. As a result of the outbreak, national and global authorities introduced extensive restrictions in an attempt to prevent uncontrolled spread of the infection. COVID-19 is having an impact on global value chains in that the necessary measures taken by public authorities, illness and fear are, at a global level, significantly affecting how we live our lives. As a part of the global seafood industry, the Group has also been severely affected. This has manifested in the form of changes in the pattern of demand for the Group's products, access to workforce both in the Group and externally, other input factors and increased credit risk.
As the national vaccination programme was rolled out, COVID-19 restrictions were partly lifted in the early autumn of 2021. However, a new wave of infections at the end of 2021 resulted in the reintroduction of restrictions to curb the pandemic. The Group's results will continue to be affected by developments in the relationship between supply and demand in the future.
Although the uncertainty may have a negative impact on the real economy in most markets, it is our opinion that AUSS's core business is founded on long-term sustainable assets within interesting segments of the global seafood industry.
The Group is exposed to risk related to the value of the Group's assets. Risk arises mainly as a result of changes in the prices of raw materials and finished products, to the extent that these changes impact the company's competitiveness and earnings potential over time. Operational factors, such as marine biomass, fishing conditions and price trends for the Group's input factors, are other key parameters that have an impact on risk for the Group.
At 31 December 2021, the Group had live fish on its statement of financial position worth NOK 6.2 billion. Biological risk has been and will remain a substantial risk factor in the Group's operations. Assessing and managing biological risk must therefore be a part of the Group's core expertise.
Changes in fishing patterns and quota adjustments mean fluctuations in catch volumes from quarter to quarter and year to year, and hence varying utilisation of the Group's production facilities. The seasonal fluctuations in catch volumes cause similar fluctuations in the Group's quarterly key figures.
Since LSG's acquisition of Havfisk and LNWS, the Group has had substantial exposure to catches of various species of whitefish subject to Norwegian quotas.
The Group faces political risk linked to administration by the different authorities, including framework conditions for fish farming and licence terms related to fisheries legislation.
Industrial developments and employment in capital-intensive activities exposed to global competition, such as fish farming, fisheries and industry, are challenging and require a long-term perspective by businesses and politicians at a national level. The Group's strategy centres on a long-term perspective, irrespective of framework conditions, to ensure a globally competitive organisation, which can continue to safeguard industrial development in the numerous local communities where the Group has operations.
In the approval granted by the Norwegian Ministry of Trade, Industry and Fisheries, LSG's ownership of Lerøy Havfisk and LNWS is linked to the ownership structure approved when the application was submitted, thereby requiring approval of any changes in ownership not covered by the exemption granted by the Ministry. The nationality requirement in section 5 of the Act relating to the right to participate in fishing must also be met.
The majority of the Group's debt is at floating interest rates, but fixed-rate contracts have been entered into for approx. 24% of the Group's interest-bearing debt.
The Group is exposed to fluctuations in foreign exchange rates, particularly the EUR, GBP, USD, Chilean peso and Peruvian sol. Measures to reduce this risk in the short term include forward contracts and multi-currency overdraft facilities. Furthermore, parts of the long-term debt are matched to earnings in the same currency.
The Group has increased its focus on climate risk. Overall, and as mentioned in the Group's presentation of risk, the Group's risk assessment covers various scenarios involving geopolitical and market-related factors, etc. In more recent years, the risk assessment has also, to a greater extent, encompassed climaterelated risk. In general, opportunities and risk are assessed on the basis of what is considered the most likely scenarios in the future. In 2022, the Group will further develop its risk management, so that climate risk is covered even more fully. The Board of Directors in the company has established an ESG committee comprising three of the Board members.
The company had 8,277 shareholders at the end of 2021. The number of shareholders at the start of Q4 2021 was 8,101.
The share price was NOK 103.70 at the start of Q4 2021 and NOK 106.40 at the end of the quarter.
A list of the company's 20 largest shareholders can be found in Note 6 in this report.
The Board of Directors intends to recommend a dividend payment for 2021 of NOK 4.5 per share to the company's annual general meeting in May 2022. The dividend for financial year 2020 paid on 9 June 2021 was NOK 3.5 per share.
Since it was established in 1981, Austevoll Seafood ASA (AUSS) has remained loyal to its strategic foundations of "creating lasting values through healthy oceans and thriving communities". The entire value chain in the Group's portfolio companies has its "origins" in sustainable use of the sea, and the Group's growth has been and shall continue to be sustainable both financially and in terms of the climate/environment. Sustainable growth places stringent requirements on the Group within finance, corporate governance, the climate and environment as well as social issues. Sustainability is essential for gaining access to capital, and is of decisive importance for the Group's survival and continued development. We are therefore proud to confirm that the Group's food production is globally competitive, according to the UN's sustainability criteria. Social sustainability is important for maintaining viable local communities and access to the Group's most important resource: the people who make up the organisations. For more detailed information, please read the company's sustainability report for 2020 on the website https://ar2020.auss.no/.
For more detailed information on the Group's work on sustainability, please go to the following links:
https://www.leroyseafood.com/en/investor/reports-andwebcast/sustainability-reports
https://www.austral.com.pe/en/annual-reports-andsustainability-reports
https://www.unglobalcompact.org/what-is-gc/participants/13988- FoodCorp-Chile-S-A-
Production, sale and distribution of salmon, trout and whitefish The Group's production of red fish currently takes place mainly in Norway. Norwegian and global salmon and trout production are experiencing relatively modest growth, which – combined with a weaker Norwegian krone – has resulted in very high prices. This provides an incentive to start production of salmon in new areas and using new, alternative technologies. These incentives have been in place for a few years now but, for many reasons, Norwegian sea-based production has maintained its global dominance. The harvest volume from land-based production of salmon remains insignificant on the end markets. The market share for Norwegian Atlantic salmon may, in the long term, be affected by production of salmon and trout in new regions and locations. By means of business development, investments and a clear operational focus on competitiveness, the Group shall ensure that its value chain continues to stand strong in the face of competition in the years to come. As well as developing existing farming operations, the Group is accumulating knowledge and/or expertise within both land-based and offshore salmon production.
In recent years, Lerøy has made significant investments in several parts of the value chain, including the construction of facilities for smolt/post-smolt capacity in all the Group's regions. At Lerøy Midt, the first smolt will be released into the new facility on schedule in Q1 2022. This facility represents the final stage of the extension of the plant. This will generate growth in Lerøy Midt's harvest volumes from 2023. The investments were made to raise the quality of the company's smolt, increase production by means of better licence utilisation and reduce costs. These investments in the Group's smolt production were an important driver in the growth in the Group's harvest volume in Norway from 158,000 tonnes in 2019 to 187,000 tonnes in 2021. At the same time, the new smolt facilities enable significant changes in our operations that we assess will help us realise improvements in the years ahead.
In common with the industry as a whole, the Group's costs per kilo of salmon and trout produced have increased significantly over the last 10 years. There are several reasons for this, but the global cost inflation the world is currently experiencing will not make things any easier. In these circumstances, operational efficiency is more important than ever, which is why it has top priority in the work under way within the Group's farming operations.
For its consolidated operations, LSG currently estimates a harvest volume of around 185,000 tonnes in 2022. The Group's share from associates is forecast to be 23,000 tonnes. This includes expected volume from Scottish Sea Farms Ltd's new acquisition, Grieg Seafood Hjaltland UK. LSG's total harvest volume in 2022 is estimated to be in the region of 208,000 tonnes.
The Group has made significant investments in catching and processing whitefish recent years. One new vessel was added to the fleet in 2018 – Nordtind – and another in early 2020 – Kongsfjord. Further improvements to fish quality were priority design criteria for Kongsfjord. Consumers are making ever-increasing demands and expectations on quality. High quality and competitiveness are essential for success when competing for consumers' preferences. The Group's target of significantly reducing greenhouse gas emissions makes new demands of technology within the fleet. The Group is monitoring developments closely.
Developments in Whitefish in 2021 were positive. The development in demand gradually led to higher sales prices at the same time as we successfully implemented a number of operational improvements in the onshore industry. The prices for relevant whitefish species were significantly higher at the start of 2022 than a year ago. This is positive overall, but a challenging situation for the onshore industry. A substantial increase in raw material prices takes time to recoup in the market, so this factor will negatively impact earnings in the onshore industry for much of 2022. Efforts and investments to make the factories less seasonally dependent continue. Together with structured and meticulous improvement initiatives in each unit, this process is expected to generate results.
The quotas for cod and haddock will be slightly lower in 2022. Work to finalise statistics and transfers from 2021 means that quotas have not yet been set for individual vessels. A reduction in cod quotas of around 20% is expected for the trawler fleet compared with 2021. The reduction for haddock is around 23%, while no change is expected in the quota for saithe fished in the zone north of 62 degrees latitude. As well as the quota changes, Havfisk's catch volumes will be impacted by around 1,350 tonnes of the 2021 cod quota having been transferred to 2022. The fact that the coastal fleet, too, moved quota from 2021 to 2022 is also positive for the onshore industry.
LSG works to develop an efficient and sustainable value chain for seafood. This not only provides cost-efficient solutions, but also quality, availability, a high level of service, traceability and competitive climate-related and environmental solutions. Investments in recent years, e.g., in a new industrial facility for Lerøy Midt, a new factory in Stamsund and new factories in Spain, the Netherlands and Italy, close to being commissioned, will make a positive contribution in the years to come.
Norskott Havbruk's subsidiary Scottish Sea Farms (SSF) completed its notified acquisition of Grieg Seafood Hjaltland UK in December 2021. The company operates in a region that SSF knows very well and, although it will take time, SSF is expected to realise significant synergies by integrating the two companies.
According to the IFFO*, fishmeal production from Regions Peru, Chile and the North Atlantic as of week 52 (week beginning 27 December 2021) was up 3.1% on the same period in 2020. The increase in production stems from Peru and Chile, at 15.3% and 6.5% respectively. There was a 26.9% reduction in production in the North Atlantic compared with the same period last year.
The quota for the second anchoveta season in Peru was 2.05 million tonnes, and the season started on 15 November. At the end of the season in mid-January 2022, 99% of the total quota had been caught. The main reason behind the lower production in the North Atlantic in 2021 compared with 2020 was the reduction in blue whiting and sand eel quotas from 2020 to 2021.
ICES' recommended quota for blue whiting in 2022 represents a reduction of 19% on the recommended quota for 2021. The quota for capelin off Iceland has been increased significantly in relation to 2021. The quota for 2022 is 904,000 tonnes, up from 127,000 tonnes in 2021.
*Source: IFFO, 52 week, 2021 (Regions Chile, Peru, Denmark/ Norway, Iceland/North Atlantic)
The Group's production of consumer products takes place in Europe and South America. In Europe, the fishing season for Norwegian spring-spawning herring is usually from January to April and the season for North Sea herring from May onwards. The main season for mackerel fishing is during the autumn and normally starts in September, not in early August as in 2021. Correspondingly, the remaining quotas for Norwegian springspawning herring are also caught during this period. The first half of the year is the season for horse mackerel in South America. ICES' recommended quota for catches in the North Atlantic in 2022 implies reduced catches of mackerel and Norwegian springspawning herring compared with the recommended quota for 2021. The reduction for these two species is 7% and 8% respectively. However, ICES' recommended quota for North Sea herring in 2022 reflects a catch increase of 45% compared with the recommended quota for 2021. ICES has also recommended catches of up to 70,000 tonnes of capelin in the Barents Sea in 2022. For 2021, ICES recommended a ban on capelin fishing in the Barents Sea. The 2022 quota recommended by SPRFMO for horse mackerel catches in the South Pacific represents a continuation of the positive development in these fisheries seen in recent years, and the decision has been made to increase the quota by approx. 15% in comparison with the quota for 2021. The 2021 quota also increased by 15% relative to 2020.
The Group is financially sound, has shown positive development and is currently well positioned in several parts of the global seafood industry. The Group's products are healthy and delicious, and production is sustainable from a financial, climate and environmental perspective.
The Group's strategy going forward is to continue to grow and further develop within its current operating segments. The Group has and shall continue to have the financial flexibility to support its strategy of further organic growth, carry out strategic acquisitions and sustain the company's dividend policy.
Over the years, the Board of Directors and management have focused on building a strong Group of companies, which includes ensuring that the Group has organisations well-prepared to solve challenges in difficult and changing conditions. The management and Group employees are doing what they can every day to ensure that the Group fulfils its underlying social responsibility by continuing to keep the value chain and food deliveries operational in challenging times.
The Board of Directors underlines that uncertainties related to assessments of future developments remain higher than normal. In the second half of 2021, demand for seafood returned to historically high levels, driven in particular by strong demand in the retail sector but also by the gradual positive development in the HoReCa sector as COVID-related restrictions were lifted. At the same time, the Group is experiencing rising prices for key input factors, which will impact cost developments in 2022. Nonetheless, the Board of Directors is confident that the Group is well positioned for the years ahead.
The Board of Directors would like to sincerely thank all the Group subsidiaries and their employees for their hard work in 2021.
Storebø, 16 February 2022 The Board of Directors of Austevoll Seafood ASA
Chairman of the Board Helge Singelstad
Board member Lill Maren Møgster Deputy Chairman of the Board Hege Charlotte Bakken
Board member Board member Eirik Drønen Melingen Helge Møgster
Board member Board member Hege Solbakken Siren M. Grønhaug
CEO Arne Møgster
| (audited) | |||||
|---|---|---|---|---|---|
| All figures in NOK 1,000 | Note | Q4 2021 | Q4 2020 | 2021 | 2020 |
| Operating revenue | 4 | 7 028 024 | 5 746 218 | 26 633 441 | 22 446 926 |
| Raw material and consumables used | 3 496 574 | 3 098 039 | 14 108 632 | 12 079 107 | |
| Salaries and personnel expenses | 1 057 769 | 956 884 | 4 064 280 | 3 604 585 | |
| Other operating expenses | 1 167 031 | 832 728 | 3 650 515 | 3 088 256 | |
| EBITDA before fair value adjustments * | 1 306 650 | 858 567 | 4 810 014 | 3 674 978 | |
| Depreciation and amortisation | 397 477 | 393 792 | 1 579 680 | 1 518 825 | |
| Impairment | 6 130 | 1 253 | 12 731 | -2 554 | |
| EBIT before fair value adjustment * | 903 043 | 463 522 | 3 217 603 | 2 158 707 | |
| Fair value adjustment related to biological assets | 3 | 246 307 | -703 816 | 1 114 412 | -954 044 |
| Operating profit | 1 149 350 | -240 295 | 4 332 015 | 1 204 663 | |
| Income from associated companies | 5 | 85 471 | 139 522 | 393 489 | 250 121 |
| Net interest expenses | -70 522 | -66 604 | -283 736 | -294 911 | |
| Net other financial items (incl. agio/disagio) | -10 015 | 7 047 | -66 239 | -132 447 | |
| Profit before tax and fair value adj.* | 7 | 905 240 | 551 735 | 3 255 095 | 2 037 136 |
| Profit before tax | 1 154 284 | -160 330 | 4 375 529 | 1 027 426 | |
| Income tax expenses | -244 893 | 52 485 | -939 415 | -204 575 | |
| Net profit | 909 391 | -107 845 | 3 436 114 | 822 851 | |
| Profit to non-controlling interest | 445 790 | -76 109 | 1 525 481 | 328 736 | |
| Profit to controlling interests | 463 601 | -31 736 | 1 910 633 | 494 115 | |
| Earnings per share (EPS) * | 1,79 | 1,30 | 7,18 | 4,55 | |
| Earnings per share (EPS) | 2,30 | -0,16 | 9,47 | 2,45 | |
| Diluted EPS | 2,30 | -0,16 | 9,47 | 2,45 |
*) before adjustment related to biological assets (alternative performance measure)
| All figures in NOK 1,000 | Q4 2021 | Q4 2020 | 2021 | (audited) 2020 |
|---|---|---|---|---|
| Net earnings in the period | 909 391 | -107 845 | 3 436 114 | 822 851 |
| Other comprehensive income | ||||
| Currency translation differences | 56 043 | -408 771 | -76 106 | -138 724 |
| Other comprehensive income from associated companies | -10 | -1 255 | -894 | -4 947 |
| Cash flow hedges | 4 074 | 24 452 | 62 758 | -34 429 |
| Others incl. tax effect | 927 | 12 915 | -2 222 | 3 635 |
| Total other comprehensive income | 61 034 | -372 659 | -16 464 | -174 465 |
| Comprehensive income in the period | 970 425 | -480 504 | 3 419 650 | 648 386 |
| Allocated to; | ||||
| Minority interests | 444 594 | -125 801 | 1 520 583 | 312 030 |
| Majority interests | 525 831 | -354 703 | 1 899 067 | 336 356 |
| All figures in NOK 1,000 | Note | 31.12.2021 | 31.12.2020 |
|---|---|---|---|
| Assets Intangible assets |
11 748 437 | 11 526 318 | |
| Vessels | 2 384 742 | 2 103 409 | |
| Property, plant and equipment | 6 895 770 | 6 275 401 | |
| Right-of-use assets | 8 | 3 063 764 | 3 105 697 |
| Investments in associated companies | 5 | 3 002 403 | 2 526 775 |
| Investments in other shares | 46 777 | 41 720 | |
| Other long-term receivables | 167 896 | 163 885 | |
| Total non-current assets | 27 309 789 | 25 743 205 | |
| Inventories | 3 | 8 104 557 | 6 735 346 |
| Accounts receivable | 2 321 067 | 2 045 398 | |
| Other current receivables | 794 719 | 754 290 | |
| Cash and cash equivalents | 5 250 543 | 4 462 765 | |
| Total current assets | 16 470 886 | 13 997 799 | |
| Total assets | 43 780 675 | 39 741 004 | |
| Equity and liabilities | |||
| Share capital | 6 | 101 359 | 101 359 |
| Treasury shares | -18 312 | -18 312 | |
| Share premium | 3 713 549 | 3 713 549 | |
| Retained earnings and other reserves | 9 504 576 | 8 311 893 | |
| Non-controlling interests | 11 885 806 | 10 882 086 | |
| Total equity | 25 186 977 | 22 990 574 | |
| Deferred tax liabilities | 3 511 547 | 3 261 183 | |
| Pensions and other obligations | 11 488 | 56 647 | |
| Borrowings | 6 663 497 | 5 650 866 | |
| Lease liabilities to credit institutions | 1 024 557 | 1 093 736 | |
| Lease liabilities other than to credit institutions | 1 382 141 | 1 055 920 | |
| Other non-current interest bearing debt | 889 | - | |
| Other long-term liabilities | 28 712 | 25 992 | |
| Total non-current liabilities | 12 622 831 | 11 144 344 | |
| Short term borrowings | 732 743 | 1 022 626 | |
| Lease liabilities to credit institutions | 265 243 | 270 899 | |
| Lease liabilities other than to credit institutions | 262 256 | 235 287 | |
| Overdraft facilities | 582 390 | 1 049 683 | |
| Account payable | 1 915 261 | 1 363 866 | |
| Other current liabilities | 2 212 974 | 1 663 725 | |
| Total current liabilities | 5 970 867 | 5 606 086 | |
| Total liabilities | 18 593 698 | 16 750 430 | |
| Total equity and liabilities | 43 780 675 | 39 741 004 | |
| Net interest bearing debt (NIBD) | 4 018 776 | 4 651 037 | |
| Lease liabilities other than to credit institutions | 1 644 397 | 1 291 207 | |
| NIBD incl. right of use assets liabilities | 5 663 173 | 5 942 244 | |
| Equity ratio | 58% | 58% |
| All figures in NOK 1,000 | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Equity at period start | 22 990 574 | 23 331 034 |
| Comprehensive income in the period | 3 419 650 | 648 386 |
| Dividends | -1 334 692 | -983 421 |
| Transactions with non-controlling interest | 111 445 | -5 425 |
| Other | - | - |
| Total changes in equity in the period | 2 196 403 | -340 460 |
| Equity at period end | 25 186 977 | 22 990 574 |
| All figures in NOK 1,000 | Q4 2021 | Q4 2020 | 2021 | (audited) 2020 |
|---|---|---|---|---|
| Cash flow from operating activities | ||||
| Profit before income taxes | 1 154 284 | -160 329 | 4 375 529 | 1 027 426 |
| Fair value adjustment of biological assets | -246 306 | 703 816 | -1 114 412 | 954 044 |
| Taxes paid in the period | -165 033 | -16 447 | -446 555 | -493 805 |
| Depreciation and amortisation | 397 478 | 393 792 | 1 579 680 | 1 518 825 |
| Impairments | 6 130 | 1 254 | 12 731 | -2 554 |
| Associated companies - net | -85 470 | -139 523 | -393 488 | -250 122 |
| Interest expense | 90 821 | 80 101 | 322 298 | 341 027 |
| Interest income | -20 298 | -13 497 | -38 562 | -46 116 |
| Change in inventories | -548 131 | -191 355 | -87 019 | -400 415 |
| Change in receivables | 98 753 | 33 839 | -93 116 | 629 946 |
| Change in payables | 1 972 | -108 812 | 443 477 | -334 538 |
| Other operating cash flow incl currency exchange | 159 601 | 123 107 | -3 299 | 620 |
| Net cash flow from operating activities | 843 801 | 705 946 | 4 557 264 | 2 944 338 |
| Cash flow from investing activities | ||||
| Purchase of intangible and fixed assets | -418 873 | -293 869 | -1 337 885 | -1 529 323 |
| Purchase of shares and equity investments | -300 987 | -34 917 | -508 691 | -36 672 |
| Proceeds from sale of fixed assets/equity investments | 8 239 | - | 43 477 | 17 223 |
| Cash inflow from business combinations | 881 | - | 3 829 | - |
| Dividend received | - | 3 408 | 113 514 | 129 548 |
| Interest income | 20 298 | 13 497 | 38 562 | 46 116 |
| Other investing activities - net | -3 729 | 3 391 | -3 263 | -29 716 |
| Net cash flow from investing activities | -694 171 | -308 490 | -1 650 457 | -1 402 824 |
| Cash flow from financing activities | ||||
| Proceeds from new long term debt | 22 892 | 165 017 | 2 393 905 | 2 111 463 |
| Repayment of long term debt | -409 240 | -422 986 | -2 466 776 | -2 224 573 |
| Change in short term debt | 235 551 | 335 458 | -410 285 | 143 721 |
| Interest paid | -97 154 | -78 330 | -325 510 | -344 560 |
| Dividends paid | -15 938 | - | -1 334 692 | -983 421 |
| Other finance cash flow - net | -7 235 | -92 091 | 15 182 | -28 720 |
| Net cash flow from financing activities | -271 124 | -92 932 | -2 128 176 | -1 326 090 |
| Net change in cash and cash equivalents | -121 494 | 304 524 | 778 631 | 215 424 |
| Cash, and cash equivalents at start of period | 5 372 037 | 4 172 639 | 4 462 765 | 4 251 100 |
| Exchange gains/losses (-) | - | -14 398 | 9 147 | -3 759 |
| Cash and cash equivalents at period end | 5 250 543 | 4 462 765 | 5 250 543 | 4 462 765 |
This interim report has been prepared in accordance with International Financial Reporting Standards (IFRS) and the related standard for interim financial reporting (IAS 34). All figures not included in the financial statements for 2020 are unaudited. The interim financial statements, including historical comparative amounts, are based on current IFRS standards and interpretations. Changes in the standards and interpretations may result in changes to the result. This interim report does not include all the information required by the International Financial Reporting Standards (IFRS) for a set of financial statements and should therefore be read in conjunction with the Group's financial statements for 2020.
Please refer to the Group's financial statements for 2020 for information on standards and interpretations applicable as of 1 January 2020.
There were related party transactions in Q4 2021. Related party transactions take place on market terms, and the relevant types of transactions are described in more detail in the Annual Report 2020.
The Group recognises and measures biological assets at fair value according to IAS 41 and IFRS 13. For salmon and trout, including parent fish, a present value model is applied to estimate fair value. For roe, fry, smolt and cleaner fish, historical cost is assumed to be the best estimate of fair value. The value of fish in the sea is estimated as a function of the estimated biomass at the time of release from stock, multiplied by the estimated sales price. For fish not ready for harvest, a deduction is made to cover estimated residual costs to grow the fish to harvest weight. The cash flow is discounted monthly by a discount rate. The discount rate comprises three main components: (1) the risk of incidents that have an effect on cash flow, (2) hypothetical licence lease and (3) the time value of money.
Estimated biomass (volume) is based on the actual number of individuals in the sea on the date of the statement of financial position, adjusted to cover projected mortality up to harvest time and multiplied by the estimated harvest weight per individual at harvest time. The measurement unit is the individual fish. However, for practical reasons, these estimates are carried out per locality. The live weight of fish in the sea is translated to gutted weight in order to arrive at the same measurement unit as for pricing.
Pricing is based on the Fish Pool forward prices. The forward price for the month in which the fish is expected to be harvested is applied in order to estimate cash flow. The price stipulated by Fish Pool is adjusted to take into account export costs and clearing costs, and represents the reference price. This price is then adjusted to account for estimated harvesting cost (well boat, slaughter and boxing) and transport to Oslo. Adjustments are also made for any projected differences in size and quality. The adjustments to the reference price are made per locality. Joint regional parameters are applied, unless factors specific to an individual locality require otherwise.
Valuation and classification are based on the principle of highest and best use according to IFRS 13. The actual market price per kilo may vary in relation to fish weight. When estimating fair value, the optimal harvest weight, i.e., the weight when the fish is ready for harvest, is defined as the live weight that results in a gutted weight of 4 kg. This corresponds to a live weight of 4.7 kg for salmon and 4.8 kg for trout. The optimal harvest weight may, however, be lowered slightly if required by factors at an individual locality (biological challenges etc.). In terms of valuation, only fish that have achieved an optimal harvest weight are classified as fish ready for harvest.
The Group enters into contracts related to future deliveries of salmon and trout. As biological assets are recognised at fair value, the fair value adjustment of the biological assets will be included in the estimated expenses required to fulfil the contract. This implies that the Group may experience loss-making (onerous) contracts according to IAS 37 even if the contract price for physical delivery contracts is higher than the actual production cost for the products. In such a scenario, a provision is made for the estimated negative value. The provision is classified in the financial statements as other current liabilities.
The fair value adjustment related to biological assets recognised in the income statement for the period comprises (1) fair value adjustment related to biological assets, (2) change in fair value (provision) related to onerous contracts and (3) change in unrealised gain/loss related to financial sale and purchase contracts (derivatives) for fish in Fish Pool. Fish Pool contracts are treated as financial instruments on the statement of financial position, where unrealised gain is recognised as other current receivables and unrealised loss as other current liabilities.
The figures for harvested volume and net growth in the tables below have been estimated on the basis of gutted weight (GWT) and converted to live weight (LWT). The gutting loss ratios applied in this conversion are 14% for salmon and 16% for trout. The table for Lerøy Seafood Group ASA includes salmon and trout. The table for Br. Birkeland Farming AS only includes salmon.
LWT = live weight measured in tonnes
GWT = gutted weight measured in tonnes
| Fair value adjustments over profit and loss | Q4 2021 | Q4 2020 | 2021 | 2020 |
|---|---|---|---|---|
| Change FV adj. of biological assets | 273 416 | -686 554 | 1 131 092 | -853 236 |
| Change in FV of onerous contracts | -35 527 | 2 023 | -44 226 | 26 485 |
| Change in FV of fishpool contracts | 10 | 0 | -1 561 | 0 |
| Total FV adjustments over profit and loss | 237 899 | -684 531 | 1 085 304 | -826 751 |
| Change in FV of fishpool contracts * | 328 | -1 857 | 5 408 | -3 183 |
|---|---|---|---|---|
| Total FV adjustments over OCI | 328 | -1 857 | 5 408 | -3 183 |
* Included in change in FV financial instruments (hedges) in statement of comprehensive income
Positive amounts are assets and negative amounts are liabilities
| Carrying amount on biological assets | 31/12/2021 | 31/12/2020 |
|---|---|---|
| Cost on stock for fish in sea | 4 118 913 | 4 231 901 |
| Cost on stock for fry, brood, smolt and cleaning fish | 385 542 | 362 065 |
| Total cost on stock for biological assets * | 4 504 454 | 4 593 966 |
| FV adj. of fish in sea | 1 450 638 | 319 546 |
| FV adj. of fry, brood, smolt and cleaning fish | 0 | 0 |
| Total FV adj. of biological assets | 1 450 638 | 319 546 |
| Monthly discount rate applied | 4% | 5% |
| FV of fish in sea | 5 569 551 | 4 551 447 |
| FV of fry, brood, smolt and cleaning fish | 385 542 | 362 065 |
| Carrying amount of biological assets | 5 955 092 | 4 913 512 |
| Carrying amount on onerous contracts (liability) | ||
| Carrying amount of onerous contracts | -44 259 | -32 |
Carrying amount of Fish Pool contracts 1 836 -2 939
* Cost on stock is historic costs after expensed mortality
| Volume in gutted weight (GWT) Q4 2021 Q4 2020 2021 2020 Salmon 43 336 41 147 161 542 142 841 Trout 7 996 7 202 25 093 28 007 Total harvested volume 51 332 48 349 186 635 170 849 VOLUME Volume of fish in sea (LWT) Q4 2021 Q4 2020 2021 2020 Volume at beginning of period 112 668 112 504 119 407 111 263 Net growht during the period 54 484 63 322 205 547 210 396 Harvested volume during the period -59 910 -56 419 -217 712 -202 252 Volume at end of period (LWT) 107 242 119 407 107 242 119 407 Specification of fish in sea (LWT) 31/12/2021 31/12/2020 Salmon 93 543 105 745 Trout 13 699 13 662 Total 119 407 107 242 Salmon > 4,7 kg (live weight) 7 802 4 376 Trout > 4,8 kg (live weight) 587 0 * Defined as mature biological assets Br. Birkeland Farming AS FAIR VALUE ADJUSTMENTS RELATED TO BIOLOGICAL ASSETS Fair value adjustment over profit and loss Q4 2021 Q4 2020 2021 2020 Change FV adj. biological assets 8 408 -19 285 29 108 -127 293 FV adj. related to biological assets 8 408 -19 285 29 108 -127 293 BALANCE SHEET ITEMS RELATED TO BIOLOGICAL ASSETS Positive amounts are assets and negative amounts are liabilities 2021 2020 Carrying amount of biological assets Cost on stock for fish in sea 265 042 200 915 Fair value adjustment fish in sea 16 526 -12 582 Fair value fish in sea 217 441 252 460 Fry, brood and smolt - - Carrying amount of biological assets 217 441 252 460 HARVESTED VOLUME Harvested volume in gutted weight (GWT) Q4 2021 Q4 2020 2021 2020 Total volume 1 774 1 542 8 151 6 790 - Salmon 1 774 1 542 8 151 6 790 VOLUME Volume of fish in sea (LWT) Q4 2021 Q4 2020 2021 2020 Volume at beginning of period 4 088 5 213 5 693 5 033 Net growth during the period 3 708 9 291 2 442 8 589 Harvested volume during the period -2 151 -3 228 -9 903 -8 631 Volume at end of period (LWT) 4 379 5 693 4 379 5 693 Fish > 4,8 kg (live weight) 987 - 987 - |
HARVESTED VOLUME: | ||
|---|---|---|---|
| All figures in NOK 1,000 |
Lerøy Seafood Group ASA |
Austral Group S.A.A |
Foodcorp Chile S.A |
Br. Birkeland AS |
Br. Birkeland Farming AS |
Other/ elimina tions |
Total Group |
Pelagia (50% of figures and volumes) |
Total Group incl. Pelagia (50%) |
|---|---|---|---|---|---|---|---|---|---|
| Q4 2021 | |||||||||
| Operating revenue | 6 529 211 | 270 213 | 75 394 | 60 611 | 96 562 | -3 967 | 7 028 024 | 1 441 020 | 8 469 044 |
| EBITDA* | 1 223 759 | 100 954 | -34 801 | 9 210 | 8 683 | -1 156 | 1 306 649 | 175 026 | 1 481 675 |
| EBITDA% | 19% | 37% | -46% | 15% | 19% | 12% | 17% | ||
| EBIT* | 901 605 | 60 148 | -43 737 | -1 051 | -8 081 | -5 843 | 903 041 | 128 391 | 1 031 432 |
| Volumes sold: | |||||||||
| Salmon (GWT tonnes) | 51 332 | 1 774 | 53 106 | 53 106 | |||||
| Fishmeal/oil/FPC (tonnes) | 15 778 | 2 463 | 18 241 | 17 800 | 36 041 | ||||
| Frozen/fresh fish (tonnes) | - | 3 276 | 3 276 | 54 800 | 58 076 | ||||
| Q4 2020 | |||||||||
| Operating revenue | 5 170 998 | 259 363 | 69 051 | 125 707 | 110 080 | 11 019 | 5 746 218 | 1 568 199 | 7 314 417 |
| EBITDA* | 750 051 | 115 095 | -40 831 | 69 270 | -33 200 | -1 818 | 858 567 | 135 647 | 994 214 |
| EBITDA% | 15% | 44% | -59% | 55% | -30% | 15% | 9% | 14% | |
| EBIT* | 441 433 | 69 543 | -49 408 | 58 328 | -48 532 | -7 842 | 463 522 | 103 830 | 567 352 |
| Volumes sold: | |||||||||
| Salmon (GWT tonnes) | 48 349 | 2 568 | 50 917 | 50 917 | |||||
| Fishmeal/oil/FPC (tonnes) | 11 129 | 3 156 | 14 285 | 27 800 | 42 085 | ||||
| Frozen fish (tonnes) | 570 | 533 | 1 103 | 61 600 | 62 703 | ||||
| 2021 | |||||||||
| Operating revenue | 23 136 094 | 2 016 837 | 715 895 | 306 484 | 432 228 | 25 903 | 26 633 441 | 5 000 786 | 31 634 227 |
| EBITDA* | 3 777 516 | 672 736 | 192 321 | 110 977 | 52 436 | 4 028 | 4 810 014 | 508 837 | 5 318 851 |
| EBITDA% | 16% | 33% | 27% | 36% | 12% | 18% | 10% | 17% | |
| EBIT* | 2 518 782 | 506 444 | 150 258 | 69 726 | -12 346 | -15 261 | 3 217 603 | 363 419 | 3 581 022 |
| Volumes sold: | |||||||||
| Salmon (GWT tonnes) | 186 635 | 8 151 | 194 786 | 194 786 | |||||
| Fishmeal/oil/FPC (tonnes) | 128 429 | 16 084 | 144 513 | 131 600 | 276 113 | ||||
| Frozen/fresh fish (tonnes) | 13 639 | 45 597 | 59 236 | 166 800 | 226 036 | ||||
| 2020 | |||||||||
| Operating revenue | 19 966 221 | 1 240 525 | 637 911 | 248 827 | 306 404 | 47 038 | 22 446 926 | 4 406 951 | 26 853 877 |
| EBITDA* | 3 108 795 | 337 944 | 137 834 | 102 657 | -30 291 | 18 039 | 3 674 978 | 327 387 | 4 002 365 |
| EBITDA% | 16% | 27% | 22% | 41% | 16% | 7% | 15% | ||
| EBIT* | 1 949 655 | 133 956 | 100 934 | 59 400 | -79 814 | -5 424 | 2 158 707 | 204 201 | 2 362 908 |
| Volumes sold: | |||||||||
| Salmon (GWT tonnes) | 170 849 | 6 790 | 177 639 | 177 639 | |||||
| Fishmeal/oil/FPC (tonnes) | 69 498 | 17 722 | 87 220 | 90 400 | 177 620 | ||||
| Frozen fish (tonnes) | 17 222 | 36 987 | 54 209 | 157 200 | 211 409 |
* Before fair value adjustments related to biological assets
| Q4 2021 | Q4 2020 | 2021 | 2020 | ||
|---|---|---|---|---|---|
| Norskott Havbruk AS* a) | 50,0% | -10 709 | 21 731 | 93 577 | 48 986 |
| Pelagia Holding AS b) | 50,0% | 94 732 | 76 356 | 272 361 | 127 312 |
| Others | 1 448 | 41 436 | 27 551 | 73 823 | |
| Income from associates | 85 471 | 139 523 | 393 489 | 250 121 | |
| * Fair value adjustment biological assets | 2 737 | -8 247 | 6 022 | -55 666 | |
| Income from associates before FV adj. | 82 734 | 147 770 | 387 467 | 305 787 | |
| Investment in associates: | |||||
| Norskott Havbruk | 1 125 883 | 713 502 | |||
| Pelagia Holding AS | 1 473 289 | 1 288 903 | |||
| Others | 403 231 | 524 370 | |||
| Total investment | - | - | 3 002 403 | 2 526 775 | |
| Dividend received | |||||
| Norskott Havbruk | - | ||||
| Pelagia Holding AS | - | 100 000 | 100 000 | ||
| Others | 3 408 | 13 514 | 29 548 | ||
| Total dividend received from associates | - | 3 408 | 113 514 | 129 548 |
a) Lerøy Seafood Group ASA owns 50% of Norskott Havbruk AS
b) Austevoll Seafood ASA owns 50% of Pelagia Holding AS
| Investor | Number of shares | % of top 20 | % of total |
|---|---|---|---|
| LACO AS | 112 605 876 | 73.26 | 55.55 |
| STATE STREET BANK AND TRUST COMP | 7 375 219 | 4.80 | 3.64 |
| STATE STREET BANK AND TRUST COMP | 4 505 171 | 2.93 | 2.22 |
| J.P. MORGAN BANK LUXEMBOURG S.A. | 4 370 989 | 2.84 | 2.16 |
| FOLKETRYGDFONDET | 2 980 544 | 1.94 | 1.47 |
| SIX SIS AG | 2 665 170 | 1.73 | 1.31 |
| OM HOLDING AS | 2 411 308 | 1.57 | 1.19 |
| PARETO AKSJE NORGE VERDIPAPIRFOND | 2 092 555 | 1.36 | 1.03 |
| THE BANK OF NEW YORK MELLON SA/NV | 1 708 419 | 1.11 | 0.84 |
| JPMORGAN CHASE BANK, N.A., LONDON | 1 618 572 | 1.05 | 0.80 |
| THE NORTHERN TRUST COMP, LONDON BR | 1 428 566 | 0.93 | 0.70 |
| STATE STREET BANK AND TRUST COMP | 1 355 913 | 0.88 | 0.67 |
| J.P. MORGAN BANK LUXEMBOURG S.A. | 1 269 384 | 0.83 | 0.63 |
| DANSKE INVEST NORSKE INSTIT. II. | 1 168 163 | 0.76 | 0.58 |
| J.P. MORGAN BANK LUXEMBOURG S.A. | 1 149 991 | 0.75 | 0.57 |
| VERDIPAPIRFONDET ALFRED BERG NORGE | 1 128 015 | 0.73 | 0.56 |
| CLEARSTREAM BANKING S.A. | 1 077 941 | 0.70 | 0.53 |
| PARETO INVEST AS | 953 500 | 0.62 | 0.47 |
| VERDIPAPIRFONDET STOREBRAND NORGE | 946 750 | 0.62 | 0.47 |
| STATE STREET BANK AND TRUST COMP | 894 320 | 0.58 | 0.44 |
| Total number owned by top 20 | 153 706 366 | 100% | 75.82% |
| Total number of shares | 202 717 374 | 100% |
Austevoll Seafood Group's accounts are submitted in accordance with international standards for financial reporting (IFRS) and interpretations established by the International Accounting Standards Board (IASB) and adopted by the EU. In addition, the Board and management have chosen to present certain alternative performance measures to aid understanding of the Group's development. The Board and management are of the opinion that these performance measures are sought and utilised by investors, analysts, credit institutions and other stakeholders. The alternative performance measures are derived from the performance measures defined in IFRS. The figures are defined below. They are consistently calculated and presented in addition to other performance measures, in line with the Guidelines on Alternative Performance Measures from the European Securities and Markets Authority (ESMA).
EBIT before fair value adjustments is an alternative performance measure utilised by the Group. Pursuant to IFRS, biological assets (fish in the sea) shall be measured at fair value in the statement of financial position (IAS 41). Estimates of fair value require various assumptions about the future, including price developments. Changes in the market's price expectations may therefore result in major changes in carrying amount. As this change in value is included in the operating profit or loss (EBIT) as defined in IFRS, this figure alone is not sufficient to illustrate the Group's performance during the period. The same applies to two other items on the statement of financial position related to biological assets: onerous contracts (IFRS 37) and financial Fish Pool contracts (IFRS 9). The Group has therefore elected to present operating profit/loss as it would be presented before recognition of the above-mentioned fair value adjustments, as an alternative performance measure. By presenting (1) EBIT before fair value adjustments, (2) fair value adjustments in the period and (3) EBIT after fair value adjustments, the user of the financial statements can easily see how much of the operating profit comprises changes in fair value (fair value adjustments) and thereby compare performance with other companies in the same industry. The note on biological assets contains a detailed description of how fair value adjustment is calculated and the figures for each component. The following components are included:
| Q4 2021 | Q4 2020 | |
|---|---|---|
| Operating profit (EBIT) | 1 149 350 | -240 295 |
| - Fair value adjustments | 246 307 | -703 816 |
| = EBIT berfore fair value adjustments | 903 043 | 463 522 |
Fair value adjustments consists of:
Change in fair value adjustment on fish in sea
Change in fair value adjustment on roe, fry and cleaning fish *
Change in fair value adjustment on onerous contracts (salmon and trout)
Change in fair value adjustment on fish pool contracts (financial contracts on salmon)
* For this group historical cost provides the best estimate of fair value. See note 3 for further details.
The operating profit/loss before depreciation and fair value adjustments is an alternative performance measure. This is estimated in the same way as for "Operating profit/loss before fair value adjustments" (above).
The profit/loss before tax and fair value adjustments is an alternative performance measure utilised by the Group. Pursuant to IFRS, biological assets shall be measured at fair value in the statement of financial position (IAS 41). The alternative performance measure shows what the profit/loss before tax would have been if IAS 41 had not been applied. This requires reversal of fair value adjustments made for fish in the sea. The reversal comprises the Group's own fair value adjustment in addition to fair value adjustments included in the share of profit/loss from associates carried according to the equity method, also in accordance with IAS 41. The following components are included:
| Q4 2021 | Q4 2020 | |
|---|---|---|
| Profit before tax | 1 154 284 | -160 330 |
| - Fair value adjustments | 246 307 | -703 816 |
| - Fair value adjustments in associated comp. | 2 737 | -8 247 |
| = Profit before tax and fair value adjustments | 905 240 | 551 734 |
NIBD is an alternative performance measure used by the Group. The figure shows how much capital the Group employs and is an important key figure for stakeholders who are planning to provide financing to the Group and for those who want to value the company. The Group therefore defines NIBD as interest-bearing liabilities, both short-term and long-term, to persons or institutions where the main objective is to provide financing and/or credit, minus interest-bearing cash or cash equivalents. This implies that long-term interest-bearing receivables (asset) and other lease liabilities exceeding lease commitments to credit institutions (liability) are not included. The latter component covers the majority of the new lease liabilities capitalised in connection with the implementation of IFRS 16. The following components from the statement of financial position are included:
| 31/12/2021 | 31/12/2020 | |
|---|---|---|
| Loans from credit institutions * | ||
| + Lease liabilities to credit institutions * | 1 289 800 | 1 364 635 |
| + Other long term loans * | 7 397 129 | 6 699 484 |
| + Overdrafts/other short term loans | 582 390 | 1 049 683 |
| - Cash and cash equivalents | -5 250 543 | -4 462 765 |
| = Netto rentebærende gjeld (NIBD) | 4 018 776 | 4 651 037 |
* Both long-term and short-term portion
The Group implemented IFRS 16 Leases on 1 January 2019. This new standard requires practically all leases to be capitalised, as there is no longer a distinction, for the lessee, between operating and finance leases. Under the new standard, the asset (right of use) and the liability to pay rent are recognised in the financial statements. Exemptions are made for short-term leases and low-value leases.
The lease liabilities (previously operating leases) are recognised at the present value of the future lease payments. The lease payments are discounted by the Group's estimated marginal average interest rate on loans (4%). The interest on the lease liability in each accounting period of the lease period shall be the amount that provides a constant periodic interest rate for the remaining balance of the lease liability (annuity principle). The interest expense related to the liability is presented as a financial expense. Lease costs that were previously included in cost of goods sold and other operating expenses are now presented in the income statement as depreciation and interest expense.
The right-of-use assets are depreciated on a straight-line basis from the date of commissioning until the end of the useful life of the right-of-use asset or the end of the lease period, whichever comes first. In the statement of cash flows, cash payments for the lease liability's principal (instalment component) are presented under financing activities. The same applies to cash payments for the interest component of the lease liability.
The table shows the breakdown of right-of-use assets by asset group.
| Right-of-use assets | Land | Buildings | equipment and other fixtures |
Vessels | Total |
|---|---|---|---|---|---|
| Carrying value 01.01. | 40 272 | 588 398 | 1 411 464 | 1 065 562 | 3 105 696 |
| Foreign currency translation differences | - | -6 459 | -3 221 | 85 | -9 595 |
| Right-of-use assets acquired | 13 824 | 33 004 | 341 422 | 654 697 | 1 042 947 |
| Disposal | -44 205 | -5 860 | -107 861 | -157 926 | |
| Depreciation | -4 411 | -58 203 | -290 138 | -213 482 | -566 234 |
| Business combinations | - | - | 11 638 | - | 11 638 |
| Reclassification | - | -46 294 | -79 965 | -236 503 | -362 762 |
| Carrying value 31.12.2021 | 49 685 | 466 241 | 1 385 340 | 1 162 498 | 3 063 764 |
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