Bakkafrost P/f

Interim / Quarterly Report • Aug 25, 2020

INTERIM REPORT

Q2 2020 and H1 2020

12,609 12,938 25,855 17,935 20,878 0 4,000 8,000 12,000 16,000 20,000 24,000 28,000 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 HARVEST VOLUME TGW

OPERATIONAL EBIT MDKK

OPERATIONAL EBIT VAP AND FARMING FO DKK/KG

Table of Contents

Highlights ............................................................................... 2

Summary of the 2nd Quarter 2020 and H1 2020........ 3

ina ia l iew F Re nc v	4
S ta te t Inc om e me n	4
f ina ia l i ion S ta te t o F Po t me n nc s	4
h low Ca F s	5
Fa ing Se t Fa Is lan ds ( F O ) rm g me n ro e	6
ing lan d ( ) Fa Se t Sc t S C T rm g me n o	7
V A P Se t g me n	8
O Se F F t g me n	9

loo k Ou t	1 0
is ks R	1 2
Ev ts f te t he Da te f t he en a r o
f ina ia l i ion S ta te t o F Po t me n nc s	1 2

by he d he S ta te t t Ma t a t me n na g em en n
d o f ire he im Bo D to t In te Re t 1 ar c rs on r p or	3

l i da d Co te Inc S ta te t ns o om e me n	1 4
Co l i da d S f te ta te t o ns o me n
he ive Co Inc mp re ns om e	1 4
l i da d f Co te S ta te t o ns o me n
ina ia l i ion F Po t nc s	1 5
l i da d h low Co te Ca F S ta te t ns o s me n	1 6
l i da d f Co te S ta te t o ns o me n
C ha in i Eq ty ng es u	1 7

he No te to t Ac t s co un	1 8
Co ta ts n c	3 0

Highlights

	Q 2	Q 2	H1	H1
00 0 DK K 1 ,	20 20	20 19	20 20	20 19
		0
INC OM E S TA TE ME NT
Gro - O rat ing up pe re ve nue	1, 13 4, 22 2	94 6, 50 6	2, 38 9, 44 8	1, 91 0, 21 5
Gro - O ion al IT* rat EB up pe	18 1, 89 7	33 8, 76 4	42 9, 98 0	60 6, 46 8
Gro - E BIT up	58 5, 91 4	23 6, 78 9	40 4, 15 4	49 7, 31 7
it f rio Gro - P rof the d up or pe	47 1, 68 1	18 8, 60 2	32 3, 70 0	40 1, 43 8
Op tio l E * ( FO ing d V ) ( K) BIT Fa AP DK era na rm an	13 4, 37 2	30 40 3, 4	6, 49 9 32	53 4, 47 1
tio l E / kg ( ing d V ) ( K) Op BIT FO Fa AP DK era na rm an	10 .38	24 .06	13 .83	20 .31
tio l E kg ( ing d V ) ( K) Op BIT / FO Fa AP NO era na rm an	15 .34	31 .31	19 .83	26 .46
mi Isla nd tin Far Far Op ng oe s - era g r ev en ue	57 4, 18 9	75 8, 61 3	1, 20 6, 72 2	1, 51 4, 01 5
mi Isla nd tio l E * Far Far Op BIT ng oe s - era na	85 75 0 ,	30 3, 43 9	28 8, 67 5	53 3, 18 2
mi Isla nd tio l E in Far Far Op BIT ng oe s - era na m arg	14 .9%	40 .0%	23 .9%	35 .2%
Far mi Far Isla nd Op tio l E BIT / kg ( DK K) ng oe s - era na	6.6 3	24 .07	12 .23	20 .26
mi Isla nd Op tio l E / kg ( NO K) Far Far BIT ng oe s - era na	9.7 9	31 .31	17 .54	26 .39
mi ing Far Sco tla nd - O rat ng pe re ve nue	37 7, 43 0	n/a	78 9, 82 5	n/a
Far mi Sco tla nd - O rat ion al EB IT* ng pe	28 79 4 ,	n/a	58 53 4 ,	n/a
mi Sco tla nd - O ion al in Far rat EB IT m ng pe arg	7.6 %	n/a	% 7.4	n/a
mi tla nd ion al IT/ kg ( K) Far Sco - O rat EB DK ng pe	3.6 3	n/a	3.8 5	n/a
mi tla nd ion al kg ( K) Far Sco - O rat EB IT/ NO ng pe	5.3 6	n/a	5.5 2	n/a
tin VA P - Op era g r ev en ue	30 7, 76 3	23 7, 55 2	58 2, 07 1	49 8, 12 6
tio l E * VA P - Op BIT era na	48 62 2 ,	-35	37 82 4 ,	1, 28 9
tio l E in VA P - Op BIT era na m arg	15 .8%	0.0 %	6.5 %	0.3 %
VA P - Op tio l E BIT / kg ( DK K) era na	7.5 7	-0. 01	3.2 0	0.1 5
Op tio l E / kg ( NO K) VA P - BIT era na	11 .19	-0. 01	4.5 9	0.1 9
tin FO F - Op era g r ev en ue	26 8, 61 1	28 3, 44 7	57 8, 58 0	56 6, 85 8
FO F - EB ITD A	49 92 1 ,	58 38 2 ,	90 13 3 ,	12 3, 63 4
FO in F - EB ITD A m arg	18 .6%	20 .6%	.6% 15	21 .8%
K/ K ( e) NO DK ave rag	67 .70	76 .86	69 .73	76 .76

	Q 2	Q 2	H1	H1
DK K 1 00 0 ,	20 20	20 19	20 20	20 19
		0	0
CIA OS ON D C AS LO FIN AN L P ITI AN H F W
tal s*** To As set	12 51 3, 50 7 ,	13 10 1, 40 5 ,	12 51 3, 50 7 ,	13 10 1, 40 5 ,
uit *** Eq y	8, 58 1, 43 0	8, 49 6, 87 5	8, 58 1, 43 0	8, 49 6, 87 5
Eq uit ati o* y r	69 %	65 %	69 %	65 %
t in -be ari de bt * Ne ter est ng	6, 12 3 1, 11	01 8, 68 1, 5	6, 12 3 1, 11	01 8, 68 1, 5
h f low fro ion Cas rat m o pe s	11 1, 39 9	32 6, 81 5	47 6, 64 8	40 3, 31 8
h f low fro m f ina nci Cas ng	-26 1, 95 7	-18 8, 70 0	-1, 03 4, 41 6	-13 4, 55 4
OF PR ITA BIL ITY
sic rni har e ( K) Ba DK ea ngs pe r s	7.9 8	3.8 8	5.4 8	8.2 5
Dil d e ing sha ( K) ute DK arn s p er re	7.9 8	3.8 8	5.4 8	8.2 5
RO CE	1.6 %	5.8 %	3.7 %	10 .8%
VO LU ME S
d v olu sla nd s ( ) Ha ste s F e I tgw rve me aro	12 94 1 ,	12 60 9 ,	23 60 8 ,	26 31 6 ,
Ha ste d v olu s S cot lan d ( tgw ) rve me	7, 93 7	n/a	15 20 5 ,	n/a
rod d v olu s ( ) VA P p tgw uce me	6, 42 0	08 8 4,	82 8 11 ,	8, 77 7
ld f eed So to nn es	22 12 1 ,	18 87 2 ,	41 24 4 ,	35 13 6 ,
al f eed les Int to ern sa nn es	16 15 9 ,	15 68 9 ,	30 47 6 ,	29 64 9 ,
Sm olt lea sed th d F e I sla nd s (p cs) re ou san aro	2, 92 2	3, 58 0	5, 18 5	5, 30 0
Sm olt lea sed th d S cot lan d ( ) re ou san pcs	2, 83 5	n/a	3, 86 7	n/a

* Aligned for fair value adjustment of biomass, onerous contracts provisions, income from associates and revenue tax – refer to Note 10

** Return on average capital employed, based on operational EBIT – refer to Note 10

*** Comparing figures from end 2019

Summary of the 2nd Quarter 2020 and H1 2020

(Figures in parenthesis refer to the same period last year).

The Bakkafrost Group delivered a total operating EBIT of DKK 181.9 million in Q2 2020.

Total harvested volumes were 20.9 thousand tonnes gutted weight (tgw). Faroe Islands (FO): 12.9 tgw, Scotland (SCT): 7.9 tgw.

The combined FO farming and VAP segments made an operational EBIT of DKK 134.4 million. The FO farming segment made an operational EBIT of DKK 85.8 million. The SCT farming segment made an operational EBIT of DKK 28.8 million. Volumes increased and thus had a positive effect on the operational EBIT.

The VAP segment made an operational EBIT of DKK 48.6 million. The EBITDA for the FOF segment was DKK 49.9 million.

The Group made a profit for Q2 2020 of DKK 471.7 million (DKK 188.6 million). For H1 2020, the profit was DKK 323.7 million (DKK 401.4 million).

Total harvested volumes for Q2 2020 were 20,878 tonnes gutted weight. FO: 12,941 tgw (12,609 tgw), SCT: 7,937 tgw (n/a). Total harvested volumes in H1 2020 were 38,813 tgw (26,316 tgw). FO: 23,608 tgw (26,316 tgw), SCT: 15,205 tgw (n/a).

In total, 5.8 million (3.6 million) smolts were transferred during Q2 2020. FO: 2.9 million (3.6 million), SCT: 2.8 million (n/a). In H1 2020, 9.1 million (5.3 million) smolts were transferred. FO: 5.2 million (5.3 million), SCT 3.9 million (n/a).

The combined FO farming and VAP segments made an operational EBIT of DKK 134.4 million (DKK 303.4 million) in Q2 2020. The operational EBIT per kg in Q2 2020 was DKK 10.38 (DKK 24.06), which corresponds to NOK 15.34 (NOK 31.31) for the combined FO farming and VAP segments. For H1 2020, the combined FO farming and VAP segments made an operational EBIT of DKK 326.5 million (DKK 534.5 million).

The FO farming segment made an operational EBIT of DKK 85.8 million (DKK 303.4 million) in Q2 2020. The harvested volumes were slightly higher and the achieved prices were lower in Q2 2020, compared to Q2 2019. For H1 2020, the operational EBIT was DKK 288.7 million (DKK 533.2 million).

The SCT farming segment made an operational EBIT of DKK 28.8 million in Q2 2020. For H1 2020, the operational EBIT was DKK 58.5 million.

The VAP segment made an operational EBIT of DKK 48.6 million (DKK 0.0 million) for Q2 2020. For H1 2020, the operational EBIT was DKK 37.8 million (DKK 1.3 million).

The FOF segment (fishmeal, oil and feed) made an EBITDA of DKK 49.9 million (DKK 58.4 million) for Q2 2020, and the EBITDA margin was 18.6% (20.6%). The EBITDA was DKK 90.1 million in H1 2020 (DKK 123.6 million), corresponding to an EBITDA margin of 15.6% (21.8%).

During Q2 2020, Havsbrún sourced 122,512 tonnes (110,109 tonnes) of raw material, and in H1 2020, Havsbrún sourced 187,319 tonnes (225,639 tonnes) of raw material.

In Q2 2020, Bakkafrost's full-time employees from 2019, still employed in Bakkafrost, have received bonus shares with the value of 2% of their salary in 2019. In total, Bakkafrost allocated 14,368 shares to its employees. The total allocation amounted to DKK 6.2 million and was based on the closing share price on the allocation day, 3 June 2020.

The Group has been impacted by the market disrupttion from Covid-19 from late Q1 2020.

The net interest-bearing debt amounted to DKK 1,116 million at the end of Q2 2020, compared to DKK 1,019 million at year-end 2019. Undrawn credit facilities amounted to DKK 2,323 million at the end of Q2 2020.

The equity ratio was 69% at 30 June 2020, compared to 65% at the end of 2019.

Bakkafrost aims at giving the shareholders a competitive return on their investment, both through payments of dividends and by value growth of the equity through positive operations. The long-term goal of the Board of Directors is that 30-50% of earnings per share shall be paid out as dividend.

Bakkafrost's financial position is strong with a solid balance sheet, a competitive operation and available credit facilities, but due to the uncertainty imposed by the Covid-19 pandemic in Q1 2020, the Board of Directors have previously decided to postpone the decision on dividend payment for 2019 until Bakkafrost's H1 presentation on 25 August 2020, at which time the Board of Directors expected the level of uncertainty to have reduced. The Board of Directors have now concluded that the uncertainty is still high and have therefore decided not to propose payments of dividends for 2019.

Financial Review

Income Statement

(Figures in parenthesis refer to the same period last year).

The Group's operating revenue amounted to DKK 1,134.2 million (DKK 946.5 million) in Q2 2020, and for H1 2020, the operating revenue amounted to DKK 2,389.4 million (DKK 1,910.2 million).

The FO farming segment's harvest volumes were higher, but the achieved prices were lower in Q2 2020, compared to the same quarter last year. The VAP segment had higher revenues because of higher volumes in Q2 2020, compared to Q2 2019. The FOF segment had lower revenue in Q2 2020, due to lower sales of fishmeal, sales of fish feed were, however, higher, compared to Q2 2019.

The Group's operational EBIT was DKK 181.9 million (DKK 338.8 million) in Q2 2020. The combined FO farming and VAP segments had lower operational EBIT in Q2 2020, compared to Q2 2019. Farming Scotland's operational EBIT was DKK 28,8 million. The FOF segment had lower EBITDA in Q2 2020, compared to Q2 2019. For H1 2020, the Group's operational EBIT was DKK 430.0 million (DKK 606.5 million).

The fair value adjustment of the Group's biological assets amounted to DKK 426.7 million (DKK -65.5 million) in Q2 2020. The adjustment is due to higher forward market prices for salmon at the end of the quarter, compared to the beginning of the quarter. For H1 2020, the fair value adjustment amounted to DKK 15.9 million (DKK -47.7 million).

Change in provisions for onerous contracts amounted to DKK 0 million (DKK 0 million) in Q2 2020. For H1 2020, the change in provisions for onerous contracts amounted to DKK 0 million (DKK 0 million).

The revenue tax amounted to DKK -22.6 million (DKK -32.0 million) in Q2 2020. For H1 2020, the revenue tax was DKK -41.8 million (DKK -64.0 million).

Net financial items in Q2 2020 were DKK -14.6 million (DKK -7.6 million). For H1 2020, net interests were DKK -13.9 million (DKK -8.8 million).

Net taxes amounted to DKK -99.6 million (DKK -40.6 million) in Q2 2020. For H1 2020, net taxes amounted to DKK -66.5 million (DKK -87.1 million).

The result for Q2 2020 was DKK 471.7 million (DKK 188.6 million), and for H1 2020, the result was DKK 323.7 million (DKK 401.4 million).

Statement of Financial Position

(Figures in parenthesis refer to end last year).

The Group's total assets amounted to DKK 12,513.5 million (DKK 13,101.4 million) at the end of Q2 2020.

Intangible assets amounted to DKK 4,377.9 million (DKK 4,395.7 million) at the end of Q2 2020.

Property, plant and equipment amounted to DKK 3,894.1 million (DKK 3,780.5 million) at the end of Q2 2020. Right of use assets amounted to DKK 431.5 million (DKK 332.8 million) in Q2 2020. Bakkafrost made investments in PP&E amounting to DKK 198.5 million during Q2 2020.

Non-current financial assets amounted to DKK 116.7 million (DKK 119.1 million) at the end of Q2 2020.

The carrying amount (fair value) of biological assets amounted to DKK 1,903.4 million (DKK 1,901.7 million) at the end of Q2 2020. Compared to year end 2019, biological assets have been fairly stable. Included in the carrying amount of the biological assets is a fair value adjustment amounting to DKK 43.6 million (DKK 27.7 million) at the end of Q2 2020.

Inventories amounted to DKK 720.8 million (DKK 548.5 million) at the end of Q2 2020.

Total receivables, including long-term receivables and deferred tax assets, amounted to DKK 614.7 million (DKK 713.5 million) at the end of Q2 2020.

Total cash and cash equivalents amounted to DKK 454.4 million (DKK 1,309.5 million) at the end of Q2 2020.

The Group's equity amounted to DKK 8,581.4 million (DKK 8,496.9 million) at the end of Q2 2020. The change in equity consists primarily of the result for H1 2020, but also acquisition of minorities amounting to DKK 167.6 million in Q1 2020.

Total non-current liabilities amounted to DKK 3,002.9 million (DKK 3,679.6 million) at the end of Q2 2020.

Deferred taxes amounted to DKK 1,182.0 million (DKK 1,123.8 million) at the end of Q2 2020.

Long-term interest-bearing debt was DKK 1,570.5 million (DKK 2,328.2 million) at the end of Q2 2020.

Long-term leasing debt amounted to DKK 249.2 million (DKK 225.6 million) and short-term leasing debt amounted to DKK 195.1 million (DKK 107.8 million). In total DKK 444.3 million (DKK 333.4 million) at the end of Q2 2020.

At the end of Q2 2020, the Group's total current liabilities were DKK 929.1 million (DKK 925.0 million). The current liabilities consist of financial derivatives, short-term leasing debt and accounts payable and other debt.

Total derivatives amounted to DKK 19.3 million (DKK 15.5 million) at the end of Q2 2020.

The equity ratio was 69% at the end of Q2 2020, compared to 65% at the end of 2019.

Cash Flow

(Figures in parenthesis refer to the same period last year).

The cash flow from operations was DKK 111.4 million (DKK 326.8 million) in Q2 2020. The changes in working capital had a negative effect on the cash flow from operations. For H1 2020, the cash flow from operations was DKK 476.6 million (DKK 403.3 million).

The cash flow from investment activities amounted to DKK -196.1 million (DKK -157.0 million) in Q2 2020. The amount relates to investments in property, plant and equipment. For H1 2020, the cash flow from investments amounted to DKK -297.4 million (DKK -263.0 million).

The cash flow from financing activities totalled DKK -262.0 million (DKK -188.7 million) in Q2 2020. For H1 2020, cash flow from financing amounted to DKK -1,034.4 million (DKK -134.6 million).

In Q2 2020, net change in cash flow amounted to DKK -346.7 million (DKK -18.9 million). For H1 2020, net change in cash flow amounted to DKK -855.2 million (DKK 5.8 million).

At the end of Q2 2020, the Group had unused credit facilities of DKK 2,323 million (DKK 742 million).

Farming Segment – Faroe Islands (FO)

The Faroese farming segment produces high quality Atlantic salmon from juveniles to harvest size salmon. The salmon is sold to fresh fish markets globally and to the internal VAP production. The farming sites are in the Faroe Islands.

Volumes

The total volumes harvested in Q2 2020 were 12,941 tonnes gutted weight (12,609 tgw) – a change in volume of 3%. 12,941 tgw came from the North region, 0 tgw from the West region and 0 tgw from the South region. Total harvested volumes for H1 2020 were 23,608 tonnes gutted weight (26,316 tgw), which is in line with the forecast for 2020.

2.9 million (3.6 million) smolts were transferred in Q2 2020. In H1 2020, 5.2 million (5.3 million) smolts were transferred. This is in line with the smolt transfer plan.

	Q 2	Q 2		H 1	H 1
D K K 1, 0 0 0	2 0 2 0	2 0 1 9	C ha ng e	2 0 2 0	2 0 1 9	C ha ng e
ina ia l F nc
l re To ta ve nu e	5 7 4, 1 8 9	7 5 8, 6 1 3	% -2 4	1, 2 0 6, 7 2 2	1, 5 1 4, 0 1 5	% -2 0
E B I T	2 0 1, 0 7 1	2 0 5, 8 7 2	-2 %	4 9, 1 5 7	4 2 4, 0 3 1	-8 8 %
ion l Op t E B I T era a	8 5, 7 5 0	3 0 3, 4 3 9	-7 2 %	2 8 8, 6 7 5	5 3 3, 1 8 2	-4 6 %
Op t ion l E B I T / kg ( D K K ) era a	6. 6 3	2 4. 0 7	-7 2 %	1 2. 2 3	2 0. 2 6	-4 0 %
ion l in Op t E B I T m era a arg	1 5 %	4 0 %	-6 3 %	2 4 %	3 5 %	-3 2 %
Vo lum es
Ha te d v lum Fa Is lan ds ( tg ) rve s o es roe w	1 2, 9 4 1	1 2, 6 0 9	3 %	2 3, 6 0 8	2 6, 3 1 6	-1 0 %
ing h Fa No t rm r -	9 1 2, 4 1	7, 8 5 8	6 % 5	9, 0 6 1 2	6 0 1 4, 1	% 3 2
ing Fa We t rm s -	0	4, 7 5 1	-1 0 0 %	2, 7 6 9	1 1, 7 1 5	-7 6 %
ing h Fa So t rm u -	0	0	-	1, 6 3 3	0	-
Sm l ts lea d ( t ho d ) o re se us an	2, 9 2 2	3, 5 8 0	-1 8 %	5, 1 8 5	5, 3 0 0	-2 %
ing h Fa No t rm r -	0	0 9 0 1,	0 0 % -1	0 8 0 1,	2, 8 0 1	-6 2 %
ing Fa We t rm s -	1, 2 1 3	1, 1 0 0	1 0 %	2, 3 9 6	1, 1 0 0	1 1 8 %
ing h Fa So t rm u -	1, 7 0 9	1, 3 9 0	2 3 %	1, 7 0 9	1, 3 9 0	2 3 %

Financial Performance

In Q2 2020, the operating revenue for the FO farming segment was DKK 574.2 million (DKK 758.6 million). The total revenue for the farming segment decreased in Q2 2020, compared with Q2 2019, because of lower sales prices. The operating revenue for the FO farming segment for H1 2020 was DKK 1,206.7 million (DKK 1,514.0 million).

In Q2 2020, the FO farming segment's EBIT amounted to DKK 201.1 million (DKK 205.9 million). The FO farming segment's EBIT for H1 2020 was DKK 49.2 million (DKK 424.0 million).

Operational EBIT amounted to DKK 85.8 million (DKK 303.4 million) in Q2 2020, which corresponds to an operational EBIT margin of 15% (40%). In H1 2020, operational EBIT was DKK 288.7 million (DKK 533.2 million).

Operational EBIT/kg for the FO farming segment was DKK 6.63 (NOK 9.79) in Q2 2020, compared with DKK 24.07 (NOK 31.31) in Q2 2020. Operational EBIT/kg for H1 2020 was DKK 12.23 (NOK 17.54), compared with DKK 20.26 (NOK 26.39) for H1 2019.

Volumes and EBIT were impacted during Q2 by the global market disruption caused by Covid-19.

Farming Segment – Scotland (SCT)

(Please note that the comparable figures and the narrative in this section are pro forma and are not part of the consolidated Bakkafrost accounts.)

The Scottish farming segment represents the operating business of The Scottish Salmon Company PLC (SSC) which was consolidated from 8 October 2019, when Bakkafrost gained control. The Scottish Salmon Company is committed to producing the finest quality Scottish Salmon with Scottish Provenance and full traceability. SSC has sites across the West Coast of Scotland and Hebridean Islands.

Volumes

The total volumes harvested in Q2 2020 were 7,937 tonnes gutted weight (9,738 tgw). Total harvested volumes for H1 2020 were 15,205 tonnes gutted weight (18,463 tgw), which is in line with the forecast for 2020.

2.8 million smolts were transferred in Q2 2020 (2.7 million). In H1 2020, 3.9 million (5.2 million) smolts were transferred. This is in line with the smolt transfer plan.

	Q 2	H 1
D K K 1, 0 0 0	2 0 2 0	2 0 2 0
F ina ia l nc
l re To ta ve nu e	3 7 7, 4 3 0	7 8 9, 8 2 5
E B I T	3 1 7, 4 9 0	2 7 2, 2 2 6
ion l Op t E B I T era a	2 8, 7 9 4	5 8, 5 3 4
Op t ion l E B I T / kg ( D K K ) era a	3. 6 3	3. 8 5
Op ion l in t E B I T m era a arg	% 8	% 7
Vo lum es
Ha te d v lum ( tg ) rve s o es w	7, 9 3 7	1 5, 2 0 5
Sm l lea d ( ho d ) ts t o re se us an	2, 8 3 5	3, 8 6 7

Financial Performance

In Q2 2020, the operating revenue for the SCT farming segment was DKK 377.4 million. The operating revenue for the SCT farming segment for H1 2020 was DKK 789.8 million.

Operational EBIT amounted to DKK 28.8 million, which corresponds to an operational EBIT margin of 7.6%. In H1 2020, operational EBIT was DKK 58.5 million, which corresponds to an operational EBIT margin of 7.4%.

Operational EBIT/kg for the farming segment in Scotland was DKK 3.63 (NOK 5.36) in Q2 2020. Operational EBIT/kg for H1 2020 was DKK 3.85 (NOK 5.52). Volumes and EBIT were impacted during Q2 by the global market disruption caused by Covid-19 as well as operational challenges to reduce transmission risk.

VAP Segment

The VAP (value added products) segment produces skinless and boneless portions of salmon in the Faroe Islands. The main market for the VAP products is Europe with increasing sales in other markets. The VAP products are sold on long-term fixed price contracts.

Volumes

50% (32%) of the total Faroese harvested volumes in Q2 2020 went to the production of VAP products, and 50% (33%) of the harvested volumes in H1 2020 went to production of VAP products.

The VAP production in the Faroe Islands was 6,420 tonnes gutted weight (4,088 tgw) in Q2 2020, an increase of 57%, compared to Q2 2019. The volumes were higher, compared to Q2 2019. In H1 2020, the VAP production was 11,828 tgw (8,777 tgw).

	Q 2	Q 2		H 1	H 1
0 0 0 D K K 1,	2 0 2 0	2 0 9 1	C ha ng e	2 0 2 0	2 0 9 1	C ha ng e
ina ia l F nc
l re To ta ve nu e	3 0 7, 7 6 3	2 3 7, 5 5 2	3 0 %	5 8 2, 0 7 1	4 9 8, 1 2 6	1 7 %
E B I T	4 8, 6 2 2	-3 5	-	3 7, 8 2 4	1, 2 8 9	-
Op t ion l E B I T era a	4 8, 6 2 2	-3 5	-	3 7, 8 2 4	1, 2 8 9	-
Op ion l / kg ( ) V A P - t E B I T D K K era a	7. 5 7	-0. 0 1	-	3. 2 0	0. 1 5	-
ion l in Op t E B I T m era a arg	1 6 %	0 %	-	6 %	0 %	-
Vo lum es
du d v lum ( ) V A P p tg ro ce o es w	6, 2 0 4	0 8 8 4,	% 5 7	8 2 8 1 1,	8, 7 7 7	3 % 5
d v lum d in du ion Ha te V A P p t rve s o es us e ro c	5 0 %	3 2 %	5 3 %	5 0 %	3 3 %	5 0 %
d v lum l d fre h / fro Ha te rve s o es so s ze n	5 0 %	6 8 %	-2 5 %	5 0 %	6 7 %	-2 5 %

Financial Performance

The operating revenue for the VAP segment amounted to DKK 307.8 million (DKK 237.6 million) in Q2 2020. The increase in revenue is due to higher volumes in Q2 2020, compared with Q2 2019. In H1 2020, the VAP revenue was DKK 582.1 million (DKK 498.1 million).

The VAP segment had an EBIT amounting to DKK 48.6 million (DKK 0.0 million) in Q2 2020. Changes in onerous contracts were DKK 0.0 million (DKK 0.0 million). In H1 2020, the VAP segment's EBIT amounted to DKK 37.8 million (DKK 1.3 million).

Operational EBIT amounted to DKK 48.6 million (DKK 0.0 million) in Q2 2020, corresponding to an operational EBIT of DKK 7.57 (NOK 11.19) per kg gutted weight in Q2 2020, compared with DKK -0.01 (NOK -0.01) per kg gutted weight in Q2 2019. Operational EBIT/kg for H1 2020 was DKK 3.20 (NOK 4.59), compared with DKK 0.15 (NOK 0.19) for H1 2019.

FOF Segment

The FOF (fishmeal, oil and feed) segment produces fishmeal, fish oil and fish feed. Most of the production is used for fish feed, used internally in the FO farming segment. The quality of the fish feed is important to the quality of the salmon from Bakkafrost FO. Fishmeal, fish oil and fish feed are also sold externally.

Volumes

Havsbrún received 122,512 tonnes (110,109 tonnes) of raw material to produce fishmeal and fish oil in Q2 2020. The raw material intake depends on the fishery in the North Atlantic and available species of fish. In H1 2020, Havsbrún received 187,319 tonnes (225,639 tonnes) of raw material.

The production of fishmeal in Q2 2020 was 24,939 tonnes (23,021 tonnes). For H1 2020, Havsbrún produced 39,074 tonnes (47,759 tonnes) of fishmeal.

The production of fish oil in Q2 2020 was 946 tonnes (679 tonnes). The production of fish oil varies, depending on the species of fish sourced for production and the timing of catch. For H1 2020, Havsbrún produced 2,479 tonnes (4,773 tonnes) of fish oil.

Sales of fish feed amounted to 22,121 tonnes (18,872 tonnes) in Q2 2020, of which the FO farming segment internally used 15,709 tonnes (15,689 tonnes) or 71.0% (83.1%), and the SCT farming segment internally used 450 tonnes or 2.0%. For H1 2020, Havsbrún sold 41,244 tonnes (35,136 tonnes) of fish feed.

Financial Performance

The operating revenue for the FOF segment amounted to DKK 268.6 million (DKK 283.4 million) in Q2 2020, of which DKK 172.6 million (DKK 159.0 million) represented sales to Bakkafrost's farming segments, corresponding to 64% (56%). For H1 2020, the revenue amounted to DKK 578.6 million (DKK 566.9 million) of which DKK 316.4 million (DKK 298.3 million) represented sales to Bakkafrost's farming segments, corresponding to 55% (53%).

	Q 2	Q 2		H 1	H 1
D K K 1, 0 0 0	2 0 2 0	2 0 1 9	C ha ng e	2 0 2 0	2 0 1 9	C ha ng e
ina ia l F nc
l re To ta ve nu e	2 6 8, 6 1 1	2 8 3, 4 4 7	-5 %	5 7 8, 5 8 0	5 6 6, 8 5 8	2 %
E B I T	4 2, 4 1 2	4 6, 8 1 7	-9 %	7 5, 4 2 1	1 0 9, 3 2 9	-3 1 %
E B I T D A	4 9, 9 2 1	5 8, 3 8 2	-1 4 %	9 0, 1 3 3	1 2 3, 6 3 4	-2 7 %
O in F F - E B I T D A ma rg	% 1 8. 6	% 2 0. 6	% -1 0	% 1 5. 6	% 2 1. 8	% -2 9
Vo lum ( to ) es nn es
To ta l Fe d s l d e o	2 2, 1 2 1	1 8, 8 7 2	1 7 %	4 1, 2 4 4	3 5, 1 3 6	1 7 %
d in l sa le Fe ter e na -	6, 9 1 1 5	6 8 9 1 5,	3 %	3 0, 6 4 7	2 9, 6 9 4	3 %
d e l s le Fe ter e x na a -	5, 9 6 2	3, 1 8 3	8 7 %	1 0, 7 6 8	5, 4 8 7	9 6 %
is hm l e l sa le F ter ea x na	2, 7 0 2	7, 3 7 1	-6 3 %	1 4, 4 7 4	1 7, 3 5 8	-1 7 %
F is h o i l e ter l sa le x na	4	0	-	9	1	8 0 0 %
ive d r ia l Re ter ce aw m a	1 2 2, 5 1 2	1 1 0, 1 0 9	1 1 %	1 8 7, 3 1 9	2 2 5, 6 3 9	-1 7 %
is ion F hm l p du t ea ro c	2 4, 9 3 9	2 3, 0 2 1	8 %	3 9, 0 7 4	4 7, 7 5 9	-1 8 %
is h o i l p du ion F t ro c	9 6 4	6 9 7	3 9 %	2, 9 4 7	3 4, 7 7	8 % -4

Total revenue for the FOF segment in Q2 2020 decreased 5%, compared to the same quarter last year. The internal revenue is higher in Q2 2020, compared to Q2 2019. The decrease in external revenue is due to lower volumes of fishmeal sold in Q2 2020, compared to Q2 2019.

EBITDA was DKK 49.9 million (DKK 58.4 million) in Q2 2020, and the EBITDA margin was 18.6% (20.6%). Havsbrún sources raw pelagic fish for the fishmeal and fish oil production, which are part of the recipe to produce salmon feed. For H1 2020, the EBITDA was DKK 90.1 million (DKK 123.6 million), corresponding to an EBITDA margin of 15.6% (21.8%).

Outlook

Market

The global harvest of Atlantic salmon was 3.4% higher in Q2 2020, compared to Q2 2019, according to the latest estimate from Kontali Analyse. The market was affected negatively by the market disruption caused by the Covid-19 pandemic.

Looking forward, the market dynamics will still be affected by the Covid-19 situation which imposes greater than normal uncertainty to the market development estimates. In Q3 2020, the global harvest of Atlantic salmon is expected to increase around 5%, compared to Q3 2019. The estimated global harvest of Atlantic salmon for 2020 is an increase of around 3-4%, compared to 2019.

Bakkafrost operates in the main salmon markets, Europe, USA, the Far East and Russia. The Covid-19 pandemic has caused significant impact in the global market, especially in the food service segment. These issues will continue for some time, but a high focus has been kept to ensure the flow in the market, and Bakkafrost aims to balance the market diversification to reduce market risk.

Farming

The size of transferred smolt is increasing, and will gradually impact the farming output over the next couple of years. The losses of fish to the severe storm, that hit the Faroe Islands in late February, caused a severe damage and took the harvest volume down from expected 57,000 tonnes to 50,000 tonnes in 2020. The operation in Scotland is gradually improving its key performing indicators and is expected to improve further over the coming years as further investments in the operation will add benefits.

Bakkafrost focuses on reducing biological risk continuously and has over the past years made significant investments to diminish this risk, but also to improve efficiency and ensures sustainable growth.

The Strond hatchery is now in full operation producing high-quality smolts and gradually increasing the average smolt size to reach 500g as part of Bakkfrost's large-smolt strategy. This strategy will also be extended to the Scottish farming operation where the plan is to invest in 2 or 3 large hatcheries in the coming years in order to become self-sufficient with large smolts.

Overall, the biological performance in the Faroese and Scottish operations have been strong during Q2 2020 with good growth and low mortality rate on harvested fish. Bakkafrost's expected harvest volume in 2020 in the Faroe Islands is 50,000 tonnes gutted weight, while the expected harvest in 2020 in Scotland is 39,000 tonnes gutted weight. Harvest volumes for 2021 in the Faroe Islands are expected to reach 62,500 tonnes gutted weight and 44,000 tonnes gutted weight in Scotland.

Bakkafrost expects to release 15.0 million smolts in 2020 in the Faroe Islands, compared to 12.7 million smolts in 2019 and 12.6 million smolts in 2018. The smolt release in Scotland is expected to be 10.7 million smolts in 2020, compared to 12.4 million smolts in 2019 and 8.6 million smolts in 2018. The number and average weight of smolts released are key elements of predicting Bakkafrost's future production.

The estimates for harvest volumes and smolt releases in both geographies are dependent on the biological development.

VAP (Value added products)

Bakkafrost has made large investments in building a highly flexible value chain which includes a state-ofthe-art VAP factory with high capacity. This enables Bakkafrost to adapt well to the rapidly changing market situations, which is a great advantage during market disruptions as the one seen during the Covid-19 pandemic. Due to the flexibility and large capacity of the VAP factory, Bakkafrost has been able to meet the significantly increased demand from the retail segment by redirecting volumes into the VAP segment.

Bakkafrost has signed contracts covering around 33% of the expected volumes for H2 2020.

Bakkafrost's long-term strategy is to sell around 40% of the harvested volumes of salmon as VAP products at contracts.

The contracts are at fixed prices, based on the salmon forward prices at the time they are agreed and the expectations for the salmon spot price for the contract period. The contracts last for 6 to 12 months.

FOF (Fishmeal, oil and feed)

The outlook for the production of fishmeal and fish oil is dependent on the availability of raw material.

The ICES 2020 recommendation for blue whiting is 1,162 thousand tonnes, which corresponds to an increase of 2%, compared to ICES's recommendation for 2019.

Bakkafrost expects a decrease in production volumes of fishmeal and fish oil in 2020, compared to 2019.

Havsbrún's sales of fish feed in 2020 are expected to be 110,000 tonnes, depending on external sales.

The major market for Havsbrún´s fish feed is the local Faroese market including Bakkafrost FO's internal use of fish feed.

Investments

Bakkafrost's investment programme for the period from 2020 to 2022, excluding investments in The Scottish Salmon Company, will amount to around DKK 1.8 billion, including maintenance capex, and will reinforce Bakkafrost's integrated business model and ensure a capacity across the value chain to be able to produce 100,000 tonnes gutted weight of salmon in the Faroe Islands. The aim of the investment programme is to minimize the biological risk, increase efficiency and create sustainable organic growth. Bakkafrost's focus on producing larger smolts plays a key role in achieving this goal.

Bakkafrost's recently finished Biogas plant is an important step-stone on Bakkafrost's sustainable growth path, as it delivers an efficient and sustainable solution to waste management. By converting the growing biological waste from the increasing operation into clean energy, the biogas plant alone is expected to save the environment from 11,000 tonnes of CO2 per year.

In addition to the planned investments in the value chain in the Faroe Islands, Bakkafrost expects to make investments of around DKK 350 million per year for 2020-2024 in The Scottish Salmon Company. A significant part of this will be invested in building increased smolt capacity in order to become self-sufficient with large smolt.

Investment programme 2020-2022 - mDKK

Financial

Despite the uncertainties imposed by the Covid-19 pandemic, long term market balances in the world market for salmon products will most likely remain favourable for Bakkafrost. Bakkafrost has a long value chain and a cost-efficient production of high-quality salmon products and will likely maintain the financial flexibility going forward.

During Q4 2019, Bakkafrost refinanced its bank facilities amounting to 352 mEUR with a further accordion option of 150 mEUR. In addition, bank facilities amounting to 100 mGBP were ensured to refinance The Scottish Salmon Company.

A high equity ratio together with Bakkafrost's bank financing, makes Bakkafrost's financial situation strong. This enables Bakkafrost to carry out its investment plans in the Faroe Islands as well as in Scotland, hereby strengthening the Group, enabling M&A's and organic growth opportunities as well as to fulfil its unchanged dividend policy in the future.

Covid-19 pandemic

Bakkafrost plays an important role in ensuring healthy food for the world's growing population, and this role is especially important in the difficult times the world is facing at present.

During the Covid-19 pandemic, Bakkafrost's ability to operate in the Faroe Islands has not been affected by the pandemic, and the operation in Scotland has been only mildly affected. A range of preventive measures have been implemented to protect our workforce and ensure continuous production. New procedures and social distancing are implemented widely in the business, and production and office facilities have been modified where necessary to prevent infection. In the Faroe Islands, all our employees are offered regular free Covid-19 screening by health professionals.

As the market situation is significantly affected by the Covid-19 pandemic, Bakkafrost is taking all necessary steps to protect the business and constantly adapts to the changing market conditions and shifting demands from customers.

Risks

Biological risk has been and will be a substantial risk for Bakkafrost. The Annual Report 2019 gives more explanation on the biological risk and Bakkafrost's risk management in this regard.

Reference is made to the Outlook section of this report for other comments on Bakkafrost's risk exposure and to Note 3. Please note the comments on Covid-19, which impose significant risks.

Bakkafrost is, as explained in the Annual Report 2019, exposed to the salmon price.

The Annual Report 2019 is available on request from Bakkafrost and on Bakkafrost's website, www.bakkafrost.com.

Events after the Date of the Statement of Financial Position

From the date of the statement of financial position until today, no events have occurred which materially influence the information provided by this report.

Statement by the Management and the Board of Directors on the Interim Report

The Management and the Board of Directors have today considered and approved the interim report of P/F Bakkafrost for the period 1 January 2020 to 30 June 2020.

The interim report, which has not been audited or reviewed by the company's independent auditors, has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and Faroese disclosure requirements for listed companies.

Glyvrar, August 24th, 2020

Management:

Regin Jacobsen CEO

The Board of Directors of P/F Bakkafrost:

Rúni M. Hansen Johannes Jensen Teitur Samuelsen Chairman of the Board Deputy Chairman of the Board Board Member

2020.

In our opinion, the accounting policies used are appropriate, and the interim report gives a true and fair

view of the Group's financial positions at 30 June

2020 as well as the results of the Group activities and

cash flows for the period 1 January 2020 to 30 June

In our opinion, the management's review provides a

true and fair presentation of the development in the

Group operations and financial circumstances of the

Øystein Sandvik Annika Frederiksberg Einar Wathne Board Member Board Member Board Member

results for the period and of the overall financial position of the Group as well as a description of the most significant risks and elements of uncertainty facing the Group.

Over and above the disclosures in the interim report, no changes in the Group's most significant risks and uncertainties have occurred relative to the disclosures in the annual report for 2019.

Consolidated Income Statement

For the period ended 30 June 2020

Consolidated Statement of Comprehensive Income

For the period ended 30 June 2020

00 0 DK K 1	Q 2 20 20	Q 2 20 19	H1 20 20	H1 20 19	DK K 1 00 0	Q 2 20 20	Q 2 20 19	H1 20 20	H1 20 19
,					,
tin Op era g r ev en ue	1, 134 22 2 ,	94 6, 50 6	2, 38 9, 44 8	1, 91 0, 21 5	Pro fit for th eri od e p	47 1, 68 1	18 8, 60 2	32 3, 70 0	40 1, 43 8
Pu rch of od ase go s	-1, 49 0, 18 2	-36 6, 89 9	-1, 77 4, 22 8	-72 8, 43 9	Ch fin ial de riv ati ang es on anc ve s	74 9	59 6	75 2	32 2
Ch e i n i d b iolo ica l as s (a ) ent set t c ost ang nv ory an g	1, 06 2, 64 9	13 4, 29 6	87 4, 75 2	16 8, 30 9	f in eff He e t ect reo com ax	-11 4	-91	-10 6	-58
Sal d p l ex ary an ers on ne pen ses	-15 9, 98 7	-11 7, 69 0	-30 8, 70 0	-23 2, 24 2	Res e t har e-b d p nt erv o s ase ay me	91 0	1, 29 5	-65 0	2, 13 4
tin Oth er op era g e xp en ses	-24 9, 03 9	-19 9, 65 6	-51 6, 50 9	-39 9, 80 9	Cu tra nsl ati dif fer rre ncy on enc es	-28 59 5	70 8	37 9 -77	70 9
De cia tio pre n	-11 5, 76 6	-57 79 3 ,	-23 4, 78 3	-11 1, 56 6	Ad jus of sha tm ent tre asu ry res	, 6, 32 3	63 3	, 4, 71 3	-2, 36 0
Op tio l EB IT* era na	18 89 1, 7	33 8, 76 4	42 9, 98 0	60 6, 46 8
					Ne t o the reh siv e in e t o b ecl ifie d t r co mp en com e r ass o
Fai alu dju f b iolo ica l as stm ent set r v e a s o g s	42 6, 65 0	-65 53 6 ,	15 93 9 ,	-47 66 5 ,	fit los s in bse t p eri od pro or su qu en s	-20 72 7 ,	3, 14 1	-72 67 0 ,	74 7
On tra cts ero us con	0	0	0	0
e f iat Inc om rom as soc es	0	-4, 40 8	0	2, 53 9
Rev tax en ue	-22 63 3 ,	-32 03 1 ,	-41 76 5 ,	-64 02 5 ,	Ne t o the reh siv e in ot to be las sif ied to r co mp en com e n rec
nin bef in Ear ter est d t ( EB IT) gs ore an ax es	58 5, 91 4	23 6, 78 9	40 4, 154	49 7, 31 7	fit los s in bse t p eri od pro or su qu en s	0	0	0	0
t in Ne ter est re ve nue	34 4	63 8	1, 14 7	74 9	Oth he nsi in er com pre ve com e	-20 72 7	3, 14 1	-72 67 0	74 7
t in Ne ter est ex pen ses	-10 05 7	-2, 53 4	-19 58 4	-4, 39 9		,		,
Ne t c eff ect urr en cy s	, -2, 55 4	-4, 76 0	, 12 89 4	-3, 33 5	siv e in rio To tal ot he reh e f the d r co mp en com or pe	45 0, 95 4	19 1, 74 3	25 1, 03 0	40 2, 18 5
Oth fin ial er anc ex pe nse s	-2, 35 5	-97 4	, -8, 37 0	-1, 83 8
nin bef s ( T) Ear ta EB gs ore xe	29 2 57 1,	22 9, 9 15	39 0, 24 1	48 8, 49 4	Co reh siv e in e f the rio d a ibu tab le t ttr mp en com or pe o
					llin int No tro sts n- con g ere	0	0	0	0
Tax es	-99 61 1 ,	-40 55 7 ,	-66 54 1 ,	-87 05 6 ,	Ow f P / F B akk afr ost ner s o	45 0, 95 4	19 1, 74 3	25 1, 03 0	40 2, 18 5
Pro fit los s fo r th eri od or e p	47 1, 68 1	18 8, 60 2	32 3, 70 0	40 1, 43 8
fit los s fo r th tri bu tab le t Pro at or e y ear o
llin int No tro sts n-c on g ere	0	0	0	0
Ow f P / F B akk afr ost ner s o	47 1, 68 1	18 8, 60 2	32 3, 70 0	40 1, 43 8
nin sh ( K) Ear DK gs per are	7.9 8	3.8 8	5.4 8	8.2 5
Dil d e ing sha ( K) ute DK arn s p er re	7.9 8	3.8 8	5.4 8	8.2 5

Pro fit for th eri od e p	47 1, 68 1	18 8, 60 2	32 3, 70 0	40 1, 43 8
Ch fin ial de riv ati ang es on anc ve s	74 9	59 6	75 2	32 2
f in eff He e t ect reo com ax	-11 4	-91	-10 6	-58
Res e t har e-b d p nt ase ay erv o s me	91 0	1, 29 5	-65 0	2, 13 4
Cu nsl ati dif fer tra rre ncy on enc es	-28 59 5 ,	70 8	37 9 -77 ,	70 9
Ad jus of sha tm ent tre asu ry res	6, 32 3	63 3	4, 71 3	-2, 36 0
t o the reh siv e in e t o b ecl ifie d t Ne r co mp en com e r ass o
fit los s in bse t p eri od pro or su qu en s	-20 72 7 ,	3, 14 1	-72 67 0 ,	74 7
Ne t o the reh siv e in ot to be las sif ied to r co mp en com e n rec
fit los s in bse t p eri od pro or su qu en s	0	0	0	0
Oth he nsi in er com pre ve com e	-20 72 7 ,	3, 14 1	-72 67 0 ,	74 7
To tal ot he reh siv e in e f the rio d r co mp en com or pe	45 0, 95 4	19 1, 74 3	25 1, 03 0	40 2, 18 5
reh siv e in e f the rio d a ibu tab le t Co ttr mp en com or pe o
llin int No tro sts n- con g ere	0	0	0	0
Ow f P / F B akk afr ost ner s o	45 0, 95 4	19 1, 74 3	25 1, 03 0	40 2, 18 5

Consolidated Statement of Financial Position

As at 30 June2020

DK K 1 00 0	30 Ju ne 20 20	31 De c. 20 19
,
AS SET S
No t a ts n-c urr en sse
ible Int set ang as s	4, 37 7, 94 8	4, 39 5, 68 7
lan nd uip Pro rty t a nt pe , p eq me	3, 89 4, 07 0	3, 78 0, 49 9
Rig ht of set use as s	43 1, 52 5	33 2, 82 4
Fin ial ets anc ass	6, 2 11 71	9, 08 11 4
eiv ab les Lon ter g- m rec	4, 42 2	4, 42 2
fer red De ta ts x a sse	35 71 8	37 59 3
To tal t a ts no n-c urr en sse	, 8, 86 0, 39 5	, 8, 67 0, 109
Cu nt ets rre ass
Bio log ica l as s ( bio ss) set ma	1, 90 3, 35 9	1, 90 1, 72 9
Inv ent ory	72 0, 76 4	54 8, 50 8
To tal in nto ve ry	2, 62 4, 12 3	2, 45 0, 23 7
cei ble Ac nts cou re va	56 3, 36 4	62 5, 99 3
Oth eiv ab les er rec	11 23 6 ,	45 52 0 ,
tal cei ble To re va s	60 0 57 4,	67 3 1, 51
h a nd sh uiv ale Cas nts ca eq	45 4, 38 9	1, 30 9, 54 6
tal nt ets To cu rre ass	3, 65 3, 2 11	43 29 6 4, 1,
TO TA L A SSE TS	12 51 3, 50 7 ,	13 10 1, 40 5 ,

00 0 DK K 1	30 Ju ne 20 20	31 De c. 20 19
,
EQ UIT Y A ND LIA BIL ITI ES
Eq uit y
Sha ita l re cap	59 14 3 ,	59 14 3 ,
Oth uit er eq y	8, 52 2, 28 7	8, 27 0, 11 2
llin int No tro sts n-c on g ere	0	16 7, 62 0
To tal uit eq y	8, 58 1, 43 0	8, 49 6, 87 5
t li ab ilit ies No n-c urr en
fer red d o the De ta r ta xes an xes	1, 18 1, 97 2	1, 12 3, 79 6
Lon ter int st- bea rin de bt g- g m ere	1, 57 0, 51 2	2, 32 8, 23 1
lea sin de bt Lon ter g- m g	24 9, 8 17	22 58 5, 5
Fin ial de riv ati anc ve s	1, 28 2	1, 96 6
t li ilit ies To tal ab no n-c urr en	3, 00 2, 94 4	3, 67 9, 57 8
Cu nt liab ilit ies rre
Fin ial de riv ati anc ve s	18 04 2 ,	13 49 3 ,
Sho le asi de bt rt-t erm ng	19 5, 14 0	10 7, 80 8
Ac nts ble d o the r d ebt cou pa ya an	71 5, 95 1	80 3, 65 1
tal liab ilit ies To nt cu rre	92 9, 13 3	92 95 2 4,
tal lia bil itie To s	3, 93 2, 07 7	4, 60 4, 53 0
TO Q ES TA L E UIT Y A ND LIA BIL ITI	12 3, 50 51 7 ,	13 10 40 1, 5 ,

Consolidated Cash Flow Statement

For the period ended 30 June 2020

DK K 1 00 0	Q 2 20 20	Q 2 20 19	H1 20 20	H1 20 19
,
nin bef in d t ( IT) Ear ter est EB gs ore an ax es	58 5, 91 4	23 6, 78 9	40 4, 154	49 7, 31 7
Ad jus tm ent s fo rite -do nd de cia tio r w wn s a pre n	15 3, 65 6	57 79 3 ,	30 4, 08 7	11 1, 56 6
Ad jus s fo alu dju of bi tm ent stm ent r v e a om ass	-42 6, 65 0	65 53 6 ,	-15 93 9 ,	47 66 5 ,
Ad jus s fo r in e f iat tm ent com rom as soc es	0	4, 40 8	0	-2, 53 9
Ad jus s fo eff tm ent ect r c urr en cy s	-14 64 3 ,	-4, 57 8	-47 97 9 ,	-40 2
Ch in inv ent an ge ory	-18 1, 30 3	-14 0, 34 3	-12 6, 40 4	-17 8, 92 4
Ch in eiv ab les an ge rec	2 77 55 ,	9 55 44 ,	96 66 4 ,	2, 00 -11 7
Ch e i de bts ent ang n c urr	-83 12 7 ,	51 76 1 ,	-13 7, 93 5	40 64 2 ,
h f fro ion Cas low rat m o pe s	11 1, 39 9	32 6, 81 5	47 6, 64 8	40 3, 31 8
Cas h f low fro inv est nts m me
fo has f fi xed Pay nts set me r p urc e o as s	-19 8, 53 6	-15 6, 99 5	-29 9, 79 3	-26 6, 95 2
t in in fin ial Ne stm ent ets ve anc ass	2, 40 4	0	2, 40 4	3, 98 8
Cas h f low fro inv est nts m me	-19 6, 13 2	-15 6, 99 5	-29 7, 38 9	-26 2, 96 4
h f low fro m f ina nci Cas ng
Ch in int bea rin de bt (s ho nd lon ) st- rt a an ge ere g g	-21 9, 02 5	20 9, 93 1	-75 8, 73 0	26 9, 44 6
Ac isit ion of ino riti qu m es	0	0	-16 7, 62 0	0
Fin ial inc anc om e	34 4	64 0	1, 14 7	75 1
Fin ial anc ex pen ses	-12 41 2 ,	-3, 50 8	-27 95 4 ,	-6, 23 7
Lea nts se pay me	-37 89 0 ,	0	-69 56 8 ,	0
Div ide nd id pa	0	-40 1, 51 3	0	-40 1.5 13
eed s f le o f o sh Ne t p roc rom sa wn are s	02 6 7,	0 5, 75	69 -11 1 ,	2, 99 9
ina nci Cas h f low fro m f ng	-26 1, 95 7	-18 8, 70 0	-1, 03 4, 41 6	-13 4, 55 4
ha in sh d c ash uiv ale in rio d Ne t c nts nge ca an eq pe	-34 6, 69 0	-18 88 0 ,	-85 5, 15 7	5, 80 0
Cas h a nd h e iva len ts ing ba lan cas qu – o pen ce	80 1, 07 9	34 1, 57 4	1, 30 9, 54 6	31 6, 89 4
h a nd sh uiv ale los ing ba lan al Cas nts tot ca eq – c ce	45 4, 38 9	32 2, 69 4	45 4, 38 9	32 2, 69 4

Consolidated Statement of Changes in Equity

As at 30 June 2020

				Share -	Curre ncy			Biom ass
		Share						Fair v alue
	Share	Prem ium	Treas ury	based	trans lation		Propo sed	adjus t-	Retai ned	Total
DKK 1 ,000	Capit al	Reser ve	Share s	Paym ent	differ ences	Deriv ative s	Divid end	ment s	Earni ngs	Equit y
Equit y 01. 01.20 20	59,14 3	4,027 ,375	-68	5,059	78,85 0	-15,3 48	0	162,2 03	4,012 ,041	8,329 ,255
lidate d pro fit Conso	0	0	0	0	0	0	0	15,93 9	308,9 07	324,8 46
Other rehen sive in comp come:
Chang es in finan cial d erivat ives	0	0	0	0	0	752	0	0	0	752
Hereo f inco me ta x effe ct	0	0	0	0	0	-106	0	0	0	-106
Share -base d pay ment	0	0	0	-650	0	0	0	0	0	-650
Curre ncy tr anslat ion di fferen ces	0	0	0	0	-77,3 79	0	0	0	0	-77,3 79
Total othe prehe nsive incom r com e	0	0	0	-650	-77,3 79	646	0	0	0	-77,3 83
Total rehen sive i comp ncom e	0	0	0	-650	-77,3 79	646	0	15,93 9	308,9 07	247,4 63
Trans action with owne rs:
ury sh Treas ares	0	0	4,713	0	0	0	0	0	0	4,713
sed d ividen d Propo	0	0	0	0	0	0	0	0	0	0
Total trans actio n wit h ow ners	0	0	4,713	0	0	0	0	0	0	4,713
Total chan ges in equi ty	0	0	4,713	-650	-77,3 79	646	0	15,93 9	308,9 07	252,1 76
Non-c ontro lling i ntere st 01. 01.20										167,6 20
Chang ntroll e in n ing in terest on-co										-167, 620
ontro lling intere st 30 .06.2 0 Non-c										0
Total equi ty 30 .06.2 020	59,14 3	4,027 ,375	4,645	4,409	1,471	-14,7 02	0	178,1 42	4,320 ,948	8,581 ,431
Equit y 01. 01.20 19	48,85 8	306,5 37	-15,5 25	6,153	6,176	-264	403,0 79	382,7 70	2,939 ,245	4,077 ,028
Conso lidate d pro fit	0	0	0	0	0	0	0	-220, 567	1,071 ,230	850,6 63
Other rehen sive in comp come:
Chang es in finan cial d erivat ives	0	0	0	0	0	-17,7 89	0	0	0	-17,7 89
Hereo f inco me ta x effe ct	0	0	0	0	0	2,705	0	0	0	2,705
Share -base d pay ment	0	0	0	-1,09 4	0	0	0	0	0	-1,09 4
Curre anslat ion di fferen ncy tr ces	0	0	0	0	72,67 4	0	0	0	0	72,67 4
Total othe prehe nsive incom r com e	0	0	0	-1,09 4	72,67 4	-15,0 84	0	0	0	56,49 6
Total rehen sive i comp ncom e	0	0	0	-1,09 4	72,67 4	-15,0 84	0	-220, 567	1,071 ,230	907,1 59
action with Trans owne rs:
Share Capit al inc rease	10,28 5	3,720 ,838	0	0	0	0	0	0	0	3,731 ,123
ury sh Treas ares	0	0	15,45 7	0	0	0	0	0	0	15,45 7
Paid-o ut div idend	0	0	0	0	0	0	-403, 079	0	1,566	-401, 513
Total trans actio n wit h ow ners	10,28 5	3,720 ,838	15,45 7	0	0	0	-403, 079	0	1,566	3,345 ,067
Total chan ges in equi ty	10,28 5	3,720 ,838	15,45 7	-1,09 4	72,67 4	-15,0 84	-403, 079	-220, 567	1,072 ,796	4,252 ,226
Non-c ontro lling intere st									167,6 20	167,6 20
Total equi ty 31 .12.2 019	59,14 3	4,027 ,375	-68	5,059	78,85 0	-15,3 48	0	162,2 03	4,179 ,661	8,496 ,875
Equit y 01. 01.20 19	48,85 8	306,5 37	-15,5 25	6,153	6,176	-264	403,0 79	382,7 70	2,939 ,246	4,077 ,030
lidate d pro fit Conso	0	0	0	0	0	0	0	-47,6 65	455,2 60	407,5 95
Other rehen sive in comp come:
Chang es in finan cial d erivat ives	0	0	0	0	0	332	0	0	0	332
Hereo f inco me ta x effe ct	0	0	0	0	0	-58	0	0	0	-58
Share -base d pay ment	0	0	0	-2,36 0	0	0	0	0	0	-2,36 0
Curre ncy tr anslat ion di fferen ces	0	0	0	0	709	0	0	0	0	709
Total othe prehe nsive incom r com e	0	0	0	-2,36 0	709	264	0	0	0	-1,38 7
Total rehen sive i comp ncom e	0	0	0	-2,36 0	709	264	0	-47,6 65	455,2 60	406,2 08
action with Trans owne rs:
Treas ury sh ares	0	0	2,134	0	0	0	0	0	0	2,134
Paid-o ut div idend	0	0	0	0	0	0	-403, 078	0	1,566	-401, 512
Total trans actio n wit h ow ners	0	0	2,134	0	0	0	-403, 079	0	1,566	-399, 379
Total chan ges in equi ty	0	0	2,134	-2,36 0	709	264	-403, 079	-47,6 65	456,8 26	6,829
Total equi ty 30 .06.2 019	48,85 8	306,5 37	-13,3 91	3,793	6,885	0	0	335,1 05	3,396 ,072	4,083 ,859

Notes to the Account

Accounting Policy

General Information

P/F Bakkafrost is a limited company incorporated and domiciled in the Faroe Islands.

The Group's Annual Report as at 31December 2019 is available upon request from the company's registered office at Bakkavegur 9, FO-625 Glyvrar, Faroe Islands, or at www.bakkafrost.com.

This Condensed Consolidated Interim Report is presented in DKK.

Note 1. Statement of Compliance

This Condensed Consolidated Interim Report has been prepared in accordance with International Financial Reporting Standards (IFRS) IAS 34 Interim Financial Reporting as adopted by the EU. It does not include all the information required for the full Annual and Consolidated Report and Accounts and should be read in conjunction with the Annual and Consolidated Report and Accounts for the Group as at 31 December 2019.

This interim report has not been subject to any external audit.

Note 2. Significant Accounting Policies

The accounting policies applied by the Group in this Condensed Consolidated Interim Report are the same as those applied in the Annual Report as at and for the year ended 31 December 2019.

Note 3. Estimates and Risk Exposures

The preparation of financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting principles and recognized amounts of assets, liabilities, income and expenses. The most significant estimates relate to the valuation of biological assets, which are measured at fair value. Estimates and underlying assumptions are reviewed on an ongoing basis and are based on the management's best assessment at the time of reporting. All changes in estimates are reflected in the financial statements as they occur.

As a result of the outbreak of Covid-19 during the first quarter of 2020, all significant estimates have been reviewed in the light of this situation, including estimates related to the expected credit loss on trade receivables, inventory valuation and impairment test on intangible assets. As at the date of these interim financial statements, no significant changes in estimates have been performed. Bakkafrost has not identified significant Covid-19 impact to the interim condensed consolidated financial statements as at 30 June 2020.

The accounting estimates are described in the notes to the financial statements in the Annual Report 2019.

Note 4. Biomass

	30 Ju ne	30 Ju ne	31 De c
DK K 1 00 0 ,	20 20	20 19	20 19
Bio log ica l as ing set nt 01 .01 s c arr y am ou	1, 90 1, 73 0	1, 35 8, 46 2	1, 35 8, 46 2
du rod ion rch Inc e t uct rea se o p or pu ase s	97 8, 01 0	69 9, 14 4	2, 02 1, 60 1
isit ion inc ir v Inc du e t l. fa alu rea se o a cqu s - e	0	0	66 7, 48 2
Red uct ion du e t o h est ing le ( ts o f g ds sol d) arv or sa cos oo	-98 8, 07 1	-78 9, 06 1	-1, 92 1, 45 6
Fai alu dju th e b inn ing of th eri od ed stm ent at r v e a eg e p rev ers	-27 69 5 ,	-38 2, 77 5	-24 4, 03 4
Fai alu dju th nd of the rio d stm ent at r v e a e e pe	43 63 4 ,	33 5, 11 0	27 69 5 ,
Rev al o f e lim ina tio t th e b inn ing of th eri od ers n a eg e p	59 12 1 ,	53 79 0 ,	53 79 0 ,
Eli mi ion nat s	12 0 -54 ,	-43 17 5 ,	-59 12 1 ,
nsl ati dif fer Cu tra rre ncy on enc es	-9, 25 0	0	-2, 68 9
Bio ica ing f th eri log l as set nt at the d o od s c arr y am ou en e p	1, 90 3, 35 9	1, 23 1, 49 5	1, 90 1, 73 0
Co ice bi olo ica l as st set pr g s	92 2, 20 1, 7	93 9, 56 0	93 84 1, 5, 5
Fai alu dju th nd of the rio d stm ent at r v e a e e pe	43 63 4 ,	33 5, 11 0	27 69 5 ,
Eli mi ion nat s	-53 23 2 ,	-43 17 5 ,	-59 12 1 ,
Cu tra nsl ati dif fer rre ncy on enc es	-9, 25 0	0	-2, 68 9
Bio log ica l as ing set nt s c arr y am ou	1, 90 3, 35 9	1, 23 1, 49 5	1, 90 1, 73 0
Bio ( ) ton ma ss nes
< 1 kg	5, 30 7	2, 21 4	5, 21 0
1 k 2 kg g <	10 68 7 ,	10 3 5,	8, 64 9
2 k kg 3 g <	10 17 2 ,	3, 55 0	10 33 4 ,
3 k kg 4 g <	12 28 5 ,	4, 63 5	14 14 6 ,
4 k g <	19 39 0 ,	17 75 6 ,	22 98 0 ,
lum f b iom at Vo e o ass se a	84 57 1 ,	33 25 8 ,	61 31 9 ,

	30 Ju ne	30 Ju ne	31 De c
of fis h ( ) Nu mb tho nd er usa	20 20	20 19	20 19
< 1 kg	10 49 9 ,	5, 17 0	12 80 1 ,
1 k 2 kg g <	6, 87 9	3, 3 71	48 5, 1
2 k kg 3 g <	4, 20 3	1, 45 4	4, 27 1
3 k kg 4 g <	3, 50 7	1, 35 8	4, 14 8
4 k g <	4, 06 9	3, 33 5	4, 63 3
tal mb of fis h a To t se nu er a	29 15 7 ,	03 0 15 ,	31 33 4 ,
of Nu mb olt lea sed YT D ( tho nd ) er sm re usa
Far mi No rth ng	1, 08 0	2, 81 1	5, 58 5
mi Far We st ng	2, 39 6	10 0 1,	27 0 5,
mi uth Far So ng	1, 70 9	1, 39 0	1, 79 7
mi tla nd Far Sco ng	2, 96 9	n/a	5, 69 6
To tal mb of olt ele d Y TD nu er sm s r ase	8, 154	5, 30 1	18 34 8 ,
sit ivi in Sen ty DK K 1 00 0 ,
Ch e i n d isc nt rat 1% ang ou e +	-12 9, 94 0	-11 1, 34 2	-10 1, 60 7
Ch e i n d isc nt rat 1% ang ou e -	14 7, 84 8	98 42 5 ,	11 5, 36 4
Ch e i ale ric 5 D KK ang n s s p e +	42 5, 74 4	21 0, 24 4	25 1, 41 6
Ch e i ale ric 5 D KK ang n s s p e -	-42 5, 27 8	-21 0, 24 4	-25 1, 41 6
e i n b iom Ch lum 1% ang ass vo e +	4, 39 9	17 61 5 ,	5, 83 6
Ch e i n b iom lum 1% ang ass vo e -	-4, 39 9	-5, 88 6	-5, 83 6
fo ard ice s in lo* On EU R F CA Os e-y ear rw pr
rio Pe d e nd	6.1 1	6.5 6	7.2 4
1 Q ( for rd) wa	4.6 0	6.0 3	6.7 2
( for rd) 2 Q wa	4.9 0	5.9 3	6.7 5
( for rd) 3 Q wa	5.8 2	6.5 1	5.5 1
4 Q ( for rd) wa	5.8 6	6.6 1	5.6 2
* S Fi sh Po ol ou rce

Note 5. Segments

ing Fa F O rm -	Q 2	Q 2	H 1	H 1
D K K 1, 0 0 0	2 0 2 0	2 0 1 9	2 0 2 0	2 0 1 9
l re Ex ter na ve nu e	3 5 2, 9 8 6	5 8 4, 5 2 7	7 5 5, 3 9 6	1, 1 4 3, 4 9 7
l re In ter na ve nu e	2 2 1, 2 0 3	1 7 4, 0 8 6	4 5 1, 3 2 6	3 7 0, 5 1 8
To ta l re ve nu e	5 7 4, 1 8 9	7 5 8, 6 1 3	1, 2 0 6, 7 2 2	1, 5 1 4, 0 1 5
Op t ing era ex p en se s	-4 3 2, 4 5 9	-4 0 9, 2 9 1	-8 0 7, 3 1 1	-8 9 3, 0 5 5
De ia t ion d a t iza t ion p rec an mo r	-5 5, 9 8 0	-4 5, 8 8 3	-1 1 0, 7 3 6	-8 7, 7 7 8
Op t ion l E B I T era a	8 5, 7 5 0	3 0 3, 4 3 9	2 8 8, 6 7 5	5 3 3, 1 8 2
Fa ir v lue d j tm ts f b io log ica l a ts a a us en o sse	1 3 7, 9 5 4	-6 5, 5 3 6	-1 9 7, 7 5 3	-4 7, 6 6 5
Inc fro ia tes om e m as so c	0	0	0	2, 5 3 9
Re tax ve nu e	-2 2, 6 3 3	-3 2, 0 3 1	6 -4 1, 7 5	-6 0 2 4, 5
ing be fo in ter t a d tax ( ) Ea E B I T rn s re es n es	2 0 0 1, 7 1	2 0 8 2 5, 7	9, 4 1 5 7	2 0 3 4 4, 1
f ina ia l i Ne t tem nc s	3, 8 6 -1 7	0 3 -7, 4	-9, 0 9 3	-9, 0 0 5
ing be fo ( ) Ea tax E B T rn s re es	1 8 7, 1 9 5	1 9 8, 8 2 9	4 0, 0 6 4	4 1 4, 5 3 1
Ta xe s	-2 5, 6 5 1	-3 3, 0 9 8	1, 7 4 6	-7 9, 8 6 4
f i los fo he io d Pr t o t o r s r p er	1 6 1, 5 4 4	1 6 5, 7 3 1	4 1, 8 1 0	3 3 4, 6 6 7

ing Fa S C T rm -	Q 2	H 1
D K K 1, 0 0 0	2 0 2 0	2 0 2 0
l re Ex ter na ve nu e	3 7 7, 4 3 0	7 8 9, 8 2 5
ing Op t era ex p en se s	-3 0 1, 1 0 9	-6 3 1, 5 6 9
ia ion d a iza ion De t t t p rec an mo r	-4 7, 5 2 7	-9 9, 7 2 2
ion l Op t E B I T era a	2 8, 7 9 4	5 8, 5 3 4
ir v lue d j f b io log ica l a Fa tm ts ts a a us en o sse	2 8 8, 6 9 6	2 1 3, 6 9 2
ing be fo in d ( ) Ea ter t a tax E B I T rn s re es n es	3 1 7, 4 9 0	2 7 2, 2 2 6
f ina ia l i Ne t tem nc s	-5, 4 5 0	8, 1 3 3
ing fo Ea be tax ( E B T ) rn s re es	3 1 2, 0 4 0	2 8 0, 3 5 9
Ta xe s	-5 6, 9 4 3	-5 0, 4 8 7
f i fo io Pr t t he d o r p er	2 5 5, 0 9 7	2 2 9, 8 7 2

lue d de d p du Va ts a ro c	Q 2	Q 2	H 1	H 1
D K K 1, 0 0 0	2 0 2 0	2 0 1 9	2 0 2 0	2 0 1 9
l re Ex ter na ve nu e	3 0 7, 7 6 3	2 3 7, 5 5 2	5 8 2, 0 7 1	4 9 8, 1 2 6
l p ha f r ia l In ter ter na urc se o aw m a	-2 2 1, 2 0 3	-1 7 4, 0 8 6	-4 5 1, 3 2 6	-3 7 0, 5 1 8
ing Op t era ex p en se s	-3 3, 1 8 8	-5 8, 7 4 8	-8 3, 3 0 9	-1 1 6, 8 3 6
ia ion d a iza ion De t t t p rec an mo r	-4, 7 5 0	-4, 7 5 3	-9, 6 1 2	-9, 4 8 3
ion l Op t E B I T era a	4 8, 6 2 2	-3 5	3 7, 8 2 4	1, 2 8 9
is ion f o Pro tra ts v o ne rou s c on c	0	0	0	0
ing fo in Ea be ter t a d tax ( E B I T ) rn re es n es s	4 8, 6 2 2	-3 5	3 7, 8 2 4	1, 2 8 9
f ina ia l i Ne t tem nc s	-1 7 4	-4 4	-3 9 2	-1 0 1
ing be fo ( ) Ea tax E B T rn s re es	4 8, 4 4 8	-7 9	3 7, 4 3 2	1, 1 8 8
Ta xe s	-8, 7 2 0	1 4	-6, 7 3 7	-2 1 4
f i los fo he io d Pr t o t o r s r p er	3 9, 7 2 8	-6 5	3 0, 6 9 5	9 7 4

In H1 2020, one customer - as defined in IFRS 8.34 - represents DKK 281 million, corresponding to 48% of the revenue in the VAP segment.

is hm l, is h O i l a d is h d F F F Fe ea n e	Q 2	Q 2	H 1	H 1
0 0 0 D K K 1,	2 0 2 0	2 0 9 1	2 0 2 0	2 0 9 1
l re Ex ter na ve nu e	9 6, 0 4 3	1 2 4, 4 2 7	2 6 2, 1 5 6	2 6 8, 5 9 3
l re In ter na ve nu e	1 7 2, 5 6 8	1 5 9, 0 2 0	3 1 6, 4 2 5	2 9 8, 2 6 5
l re To ta ve nu e	2 6 8, 6 1 1	2 8 3, 4 4 7	5 7 8, 5 8 0	5 6 6, 8 5 8
f g ds l d Co t o s oo so	-1 6 5, 7 5 4	-1 6 9, 2 7 3	-3 8 4, 9 7 8	-3 3 0, 3 5 6
ing Op t era ex p en se s	-5 2, 9 3 6	-5 5, 7 9 2	-1 0 3, 4 6 9	-1 1 2, 8 6 8
ia ion d a iza ion De t t t p rec an mo r	-7, 5 0 9	-7, 1 5 7	-1 4, 7 1 2	-1 4, 3 0 5
ion l Op t E B I T era a	4 2, 4 1 2	5 1, 2 2 5	7 5, 4 2 1	1 0 9, 3 2 9
fro ia Inc tes om e m as so c	0	-4, 4 0 8	0	0
ing be fo in d ( ) Ea ter t a tax E B I T rn s re es n es	4 2, 4 1 2	4 6, 8 1 7	7 5, 4 2 1	1 0 9, 3 2 9
f ina ia l i Ne t tem nc s	4, 8 7 8	-5 4 3	-1 2, 5 6 1	7 7 9
ing be fo ( ) Ea tax E B T rn s re es	4 7, 2 9 0	4 6, 2 7 4	6 2, 8 6 1	1 1 0, 1 0 8
Ta xe s	-8, 5 1 2	-8, 3 2 9	-1 1, 3 1 5	-1 9, 8 1 9
f i fo io Pr t o los t he d o r s r p er	3 8, 7 7 8	3 7, 9 4 5	5 1, 5 4 6	9 0, 2 8 8

Reconciliation of reportable segments

ing be fo ( ) to Gr tax E B T ou p ea rn s re es	Q 2	Q 2	H 1	H 1
D K K 1, 0 0 0	2 0 2 0	2 0 1 9	2 0 2 0	2 0 1 9
ing lan ds Fa Fa Is rm roe	1 8 7, 1 9 5	1 9 8, 8 2 9	4 0, 0 6 4	4 1 4, 5 3 1
ing lan d Fa Sc t rm o	3 1 2, 0 4 0	0	2 8 0, 3 5 9	0
( lue d de d p du ) V A P Va ts a ro c	4 8, 4 4 8	-7 9	3 7, 4 3 2	1, 1 8 8
( is hm l, is h o i l a d f is h d ) F O F F F Fe ea n e	4 7, 2 9 0	4 6, 2 7 4	6 2, 8 6 1	1 1 0, 1 0 8
l im ina ion E t s	-2 3, 6 8 0	-1 5, 8 6 5	-3 0, 4 7 3	-3 7, 3 3 1
ing fo Gr be tax ( E B T ) ou p ea rn s re es	5 7 1, 2 9 3	2 2 9, 1 5 9	3 9 0, 2 4 3	4 8 8, 4 9 5

Note 6. Capital Commitments

The Group had capital expenditures committed but not provided in these accounts at the date of the Statement of Financial Position of approximately DKK 649 million which relate to the farming segments in both the Faroe Islands and Scotland.

Note 7. Transactions with Related Parties

Note 5.2 in Bakkafrost's Annual Report for 2019 provides detailed information on related parties' transactions.

Transactions between P/F Bakkafrost and its subsidiaries meet the definition of related party transactions. As these transactions are eliminated on consolidation, they are not disclosed as related party transactions.

Note 8. Fair Value Measurements

All assets/liabilities, for which fair value is recognized or disclosed, are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1: Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities.

Level 2: Valuation techniques (for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable).

Level 3: Valuation techniques (for which the lowest level input that is significant to the fair value measurement is unobservable).

For biological assets, the fair value calculation is done using a valuation model (level 3 in the valuation hierarchy) where the value is estimated based on observable market prices per period end.

For more information on these calculations, please refer to Note 4.

For assets/liabilities that are recognized at fair value on a recurring basis, the Group determines, whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement).

There have been no transfers into or out of Level 3 fair value measurements.

As at 30 June 2020, the Group held the following classes of assets/liabilities measured at fair value:

D K K 1, 0 0 0		Co t s
d l ia b i l i ies d a fa ir v lue As ts t t se an m ea su re a	ir v lue Fa a	t am ou n	l Le 1 ve	l Le 2 ve	l Le 3 ve
io log ica l a ( b iom ) B ts sse as s	1, 9 0 3, 3 5 9	1, 8 5 9, 7 2 5	0	0	1, 9 0 3, 3 5 9
d a fa ir v lue / As ts t 3 0 6- 2 0 2 0 se me as ur e a	1, 9 0 3, 3 5 9	1, 8 5 9, 7 2 5	0	0	1, 9 0 3, 3 5 9
ia b i l i t ies d a t fa ir v lue 3 0 / 6- 2 0 2 0 L m ea su re a	0	0	0	0	0
io log ica l a ( b iom ) B ts sse as s	9 0 3 0 1, 1, 7	8 0 3 1, 7 4, 5	0	0	9 0 3 0 1, 1, 7
fa ir v As ts d a t lue 3 1 / 1 2- 2 0 1 9 se me as ur e a	1, 9 0 1, 7 3 0	1, 8 7 4, 0 3 5	0	0	1, 9 0 1, 7 3 0
L ia b i l i t ies d a t fa ir v lue 3 1 / 1 2- 2 0 1 9 m ea su re a	0	0	0	0	0

Note 9. Business Combinations

H1 2020

There have been no new business combinations in H1 2020.

2019

On 25 September 2019, Bakkafrost signed a binding Share Purchase Agreement (SPA) to acquire 68.6% of the outstanding shares in The Scottish Salmon Company Plc (SSC) from Northern Link Ltd. The closing date was 8 October 2019. Further acquisition has been made in Q4, and at 31 December 2019, Bakkafrost held 95.6% of the shares in SSC.

SSC is an integrated salmon farming business operating exclusively in Scotland with 60 sites across the West Coast and Hebridean Islands. The company is engaged in nearly all stages of the value chain ensuring full traceability and total supply chain integrity. The current annual production capacity is 50,000 tonnes. SSC produced 33,798 tonnes gutted weight in 2019 and exported to 21 countries with a focus on North America and the Far East. SSC has developed a range of strong flagship brands, including Native Hebridean Salmon, Tartan Salmon Label Rouge and Lochlander Salmon. The company has 651 employees.

SSC's main office is in Edinburgh, Scotland.

Strategic Rationale

The strategic rationale for the acquisition includes the following:

• Increases the scope of Bakkafrost's operation significantly and brings new growth and development opportunities to the Group.

• Provides Bakkafrost access to the Scottish farming region, diversifying our farming operation into a new geography, which is a niche farming region with Scottish provenance products priced at a premium to the market.
• Creates a combined differentiated global leader in premium salmon with dual exposure to both Faroe Islands and Scottish premium salmon.
• Positive diversification of Bakkafrost's operations from a pure play Faroe Islands company to a presence in two attractive salmon farming markets, while remaining both focused on developed markets and markets for premium products.
• Potential for material improvement in The Scottish Salmon Company's profitability over a five-year horizon through realization of identified synergies, transfer of best practices and a targeted investment programme. Bakkafrost expects to generate synergies in three key areas mainly related to Feed and Procurement, Sales Cooperation and SG&A and Overhead savings.
• Feed & Procurement: Bakkafrost produces fish feed with a significantly higher marine index, compared to industry feed. Supplying feed to SSC would result in fixed cost efficiency at Bakkafrost's feed facilities through intercompany sales of higher quality feed to SSC. Net synergy estimated at DKK 1.2 per kg feed, equating to annual synergies of approximately DKK 70 million from 2022 onwards (~NOK 2.6 / kg of SSC harvested salmon).
• Sales Cooperation: Both SSC and Bakkafrost market premium salmon and brands that obtain a significantly higher price due to provenance and product differentiation. Both companies plan to drive efficiencies by coordinating sales efforts going forward, taking advantage of relative distribution strengths in global markets.
• SG&A & Overheads: Leaner head office structure in Scotland (through discontinuing the listed functions of SSC).

Bakkafrost also believes that there is the potential for transfer of best practices including (i) secondments to stimulate identification and transfer of best practices, (ii) implementation of better farming procedures for improved cost performance, (iii) gradual consolidation of sites, (iv) mitigation of biological threats through delousing expertise. The overall result of these actions is expected to result in larger fish, improving price achievement and profitability.

Bakkafrost also plans to make targeted investments to achieve the efficiencies outlined above. These include investment in a new modern recirculation plant for smolt production, replacing SSC's large number of small smolt facilities. Additionally, investments are planned to be directed towards replacing SSC's existing sea water equipment.

Bakkafrost is committed to strong cooperation with local communities and authorities and hopes to stimulate employment through significant investment in the business. Additionally, Bakkafrost is committed to ongoing work to strengthen the Scottish regulatory framework.

Net assets acquired

Most of SSC's intangible assets are related to licenses. Licenses are viewed as perpetual in nature and are thus not amortized but made subject to an annual impairment review.

We have identified three significant brand names in SSC, namely Tartan Salmon, Lochlander Salmon and Native Hebridean. The remaining volumes are sold under the general Scottish Salmon Company brand, to a large extent to wholesalers and directly to customers. Brand is valued by the income approach by calculating the net present value (NPV).

We expect that most of the excess value from the transaction is related to licenses, and the question will be, where to draw the line between goodwill and licenses. In the PPA, we have allocated value to all other identified assets including brand value, and the remaining excess value is subsequently allocated to licenses. We have then assessed this value by utilizing a top-down market approach. Please refer to the present page regarding strategic rationale.

We have not seen any indicators that the respective trade names have a definite expected life.

The aggregated goodwill of DKK 550.4 million recognized, arises from the tax calculations on the fair value adjustments. The table below summarizes the consideration paid for SSC and the assessed fair value of the assets acquired and liabilities assumed, recognized at the acquisition date.

The figures provided are subject to further scrutiny and may change as Bakkafrost becomes able to gain access to more information from SSC within the 12- month period stipulated by IFRS 3.

Acquisition-related costs were expensed to the profit or loss as incurred and included within operating cash flows in the Statement of Cash Flow. Total cost for Bakkafrost is DKK 10.8 million, and costs held by SSC are DKK 57.0 million.

The assets and liabilities recognized are as follows:

	Bo k Va lue o	Fa ir Va lue
D K K 1, 0 0 0, 0 0 0	8 / 0 / 2 0 9 1 1	d j tm t a us en	8 / 0 / 2 0 9 1 1
Go dw i l l o	5 0. 9	4 9 9. 6	5 5 0. 4
ice L ns es	2 0 1. 8	3, 1 3 1. 6	3, 3 3 3. 5
Br ds an	-	1 0 8. 4	1 0 8. 4
lan d e ip Pro ty t a t p er p n qu me n ,	7 0 2. 2	-	7 0 2. 2
iva b les Ac ts co un rec e	1 2 3. 4	-	1 2 3. 4
ies Inv to en r	3 1. 7	-	3 1. 7
B io log ica l a ts sse	6 6 0. 5	-	6 6 0. 5
O he lu d ing h a d ba k t t a ts, r c ur ren sse ex c ca s n n	0. 9 4	-	0. 9 4
h, ba k a d m ke b le i ies Ca ta t s n n ar se cu r	3 2. 5	-	3 2. 5
To ta l a ts sse	1, 8 4 4. 0	3, 7 3 9. 6	5, 5 8 3. 6
fer d De tax re es	1. 7	5 5 1. 3	5 5 2. 9
he lon l ia b i l i ies O t ter t r g- m	1 9 8. 5	-	1 9 8. 5
Lo -te l ia b i l i t ies in ter t- be ing ng rm es ar ,	9 2. 1 7	-	9 2. 1 7
l ia b i l i ies in be ing Cu t t ter t- rre n es ar ,	1 0 8. 4	-	1 0 8. 4
b le Ac ts co un p ay a	2 0 1. 8	-	2 0 1. 8
he l ia b i l i ies O t t t r c ur ren	2 3 9. 4	-	2 3 9. 4
Cu t tax rre n es	8. 3	-	8. 3
l l ia b i l i ies To ta t	9 5 0. 7	5 5 1. 3	1, 5 0 2. 0
ire Ne t a ts d sse ac q u			4, 0 8 1. 5
ha ice l loc t ion Pu rc se p r a a :

ha ice fo ha ( ) Pu 6 8. 6 % rc se p r r s res	2, 8 0 0. 4
ha ice fo ha ( ) Pu 1 0 0 % se p r s res rc r	4, 0 8 1. 5
ion f e i Tr t lue ( ke t v lue ty ) an sa va ma a c r o q u	4, 0 8 1. 5

Note 10. APM

- Alternative Performance Measures

Bakkafrost's financial information is prepared in accordance with international financial reporting standards (IFRS). In addition, the management's intention is to provide alternative performance measures, which are regularly reviewed by the management to enhance the understanding of the company's performance, but not replacing the financial statements prepared in accordance with IFRS. The alternative performance measures presented may be determined or calculated differently by other companies. Bakkafrost's experience is that these APM's are frequently used by analysts, investors and other parties.

These APM's are adjusted IFRS measures, defined, calculated and used in a consistent and transparent manner over the years and across the company where relevant.

NIBD

Net interest-bearing debt consists of both current and non-current interest-bearing liabilities, less related current and non-current hedging instruments, lease liabilities, financial instruments, such as debt instruments and derivatives and cash and cash equivalents. The net interest-bearing debt is a measure of the Group's net indebtedness that provides an indicator of the overall balance sheet strength. It is also a single measure that can be used to assess both the Group's cash position and its indebtedness. The use of the term 'net debt' does not necessarily mean that the cash included in the net debt calculation is available to settle the liabilities included in this measure. Net debt is an alternative performance measure as it is not defined in IFRS. The most directly comparable IFRS measure is the aggregate interest-bearing liabilities (both current and non-current), derivatives and cash and cash equivalents. A reconciliation is provided below.

	3 0 Ju ne	3 1 De c.
D K K 1, 0 0 0	2 0 2 0	2 0 1 9
h a d c h e iva len Ca ts s n as qu	4 5 4, 3 8 9	1, 3 0 9, 5 4 6
d s ho in be ing de b Lo t- ter ter t- t ng - a n r m es ar	-1, 5 7 0, 5 1 2	-2, 3 2 8, 2 3 1
in be ing de b Ne t ter t- t es ar	-1, 1 1 6. 1 2 3	-1, 0 1 8, 6 8 5

Operational EBIT

Operational EBIT is EBIT aligned for fair value adjustments, onerous contracts provisions, income from associates and revenue tax.

Operational EBIT is a major alternative performance measure in the salmon farming industry. A reconciliation from EBIT to Operational EBIT is provided below.

	Q 2	Q 2	H 1	H 1
D K K 1, 0 0 0	2 0 2 0	2 0 1 9	2 0 2 0	2 0 1 9
E B I T	5 8 5, 9 1 4	2 3 6, 7 8 9	4 0 4, 1 5 4	4 9 7, 3 1 7
ir v lue d j f b io log ica l Fa tm ts a a us en o ts as se	-4 2 6, 6 5 0	6 5, 5 3 6	-1 5, 9 3 9	4 7, 6 6 5
Inc fro ia tes om e m as so c	0	4, 4 0 8	0	-2, 5 3 9
Re tax ve nu e	2 2, 6 3 3	3 2, 0 3 1	4 1, 7 6 5	6 4, 0 2 5
ion Op t l E B I T era a	1 8 1, 8 9 7	3 3 8, 7 6 4	4 2 9, 9 8 0	6 0 6, 4 6 8

Operational EBIT per kg

i F t: a r m n g s e g m e n	୧୭୬ ୪ ୧୬ ୓୮ ୉ ୆ ୍ ୘ ୊ୟ ୟ୲ ୲ ୣ୰ ୟ ୰୫ ୥ ୱୣ ୥ ୫ ୣ୬
	୪ ୦ୟ ୢ ୪୳ ሺ ሻ ୘୭ ୲ୟ ୲ୣ ୰୴ ୣୱ ୴୭ ୫ ୣୱ ୥ ୵
V A P t: s e g m e n	୧୭୬ ୪ ୓୮ ୉ ୆ ୍ ୘ ୚ ୅ ୔ ୟ୲ ୲ ୣ୰ ୟ ୱୣ ୥ ୫ ୣ୬
	୪ ୪୳ ୢ୳ ୢ ሺ ୪ ሻ ୘୭ ୧ୟ ୲ୟ ୲ୣ ୴୭ ୫ ୣୱ ୮ ୰୭ ୡୣ ୰ୟ ୵ ୫ୟ ୰ ୥ ୵
i d F V A P: a r m n g a n	୓୮ ୧୭୬ ୪ ୧୬ ୢ ୅ ୉ ୆ ୍ ୘ ୊ୟ ୚ ୔ ୟ୲ ୲ ୣ୰ ୟ ୰୫ ୥ ୟ୬ ୱୣ ୥ ୫ ୣ୬
	୪ ୦ୟ ୢ ୪୳ ሺ ሻ ୘୭ ୲ୟ ୲ୣ ୰୴ ୣୱ ୴୭ ୫ ୣୱ ୥ ୵

EBITDA

Earnings before interest, tax, depreciations and amortizations (EBITDA) is a key financial parameter for Bakkafrost's FOF segment. EBITDA before other income and other expenses is defined as EBITDA less gains and losses on disposals of fixed assets and operations and is reconciled in the section Group overview. This measure is useful to users of Bakkafrost's financial information in evaluating operating profitability on a more variable cost basis as it excludes depreciations and amortization expenses related primarily to capital expenditures and acquisitions, which occurred in the past, nonrecurring items, as well as evaluating operating performance in relation to Bakkafrost's FOF segment's competitors. The EBITDA margin presented is defined as EBITDA before other income and other expenses divided by total revenues.

Adjusted EPS

Adjusted EPS is based on the reversal of certain fair value adjustments shown in the table below, as it is Bakkafrost's view that this figure provides a more reliable measure of the underlying performance.

	Q 2	Q 2	H1	H1
DK K 1 00 0 ,	20 20	20 19	20 20	20 19
fit for th eri od the sh ho lde of Pro to e p are rs P/ akk afr F B ost	68 47 1, 1	18 8, 60 2	32 3, 70 0	40 43 8 1,
Fai alu dju of bi stm ent r v e a om ass	-42 6, 65 0	65 53 6 ,	93 9 -15 ,	66 47 5 ,
fa ir v alu dju d o Tax stm ent on e a an ne rou s isio tra cts con pr ov ns	76 79 7 ,	79 6 -11 ,	2, 86 9	-8, 58 0
Ad jus ted ofi t fo r th eri od to pr e p sha reh old of P/ F B ak kaf t ers ros	12 1, 82 8	24 2, 34 2	31 0, 63 0	44 0, 52 3
Tim eig hte d a be f s ha e-w ve rag e n um r o res tst din thr h t he rio d ou an g ou g pe	59 11 5, 06 6 ,	48 66 9, 66 8 ,	59 11 5, 06 6 ,	48 66 9, 66 8 ,
Ad jus ted rni ha ( bef fa ir ea ngs pe r s re ore lue ad jus tm t o f b iom d va en ass an vis ion s fo tra cts ) pro r o ne rou s c on (a dju ste d E PS)	2.0 6	4.9 8	5.2 5	9.0 5

ROCE

Return on average capital employed (ROCE) is defined as the period's operational EBIT divided by the average capital employed, which is total assets adjusted for total current liabilities. The performance measure is expressed as a percentage and is useful for evaluating Bakkafrost's profitability.

	Q 2	Q 2	H1	H1
DK K 1 00 0 ,	20 20	20 19	20 20	20 19
tio l E Gro -Op BIT up era na	18 1, 89 7	33 8, 76 4	42 9, 98 0	60 6, 46 8
ita l Em loy ed Av Cap era ge p	11 43 1, 79 9 ,	5, 81 9, 46 4	11 72 7, 83 9 ,	5, 63 3, 79 1
RO CE	1.6 %	5.8 %	3.7 %	10 .8%

Contacts

P/F BAKKAFROST Bakkavegur 9 FO-625 Glyvrar Faroe Islands Telephone: +298 40 50 00 Fax: +298 40 50 09 Email: bakkafrost@bakkafrost.com Website: www.bakkafrost.com