Annual Report • Apr 30, 2015
Annual Report
Open in ViewerOpens in native device viewer
3
Passion for Salmon
8
7 Key Figures •
CEO's report •
0
• 13 800 tons 1SalMars 50% share
0
0
Troms and Finnmark
SalMar holds quarterly presentations open to the public. The presentations will take place at 08.00 CET at Hotel Continental in Stortingsgaten 24/26 in Oslo, Norway.
Please note that the dates are subject to change. Changes will be communicated.
4th Quarter 2014 results
1st Quarter 2015 results
Annual General Meeting • 02.06.2015
2nd Quarter 2015 results
3rd Quarter 2015 results
1000 tons – product weight
VALUE ADDED PRODUCTS 2014
SalMar Northern Norway
Segment Rauma
Segment Villa Organic
Scottish Sea Farms Ltd (50 % share)
1 000 tons – gutted weight
| OPERATING REVENUES AND | |||
|---|---|---|---|
| OPERATING PROFIT NOK mill . | 2014 | 2013 | 2012 |
| Operating revenues | 7 186 | 6 246 | 4 205 |
| Operational EBIT | 1 879 | 1 259 | 341 |
| Operating margin | 26 % | 20 % | 8 % |
| Operating profit | 1 647 | 1 949 | 639 |
| Profit before tax | 1 629 | 2 322 | 609 |
| Profit margin | 23 % | 37 % | 14 % |
| Profit for the year | 1 215 | 1 903 | 481 |
| KEY FIGURES 2014 |
||||
|---|---|---|---|---|
| OPERATING REVENUES AND | ||||
| OPERATING PROFIT NOK mill . | 2014 | 2013 | 2012 | |
| Operating revenues | 7 186 | 6 246 | 4 205 | |
| Operational EBIT | 1 879 | 1 259 | 341 | |
| Operating margin | 26 % | 20 % | 8 % | |
| Operating profit | 1 647 | 1 949 | 639 | |
| Profit before tax | 1 629 | 2 322 | 609 | |
| Profit margin Profit for the year |
23 % 1 215 |
37 % 1 903 |
14 % 481 |
|
| Earnings per share after fair value adjustment of biomass | 10,5 | 15,8 | 4,2 | |
| Pa | ||||
| ssi on |
||||
| fo r S |
||||
| alm | ||||
| BALANCE SHEET NOK mill . | 2014 | 2013 | 2012 | on |
| Non-current assets | 5 455 | 4 732 | 4 375 | |
| Current assets | 4 669 | 5 199 | 3 252 | |
| Total assets | 10 124 | 9 932 | 7 627 | |
| Equity | 5 137 | 5 061 | 2 968 | |
| Debt Total Equity and debt |
4 987 10 124 |
4 871 9 932 |
4 659 7 627 |
|
| Net interest bearing debt | 2 301,3 | 1 772,4 | 2 764,4 | |
| Equity share | 51 % | 51 % | 39 % | |
2014 was another record year for SalMar. Indeed, using the phrase "another record year" is becoming something of a habit when describing SalMar's per formance. Once again it was a combination of a higher harvested volume and higher salmon prices that helped boost the Group's consolidated gross revenues to NOK 7.19 billion, and its operating profit to NOK 1.88 billion.
-
16, which is intended to pave the way for the further predictable growth in the industry. Unfortunately, it could easily have the opposite effect if it is adopted in its present form. A united aqua culture industry is critical of several of the changes proposed by the government. SalMar sent its own response to the report when it was circulated for consultation, in which we expressed our criti cism of and disagreement with parts of the proposal. However, it is my impression that the government has taken little account of the industry's feedback.
-
-
SalMar is positive to the government's wish to stimulate environ mentally sustainable growth in the aquaculture industry. High costs and tariff barriers make secondary processing in Norway a challenge. SalMar has nevertheless chosen to "swim against the tide" and has invested heavily in secondary processing, even though, seen in isolation, the export of unprocessed raw materials is more immediately profitable. In the Report to the Storting, the government sows doubt about one important framework condi tion for secondary processing in Norway – the co-called "inter-re gional biomass ceiling", which the ministry now wishes to evaluate. This is an arrangement which enables fish farmers to exploit the maximum allowable biomass (MAB) between production areas and regions in a flexible manner.
-
-
-
-
If the inter-regional biomass ceiling is revoked, it will have ex tremely negative consequences for SalMar and others engaged in secondary processing in Norway. This is the only initiative of any significance that the Norwegian authorities have introduced to stimulate the secondary processing of salmon in Norway. Process ing has a far greater impact on employment and value creation in the country as a whole and in coastal districts than raw materials export. Furthermore, it results in a far better environmental bal ance sheet, since it allows much more effective exploitation of the basic raw materials and reduced road transport. Those who
-
Through a series of meetings, SalMar has urged the country's political leaders to issue clear guidelines to the effect that the processing regulations in the Nor wegian aquaculture industry must remain as they are, and to make it plain that the Norwegian authorities still think it is important to engage in secondary processing in Norway. The existing entitlement to flexible exploita tion of the biomass should be an important premise and precondition, regardless of the future regulatory regime.
In its recent Report to the Storting the government expressed a restrictive view on aquaculture growth, in light of the environmental challenges facing the indus try. Nevertheless, it should, at the very least, be possible to grant new production licences to companies that are developing methods and equipment that can handle the environmental challenges far better than today. SalMar has developed a pioneering new ocean-going sea cage that does just that. It is the result of a collaboration between experts from Norway's aquaculture and off shore oil and gas industries, and has been successfully tested at MARINTEK's marine laboratory. We hope the government will, as soon as possible, permit the grant ing of licences for R&D purposes, as it undertook to do in the Report to the Storting.
At SalMar we want growth – but growth that comes first and foremost in ways that promote the best interests of the salmon in our care. Today, it is easy to believe that technology and science can solve almost any problem, but in the end we are still the deciding factor. Our six cul tural tenets remain valid. They describe the SalMar cul ture – what guides our day-to-day decisions and actions.
We will continue to do things better today than we did yesterday. We will continue to do our utmost to satisfy every link in the supply chain up to and including the end-user. Success here is possible only if every part of the organisation works together as a team. And we will continue to care and to contribute to the sustainability of the aquaculture industry.
We can neither buy nor artificially construct a sustain able aquaculture industry. Sustainability is about atti tudes, and attitudes must come from within. That is the driving force we call "passion".
SalMar is the world's fourth largest aquaculture com pany, and last year we harvested 141,000 tonnes gutted weight of salmon from our own fish farms. That is around 13 per cent of all the salmon farmed in Norway, and corresponds to more than 40 per cent of the Norwegian agricultural sector's total meat produc tion. After such a success it might be tempting to 'chill out' and take it easy for a while, but there are too many challenges and too many opportunities to be had in the Norwegian aquaculture industry for that.
Nevertheless, it remains the case that our produc tion costs are rising – largely as a result of higher feed prices and greater biological challenges, particularly with regard to keeping salmon lice levels down. The conse quences of higher costs pursue us along the entire value chain.
Intense efforts are underway to keep salmon lice num bers under control. This applies to both medicinal and non-medicinal methods. Various research environments, equipment, feed and vaccine suppliers and the industry itself are all working extremely hard to find a solution. Progress is being made, and I am optimistic that the problem of salmon lice will be resolved in the not too distant future.
In 2014 we have done a lot to define in more detail what we mean by a "Passion for Salmon", the watchword we have chosen to encapsulate our vision. The strategy surrounding our "Passion for Salmon" is wide-ranging, and we obviously cannot prioritise everything equally strongly all the time. Since I want SalMar's primary focus to be operational, we have decided to give initial priority to the following eight strategic areas:
8
SalMar was founded in February 1991 following the acquisi tion of a licence for the production of farmed salmon and a white fish harvesting/processing plant from a company that had gone into liquidation. These events took place during one of the most turbulent periods in the history of the Norwegian aquaculture industry, which subsequently also led to the collapse of the fish farmers' own sales organisation (Fiske opp-dretternes Salgslag AL) in November that same year. It was precisely this company's failure, and the so-called salmon mountain, that helped lay the foundations for the secondary processing operations which are a cornerstone of the SalMar story. Up until then the vast majority of Norwegian salmon had been exported as fresh or frozen round gutted fish. This was the start of a major restructuring of the Norwegian aquacul ture sector, which gradually led to a substantial increase in its level of industrialisation.
Since its inception in 1991 SalMar has developed into a vertically integrated aquaculture enterprise, whose produc tion stretches from roe/broodfish to the sale of finished products. SalMar has gone from a single company with one licence for the production of farmed salmon in Norway, to an international concern with 100 fish farming licences in Norway and considerable shareholdings in the UK
SALMAR Passion for Salmon ANNUAL REPORT
Total volume harvested: 65,000 tonnes gutted weight. Acquisition of one licence in Central Norway (Møre & Romsdal) and one in Northern Norway (Troms). Senja Sjøfarm AS is renamed SalMar Nord AS. The Company now includes all SalMar's operations in Troms. Acquisition of 34% of the shares in Volstad Seafood AS.
Total volume harvested: 77,000 tonnes gutted weight. Acquisition of the remaining 66% of the shares in Volstad Seafood AS, making SalMar sole owner of the company.
Total volume harvested: 79,000 tonnes gutted weight. Acquisition of 75.54% of Rauma Gruppen AS. Broodfish, two hatcheries and eight fish farming licenses in Central Norway (Møre & Romsdal). Acquisition of 23.29% of the shares in the listed Faeroe Islands company Bakkafrost P/f. Acquisition of Stettefisk AS.
Total volume harvested: 104,000 tonnes gutted weight. Completion of the world's most innovative and efficientsalmon harvesting and processing plant – InnovaMar. Acquisition of Bringsvor Laks AS with two licences in Central Norway (Møre & Romsdal). Acquisition of Krifo Havbruk AS with one licence in Central Norway (Trøndelag). Leif Inge Nordhammer steps Down as CEO and is replaced by Yngve Myhre on 6 June. Acquisition of Villa Miljølaks AS with four licenses in Central Norway (Møre og Romsdal). Acquisition of a further 1.5% of the shares in P/F Bakkafrost, bringing SalMar's total shareholding to 24.8%.
Total volume harvested: 116,100 tonnes gutted weight. Acquisition of 10 licenses in Northern Norway (Finnmark) from Villa Artic AS. Acquisition of additional shares in P/F Bakkafrost, bringing SalMar's total shareholding to 25.21%.
weight. Acquisition of minority shares in SalMar Rauma AS. Acquisition of 50.4% of the shares in Villa
Organic AS. Divestment in P/F Bakkakfrost. New share holding approximately 14.9%. Divestment of remaining 14.9% of shares in P/F Bakkafrost. Following the transaction SalMar has no shares in P/F Bakkafrost.
Yngve Myhre steps down as CEO and is replaced by Leif Inge Nordhammer on 20 January. Nordhammer previously served as SalMar's CEO for a period of 15 years until he stepped down in 2011.
Acquisition of 8 green licenses.
*Total harvest volume SalMar group, incl. 50 % of SSF harvest volumes.
SalMar is founded in Frøya in Sør-Trøndelag following the acquisition of one licence for the production of farmed salmon and a harvesting/processing plant from a company that had gone into liquidation. The company's primary business was the processing of frozen salmon. This was the start of a major restructuring of the Norwegian aquaculture sector, which gradually led to a substantial increase in its level of industrialisation.
Acquisition of two licences for the production of farmed salmon in Central Norway.
Acquisition of Follasmolt AS in Verran, Nord-Trøndelag. Start of smolt production. Lease of Kjørsvik Settefisk's hatchery in Aure, Møre & romsdal.
Extension of the plant at Nordskaget in Frøya to increase processing capacity. Kverva Holding AS becomes sole owner of SalMar.
Total volume harvested: 11,000 tonnes gutted weight. Establishment of operations outside of Central Norway through the acquisition of 49% of the shares in Senja Sjøfarm AS in Troms. At that time Senja Sjøfarm had nine production licences and its own hatchery.
Total volume harvested: 15,000 tonnes gutted weight. Establishment of operations outside Norway through Norskott Havbruk AS, a 50/50 joint venture with Lerøy Seafood Group. Norskott Havbruk AS is sole owner of Scottish Sea Farms Ltd, the UK's second largest salmon producer.
weight. Divestment of operations SalMar does not consider to be core businesses, including the production of herring, herring oil and fish meal. Greater focus on core business activities, farming, harvesting and processing of salmon.
weight. Kverva Holding AS sells 42.5% of the company's shares to a limited number of Norwegian and international investors. Acquisition of three new licenses in Nordmøre. Acquisition of the remaining 51% of the shares in Senja Sjøfarm AS, making SalMar sole owner of the company.
Total volume harvested: 64,000 tonnes gutted weight. SalMar shares floated on the Oslo Stock Exchange on 8 May 2007. Acquisition of Halsa Fiskeoppdrett AS (two licences) and Henden Fiskeoppdrett AS (two licences) in Møre & Romsdal. Acquisition of Arctic Salmon AS (four licences) in Nordreisa, Troms.
Ocean Farming has received funding from Innovation Norway during the project analysis phase.
The technical solution is based on the best that the Norwegian aquaculture and offshore oil industries have to offer – a loosely anchored submersible facility, with a rigid structure capable of maintaining flotational stability in areas close to the open ocean at sea depths of 100-300 metres, where biological conditions are perfect for "fish-friendly" farming. The project is built up around tried and tested technologies, which are combined for optimal fish production.
All fish handling can be carried out on site, without the need for external boats or equipment. In other words, from the moment the smolt is transferred to the sea until it is ready for harvesting, the fish will remain at the farm. In addition, the facility is equipped with one sliding bulkhead and two fixed bulkheads, which allow it to be divided into three separate zones in which different fish-related operations can be carried out. Nozzles will also be installed on the sliding bulkhead, which will make it possible to clean the netting daily if desired. The facility is automated, thus avoiding many heavy, manual operations. On a day-to-day basis the facility will have an on-site crew of 2-4 people for operational monitoring/control. However, remote operation of the farm will also be possible. Analysis reinforces the view that the facility will be highly escape proof.
Development work began as far back as 2012, and in the spring of 2013 Ocean Farming presented a technical concept design for a fish farm that was robust enough to be installed and operated close to the open ocean, and that – through industrialised construction and streamlined/automated operation – would help to keep production costs competitive. Through 2014 the company started detailed specification work, and invited bids for the construction (EPC contract) of the first pilot facility. 1 4 1 5
Global Maritime AS has carried out the facility's technical design/project specification (FEED). A model test performed by MARINTEK confirms its favourable behaviour under various challenging weather conditions. In addition, the design will be verified and quality assured by means of independent third-party audits, in accordance with standard oil industry practice.
This pilot facility will also be equipped specifically to carry out various R&D activities, relating to biological conditions and fish welfare. This will help to advance the development of the aquaculture industry as a whole, as well as provide opportunities for applied research and development in this field.
Realisation of the project depends on satisfactory construction costs and regulatory conditions. Clarification with respect to the award of licences by the authorities has yet to be received. Realisation of the offshore fish farm will be costly, and is contingent on the authorities granting a licence for adequate production volumes at competitive terms.
Ocean Farming AS is part of the SalMar Group. It was established to develop offshore fish farming operations.
A robust design that enables installation and operation of fish farming in ocean-exposed (offshore) areas with excellent aqua biological conditions.
The broodstock are the parent fish which provide the eggs and sperm (milt) required to produce new generations. The ferti lised eggs take 60 days to hatch when placed in an incubator kept at eight degrees Celsius.
After 25-30 days in the incubator the eggs have developed to the stage where the eyes of the salmon are clearly visible as two black dots inside the egg.
The egg hatches when the eggshell cracks open, liberating the baby fish (fry) inside. When it hatches the fry is attached to a yolk sac, which provides it with the sustenance it needs during its first few weeks of life. From now on the fish's growth and development will all depend on temperature.
When most of the yolk sac has been absorbed, the fry can be moved from the incubator into a fish tank. They are now ready for initial feeding. The water temperature is kept at 10-14 degrees Celsius, and the fry are exposed to dim lighting 24 hours a day. The initial feeding period lasts for six weeks. As they grow the fry are sorted and moved to larger tanks. Well ahead of their "smoltification" all the fish are vaccinated before being shipped by wellboat to the fish farm's marine net-pense.
The process whereby the juvenile fish transition from a life in freshwater to a sea-going existence is called smoltifi cation. During this process the fish develop a silver sheen to their bellies, while their backs turn a blue-green colour. Their gills also change when the juvenile fish turns into a smolt.
The farming of fish for human consumption takes place in netpens, large enclosed nets suspended in the sea by flotation devices. In addition to a solid anchorage, net-pens require reg ular cleaning and adequate measures to prevent the farmed fish from escaping. Growth in the net-pens is affected by feed ing, light and water quality. Here too the fish are sorted as they develop and grow.
A year after transfer to the marine net-pens, the first fish are ready for harvesting. The fish are transported live by wellboat to the processing plant. There the fish are kept in holding pens, before being carefully transferred to the plant itself. The fish are killed and bled out using high tech equipment, and always in accordance with applicable public regulations. After harvesting the salmon is subject to various degrees of processing.
The fish is sold either as whole gutted salmon (fresh or frozen), fillets, in individual portions or a wide range of other products, which are distributed to markets around the world.
T R AC E A B LE S U P P LY C H A I N
Output:
28 million smolt, 25 million roe. Plans for production of 1.4 million lumpfish in 2015.
The facilities are distributed from Senja in the north to Sunnmøre in the west. Two of the facilities in Romsdal and Sunnmøre produce organic smolt, while the other facilities produce conventional smolt. Smolt vary in weight from 60-250 g.
The segment employs 75 people, many of whom are extremely experienced. A large proportion of the workforce are collegeeducated or have certificates of completed apprenticeship. The segment's staff are highly competent with regard to both day-today operations and development work/projects. The production of smolt is currently switching to the use of recirculated water. SalMar currently has this in place at its Follfoss and Moldtustranda facilities. The segment has also commenced work on a facility in Senja, which will produce 15 million smolt using only recirculated water. Construction started in the spring of 2015, with the first smolt due for delivery in the autumn of 2017. This facility will plan an extremely important role in SalMar's plans to achieve selfsufficiency in smolt production in Troms and Finnmark.
The success of SalMar's efforts to enhance the quality of the smolt it delivers is reflected in the steadily rising survival rate for smolt transferred to the sea.
SalMar's lumpfish production unit is located in Langstein. The first, lice-eating lumpfish were delivered to the Group's marine-phase fish farms during the fourth quarter 2014.
licences in the Green B round of licence awards in 2014. These went into operation in July of that year. The bulk of SalMar's marine-phase fish farming operations are organised in SalMar Farming AS, and are located in central Norway, stretching from Nordmøre to the Namdal coast. Fish Farming Central Norway is divided into three regions, south (Nordmøre), central (Frøya – Hitra) and north (Fosen – Nord-Trøndelag). At the close of 2014 the segment employed some 250 people. The environmental conditions for salmon farming in this region are extremely good, with favourable sea temperatures all year round thanks to the Gulf Stream, a high water replacement rate and plenty of suitable locations. SalMar Northern Norway currently holds 32 licences for the production of farmed salmon, and is the largest aquaculture enterprise in Troms and Finnmark. SalMar's Fish Farming Northern Norway segment has operations in eight districts, stretching from Harstad in southern Troms to Lebesby in Finnmark. Although the bulk of the fish farms are located around Senja, Finnmark accounts for part of the increase through our sites in Laksefjord. In northern Norway, SalMar harvests most of its output locally, and purchases harvesting services for a substantial portion of its volume in Skjervøy, Troms.
Located at Vågstranda in Romsdal, SalMar's onshore salmon roe production facility has the capacity to produce 60 million roe each year. However, current output stands at around 25 million roe. At this facility broodfish are brought ashore for breeding purposes. SalMar has its own breeding material: the Rauma stock.
R&D licences, three of which in association with the research firm ACE (Sintef). The purpose of these licences is to develop more sustainable technologies. The segment also cooperates with VESO on the operation of two licences associated with improved fish health. The collaboration it used to have with Frøya Upper Secondary School came to an end in July. SalMar Farming acquired seven (Troms and Finnmark) No. of licences: 32 Harvested volume in 2014: 1 8 1 9
(Trøndelag and Nordmøre) No. of licences: 52 Harvested volume in 2014: 75,200 tonnes gutted weight
SalMar's fish farms focus on cost-effective operation and maintain a high ethical standard with respect to animal husbandry. In order to contribute to SalMar reaching its goal of being the most costeffective producer of farmed salmon, there is a continuous focus on sub-goals, such as achieving the fastest possible growth, with the lowest feed factor. The company was quick to introduce its own standards and 'best practices' in order to secure increased efficiency. This involves, among other things, concentrating marine-phase production at large, sustainable facilities with the correct capacity. The segment currently has around 115 permanent employees, and plans to further expand its workforce in 2015 due to increased activity and output in the region. Fish Farming Northern Norway has many college-educated employees, who have built up a great deal of experience over the years. Moving forward, the segment will focus more on R&D through the newly acquired jointly operated licence with the research facility Havbruksstasjonen i Troms.
Central Norway is the region in which the SalMar Group first established its business. Initially this was based on assets acquired from a company that had gone into liquidation, and which had one licence for the production of farmed salmon and a harvesting and processing plant in Frøya that was designed to handle white fish. Since then both the Group as a whole and the segment have gone from strength to strength. Today SalMar's Fish Farming Central Norway segment controls 52 production licences: 34 in Trøndelag and 18 in Nordmøre. In addition, the segment operates several
SEGMENT FISH FARMING CENTRAL NORWAY (Trøndelag and Nordmøre) No. of licences: 52 Harvested volume in 2014: 75,200 tonnes gutted weight
SEGMENT FISH FARMING – ROE/SMOLT PRO-DUCTION Output: 28 million smolt, 25 million roe. Plans for production of 1.4 million lumpfish in 2015.
SEGMENT FISH FARMING NORTHERN NORWAY (Troms and Finnmark) No. of licences: 32 Harvested volume in 2014: 37,500 tonnes gutted weight
Passion for Salmon
SALMAR
ANNUAL REPORT
(product weight): approx. 29,000 tonnes
In northern Norway, SalMar has established a 'feed centre' at Lysnes in Lenvik. This provides joint surveillance and control of all the segment's sites. The largest facility of its kind in Norway, Sal-Mar's 'feed centre' can monitor 16 sites and 140 separate units. In conjunction with the centre, there are plans for a demonstration aquaculture facility, and Fish Farming Northern Norway has applied for a demonstration licence for this purpose. Fish Farming Northern Norway is headquartered in Finnsnes.
We know that it is possible to produce more salmon in Norway, and Northern Norway has a strong potential for further growth. This region poses fewer challenges with respect to disease and salmon lice, has excellent environmental conditions for sustainable production, and plenty of good sites with the potential to increase the maximum allowable biomass (MAB). The planned expansion of smolt production is an important element in the segment's future growth.
University College and the Institute of Marine Research. The objective is to improve the welfare of the cleaner fish used to rid salmon of lice. The segment is also working closely with Ålesund University College to resolve challenges associated with organic fish farming, and the college's R&D licence is operated alongside the segment's own licences. Including the R&D licences, Fish Farming Rauma operates a total of 19 licences.
Romsdal and Sunnmøre have excellent environmental conditions for sustainable and profitable fish farming, and SalMar has many sites with the potential for expansion and further growth.
The Sales and Processing segment administers the Group's sales activities and onshore processing facilities. The Sales department handles the sale of approx. 150,000 tonnes of salmon and other fish-based products. Sales are focused in the markets of Europe, Asia and the USA. The segment distributes salmon to more than 40 different countries.
Smolt are also produced in Senja. The company's hatchery is located in Gjørvika, on the Sør-Senja peninsula. Its staff of four permanent employees oversees an annual output in excess of 1.7 million smolt. Substantial groundwork was carried out at the site in 2014 in preparation for construction of a new building with the aim of increasing annual output to 15 million smolt. Construction is due to get underway in the spring of 2015. The extension will add a further 12,000 m2 to the facility, bringing its total area to 14,500 m2. Smolt production will be halted during the construction period, and will be resumed when a new hatchery with fresh water recirculation goes into operation in 2016. 2 0 2 1
The segment also administers the Group's industrial production capacity. InnovaMar is the SalMar Group's main salmon harvesting and processing facility, and is located in Frøya. Construction of InnovaMar was completed in 2010. It is an ultra-modern building
FISH FARMING RAUMA (Møre and Romsdal) No. of licences: 16 Harvested volume in 2014: 16,500 tonnes gutted weight
The Rauma segment operates 16 marine-phase production licences. These include conventional, organic and broodfish licences. The Rauma segment has operations in eight districts. Although the bulk of its fish farms are located in the Romsdal region, it also has sites in several districts in Sunnmøre. The segment is administered from offices located in Sjøholt, and employs a total of 75 people on land and at sea.
SalMar is currently the world's largest producer of organic farmed salmon. Organic farmed salmon used to be produced in both Trøndelag and Romsdal, but with effect from 2013 all production activities were brought together in Fish Farming Rauma. In 2014 the segment harvested 16,500 tonnes (gutted weight) of salmon at Vikenco AS in Aukra. Organic salmon accounted for almost 45 per cent of the segment's total salmon output in 2014. The proportion of organic salmon is expected to rise in the time ahead.
Fish Farming Rauma operates three R&D licences. One of the projects is being undertaken in close cooperation with the research institution Møreforskning, Ålesund covering some 17,500 m2, with an advanced equipment park for harvesting and filleting. InnovaMar has the capacity to harvest 70,000 tonnes of salmon a year in one shift, of which a significant portion goes on to further processing before being shipped to customers and consumers worldwide. Through innovative use of production technology, the quality of the final product is enhanced, costs are reduced and the working environment for staff is improved. A total of 127,900 tonnes of salmon was harvested at InnovaMar in 2014, up from 117,800 tonnes in 2013. Through our part-ownership of Vikenco AS, we facilitate the harvesting of fish from the southern part of central Norway. In 2014 Vikenco and InnovaMar together produced over 29,000 tonnes of processed products, measured by product weight. Fish produced by SalMar's Fish Farming Northern Norway segment is harvested largely by Lerøy Aurora AS under an industrial cooperation agreement.
SEGMENT FISH FARMING RAUMA (Møre and Romsdal) No. of licences: 16 Harvested volume in 2014: 16,500 tonnes gutted weight
Passion for Salmon
SalMars cultural tenets Today, SalMar is one of the world's foremost producers of farmed salmon. Throughout its history company growth has gone hand in hand with outstanding financial performance. The aquaculture industry is developing rapidly, and the potential for further growth is enormous. However, at SalMar we are in no doubt that any growth must be sustainable: environmentally, socially and financially.
In 2014, to reinforce our focus on the elements that have made SalMar the company it is today, we adopted a new vision that will henceforth guide our steps; «Passion for Salmon»
Although SalMar continues to pursue its stated aim of cost leadership, it is moving from a focus on outcomes to a focus on performance. We aim for excellence at all levels and in all aspects of our operation.
The new vision will underpin all activities and all actions within SalMar. All decisions relating to production will be made on the basis of our passion for salmon. The fish will be farmed in conditions most conducive to their wellbeing. We believe that the best biological results will pave the way for the best financial results, and thus safeguard our position as the most cost-effective producer of farmed salmon in the world.
This new vision and ambition depend on the existence of a winning culture throughout the organisation. The source of SalMar's corporate culture and the company's cultural tenets is our shared passion for salmon. These tenets underpin our vision and describe the attitudes and conduct expected of all employees.
To be the most cost-effective salmon producer demands continuous improvement at all stages of the production process. This tenet is about daring to step into the unknown and develop a culture of winning, where performance is both measured and celebrated.
This means that we will meet the expectations of others and demand high standards of each other, in accordance with our own SalMar standards. There are many 'suppliers' and 'customers' in the production chain, and it is only by treating each other with mutual respect that we will succeed.
Everyone who works for SalMar, regardless of position or place, has a duty to help come up with solutions and contribute to improvement processes. We will challenge existing practices and systems, we will jointly implement solutions, and we will talk to, not about, each other.
To succeed as a team we must also develop the right attitudes towards, as well as respect and care for salmon, co-workers, customers, business associates and the environment. We must think for ourselves but act with loyalty, and always bear in mind that what we are engaged in is food production.
Although SalMar as a whole numbers more than 800 people, it is vital to develop personal attitudes and an understanding that what happens is up to me and my function. It is therefore vital that everyone is familiar with our vision, objectives and values, and that we support each other on our way to being at all times the lowest-cost supplier of farmed salmon. 2014 Passion for Salmon
High ethical and moral standards form the basis for developing an even stronger focus on safeguarding the environment that we work in day to day, and that we are the temporary custodians of. We shall not deplete the environment, but ensure that we pass it on unimpaired to the next generation. This is our shared social responsibility, and everything we do must stand up to public scrutiny both today and in the future.
SalMar's corporate culture is constantly evolving, and builds on the success factors that have been cultivated within the company since its inception in 1991. Although the company's culture is affected by both external and internal framework conditions, it remains firmly anchored in a few overarching principles, in particular a strong focus on good husbandry, operational efficiency and safe food production.
SalMar intends to secure long-term profitability and growth by operating all aspects of its fish farming and processing activities in a sustainable manner, and by acting as a responsible corporate citizen. For SalMar, sustainability means maintaining high ethical standards and helping to further raise awareness of the environment in which we work every day. We shall protect the environment and ensure it is managed in a way that will benefit future generations.
After 25-30 days in the incubator the eggs have developed to the stage where the eyes of the salmon are clearly visible as two black dots inside the egg.
2 4 2 5
SalMar has a presence in many local communities. The Group is therefore extremely aware of the diverse nature of its social responsibilities: as an employer, an industrial processor, a producer of healthy food, a user of the natural environment, and as a custodian of financial and intellectual capital. We strive to fulfil our corporate social responsibilities, ensure that everything we do bears public scrutiny, and minimise the impact of our operations on the environment.
SalMar's code of conduct and social responsibility has been made known to all employees. The code of conduct, which covers, among other things, SalMar's policies on business ethics and corruption, the working environment and community relations, is intended to contribute towards the development of a healthy corporate culture and uphold the company's integrity. Internal training programmes also highlight how employees can report wrongdoing or other causes for concern. A high ethical standard in all aspects of our business is an absolute requirement, and constitutes the very foundation of SalMar's HSE strategy.
A set of corporate tenets has been drawn up. These tenets describe desired behaviours and provide a shared platform for the actions of all employees. It is the workforce that embodies and develops SalMar's corporate culture. The employees' commitment and positive attitudes have always played a key role in SalMar's success. These issues are discussed at the SalMar School's annual seminars. For further details, please see page 5 of SalMar's sustainability report for 2014.
The code of conduct and corporate tenets may be obtained from SalMar's website www.salmar.no.
In addition to being measured and audited in accordance with statutory regulations and the sustainability requirements of third parties and customers, SalMar has developed its own 'SalMar Standard' performance criteria for the various parts of its operation. The 'SalMar Standard' designation is awarded to those departments
In 2014 a corporate governance platform, including systems for risk assessment, non-conformance handling, document handling and a competence module, was implemented in all operational parts of the business. At the same time the tool will be further developed to include additional opportunities for performance management and learning across the different units. For further details, please see page 21 of SalMar's sustainability report for 2014.
SalMar uses the competence enhancement programme Ledelse på norsk as a tool for employee and organisational development at various levels within the company. Key elements include management development, the training of internal consultants and use of overarching analytical tools. The programme takes a holistic ap-
In 2014 SalMar started publishing separate sustainability reports in compliance with the principles of the Global Reporting Initiative. For a more complete account of HSE, sustainability and social responsibility at SalMar, please see this report. The following text must therefore be seen as an overarching summary of selected issues discussed in that report, which is available in its entirety from SalMar's website www.salmar.no. 2 6 2 7
The sickness absence rate in 2014 came to 5.79 per cent, compared with 5.00 per cent in 2013 and 4.74 per cent in 2012. The
In addition to risk assessments, evaluations and the thorough analysis of incidents and non-conformances, employee training, internal auditors, safety inspections and seminars for safety representatives are important measures to increase safety in the workplace. Internal consultants are used actively to further raise the quality of the company's improvement efforts. All new employees receive HSE training through induction courses, operational seminars and the SalMar School. processing sector drives up the average, but here too the sickness absence rate is relatively low compared with the industry average. Short-term sickness absence in 2014 totalled 2.19 per cent, compared with 2.12 per cent in 2013, while long-term sickness absence totalled 3.60 per cent, compared with 2.88 per cent in 2013.
which score highly in internal audits. For further details, please see page 19 of SalMar's sustainability report for 2014.
SalMar supports and respects internationally recognised human rights by acting responsibly in all areas of its business. This means that the company respects labour rights, opposes any form of child labour, forced labour or discrimination, avoids corruption and is considerate of the environment.
SalMar's HSE activities are based on our values and strategic priorities. SalMar has drawn up a set of overarching objectives, with associated activities and action plans. On the basis of these overarching objectives, each individual division and department has drawn up its own local sub-goals. Management is committed to realising the goals that have been set.
In 2014 work on the development of an overarching management structure and tools which can be used to follow up staff was further intensified. This effort will continue in 2015. Emphasis will be placed on competence enhancement, surveillance and control of key figures and the evaluation of non-conformances.
proach, involving the analysis of personal and professional factors, as well as work processes. The quality of SalMar's in-house evaluation competence is assured partly through collaboration with this external expertise. For SalMar, Ledelse på norsk is an important step towards greater security for people, fish and the surrounding environment. The SalMar School comprises a series of workshops for all employees, which focus on relevant work-related topics as well as business ethics and attitudes. For further details, please see page 21 of SalMar's sustainability report for 2014. SalMar accepts no forms of corruption. No SalMar employee shall, directly or indirectly, offer, promise, give or receive any bribe, unlawful or inappropriate benefit or remuneration in order to achieve advantage for themselves or the company. As part of its anti-corruption measures, SalMar has adopted guidelines with respect to gifts. To date, SalMar has not been accused of or involved in any cases relating to any form of corruption or bribery. The board and management are not aware of any violations of the company's code of conduct in this respect.
Risk assessments are carried out in accordance with the Norwegian standard NS 5814, and result in the drawing up of contingency and action plans that are regularly reviewed. Senior personnel have environmental responsibility as part of their job descriptions, and HSE rules and regulations have been drawn up for all employees. All non-conformances are reported, dealt with and evaluated on an ongoing basis. Activities relating to the environment are followed up through systematic monthly reviews by SalMar's management teams. The issue of sustainability, with particular emphasis on the working environment and human safety, is tabled for discussion annually by SalMar ASA's board of directors.
SalMar intends to be a safe place to work. The company works systematically with risk assessment and training to safeguard its employees. For further details, please see page 21 of SalMar's sustainability report for 2014. Sickness absence Sickness absence has remained relatively stable in recent years. SalMar works systematically to avoid having an undesirable impact on its surroundings. This includes the day-to-day actions of its employees, involvement in research and development, as well as collaboration with government and regulatory authorities, interest groups, other aquaculture companies and suppliers of goods and services. For further details, please see pages 18-27 in SalMar's sustainability report for 2014.
Systematic efforts are being made to implement preventive measures and, where necessary, adapt workplaces and workloads to the needs of individual employees.
The Group has published clear policies with respect to diversity and equality in its code of conduct. SalMar accepts no discrimination of employees, shareholders, board members, customers or suppliers on the grounds of ethnicity, nationality, age, gender or religion. Respect for the individual is the cornerstone of the company's policies. For further details, please see page 20 of SalMar's sustainability report for 2014.
SalMar ASA aims to maintain a high standard of corporate governance. Good corporate governance strengthens public confidence in the company and contributes to long-term value creation by regulating the reciprocal roles and responsibilities of shareholders, the board of directors and the company's manage ment, over and above that which is stipulated in legislation and other statutory instruments.
Corporate governance at SalMar shall be based on the following main principles:
The process whereby the juvenile fish transition from a life in freshwater to a seagoing existence is called smoltification. During this process the fish develop a silver sheen to their bellies, while their backs turn a blue-green colour. Their gills also change when the juvenile fish turns into a smolt.
SalMar's board of directors has overall responsibility for ensuring that the company has adequate corporate governance. The com pany's board and management perform a thorough annual assess ment of its principles for corporate governance.
SalMar is a Norwegian public limited company listed on the Oslo Stock Exchange. The company is subject to Section 3-3b of the Norwegian Accounting Act as well as the Oslo Stock Exchange's requirements for an annual statement of its principles and prac tices with respect to corporate governance. The Norwegian Corpo rate Governance Board (NUES) has drawn up a Norwegian Code of Practice for Corporate Governance (the "code of practice"). SalMar complies with the current code of practice, published 30 October 2014. The code of practice may be found at www.nues.no.
Application of the code of practice is based on the 'comply or ex plain' principle. In other words, companies must comply with the individual provisions of the code or explain why they have not done so.
The company issues a comprehensive annual statement of its principles for corporate governance in its annual report, and this information is available from www.salmar.no. The statement de scribes how SalMar has conducted itself with respect to the code of practice in 2014.
SalMar deviated from the code of practice with respect to one chapter in 2014:
• Senior executives on the board (Chapter 8).
SalMar's core values are based on such principles as equality, quality, care for the environment, focus on work tasks and con tinuous improvement. The core values are well embedded in the day-to-day operation of the business. Through the SalMar School and day-to-day exposure to SalMar's corporate and performance culture, all employees are given encouragement and opportunities for development. The SalMar School was set up in 2002 and has been further developed each year since then. The SalMar School has been important for the Group's strong corporate culture. For more information on the SalMar culture, please see the annual re port and the company's website www.salmar.no.
SalMar has drawn up a code of conduct and social responsibility, whose purpose is to safeguard and develop the company's values, create a healthy corporate culture and uphold the company's integ rity. The code of conduct is also meant to be a tool for self-assess ment and for the further development of the company's identity. All employees of the company are bound to comply with the ethi cal guidelines laid down in the code of conduct. The reporting of any wrongdoing or other causes for concern is covered by specific procedures, which also allow employees to report anonymously through an external channel. The code of conduct is available from the company's website www.salmar.no.
SalMar has a presence in many local communities. The Group is therefore extremely aware of the diverse nature of its social re sponsibilities: as an employer, an industrial processor, a producer of healthy food, as a custodian of financial and intellectual capital,
Authorisations granted to the board are normally time limited, and are valid only up until the next AGM.
-
The first authorisation allowed the board to increase the compa ny's share capital by up to NOK 2,829,667.5 million, through the issue of up to 11,318,670 shares to finance investments and the acquisition of businesses through cash issues and contributions in kind.
may need to waive existing shareholders' preference rights, which is permitted under the terms of the authorisations concerned.
Both board authorisations are valid up until the next AGM, which will be held on 2 June 2015.
Deviations from the code of practice: None
As at 31 December 2014 SalMar ASA owned 1.3 million treasury shares, which accounts for 1.15 per cent of the company's reg
SalMar intends to provide shareholders with a competitive return on invested capital, taking into consideration the company's risk profile. Returns will be achieved through a combination of positive share price development and the payment of a dividend. The com pany plans to pay out surplus liquidity (funds not necessary for the company's day-to-day operations) in the form of a dividend or by means of a capital reduction with distribution to the shareholders. The company will at all times consider whether the available liquid ity should be used for new investments or the repayment of debt instead of being paid out as dividend. Provided the Annual General Meeting approves, the aim is to make annual payments of dividend. The company will also consider the buyback of treasury shares within the authorisation limits granted to the board by the AGM. shares are undertaken on the stock exchange or oth erwise at the listed price. In the event of material transactions with related par ties, the company shall make use of valuations provid ed by an independent third party. In the event of capital increases based on an authori sation issued by a general meeting of shareholders, where the existing shareholders' rights will be waived, the reason for this will be provided in a public an nouncement in connection with the capital increase.
-
and – not least- as a user of the natural environment. Increased biological control is one of the company's most important focus areas, and is a material prereq uisite for long-term success. The company is, among other things, working actively to safeguard fish wel fare and prevent salmon from escaping.
One of the company's most important tenets is 'We care'. This permeates the SalMar culture, and ensures a high degree of awareness among employees, both internally and externally, in the areas in which the com pany operates.
Deviations from the code of practice: None
Based on the year-end financial results for 2014, the board has proposed payment of a dividend amounting to NOK 10 per share. The company has performed very well in the past year, with high salmon prices and profit growth. The operational EBIT for the year 2014 is the highest in the company's history. SalMar's code of conduct sets out what is required of employees with respect to loyalty, conflicts of inter est, confidentiality and guidelines for trading in the company's shares. The code of conduct states that all employees must notify the board if they, directly or in directly, have a material interest in any agreement en tered into by the company. Board members also have a duty to comply with the company's code of conduct.
SalMar is one of the world's largest producers of farmed salmon, and owns 100 licences for marine pro duction of Atlantic salmon in Norway. In addition, Sal - Mar owns 50 per cent of Norskott Havbruk AS, which in turn owns 100 per cent of Scottish Sea Farms Ltd, the UK's second largest producer of salmon. The com pany has a substantial secondary processing business, which is co-located with its headquarters in Frøya.
SalMar ASA's objectives are defined in Article 2 of its articles of association:
"The objective of the company is fish farming, the processing and trading of all types of fish and shell fish, and other financial activities related thereto. The company may, in accordance with directives from the relevant authorities, undertake general investment ac tivities, including participation in other companies with similar or related objectives."
The AGM of 4 June 2014 granted the board two authorisations, one to increase the company's share capital and one to buy back its own (treasury) shares. Both authorisations were extensions of authorisations granted by the AGM in 2013, and, in line with the Norwegian code of practice, they were considered separately. The regulations governing the board's working prac tices provide guidelines for how individual directors and the CEO should conduct themselves with respect to matters in which they may have a personal interest. Among them is the stipulation that each director must make a conscious assessment of his/her own impar tiality, and inform the board of any possible conflict of interest. 3 0 3 1
The second authorisation allowed the board acquire treasury shares up to a maximum of 10 per cent of applicable share capital: in other words, up to 10,029,999 treasury shares, with a total face value of NOK 2,507,499.75. The authorisation could be used to purchase company shares in connection with the share-based in centive scheme for senior management and as a means of return ing value to existing shareholders. It follows from the purpose of both authorisations that the board 5. FREE TRANSFERABILITY The company's shares are freely transferable on the Oslo Stock Exchange, and its articles of association do not contain any restrictions on the shares' transferabil ity. Nor are there any restrictions on the buying and selling of shares by board members and members of company management, as long as the regulations gov erning insider trading are complied with.
SalMar's board of directors has drawn up clear objec tives and strategies for the Group. Each business area has developed its own goals in line with these, and strategic priorities have been defined. Within the framework of the above article, SalMar is currently engaged in broodfish and smolt production, marinephase farming, harvesting, processing and sale of farmed salmon and white fish.
The company's objectives and main strategies are fur ther discussed in the annual report and can be found on the company's website www.salmar.no.
Deviations from the code of practice: None
As at 31 December 2014, the company's equity to talled NOK 5,137 million, which corresponds to an equity ratio of 50.7 per cent. The board considers SalMar's equity to be adequate in relation to the com pany's objectives, strategy and risk profile.
istered share capital. Transactions involving treasury
Any transactions with related parties are discussed in Note 29 to the 2014 financial statements.
Deviations from the code of practice: None
Deviations from the code of practice: None
The company's highest decision-making body is the General Meeting of Shareholders.
The 2015 AGM will be held on 2 June at the company's
head office in Frøya. An invitation to attend the AGM or an EGM will be issued no later than 21 days prior to the date of the meeting.
In accordance with the company's articles of association, documents relating to matters to be addressed at a general meeting of shareholders may be made available on SalMar ASA's website. The same applies to documents which by law must be included in or attached to the invitation to attend the general meeting. If the documents are made available in this way, the statutory requirement with respect to distribution to shareholders is not applicable. A shareholder may nevertheless ask to be sent documents relating to matters to be discussed at a general meeting by post. Case documents must contain all the documentation necessary to enable shareholders to take a standpoint on all matters to be addressed.
The deadline for notification of shareholders' intention to attend a general meeting is stipulated by the board of directors in the invitation thereto, no less than five days prior to the date of the meeting. Shareholders may send notification of their attendance, using the form provided, by post or email to the company's account manager Nordea Bank Norge AS, or via the company's website www. salmar.no.
Shareholders are entitled to make proposals and cast their votes either in person or through a proxy, including a proxy appointed by the company. The proxy form also enables shareholders to grant a proxy vote for each individual agenda item.
The board of directors, Nomination Committee and the company's auditor will be represented at the AGM, which will normally be chaired by the Board Chair. In the event of any disagreement on individual agenda items where the Board Chair belongs to one of the factions, or for some other reason is not deemed to be impartial, a different person will be selected to chair the meeting in order to ensure independence with respect to the matters concerned.
The company will publish the minutes of general meetings of shareholders in accordance with stock exchange regulations.
Deviations from the code of practice: None
Article 8 of the company's articles of association stipulates that the Nomination Committee shall comprise a total of three people, who shall be shareholders or shareholders' representatives. The Nomination Committee's composition shall be such that the interests of shareholders as a community shall be upheld, and the majority of committee members shall be independent of management and the board. The members of the Nomination Committee, including its chair, are elected by the AGM for a term of two years. Members may be re-elected. To ensure continuity, members' terms of office shall not coincide. The remuneration payable to members of the Nomination Committee is determined by the AGM. A set of regulations governing the work of the Nomination Committee was adopted at the board meeting of 21 March 2007 and updated at the AGM in 2014.
As at 31 December 2014, the Nomination Committee comprises the following:
by the board itself. The company's current board is made up of seven members, including two employee representative. Three of the company's directors are women, including one female employee representative. Women therefore comprise 43 per cent of An overview of the individual directors' shareholdings in SalMar can be found in the 2014 annual report. Independence of the board SalMar's board of directors is composed such that it is able to act independently of any special interests.
The Nomination Committee shall make a recommendation to the AGM with respect to candidates for election to the board of directors and Nomination Committee, as well as propose the remuneration payable to the members of the board and the Nomination Committee. In its work, the Nomination Committee shall take into consideration relevant statutory requirements with respect to the composition of the company's governing bodies, as well as principles for corporate governance laid down in the Norwegian Code of Practice for Corporate Governance drawn up by NUES. Proposals for members of the board and Nomination Committee should safeguard the shareholder community's interests and the company's need for competence, capacity and diversity. To achieve this the Nomination Committee may contact shareholders and company directors.
the board, which is in line with the provisions of the Norwegian Accounting Act. The regulations governing the work of the Nomination Committee state that emphasis shall be placed on ensuring that members of the board have the necessary competence to carry out an independent assessment of the matters presented to it by management and of the company's business activities. Emphasis shall also be placed on ensuring that there is a reasonable gender balance and that directors are independent with respect to the company. The Nomination Committee's recommendation shall meet the requirements relating to board composition stipulated by applicable legislation and the regulations of the Oslo Stock Exchange. Board members are elected for a term of two years and may be re-elected. An overview of the individual directors' competence and background is available from the company's website www.salmar.no. Board Chair Bjørn Flatgård also chairs the board of Kverva AS, and is therefore not deemed to be independent. In 2014 Merethe Holte became an employee of Lofotprodukter AS, a subsidiary of Kverva AS, and is not deemed to be independent. The remaining directors, with the exception of Gustav Witzøe, who founded SalMar, are deemed to be independent of senior executives, material business associates and the company's largest shareholders. In matters of material importance in which the Board Chair is, or has been, actively engaged, another director is appointed to chair the board's deliberations. No such matters have been addressed during 2014.
The Nomination Committee draws up criteria for the selection of candidates for the board and Nomination Committee, in which both sexes should be represented. The Nomination Committee should, over time, balance the requirements for continuity and renewal in the individual governing body. Relevant candidates must be asked whether they are willing to undertake the office of director or deputy director.
Deviations from the code of practice: Pursuant to the Norwegian Code of Practice for Corporate Governance, senior executives should not be members of the board of directors. Board member Gustav Witzøe is the founder of SalMar and a member of group management. However, the board considers that it is in the company's interests to avail itself of Gustav Witzøe's extensive experience and considerable expertise, both as a senior executive and as a director. Deviation from the code of practice on this point has therefore been deemed acceptable. Gustav Witzøe is also the company's largest shareholder through his company Kverva AS, which owns 53.4 per cent of SalMar's shares. ing year. Proposals relating to targets, strategies and budgets are drawn up and presented by management. Strategy is normally discussed during the autumn, ahead of the Group's budget process. Within the area of strategy, the board shall play an active role in setting management's course, particularly with regard to organisational restructuring and/or operational changes. The board meets as often as necessary to perform its duties. In 2014 the board held 10 meetings, of which
The committee should base its recommendations with respect to the remuneration payable on (a) information about the size of the remuneration paid to elected officers in other comparable companies, and (b) on the scope of work and the amount of effort the elected officers are expected to devote to the task on behalf of the company.
The board has overall responsibility for the management of the Group and the supervision of its day-to-day management and business activities. The work of the board is governed by a set of regulations which describe the board's responsibilities, tasks and administrative procedures. Furthermore, the board determines the Group's overall objectives and strategy, including the overall composition of the Group's portfolio and the business strategies of the individual business unit. The board has also prepared a set of instructions for the executive management team that clarifies its duties, lines of authority and responsibilities. The board shall approve the Group's plans and budgets, and shall, no later than December, approve the Group's budget for the com- The board makes an annual assessment of its own work and competence. An evaluation of this kind was last conducted in December 2014. Audit Committee Pursuant to the Public Limited Companies Act, SalMar has a board-appointed Audit Committee. The committee's main tasks are to monitor the Group's internal control systems, ensure that the auditor is independent and that the financial statements reflect the Group's performance and position in accordance with generally accepted accounting practice. The Audit
The Nomination Committee's recommendation to the AGM must be published in good time, so that it can be communicated to the shareholders before the meeting takes place. The recommendation shall accompany the invitation to attend the AGM, no later than 21 days before the meeting takes place. The committee's recommendation shall contain information about the candidates' independence and competence, including age, education and work experience. If relevant, notice shall also be given about how long the candidate has been an elected officer of the company, any assignments for the company, as well as material assignments for other group companies that may be of significance.
Deviations from the code of practice: None
The company does not have a Corporate Assembly. Pursuant to Article 5 of SalMar's articles of association, the board of directors shall comprise five to nine members, to be elected by the AGM. The Board Chair is elected by the AGM, while the Vice-Chair is elected three were by telephone. The overall attendance rate at board meetings was 96 per cent. See also the table above for further details.
| either in person or through a proxy, including a proxy appointed by the company. The proxy form also enables shareholders to grant a |
The Nomination Committee should, over time, balance | Board members | Position Year first elected Current term ends No. of board meetings attended in 2014 | |||||
|---|---|---|---|---|---|---|---|---|
| proxy vote for each individual agenda item. | the requirements for continuity and renewal in the in dividual governing body. Relevant candidates must be |
Bjørn Flatgård | Board Chair | 2002 | 2015 | 10 of 10 | ||
| asked whether they are willing to undertake the office | Gustav Witzøe | Director | 1991 | 2015 | 8 of 10 | |||
| The board determines the agenda for its own meetings, and the | of director or deputy director. | Kjell A. Storeide | Director | 2008 | 2016 | 10 of 10 | ||
| main issues to be dealt with by the AGM are regulated by Article 9 | Tove Nedreberg | Director | 2012 | 2016 | 10 of 10 | |||
| 3 2 | of the company's articles of association. | The committee should base its recommendations with | Merethe Helene Holte Director | 2013 | 2015 | 10 of 10 | 3 3 | |
| respect to the remuneration payable on (a) information | Pål Georg Storø | Employee rep | 2013 | 2015 | 9 of 10 | |||
| The board of directors, Nomination Committee and the company's | about the size of the remuneration paid to elected of | Hanne Tobiassen Employee repr | 2013 | 2015 | 10 of 10 |
| 2015 | $10$ of $10$ |
|---|---|
| 2015 | 8 of 10 |
| 2016 | 10 of 10 |
| 2016 | $10$ of $10$ |
| 2015 | $10$ of $10$ |
| 2015 | 9 of 10 |
| 2015 | 10 of 10 |
Committee held four meetings in 2014, with an overall attendance rate of 100 per cent.
As at 31 December 2014, the Audit Committee comprises the following:
Deviations from the code of practice: None
The board is responsible for ensuring that the company's risk man agement and internal control systems are adequate in relation to the regulations governing the business. The company's systems and procedures for risk management and internal control are in tended to ensure efficient operations, timely and correct financial reporting, as well as compliance with the legislation and regula tions to which the company is subject. Specific targets for the internal control effort within the company are drawn up, and are revised annually by SalMar's group management.
Internal control of financial reporting is achieved through day-today follow-up by management and process owners, and supervision by the Audit Committee. Non-conformances and improvement opportunities are followed up and corrective measures implemented. Financial risk is managed by a central unit at head office, and, where appropriate, consideration is given to the use of financial hedging instruments.
Follow-up and control of compliance with the company's values, code of conduct and guidelines for social responsibility is carried out by the line organisation and is part of day-to-day operations. Material risks and any changes in them are discussed at fortnightly management meetings.
The board will, through the Audit Committee, conduct an annual comprehensive review of the Group's financial and risk manage ment systems. Key risk factors for the company are biological risk associated with the state of health at the company's hatchery and fish farming facilities, as well as the risk of salmon escaping from the company's fish farms, and financial risk (foreign exchange, credit and interest rates). These risk factors are monitored and ad dressed by managers at all levels in the organisation. For further information on this matter, please see the 2014 annual report and Note 2 to the financial statements included therein.
Deviations from the code of practice: None
The Nomination Committee's proposal for the remu neration payable to the board of directors is approved or rejected by the company's AGM. Directors' fees shall reflect the board's responsibilities, competence, time spent and the complexity of the business.
Directors' fees are not performance-related and con tain no share option element. Additional information relating to directors' fees can be found in Note 24 to the financial statements included in the 2014 annual report.
Director Gustav Wizøe is also a member of SalMar's group management, and is remunerated as an employ ee representative to the board.
Deviations from the code of practice: None
Pursuant to Section 6-16a of the Public Limited Companies Act, the board of directors has prepared a statement relating to the determination of salaries and other benefits payable to senior executives. This statement will, in line with the said statutory provision, be laid before the company's AGM each year.
The company's senior executive remuneration policy is based primarily on the principle that executive pay should be competitive and motivating, in order to at tract and retain key personnel with the necessary competence.
The statement refers to the fact that the board of di rectors shall determine the salary and other benefits payable to the CEO. The salary and benefits payable to other senior executives are deter-mined by the CEO in accordance with the guidelines laid down in the statement. Today's compensation scheme is divided into three and comprises a fixed salary, a performancerelated bonus (capped at six months' salary), and a share-based incentive scheme in line with the board's authorisation.
At the 2014 AGM the statement on executive remu neration was set forth as a separate case document. The AGM voted individually on the item relating to share-based remuneration and the item relating to the guidelines for the determination of salary and other benefits to senior executives for the 2014 financial year.
The board's statement, as well as further details relating to the salary and benefits payable to the CEO and other senior executives can be found in Note 24 to the finan cial statements included in the 2014 annual report.
Deviations from the code of practice: None
Communication with shareholders, investors and analysts is a high priority for SalMar. The objective is to ensure that the financial markets and shareholders receive correct and timely information, thus providing the soundest possible foundation for a valuation of the company. All market players shall have access to the same information, and all information is published in both Norwegian and on the company's website and at www.newsweb.no.
The most important risk factor for SalMar is the biological perfor mance of its hatchery and fish farming facilities. The company has an internal control scheme that involves systematic planning, or ganisation, performance and evaluation of the Group's activities in accordance with both the regulatory framework and internal ambi tions with respect to continuous improvement. The company has, among other things, drawn up shared goals for its internal control activities with respect to the working environment and personal safety, the prevention of fish escapes, fish welfare, pollution, food safety and water resources. It is the CEO's responsibility to ensure that the company operates in accordance with all relevant statutes and guidelines associated with operation of the Group's divisions. This also includes acquisition, operation and maintenance of fish farming equipment, as well as the handling of the company's biomass. 3 4 3 5
The company publishes its provisional year-end accounts by the end of February each year, and a complete set of financial state ments, including an annual report, is made available at the latest three weeks before the date of the AGM, and no later than the end of April each year. The company's interim results are published no more than 60 days after the close of the quarter, in line with the Oslo Stock Exchange's regulations.
-
-
SalMar will minimise its contacts with analysts, investors and jour nalists in the final three weeks before publication of its results. During this period, the company will hold no meetings with inves tors or analysts, and will give no comments to the media or other parties about the Group's results and future outlook. This is to en sure that all interested parties in the market are treated equally.
English. All notices sent to the stock exchange are made available SalMar seeks to comply with the Oslo Stock Exchange's recommen dations on the reporting of information to investors on companies' websites, last updated on 10 June 2014. The company has, in line with the Norwegian Code of Practice for Corporate Governance, also adopted an 'IR Policy', which is available from the company's website. The CEO, CFO and IRO are responsible for communica tions with shareholders in the period between general meetings. If a takeover bid has been made, the board will make a statement and at the same time assess whether to obtain a valuation from an independent expert. The board will obtain an independent valuation if a major shareholder, board member, member of the manage ment team, related party or any collaborator of such a related party, or anyone who has recently held one or more of the above-mentioned positions, is either the bidder or has a particular interest in the takeover bid.
Financial information The company holds open investor presentations in association with the publication of its year-end and interim results. These pres entations are open to all, and provide an overview of the Group's operational and financial performance in the previous quarter, as well as an overview of the general market outlook and company's own future prospects. These presentations are also made avail able on the company's website. The board will not seek to prevent any takeover bid, unless the board is of the opinion that such action is justified out of consideration for the company and the company's shareholders. The board will not exercise any authorisations or adopt other measures for the purpose of preventing the takeover bid. This stipulation may be waived with the approval of a general meeting of shareholders after a bid has been announced.
Deviations from the code of practice: None
The guidelines shall ensure that the interests of share holders are safeguarded, and that all shareholders are treated equally. Furthermore, the guidelines shall help ensure that company operations are not unnecessarily disturbed. The board will strive to provide shareholders will sufficient information to enable them to make up their minds with respect to the specific bid.
Each year SalMar publishes a financial calendar indicating the dates of publication of the Group's interim reports, as well as the date of its AGM. The calendar is available from the Group's website www. salmar.no. It is also distributed as a stock market notice and updated on the Oslo Stock Exchange's website www.newsweb.no. The calendar is published before 31 December each year. at least one meeting each year without any represent atives of the company's management being present. The board shall inform the AGM of the remuneration payable to the auditor, broken down into an auditing and other services component. The AGM shall approve the auditor's fees.
Deviations from the code of practice: None
The company's auditor is appointed by the Annual Gen eral Meeting and is independent of SalMar ASA. Each year the board of directors shall receive written confir mation from the auditor that the requirements with re spect to independence and objectivity have been met.
Deviations from the code of practice: None
Trond Tuvstein Chief Financial Officer
Trond Tuvstein was appointed as new CFO October 2013. Tuvstein served as Head of Investor Relations in SalMar ASA from January 2012 until October 2013. Tuvstein therefore knows both SalMar and the aquaculture industry well. Mr. Tuvstein is certified public accountant, having completed a Master's degree in Accounting and Auditing at the Norwegian School of Economics and Business Administration (NHH) in Bergen. Mr. Tuvstein has extensive experience from the accounting industry. He has held leading positions in auditors PricewaterhouseCoopers and Systemrevisjon, among others.
Holding as at 31.12.2014: Shares: 12.425 RSU-Rights: 7 099
Olav-Andreas Ervik Director farming
Mr.Ervik started in the position as head of Sal-Mar ASA´s Farming division August 2014. Before this Mr. Ervik held the position as General Manager in SalMar Farming AS. Mr. Ervik has held various positions in companies within the salmon farming industry, including Lerøy Midnor, Scottish SeaFarms and Lerøy Hydrotech.
Holding as at 31.12.2014: Shares: 0 RSU-Rights: 6 755
Eva Haugen Director Quality Management/HSE/HR
Eva Haugen has held the position as Director Quality Management/HSE/HR since 2H 2013. Prior to this position Haugen has been the Head of Quality Management in the SalMar Group since 2005. Haugen has also worked as a quality manager at the factory in Nordskaget in the periods 2001 and 2004. She has several years of experience as a teacher in secondary school subjects such as aquaculture, science and biology. Haugen is a graduate from NTNU in the fields of chemistry, biology and education studies, and holds a degree in ecotoxicology and physiology in salmonids.
Holding as at 31.12.2014: Shares: 800 RSU-Rights: 4 662
Mr Witzøe is the co-founder of SalMar ASA. He holds a degree in engineering. After several years as an engineer co-founded BEWI AS, a company producing styrofoam boxes for the fish farming industry. Mr Witzøe held the position as managing director of BEWI AS until 1990. Since Mr Witzøe founded SalMar ASA in 1991 he has gained extensive experience in fish farming and processing. In addition to being a director of SalMar ASA, Mr Witzøe is chairman of Egersund Fisk AS and is a director of Norskott Havbruk AS and Scottish Sea Farms Ltd.
RSU-Rights: None
Tom Aleksandersen Chief Strategy Officer (CSO)
Tom Aleksandersen was appointed as Chief Strategy Officer 1 March 2015. Aleksandersen holds an MBA with specialization in Innovation and Implementation (1995). His main areas of expertise is: Strategy, business development, cultural development and leadership training. Aleksandersen has extensive experience from working with strategic processes and organizational development from businesses in Central Norway, including several years of experience as a partner and head of BDO's consultancy department in Central Norway.
Holding as at 31.12.2014: Shares: 0 RSU-Rights: None
Shares: Mr Witzøe owns 90.85% of Kverva AS, which in turn owns 53.4% of the shares in SalMar ASA. Mr Witzøe is also a director of Kverva AS. 3 6 3 7
Leif Inge Nordhammer President and CEO
Mr. Nordhammer was the CEO of SalMar ASA from October 1996 to June 2011. Mr. Nordhammer retook the position of CEO in January 2014. He has extensive experience from leadership positions in a variety of fish farming companies, and has worked in the industry since 1985. Previous employers include Sparebanken 1 Midt-Norge and Frøya Holding AS/ Hydro Seafood AS. Mr. Nordhammer holds an education from the army along with a business degree from Trondheim Business School and the University of Trondheim.
Holding as at 31.12.2014: Shares: Mr. Nordhammer directly and indirectly owns 2.30% of the shares in SalMar. RSU-Rights: 12 110
SALMAR
4th Quarter 2014 results: 26. February 2015 1st Quarter 2015 results: 20. May 2015 Annual general meeting: 2. June 2015 2nd Quarter 2015 results: 25. August 2015 3rd Quarter 2015 results: 12. November 2015
SalMar holds quarterly presentations open to the public. The presentations will take place at 08.00 CET at Hotel Continental in Stortingsgaten 24/26 in Oslo, Norway. The annual general meeting will be held at Frøya. Please note that the dates are subject to change. Changes will be communicated.
If you would like to subscribe to news from SalMar, please send an e-mail to [email protected] so that we can include your e-mail in our news distribution list.
| NAME | Shareholding 31.12.14 | Shareholding (%) | |
|---|---|---|---|
| Kverva AS | 60 500 000 | 53,40 % | |
| 2014 2013 |
Folketrygdfondet | 8 275 589 | 7,30 % |
| LIN as | 2 005 200 | 1,77 % | |
| SHAREPRICEDEVELOPMENT TECHNICAL INFORMATION Share price per 01.01.2014 was NOK 74,00 thus valuing As at 31 December 2014 SalMar ASA had 113,299,999 |
Pareto Aksje Norge | 1 716 652 | 1,52 % |
| SalMar at NOK 8 384 million. At year-end the share price shares outstanding, with each share having a face value of |
Odin Norge | 1 635 467 | 1,44 % |
| was NOK 127,50 valuing SalMar at NOK 14 446 million. NOK 0.25. 3 8 |
State Street Bank & Trust Co. | 1 427 782 | 3 9 1,26 % |
| As at 31 December 2014 the company had approx. 3,400 | SalMar ASA | 1 300 000 | 1,15 % Pa |
| SA shareholders. LM The company's VPS number is ISIN NO 001-0310956. |
Verdipapirfondet DNB Norge (iv) | 1 280 097 | 1,13 % ssi |
| AR AN |
State Street Bank & Trust Co. | 813 486 | on 0,72 % fo |
| Account operator is Nordea Bank. NU The company's ticker on the Oslo Stock Exchange is SALM . |
Pareto Aktiv | 722 798 | r S 0,64 % alm |
| AL RE |
The Bank of New York Mellon | 709 808 | 0,63 % on |
| PO RT |
The Bank of New York Mellon | 669 323 | 0,59 % |
| 20 | Storebrand Norge | 614 184 | 0,54 % |
| 14 | State Street Bank and Trust Co. | 543 015 | 0,48 % |
| RBC investor services bank S.A | 492 524 | 0,43 % | |
| Schroder Internation Selection FD | 467 809 | 0,41 % | |
| KLP Aksje Norge Indeks VPF | 460 736 | 0,41 % | |
| Runar Sivertsen Trond Tuvstein |
State Street Bank & Trust Company | 449 271 | 0,40 % |
| Head of Investor Relations CFO Telephone: +47 960 97 000 Telephone: +47 918 53 139 |
JPmorgan Chase Bank, N.A | 446 716 | 0,39 % |
| [email protected] [email protected] |
The Northern Trust Co. | 419 783 | 0,37 % |
| IR CONTACT IN SALMAR | Total 20 largest shareholders | 84 950 240 | 74,98 % |
| Communication with shareholders, investors and analysts is a high priority for SalMar. The objective is to ensure that the | Other shareholders | 28 349 759 | 25,02 % |
| financial markets and shareholders receive correct and timely information, thus providing the soundest possible foundation for a valuation of the company. All notices sent to the stock exchange are made available on both the company's website, the |
Total | 113 299 999 | 100,00 % |
| Oslo Stock Exchange's www.newsweb.no site and though news agencies. | Shareholders | 3 403 | |
| If you would like to subscribe to news from SalMar, please send an e-mail to [email protected] so that we can include your | Total no. of shares | 113 299 999 |
2014 was another record year for SalMar. Unparalleled operating revenues, driven by high salmon prices and a rise in harvested volume, produced the best Operational EBIT in the Group's history. Net profit for the year came to NOK 1,215 million. >>>
Mr Flatgård is currently working as a professional director of several leading Norwegian companies and as an investor. From 1996 to 2007 he was President & CEO of Elopak ASA. Prior to that he was CEO of Nycomed Pharma and a member of the executive management of Hafslund Nycomed. Mr Flatgård gained an MSc in Chemical Engineering from the Norwegian University of Science and Technology in 1973 and a degree in Economics and Business Administration from the Norwegian School of Management BI in 1981. Mr Flatgård has board positions with several Norwegian companies. Amongst others he is board member of Aker ASA and Aker Biomarine ASA as well as Chairman of Handelsbanken Norway. Mr. Flatgård joined SalMar's board of directors in August 2002, becoming chairman in 2006. Through his family company Glo-Mar AS, Mr Flatgård owns 2.38% of the shares in Kverva AS, which in turn owns 53,4% of the shares in SalMar ASA. Mr Flatgård is also Chairman of Kverva AS.
GUSTAV WITZØE, DIRECTOR Mr Witzøe is the co-founder of SalMar
ASA. He holds a degree in engineering. After several years as an engineer cofounded BEWI AS, a company producing styrofoam boxes for the fish farming industry. Mr Witzøe held the position as managing director of BEWI AS until 1990. Since Mr Witzøe founded SalMar ASA in 1991 he has gained extensive experience in fish farming and processing. In addition to being a director of SalMar ASA, Mr Witzøe is chairman of Egersund Fisk AS and is a director of Norskott Havbruk AS and Scottish Sea Farms Ltd. Mr Witzøe owns 90.85% of Kverva AS, which in turn owns 53.4% of the shares in SalMar ASA. Mr Witzøe is also a director of Kverva AS.
Employee representative Ms. Tobiassen has worked in SalMar since 2009 when she was hired as Laboratory Manager. From 1 September 2013 she began a new role as Quality Manager in SalMar Processing AS. Prior to joining SalMar, Ms. Tobiassen has worked in various fields related to quality management for companies like Marine Harvest and Frøya Seafood. Ms. Tobiassen holds a degree in Food Technology from Sør-Trøndelag University College.
KJELL A. STOREIDE, DIRECTOR
Mr Storeide is a graduate of the Norwegian School of Economics and Business Administration (NHH) in Bergen. From1990 to 2004 he was the CEO and co-owner of Stokke Gruppen AS. Mr Storeide is chairman of several industrial companies in Norway. Mr Storeide joined SalMar's board of directors in February 2008.
Ms. Holte has extensive experience in consulting and food industries. Long experience as a consultant in A.T. Kearney (international consulting company) and the food industry in Mills. Ms. Holte is now Partner in Aukner Neuman AS, a Norwegian-based consulting company with core competencies in strategy & business development and organization & management. Ms. Holte has served on the board of SalMar since 05.06.2013.
PÅL GEORG STORØ, Employee representative
Mr. Storø has worked in SalMar since 1991 and since that time hold a number of leading positions in SalMar Processing AS, SalMars harvesting and processing operations.Mr. Storø currently works as a project manager in SalMar Processing.
TOVE ELIN NEDREBERG, DIRECTOR
Ms. Nedreberg holds the position as CEO of Adresseavisen Gruppen AS and Adresseavisen AS. She as extensive experience at executive level from positions in large corporations, including board positions. Nedreberg has served on the board of SalMar since 31.05.2012.
The SalMar Group generated gross operating revenues of NOK 7,186 million in 2014, 15 per cent more than in 2013. The main reason for the increase in revenues was a 23 per cent rise, from 115,000 to 141,000 tonnes, in the volume of fish harvested by the Group.
Operational EBIT rose by 49 per cent from NOK 1,259 million in 2013 to NOK 1,879 million in 2014.
The board of directors is pleased with the Group's improved performance. The market developed strongly during the year, and demand for salmon has continued even at high prices.
The Group's largest fish farming segment, Central Norway, posted strong year-end results, despite operational challenges. The cost of keeping levels of salmon lice below regulatory thresholds has been high. The volume harvested rose by a good 7 per cent.
The Northern Norway segment experienced substantial growth in 2014. The volume harvested was 58 per cent higher than in 2013. The activities of the Villa Organic group of companies have now been fully restructured and integrated into the segment's overall business. The region posted satisfactory results, with developments in Finnmark being particularly good.
Salmon lice made 2014 a challenging year for the Rauma segment, too. In addition, the viral illness PD had a negative impact on its performance. The Group's output of organic salmon comes from this segment. The prices achieved were good, and have made a positive contribution to its results.
SalMar is headquartered in Frøya, Sør-Trøndelag, and the Group's registered address is 7266 Kverva.
Compared with 2013, the Sales and Processing segment significantly improved its results in 2014. InnovaMar increased the volume it harvested to around 128,000 tonnes of self-produced and third-party fish during the year. In 2014 around 46 per cent of the harvested volume was sold at a profit under fixed-price contracts. The high salmon prices in 2014 proved challenging for the secondary processing business, due to high raw materials costs.
SalMar ASA is a Norwegian public limited company, whose shares are quoted on the Oslo Stock Exchange under the ticker SALM. The Group is one of the world's largest and most efficient producers of Atlantic salmon, and is vertically integrated through the entire value chain from broodfish, roe and smolt to harvesting, processing and sales. At the close of 2014 SalMar had a total of 100 wholly owned licences for the production of Atlantic salmon in Norway: 68 in central Norway (Møre & Romsdal, Sør-Trøndelag and Nord-Trøndelag), and 32 in northern Norway (Troms and Finnmark). In addition, the Group has a substantial harvesting and processing capacity at InnovaMar in Frøya and Vikenco in Aukra. SalMar owns 50.0 per cent of Scottish Sea Farms Ltd (through Norskott Havbruk AS), the UK's second largest producer of farmed salmon. ther reinforced. Initiatives will focus primarily on optimising the company's core business operations. SalMar has experienced substantial growth in recent years, and strategic priority has been given to measures that will enable us to resolve the challenges arising out of rapid expansion. By concentrating on further developing our overall corporate culture as well as the competence of our operational management, we are convinced that our performance will reach new heights. Clear operational targets will be shared with all employees, and good feedback along the way will ensure that our performance culture receives the nourishment it needs to flourish. Future growth for SalMar will be based on the strategic principle of "further out to sea and deeper into the market". The watchword "Passion for Salmon" has already become a powerful driver for the development of tomorrow's aquaculture company.
2014 was also a good year for Norskott Havbruk. The company generated record high revenues of NOK 1,385 million, and posted an Operational EBIT of NOK 232 million.
SalMar's board of directors has a clearly defined objective of being the most cost-effective producer of farmed salmon in Norway. It is the Group's opinion that this objective can be realised only through sustainable biological production. To intensify the focus on those actions which create the best biological results, the board chose in 2014 to establish a new vision: "Passion for Salmon" Leif Inge Nordhammer took over as SalMar's new CEO on 13 January 2014. Nordhammer had previously served as CEO for a period of 15 years until he stepped down voluntarily in 2011.
Following a 22 per cent increase in the global supply of Atlantic Salmon in 2012 and a 2 per cent increase in 2013, output grew by 9 per cent in 2014. A total of slightly more than 2.2 million tonnes of Atlantic salmon was harvested during the year. Preliminary forecasts for 2015 indicate a volume growth of around 3 per cent. Moving forward, SalMar anticipates good demand in the most important salmon markets, and, consequently, good salmon prices.
The Group expects to havest a total of 139,000 tonnes of salmon in 2015, a decrease of approx. 2,000 tonnes compared with 2014.
SalMar's stated aim is to be the best aquaculture company in the world. And the way it will achieve this ambition is through a "Passion for Salmon". Following an in-depth strategy process, SalMar has identified a series of strategic initiatives that will ensure it becomes the world's best aquaculture company. The strategy builds on SalMar's already strong performance culture, which will be fur-4 2 4 3
Based on the financial statements for 2014, the board of directors is proposing a dividend payout of NOK 10.0 per share.
Green licences. SalMar Farming AS was awarded eight out of a total of 15 so-called green licences in group B on 28 March. The award was based on an auction principle, in which SalMar bid from NOK 66 million to NOK 55 million per licence. SalMar paid a total of NOK 494 million for these licences, seven of which will be operated by the Central Norway segment, while one will be operated by the Northern Norway segment.
Refinancing. SalMar ASA signed a new borrowing agreement with DNB, Nordea and Danske Bank, which extended and restructured the company's existing credit facilities. The term of the loans is five years, and the credit facilities are for a total of NOK 5,000 million. The credit facilities comprise a term loan of NOK 1,000 million, an investments/acquisition facility of NOK 2,000 million and a revolving credit facility of NOK 1,500 million, In addition, an annually renewable operating credit capped at NOK 500 million has been agreed.
Villa Organic AS. The demerger of Villa Organic AS was completed on 9 July. SalMar took over 100 per cent ownership of eight licences and gained control of the entire Laksefjord area. SalMar also acquired a 50 per cent shareholding in Kirkenes Prosessing AS, a salmon harvesting plant located in Kirkenes, and 44.5 per cent of Romsdal Processing AS, a processing facility located in Misund. Over the past two years, therefore, SalMar has increased its production capacity in Northern Norway from 13 to 32 licences. This corresponds to a growth of 138 per cent.
No material events have occurred after the close of the year.
The Group generated gross operating revenues of NOK 7,185.9 million in 2014. This corresponds to an increase of 15 per cent from the NOK 6,245.9 million generated I 2013.
Excluding Norskott Havbruk, the Group harvested a total of 141,000 tonnes, up from 115,000 tonnes in 2013. Of this 23 per cent increase, 5,100 tonnes is attributable to Fish Farming Central Norway, 1,600 tonnes to the Rauma segment, 13,700 tonnes to Fish Farming Northern Norway, and 5,700 tonnes to Villa Organic. Villa Organic was consolidated into the Group's accounts with effect from 30 June 2013 until deconsolidation on 1 July 2014. Including SalMar's 50.0 per cent share of Norskott Havbruk, the overall volume harvested totalled 154,700 tonnes.
The average price of salmon (NASDAQ) in 2014 came to NOK 40.56, compared with NOK 39.82 in 2013. The price in the first quarter was record high, averaging NOK 47.58, but fell back in both the second and third quarters. Towards the end of the year, however, the price rose sharply, with much of the effect attributable to a significant decline in the value of the NOK measured against the most important trading currencies. The average price for December ended at NOK 45.23, which was NOK 6.39 more than in November. Around 46 per cent of SalMar's total harvested volume in 2014 was sold at fixed-price contracts. These are contracts with varying terms, but not normally longer than 12 months. In total, fixed-price contracts secured higher prices than the spot price, thereby contributing positively to the results achieved in 2014.
Around 45 per cent of SalMar's total output volume was harvested in the first half year, while 55 per cent was harvested in the second half. The volume harvested in the first quarter was lower than in the second quarter, which meant that SalMar did not benefit fully from the high average price in the first six months of the year. The volume harvested in the second half of 2014 had a favourable Total interest and financial income for 2014 came to NOK 11.1 million, compared with NOK 384.3 million in 2013. The change is primarily attributable to the significant recognised gain associated with the sale of shares in P/f Bakkafrost and Nordskag Næringspark AS. SalMar's total financing costs for 2014 came to NOK 125.1 million, a decrease of NOK 44.5 million from the year before. The reduction can be explained by lower interest rates and a lower average interest-bearing debt.
Operations at SalMar's associates, ie companies in which SalMar – through its shareholdings – has a significant influence, were good in 2014, and they posted satisfactory results. SalMar's share of the profit/loss deriving from these investments totalled NOK 96.1 million in 2014. This derives almost entirely from Norskott Havbruk. The corresponding figure for 2013 was NOK 158.0 million. 2014, while NOK 115.1 million was paid in net interest and financing expenses. The restructuring of Villa Organic resulted in the payment of NOK 140.9 million to non-controlling shareholders. A further NOK 10.2 million was paid out in connection with the Group's option scheme.
distribution, with more being harvested in the fourth quarter than in the third. The price rise experienced towards the end of the year therefore had a positive impact on the Group's overall revenue stream.
From a biological point of view, 2014 was a challenging year. The problems that salmon lice pose for the industry have been growing, and SalMar intensified its delousing treatments during the year. In addition to the costs directly relating to the treatments themselves, fish growth is also affected as a result of fewer feeding days and a poorer appetite on the part of the fish. PD outbreaks have also had a negative impact on costs, in the form of both higher direct farming costs and indirect costs associated with the handling of PDinfected fish. As a result, the cost of the harvested biomass was higher in 2014 than in 2013.
Net financial items for 2014 therefore totalled NOK -114.0 million, such that profit before tax came to NOK 1,628.8 million, down from NOK 2,322.1 million in 2013. Despite the lower profit before tax in 2014, the estimated tax expense for the year was on a par with 2013 (NOK 413.3 million in 2014, compared with NOK 418.7 million in 2013). This can be explained by the substantial gains on shares in 2013 that have not had any impact on tax. Consolidated balance sheet As at 31 December 2014, SalMar's balance sheet totalled NOK 10,124.4 million, an increase of NOK 192.9 million since the close of 2013. The Group's intangible assets rose by NOK 434.6 million during 2014. A total of nine licences were
The SalMar Group posted an Operational EBIT of NOK 1,879.0 million in 2014, compared with NOK 1,259.5 million in 2013. This rise can be attributed primarily to a higher harvested volume and a significant improvement in the profits posted by the Sales and Processing segment. Operational EBIT is SalMar's most important measure of its performance under IFRS, since it shows the results of underlying operations during the period. Specific items not associated with underlying operations are presented on separate lines in the consolidated financial statements.
1,106.0 million in 2013. The largest positive item of profit and loss without any cash flow effect is the Group's NOK 96.1 million share of profit/loss from associates. The largest negative items of profit and loss without any cash flow effect derive from NOK 278.2 million in depreciation and NOK 232.3 million in fair value adjustments. Furthermore, the items "interest expenses" and "option expenses" have been reclassified to financing activities. During the period, SalMar increased its working capital (change in trade receivables and payables, inventory, etc) by NOK 376.5 million. In 2014 SalMar paid NOK 25.8 million in corporation tax. assets. The total book value of property, plant and equipment came to NOK 2,017.6 million at the close of the year, NOK 158.3 million more than at the close of 2013. The Group's rate of investment is still higher than overall depreciation. A total of NOK 523.8 million was invested in 2014. In connection with the restructuring of Villa Organic, property, plant and equipment worth NOK 104.6 million was transferred to the non-controlling shareholder.
SalMar's net profit for the year 2014 totalled NOK 1,215.5 million, compared with NOK 1,903.4 million in 2013. Consolidated statement of cash flow SalMar generated a positive cash flow from operating activities in the amount of NOK 1,647.0 million in 2014, compared with NOK acquired, of which eight were so-called green licences. In connection with the restructuring of Villa Organic, eight licences were transferred to the minority shareholder. Furthermore, NOK 22.2 million was capitalised in connection with the development of an experimental offshore fish farm. At the close of 2014, the Group had recognised NOK 2,898.6 million in intangible 4 4 4 5
Fair value adjustments reduced profit by NOK 232.2 million in 2014. The corresponding adjustment in 2013 boosted profit by NOK 528.2 million. Fair value adjustment comprises fair value adjustment of the biomass, including unrealised effects of forward currency contracts associated with future contract deliveries and Fish Pool contracts, as well as provisions for loss-making contracts. The bulk of the fair value adjustments in 2014 are associated with changes in the value of unrealised forward currency contracts, which in 2014 decreased profit by NOK 123.6 million, compared with a decrease of NOK 13.2 million in 2013. In 2013 fair value adjustments were largely associated with changes in the fair value of the biomass, which increased by NOK 529.4 million, compared with a decrease of NOK 39 million in 2014. The bulk of change can be attributed to a sharp increase in prices from 2012 to 2013, compared with an almost stable price picture from 2013 to 2014. In addition to the change in overall prices, SalMar's total biomass as at 31 December 2014 was 1,138 tonnes smaller than at the same point the year before.
Cash flow from investing activities was negative in the amount of NOK 1,031.9 million during the period. By comparison, SalMar had a positive cash flow from investing activities, NOK 698.7 million, in 2013. A total of NOK 1,040.1 million was invested in intangible assets, property, plant and equipment during the year. Of this amount, the purchase of green licences accounted for NOK 494.0 million. Investments in onshore and offshore facilities for the production of biological assets totalled NOK 523.8 million. This has been necessary to exploit the company's biological growth potential, as well as meet higher equipment and technology standards. Dividend received from associates totalled NOK 36.3 million, and payments for the acquisition of businesses came to NOK 28.6 million. Net disbursements from financing activities in 2014 totalled NOK 1,522.5 million, compared with NOK 790.0 million in 2013. In 2014 SalMar paid a dividend totalling NOK 898.2 million to its shareholders. NOK 357.4 million in interest-bearing debt was repaid in At the close of 2014 the Group had non-current financial assets worth NOK 539.2 million. The bulk of this amount relates to the investment in Norskott Havbruk. The Group's biological assets were valued at NOK 3,114.7 million at the close of the year, NOK 37.5 million more than at the close of 2013. Measured in tonnes, the biomass as at 31 December was more or less the same as at the start of the year. At the close of the first half of 2014, Villa Organic's non-controlling shareholder took over eight licences and associated biomass. At practically the same time, eight green l icences went into operation, and have contributed to keeping the biomass at the same level as at the start of the year. Adjustment in the fair value of the biomass at the close of the year came to NOK 848.6 million, which is NOK 26.3 million lower than at the start of the year. The cost of producing the biomass rose by NOK
There were no recognised non-recurring gains associated with the acquisition of companies in 2014, compared with gains of NOK 161.8 million in 2013.
As in 2013, there were no particular biological incidents in 2014, such that the Group's operating profit for 2014 totalled NOK 1,646.7 million, down from NOK 1,949.4 million the year before.
Overall, this gives SalMar a negative net cash flow for 2014 of NOK 907.3 million, which reduced the Group's holdings of cash and cash equivalents to NOK 167.0 million at the close of the year. The restructuring of the Group's main financing agreements resulted in SalMar having unused drawing rights of NOK 3,136.2 million at the close of the year, of which NOK 1,136.2 million relates to rolling credit for the financing of day-to-day operations. The other drawing rights are reserved for investments and strategic growth.
83.5 million, putting total production costs at NOK 2,285.9 million. As a result of the rise in sales towards the end of 2014, compared with 2013, trade receivables have risen from NOK 662.1 million to 888.2 million at the close of the year. Credit time has remained stable, and the bulk of the trade receivables are insured. A provision of NOK 12.2 million has been made to cover potential bad debts.
At the start of the year receipts from the sale of shares in P/f Bakkafrost were held in a separate bank account. These funds have been used during the year, and are the main reason for the reduction in bank deposits from NOK 1,071.0 million at the close of 2013 to NOK 167.0 million at the close of 2014. See Consolidated cash flow for further details.
At the close of 2014 the Group's equity totalled NOK 5,137.3 million, up from NOK 5,060.8 million at the close of 2013. This corresponds to a practically unchanged equity ratio of 50.7 per cent at the close of 2014, compared with 51.0 per cent at the same point in 2013.
The Group expects to pay NOK 321.8 million in corporation tax, based on its taxable income for 2014.
The increase in the Group's assets during 2014 is attributable to a NOK 76.5 million increase in equity, a NOK 375.2 million decrease in interest-bearing debt, and an increase in interest-free liabilities of NOK 491.5 million.
Central Norway, the Group's largest fish-farming region, had a good year despite some operational challenges. The segment generated NOK 2,863.5 million in operating revenues in 2014, compared with NOK 2,702.0 million in 2013. Operational EBIT came to NOK 946.2 million in 2014, compared with NOK 924.2 million the year before. For the year as a whole, Operational EBIT per kg gutted weight came to NOK 12.60, down from NOK 13.20 in 2013. The downturn is attributable to higher production costs for the harvested biomass than in 2013, due largely to salmon lice, PD and higher feed costs. Although SalMar had control of the situation in 2014, the large number of treatments has had a direct impact on costs, while a reduction in the number of feeding days deriving from the sales price achieved. The Rauma segment has also had cases of amoebic gill disease (AGD) at individual sites. Treatment has been satisfactory, but AGD also affects appetite and growth, with resulting increased costs per kg.
This segment is, moreover, responsible for SalMar's breeding and genetics activities. This involves the harvesting of broodfish, which have a significantly higher cost. The segment is also responsible for production of the Group's organic salmon. Although more costly to produce than conventional salmon, organic salmon command higher and more stable prices.
The Rauma segment harvested a total of 16,500 tonnes in 2014, compared with 14,900 tonnes in 2013. SalMar expects the segment to harvest around 18,000 tonnes in 2015, a rise of 9 per cent.
Villa Organic generated gross operating revenues of NOK 527.5 million in the first half of 2014. A total of 11,800 tonnes was harvested, which generated an Operational EBIT of NOK 164.5 million.
per cent higher than in 2013. A total of 37,500 tonnes was harvested by SalMar Northern Norway, compared with 23,800 tonnes in 2013. A substantial 21,900 tonnes was harvested in the second half of 2014. One of the eight green licences awarded in 2014 is operated by this segment. lion in 2014, compared with NOK -160.9 million in 2013. In 2014 around 46 per cent of the harvested volume was sold under profit-making, fixed-price contracts. A generally good allocation of volumes sold at spot prices also contributed to improved margins for the
Net interest-bearing debt (interest-bearing debt less cash & cash equivalents) totalled NOK 2,301.3 million at the close of the year, up from NOK 1,772.4 million at the close of 2013. In July 2014 the Group entered into a new 5-year borrowing agreement with a consortium of Nordic banks. The financing agreement covers both operating credit facilities and acquisition funding, and provides the Group with drawing rights of NOK 5,000 million. At the close of the year NOK 1,875.2 million had been drawn down on these facilities. In addition to this main financing package, some of the Group's subsidiaries have their own financing agreements, the interestbearing debt associated with which came to NOK 125.8 million at the close of the year. The Group has, moreover, leasing liabilities amounting to NOK 134.5 million. Because of its nature, the leasing agreement with respect to InnovaMar is classified as a financing agreement, the liability for which stood at NOK 314.9 million at the close of the year. Next year's instalments on interest-bearing debt total NOK 153.5 million. Unused drawing rights amounted to NOK 3,136.2 million at the close of 2014. 4 6 4 7
treatments has affected fish growth. More frequent delousing treatments of marine-phase fish causes an accumulation of costs per kg, which is also expected to affect the level of expenses in 2015. Increased feed costs result from the weakening of the NOK against the major international currencies as well as higher prices for the ingredients used to make them.
SalMar expects this segment to harvest around 42,000 tonnes in 2015, an increase of approx. 12 per cent on 2014. Fish Farming Rauma segment. Although the closure of the Russian market has been a challenge, the sales volumes affected were replaced in new and existing markets during the period. InnovaMar harvested around 127,900 tonnes of fish
The Rauma segment generated gross operating revenues of NOK 782.0 million in 2014, compared with NOK 595.4 million in 2013. Operational EBIT came to NOK 214.7 million in 2014, compared with NOK 161.9 million the year before. in 2014, up from 117,800 tonnes in 2013. Harvesting operations at InnovaMar have improved both in efficiency and overall capacity utilisation. Capacity utilisation was, however, somewhat low in the first half of the year due to a lack of raw materials. This resulted in
Fish Farming Central Norway harvested a total of 75,200 tonnes in 2014, compared with 70,200 tonnes in 2013. 26,300 tonnes were harvested during the first half of the year, and 48,900 in the second half. The fact that the bulk of the volume was harvested in the second half of 2014 had a negative impact on the prices achieved by the segment.
Operational EBIT per kg gutted weight came to NOK 13.00 in 2014, up from NOK 10.90 in 2013. The segment's operational and biological status has been affected by salmon lice and the viral illness PD. Low growth rates and quality issues affected both production cost per kg harvested fish and the a rise in fixed costs per kg, which negatively affected the financial performance of both the harvesting and secondary processing departments. Capacity utilisation at InnovaMar in the second half was good. The high salmon prices in 2014 were challenging for the processing business, due to high raw materials costs.
The segment's production capacity increased through the year, since it operates seven out of the eight green licences awarded. The licences were put into operation quickly, and almost full capacity utilisation was reached during the autumn.
SalMar expects this segment to harvest around 79,000 tonnes in 2015, an increase of 5 per cent on 2014.
The Northern Norway segment generated gross operating revenues of NOK 1,443.1 million in 2014, compared with NOK 912.7 million in 2013. Operational EBIT came to NOK 477.2 million in 2014, compared with NOK 320.2 million the year before.
Operational EBIT per kg gutted weight came to NOK 12.70 in 2014, down from NOK 13.50 in 2013. Although 2014 was a satisfactory year for Fish Farming Northern Norway, the decrease in EBIT/kg is larger than the general change in prices would indicate. This is primarily attributable to an unfavourable harvesting profile in the second and third quarters. Furthermore, the average weight of the fish harvested was lower than desirable due to challenges associated with the maximum allowable biomass (MAB) at individual sites. Some of the fish at one site reached sexual maturity during the third quarter, which also had a negative impact on the prices realised. Salmon lice are less of a problem here than in the Central Norway area, and the company considers the situation to be under control. The segment's biological situation is deemed to be good.
The Villa Organic segment was part of the Group until the close of the first-half 2014. At that time the segment's operations were divided between SalMar, its controlling shareholder, and Lerøy Seafood Group, the non-controlling shareholder. Each of the parties took over eight production licences. The sites were divided such that SalMar took over the Laksefjord area, while Lerøy took over Varangerfjord. SalMar took over all the biomass in Laksefjord and a portion of the biomass in Varangerfjord. The operations taken over by SalMar were integrated into its Fish Farming Northern Norway segment with effect from the second half year. of 27,500 tonnes in 2014, up from 26,900 tonnes the year before. It expects to harvest around 31,000 tonnes in 2015. Norskott Havbruk is recognised as an associate, with SalMar's share of the company's profit/loss after tax and fair value adjustment of the biomass (50.0 per cent) being recognised as financial income. SalMar's share of the company's profit after tax was NOK 95.5 million in 2014, compared with NOK 101.1 million in 2013.
The restructuring of activities belonging to Villa Organic has been finalised, and, with effect from the second half of 2014, they are now fully integrated into the segment's overall operations. Developments in Finnmark have been good, and fish has been harvested from sites that, from both a production and cost point of view, have performed on a par with SalMar's best locations.
The Sales and Processing segment posted significantly better results in 2014 than in 2013. The segment sells the entire Group's harvested volume, with the exception of that deriving from joint operations with Lerøy in Finnmark. The segment generated gross operating revenues of NOK 6,847.8 million in 2014, up from NOK 6,047.4 million in 2013. Operational EBIT came to NOK 137.7 milministrative resources are employed by this company. In 2014 it employed a total of 28 full-time equivalents. The company made a net profit for the year of NOK 803.1 million in 2014, compared with NOK 815.3 million in 2013. The bulk of the company's revenues
SalMar's Northern Norway segment achieved considerable growth in 2014. The harvested volume was 58
2014 was also a good year for Norskott Havbruk. At NOK 1,384.6 million, the company's sales revenues were historically high, rising from the NOK 1,189.1 million achieved in 2013. Operational EBIT came to NOK 232.1 million in 2014, up from NOK 221.1 million the year before.
Operational EBIT per kg gutted weight came to NOK 8.40 in 2014, up from NOK 8.20 in 2013. The increase is largely attributable to the rise in prices. The company's biological situation is satisfactory, with lice and health issues being dealt with effectively.
A high proportion of contract sales affected the margins achieved in 2014. The company harvested a total
The parent company, SalMar ASA, is a shareholding and administrative entity. Group management and adderive from investments in subsidiaries and associates. 2014 was a good year for the company's subsidiaries, and resulted in the recognition of NOK 1,108.2 million in dividends/group contributions. Furthermore, the company recognised a dividend of NOK 36.3 million from its investment in the associate Norskott Havbruk AS. SalMar ASA also administers the Group's main financing activities, and received NOK 91.2 million in interest income on loans to subsidiaries, while interest expenses associated with financing came to NOK 71.6 million.
SalMar ASA had capitalised assets of NOK 4,676.5 million at the close of 2014. Non-current financial assets accounted for NOK 3,340.4 million of this amount, with loans to subsidiaries coming to NOK 2,175.9 million. Current receivables totalled NOK 1,300.0 million, and are largely made up of dividend/group contributions receivable from subsidiaries. The company had cash and cash equivalents of NOK 14.8 million at the close of the year. Equity as at 31 December 2014 totalled NOK 1,214.9 million, which corresponds to an equity ratio of 26 per cent. Non-current liabilities are entirely made up of interest-bearing debt, and total NOK 1,810.0 million. Current liabilities total NOK 1,651.6 million, of which NOK 1,120.0 million have been allocated to dividend.
The board is proposing the payment of a dividend of NOK 10.00 per share for the 2014 financial year. The board proposes the following allocation of the year's net profit:
• Total NOK 803.1 million
At the close of the year the company had distributable reserves of NOK 1,186.9 million.
The financial statements for 2014 have been prepared on the assumption that the company is a going concern, as stipulated in Section 3.3a of the Norwegian Accounting Act. With reference to the Group's financial results, financial position and forecasts for years to come, it is hereby confirmed that grounds for this assumption do exist. In the assessment of the board of directors, the Group's financial position and performance are sound.
Risk management is a key function of the management team. The Group has systems and routines in place to monitor important risk factors in all business areas, and particular emphasis is placed on the control and follow up of production facilities in accordance with the quality handbook and defined operating standards.
It is the CEO's responsibility to ensure that the Group operates in compliance with all relevant legislation and operating guidelines for group entities. Follow-up and control of risk factors, as well as compliance with the Group's values and code of conduct, is carried out in the line organisation as part of day-to-day operations.
The largest operational risk facing SalMar relates to the development of its fish stocks, both at its hatcheries and marine-phase
fourth quarter 2014. Experience from the operation of these licences is so far extremely good. A separate report summing up SalMar's experience and evaluating the operation of its green licences will be published annually. SalMar has also emphasised participation in a project to monitor salmon rivers in Trøndelag county in order to develop methods and increase expertise in the tracking and mapping of escaped farmed salmon. varied more substantially from year to year. In addition to planned output volumes defined by the number of smolt released, supply is also affected by a number of external factors. Fluctuations in sea temperatures, the spread of salmon lice and outbreaks of disease are all factors which, directly or indirectly, affect fish growth and thus supply. As a consequence, relatively substantial variations in supply may occur within short periods of time. With relatively stable demand, this can result in considerable price instability.
fish farms. Even though SalMar draws up and establishes effective routines for its own operations, the business is such that it will always be important to keep abreast of what competitors and neighbouring facilities are doing.
The aquaculture industry faces challenges with respect to the spread of salmon lice and an increase in the numbers of resistant lice, ie lice which have a reduced sensitivity to the preparations and medications that have been effective in treating salmon lice over the past decade.
SalMar's overarching objective is to reduce the use of chemical delousing treatments, by focusing on biological methods using self-produced cleaner fish, good and robust production zones, and measures to reduce the marine-phase production time. SalMar is convinced that salmon lice can be controlled and kept at acceptable levels through a combination of different forms of treatment and medication, new technologies and the already well-established collaboration between fish farmers. In general terms SalMar's uncompromising focus on biological quality and control means that it chooses solutions and implements measures which safeguard long-term biological security over short-term financial gain. SalMar sells a portion of its output through fixed-price contracts. The Group has drawn up guidelines for such contracts to limit exposure to salmon price volatility. It is the Sales and Processing segment which sells the entire Group's harvested volume, with the exception of that produced by Villa Organic. The impact of the Group's fixed-price contracts is therefore recognised in this segment's financial statements. Approximately 46 per cent of the Group's volume was sold under fixedprice contracts in 2014.
SalMar plays an active role in the effort to combat salmon lice, and works effectively with the authorities, other fish farmers and scientific expertise to reduce biological risk. SalMar has developed its own strategy for dealing with salmon lice, which has been in operation since mid-2009. In addition to its own strategy plan the Group complies with all the counting and treatment strategies implemented by the authorities, including the Norwegian Food Safety Authority's absolute threshold for the initiation of remedial measures. By using cleaner fish, large smolt and effective zoning, the salmon lice situation has been kept under control throughout 2014.
For the first year of the fish's marine-phase existence, SalMar handles the salmon lice situation with the help of cleaner fish. The intensity of delousing treatments is therefore extremely low. Since cleaner fish are not as effective on larger fish, the frequency of treatments on fish in their second year in the sea was higher in 2014 than in 2013.
The bulk of the Group's output is sold internationally, with accounts settled largely in EUR, USD, GBP and JPY. Changes in exchange rates therefore represent both a direct and indirect financial risk for the Group. Sales in foreign currencies are hedged on the transaction date, while contract sales are hedged when the contract is entered into. The company uses forward contracts as hedging instruments. Foreign exchange exposure linked to the Group's costs is, however, limited, since input factors and salaries are paid largely in NOK (Norwegian kroner). All interest-bearing debt is, moreover, in NOK. Use of forward currency contracts is described in Note 11 to the financial statements. The Group does not have any significant credit risk associated with an individual counterparty or counterparties which may be considered a group due to similarities in the credit risk they represent. The Group has guidelines to ensure that sales are made only to customers who have not previously had material payment problems, and that outstanding sums do not exceed defined credit limits. The bulk of the Group's trade receivables is insured against bad debts.
SalMar used more hydrogen peroxide (H2O2) against lice in 2014 than in 2013, and there was also a slight increase in the use of other delousing agents. The reason for the higher consumption of hydrogen peroxide in 2014 is that resistance to the other delousing agents has worsened during the year.
The follow up of internal controls associated with financial reporting is carried out through management's day-to-day supervision, the process owners' follow up and monitoring by the board's Audit Committee. Non-conformances and improvement areas are followed up and remedial measures implemented. Financial risk is managed by a central unit at head office, and financial hedging instruments are employed where they are considered appropriate. The risk of a counterparty not having the financial resources to meet his obligations has, historically, been considered low, and SalMar's losses resulting from bad debts have been very small. Nevertheless, the economic downturn experienced in large parts of the world in recent years has led SalMar to tighten its commercial terms and focus more strongly on the follow up of trade receivables. 4 8 4 9
For SalMar, it is important that production take place in areas which have the capacity and sustainability for the volumes being produced. To ensure the quality of the fish farming facilities, routine measurements and Modelling – On-growing fish farm – Monitoring (MOM) surveys are carried out.
The borrowing portfolio is currently at floating interest rates, which means that the Group is affected by changes in interest rates. Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
SalMar's entire business is related to salmon, and is therefore directly and indirectly affected by developments in salmon prices. The Group's profitability and cash flows are strongly correlated with movements in the price of salmon. Historically, salmon prices have been highly volatile seen in an annual, quarterly and monthly perspective. In 2014 the spot price of Atlantic salmon fluctuated between NOK 31.73 and NOK 52.69 per kg, measured weekly. SalMar's objective is to have sufficient cash, cash equivalents or medium-term credit facilities to meet its short-term funding requirement. The Group engages in active cash management, and prepares rolling cashflow forecasts to ensure that it has sufficient liquidity at all times. Furthermore a flexible financing structure is maintained through established credit lines. Unused credit facilities are described in the comments on the Statement of Cash Flow.
SalMar also purchased eight "green" licences after the authorities' round of awards in 2013/2014. The green licences set stricter limits for permitted lice and the number of medicinal delousing treatments, and put a stronger focus on escape prevention. At its green licence facilities, SalMar has focused particularly on the use of a more escape-proof cage construction, as well as the use of cleaner fish (in the form of farmed lumpfish) to control lice numbers. A major investment has been made in a dedicated facility for the farming of cleaner fish in Langstein in Trondheimsfjord. SalMar deployed the first lumpfish raised at this facility in the
The global salmon market is largely a fresh-fish market, where most of the fish harvested is sold immediately to processing companies or directly to the consumer. For several years growth in demand has been relatively stable, while growth in supply has The Group's equity ratio, its prospects for future profits and current credit facilities mean that the Group's liquidity risk is considered to be low.
The Norwegian aquaculture industry has experienced a period of dramatic growth. Around 100 tonnes of farmed salmon was produced in the early 1970s, while in 2014 output reached 1.25 million tonnes. This growth has been made possible by the indus try's unfailing desire to improve and create new, more secure and more efficient ways of producing salmon. Research and develop ment has been an essential part of that effort. The industry has depended on close cooperation with public authorities as well as other commercial, academic and research centres. In a short space of time this collaboration has transformed fish farming from a small niche activity into a modern aquaculture industry that em ploys thousands of people along the entire Norwegian coast. The aquaculture industry is still young, and a great deal of R&D is re quired to lift the sector to new heights.
SalMar is Norway's third largest producer of farmed salmon, and the Group is an important contributor to the development of the industry. SalMar gives a high priority to the development of spe cialist knowledge and production skills within its business areas. Knowledge and 'best practices' are developed and disseminated to the entire organisation through the SalMar School. Management in each business area is responsible for identifying and initiating projects and initiatives that can help further develop the Group's competence.
In 2014 SalMar continued its growing investment in R&D. The Group has sharpened its R&D strategy by investing heavily on inhouse projects through the SkatteFUNN tax incentive scheme. In addition, SalMar has continued its active participation in Norwegian Seafood Research Fund (FHF) projects, through membership of both steering committees and project groups. The Group has also established operating partnerships with other entities in connection with R&D licences, and continued existing agreements. Overall, activities in the R&D field increased in 2014, and the direc tion and method of working in this area has been changed to place greater emphasis on practical applicability.
Relevant issues are largely the same, with the main focus on lice, operational efficiency improvements and feeding. SalMar is also placing greater emphasis on cleaner fish and general fish welfare. One of SalMar's challenges in this area is to continue the work being done within the company's own time-limited R&D licence for the production of cleaner fish.
As mentioned above, SalMar has a growing emphasis on in-house SkatteFUNN projects. SalMar has determined that this way of working is expedient for the company, and has succeeded in increasing the level of activity substantially by establishing resources linked to administration of the scheme. It is worth mentioning some exciting projects linked to innovative technical solutions with the area of SalMar's major investment in recirculat ing aquaculture systems for smolt production.
For many years SalMar has been a major player in the operation of R&D licences. In 2014 the company has adjusted the operation of several such licences, based on experience built up in recent years. The idea is that SalMar will, to a greater extent, participate actively in and influence the actual research projects, not merely under take day-to-day operation of the facilities. To this end, SalMar has changed the way it organises and administers its efforts, and has
All authorisations granted to the board remain valid until the 2015 AGM, which will be held on 2 June.
At the AGM it will be possible to vote in advance, in line with s5-8b of the Public Limited Companies Act. This required an amendment to Article 7 of the company's articles of association.
On 3 December 2014 the board approved a share-based incentive scheme pursuant to the authorisation granted at the AGM. The final scheme adopted in 2014 encompasses 351,336 shares, and has a duration of three years.
ing Act, the board of directors has drawn up guidelines covering business ethics and corporate social responsibility. These are avail able from the Group's website www.salmar.no. SalMar's activities in the area of social responsibility, including human rights, labour rights, the working environment, equality, discrimination, anticorruption and the external environment, are described in a separate section of this annual report on pages 25 to 27. In addition, a corporate separate sustainability report for 2014 has been pub lished. This report is also available from the Group's website. SalMar ASA has one main shareholder, Kverva AS, which owns 53.4 per cent of the company's shares. Kverva AS is controlled by SalMar's founder Gustav Witzøe, who is also a member of the board of directors and of group management in his capacity as director of sales and processing. The company's 20 largest shareholders own a total of
established arenas in conjunction with the licenceholders which give it greater scope to challenge the project portfolio, and so ensure that the emphasis on practical applicability is maintained. As far as SalMar can tell, all its partners appreciate this model.
SalMar has been particularly keen to raise the quality of the logistics surrounding the fish – both with respect to bio-security and fish welfare. In 2014 the company has also had its own project team members aboard leased well-boats to gather and systematise data that adequately describes practices and problems. SalMar sees that it is possible to improve logistical quality, and feels that new technology will be a useful tool in the years ahead. SalMar will therefore continue with this effort in 2015.
SalMar's shares traded at prices ranging from NOK 71.75 to NOK 129.00 in 2014. The final closing price on 30 December, the last day of trading in 2014, was NOK 127.50. The Annual General Meeting of 4 June 2014 authorised the board to increase the company's share capital. The authorisation was an extension of one granted at the 2013 AGM. The articles of association contain no stipulations limiting the transferability of the company's shares. Furthermore, the company is not aware of any agree ments between shareholders that limit the possibility of trading in or exercising voting rights with respect to shares.
In 2014 SalMar entered into its first arrangement linked to the industrial PhD scheme. A PhD student was recruited to pursue a four-year research programme relating to the practical management of PD. In addition, the student will be working on the health and welfare of cleaner fish. SalMar is eager to see whether the arrangement, 50 per cent of whose costs are paid from the public purse, will function as planned. However, the company already feels that it seems to be working very well from a practical point of view.
company's own (treasury) shares in an amount such that the to tal holding of treasury shares does not at any time exceed 10 per cent of the outstanding share capital. The authorisation may be used to purchase company shares in connection with stock op tion schemes for senior management and as a means of returning value to existing shareholders. The board was also authorised to introduce a share-based incen - The Group's board of directors comprises five members elected by the shareholders and two employee representatives. Three of the board members are women, including one employee representative. Female representation among the shareholder-elected direc tors corresponds to 40 per cent, which is in compliance with Norwegian legislation.
The authorisation permits the board to increase the company's share capital by up to NOK 2,829,667.50 though the issue of up to 11,318,670 shares in order to finance investments and the ac quisition of businesses through cash issues and contributions in kind, as well as reward senior executives participating in ongoing share based incentive programmes. Given the purpose of the authorisation, the board of directors may need to waive the preference rights of existing shareholders. Such a move is allowable under the terms of the authorisation. The AGM also authorised the board of directors to acquire the CORPORATE GOVERNANCE SalMar has carried out a thorough review of its prin ciples for corporate governance. The Group complies with the legislation, regulations and recommendations to which a public limited company is subject, includ ing Section 3-3b of the Norwegian Accounting Act on corporate governance, day-to-day obligations of a company listed on the Oslo Stock exchange and the current version of the Norwegian Code of Practice for Corporate Governance. These principles are discussed in detail in a separate chapter of the annual report. 5 0 5 1
In recent years, SalMar, through its subsidiary Ocean Farming AS, has been working with leading internation al maritime environments to develop a new equipment concept that will make it possible to site fish farms further out to sea and in more exposed locations. The design of this ocean farm is based on advanced off shore concepts developed for the petroleum industry. It has been successfully tested at MARINTEK's marine laboratory. So far, SalMar has invested just over NOK 40 million in the project.
tive scheme for senior executives. The programme entitles partici pating employees to receive shares free of charge. Entitlements are accrued over a three-year period. The new share-based in centive scheme is intended to be an annual programme, in which awards and performance criteria are determined each year. It was decided that the maximum number of shares under the 2014 scheme should not exceed 650,000. The board was authorised to draw up more detailed guidelines. Changes in board membership At the Group's AGM on 4 June 2014 Kjell Storeide and Tove Nedreberg were re-elected to the board of direc tors for a term of two years. There have been no changes in the employees' repre sentation on the board.
The new ocean farm will be extremely escape-proof, and the construction – as well as its siting in more exposed areas further out to sea – is liable to reduce the biological challenges posed by disease and salmon lice. Realisation of the ocean farm concept will be costly, and will depend on the authorities granting adequate production volumes at competitive terms.
It is SalMar's goal to be a responsible corporate citizen and a sustainable producer of farmed fish and pro cessed products. As an employer, SalMar aims to pro vide a safe and developing workplace. The Group works continuously to enhance measures and processes associated with health, safety and the environment (HSE), as well as provide professional development opportunities for managers and employees through, among other things, the SalMar School.
Pursuant to section 3-3c of the Norwegian Account - 74.98 per cent of the shares. As at 31 December 2014 SalMar ASA was the seventh largest shareholder with a holding of 1.3 million shares or 1.15 per cent. SalMar acquired no treasury shares in 2014.
At the same AGM Helge Moen and Endre Kolbjørns en were re-elected as members of the Nomination Committee for a term of two years.
While the global supply of Atlantic salmon rose by 22 per cent in 2012 and 2 per cent in 2013, it rose by 9 per cent in 2014, bringing the total volume harvested to just over 2.2 million tonnes. Norway increased its combined output by 5 per cent, or around 55,000 tonnes during the year. Growth continued in Chile, whose output rose by 25 per cent, or just over 114,000 tonnes. Production in North America fell by 10 per cent, or around 14,000 tonnes during the period. Output from the Faeroes continued to grow, increasing by 13 per cent, or just under 10,000 tonnes, while developments in the other markets were relatively stable.
Combined Norwegian exports of Atlantic salmon totalled approx. 1,150,000 tonnes round weight in 2014, a rise of 5 per cent compared with 2013. This contributed to an increase in value of 11 per cent. Salmon exports from Norway were worth almost NOK 44 billion in 2014, NOK 4.2 billion more than the year before. Norway exports 72 per cent of its volume to the EU, which all told received a total of 830,000 tonnes of Norwegian salmon. France reduced its imports of Norwegian salmon by 8 per cent, while Poland increased its imports by 8 per cent. The key Asian markets (Vietnam, China and Hong Kong) cut their imports by a combined 2 per cent.
Since August 2014, exports to Russia have been severely affected by that country's ban on imports of Norwegian salmon. As a result, Russia imported 51 per cent less Norwegian salmon than in 2013. Following the introduction of trade restrictions, the volume that was previously destined for the Russian market had to be channelled elsewhere. Since August 2014 SalMar has replaced these volumes primarily in existing markets. So far in 2015 (beginning of April), no volumes have been sold to the Russian market.
The price of Atlantic salmon (NASDAQ) fell steadily through the first half of 2014 (from NOK 50 to NOK 35 per kg). It subsequently stabilised through the third quarter (at around NOK 35 per kg). The year's highest price, NOK 52.69, was measured in week 1. Strong prices in the first half of 2014 and a sharp rise in the fourth quarter nevertheless contributed to a record average price for the year as a whole. At NOK 40.56 per kg, this was 2 per cent higher than the average for 2013.
leading aquaculture companies, with further growth and improved
SalMar's share of the volume harvested by Norskott Havbruk (50.0 per cent) in 2015 is expected to be around 15,500 tonnes.
By means of hard work and dedication over many years SalMar has built up a strong position in a growing aquaculture industry. Norway in general, and central Norway in particular, affords excellent natural fish farming conditions, and SalMar will continue to manage these resources in the best possible way for its shareholders, employees, customers and affected local communities. Based on its strong competitive position and financial strength the SalMar Group aims to retain its position as one of the world's tools, such as the use of cleaner fish as a delousing method, well-boats to secure delousing capacity and sanitary harvesting when necessary. SalMar has a high emergency response capacity on the harvesting side, so that extraordinary incidents can be dealt with in the prescribed manner. In addition, efforts are constantly being made to develop the most sustainable operating areas and the best locations. Overall, SalMar believes that this is helping to reduce the Group's level of operational risk.
The NOK weakened against the EUR, USD and GBP through 2014, a trend which may have helped to dampen the effect for customers with local currencies. During the period the NOK weakened by 7.0 per cent against the EUR, 7.2 per cent against the USD and 12.8 per cent against the GBP.
profitability in 2015. The board is of the opinion that this is something SalMar is well positioned to achieve. Although considerable uncertainty attaches to an assessment of future circumstances, both on the market and production sides, the board considers the Group's outlook to be extremely bright. The volume harvested in 2015 is expected to be slightly lower Feed is the most important cost component in the farming of salmon, accounting for 55-60 per cent of total production costs. Feed prices rose steadily in 2014, due to higher prices on important input factors, such as fishmeal and fish oil. This price increase has been reinforced by the weakening of the NOK against the USD. So far there are no indications of any material changes in prices in 2015.
SalMar sold directly to over 40 different countries in 2014. As in 2013, SalMar's most important market was Europe, with Poland, the UK and Lithuania as the largest individual markets. Asia is SalMar's second largest market, with Japan, Vietnam and Israel as the largest individual markets. The Chinese market remains challenging. SalMar's exports to Russia ceased in August 2014 as a result of the previously mentioned import ban on Norwegian salmon. In consequence, North America has taken over as the Group's third largest market, with the USA and Canada as the largest individual markets.
At the close of 2014 Norway's standing biomass stood at 725,100 tonnes round weight, up 4 per cent from the 694,400 tonnes it had at the close of 2013. At the close of 2014 the UK had a biomass of 87,800, 2 per cent more than a year before. At 295 900 tonnes, Chile's biomass was only marginally higher than 12 months previously. The total biomass in the Faeroes was estimated to be 39,200 tonnes at the close of the year, down 9 per cent on a year before.
than in 2014. This is due primarily to the fact that the entire volume harvested by Villa Organic, in which SalMar had a 50.4 per cent shareholding, was included in the figures for the first half of 2014. In total, SalMar expects to harvest 139,000 tonnes in 2015. This is based on 100 wholly owned production licences and joint operation of 14 licences owned by partner organisations. In 2015 a larger proportion of the output will be switched to a socalled green operating concept, with associated requirements with respect to equipment and operational standards. In 2016 a total of 16 licences will be linked to "green production". This is part of the award criteria for the acquisition of eight green licences. In total this means that SalMar expects the cost price of the harvested biomass to be higher in 2015 than in 2014. SalMar will continue its ongoing investment programme, and expects to invest around NOK 400 million in 2015. The bulk of this will be associated with marine-phase production. Investments in increased smolt capacity in Northern Norway continue as planned, and the facility is expected to be completed in the second half of 2016. Around NOK 200 million of this investment will accrue in 2015. 5 2 5 3
It is expected that around 40 per cent of the volume will be harvested in the first half of the year, while the remaining 60 per cent will be harvested in the second half. Contract coverage in 2015 is, at the time of writing, just over 30 per cent of the expected harvested volume. The volume is highest in the first half of the year. The biological situation in Norway is challenging. The Group From a financial performance point of view, 2014 was an extremely good year for SalMar. High salmon prices and a record volume of fish harvested have generated the highest operating profit in the Group's history. The board deems SalMar's financial position to be extremely good and is therefore recommending a dividend of NOK 10.00 per share. In the opinion of the board, SalMar's financial capacity for continued growth is strong.
Preliminary forecasts for 2015 (Kontali) indicate a global increase in supply of around 3 per cent. Norway is the most important contributor, with an expected rise in output of approx. 4 per cent. In Chile, however, the strong growth of recent years is expected to tail off, with output expected to fall by 4 per cent in 2015. Output of Atlantic salmon from the Faeroes is also expected to fall by 10 per cent. Producers in North America are expected to increase their output by 20 per cent, while there will be only minor changes in output from the UK in 2015.
has several outbreaks of PD in Central Norway, and amoebic gill disease (AGD) has established itself in certain regions. The new regime for treating lice also results in higher costs than in previous years. Intensive treatment due to high concentrations of lice over longer periods has also resulted in resistance issues. SalMar is working continuously to stay well positioned to deal with biological challenges. This is done through investments in important The SalMar culture permeates the entire business, and the continuous development of the organisation is therefore a key focus area for the Group. The board would like to thank all the company's employees for their dedicated efforts, on which the SalMar Group's long-term success is based.
Frøya, 16th April 2015
Tove Elin Nedreberg Director
Pål Georg Storø
Director/Employee representative
Bjørn Flatgård
Chair
Kjell A. Storeide Director
Merethe Helene Holte Director
Leif Inge Nordhammer President & CEO
Hanne Kristine Tobiassen Director/ Employee representative
Gustav Witzøe Director
Pursuant to section 6-16a of the Public Limited Companies Act, the board of directors of SalMar ASA (the Company) has issued the following statement containing guidelines for the determination of salary and other benefits payable to the Company's CEO and other senior executives (collectively termed "senior executives") in the 2015 financial year. The statement was approved by the board of directors of SalMar ASA on 16 April 2015. In accordance with the provisions of sections 6-16a and 5-6 paragraph 3, the guidelines will be submitted to SalMar ASA's Annual General Meeting (AGM) on 2 June 2015 for a consultative vote, with the exception of clause 3 "Share-based incentive schemes", which will be submitted to the AGM for approval.
The guidelines in clause 3 "Share-based incentive schemes" are binding on the board. The remaining guidelines are not binding, though any deviations therefrom must be decided by the board. In the event of any such decision, the reason for deviating from the guidelines must be noted in the board meeting's minutes.
The board of directors determines the salary and other benefits payable to the CEO. The CEO determines the salary and other benefits payable to other senior executives. The board shall exercise general oversight of the remuneration paid to other senior executives, and may issue more specific guidelines for the remuneration of other senior executives in addition to those presented below. If the CEO wishes to offer remuneration to senior executives that exceeds such more specific guidelines, a proposal therefor shall be submitted to the board of directors for approval.
The Company's senior executive remuneration policy is based on the following main principles:
On the basis of these main principles, the board has drawn up the following remuneration structure for the company's senior executives.
Basic salary is the main element in the executive's compensation package. Basic salary shall correspond to the going rate in the market, and shall reflect the individual position's duties and level of responsibility.
The fish is sold either as whole gutted salmon (fresh or frozen), fillets, in individual portions or a wide range of other products, which are distributed to markets around the world.
SalMar has a bonus scheme for group management that is determined by the board of directors. The board carries out an annual assessment of the scheme and determines the bonus criteria for the coming year. Variable salary increments under the scheme may not exceed 33% of the individual executive's basic salary. The bonus criteria are threefold, and are linked to the achievement of goals at the Group/divisional/ personal level.
SalMar has a share-based incentive scheme for senior executives in the Group. The first such programme was approved by the AGM on 4 June 2014. The programme encompasses incumbents of senior positions and key individuals within the Group. The programme entitles the employee to receive shares free of charge. This entitlement accrues over a three-year period. The individual employee may be awarded share entitlements worth the equivalent of 6 months' salary. Accrual of 2/3 of the entitlements depends on the achievement of predefined performance criteria. The maximum amount the individual may earn in any one year under the scheme is capped at the equivalent of a full year's salary.
The intention is that the incentive scheme shall be continued with the establishment of annual programmes. The board will adjust these annual programmes as it deems necessary, and each individual programme will be submitted to the AGM for approval.
Members of group management participate in the Group's general pension scheme. The scheme is a defined contribution plan, in which contributions correspond to 7% of salary up to 12 G (G being the basic unit of calculation used by the Norwegian National Insurance Scheme).
In principle, senior executives must serve a 6-month period of notice. In selected cases, and depending on the position, severance pay of 6 to 12 months may be paid.
The Company shall not offer benefits-in-kind over and above these which are normal for senior executives in comparable companies.
In addition to that stipulated above, the Company may not offer senior executives any variable elements in the remuneration they receive or special benefits that supplement their basic salary.
The Company's senior executive remuneration policy for the 2014 financial year has been carried out in accordance with the statement for 2014 adopted by the AGM on 4 June 2014.
Passion for Salmon
| NOTE | 2014 | 2013 | ASSETS | NOTE | 2014 | 2013 |
|---|---|---|---|---|---|---|
| OPERATING REVENUES AND OPERATING EXPENSES | ||||||
| Sales revenues 23 |
7 160 010 | 6 228 305 | NON-CURRENT ASSETS | |||
| Other operating revenues | 25 877 | 17 555 | INTANGIBLE ASSETS | |||
| Total operating revenues | 7 185 887 | 6 245 860 | Licences, patents, etc | 4,20 | 2 451 271 | 2 030 710 |
| Goodwill | 4 | 447 372 | 433 348 | |||
| Change in stocks of goods in progress and finished goods | -162 119 | -324 914 | Total intangible assets | 2 898 643 | 2 464 058 | |
| Cost of goods sold | 3 337 411 | 3 376 109 | ||||
| Payroll costs 19,24 |
710 430 | 623 053 | PROPERTY, PLANT & EQUIPMENT | |||
| Depreciation of PP&E and intangible assets 4,5 |
275 765 | 220 820 | Land, building & other real property | 5,20 | 489 496 | 473 408 |
| Write-downs of PP&E 5 |
2 399 | 5 000 | Plant, equipment & operating consumables | 5,20 | 1 336 126 | 1 248 820 |
| Other operating expenses 5,12,21,24,25 |
1 142 953 | 1 086 299 | Vessels, vehicles, etc | 5,20 | 191 953 | 137 096 |
| Total operating expenses | 5 306 839 | 4 986 367 | Total property, plant & equipment | 2 017 575 | 1 859 324 | |
| Operational EBIT | 1 879 048 | 1 259 493 | ||||
| NON-CURRENT FINANCIAL ASSETS | ||||||
| Fair value adjustments 14 |
-232 349 | 528 176 | Investments in associates | 9 | 523 711 | 402 338 |
| Non-recurring gains on acquisitions 7 |
0 | 161 755 | Investments in shares & other securities | 10 | 519 | 384 |
| Operating profit | 1 646 699 | 1 949 425 | Pension fund assets | 10,12,19 | 1 592 | 802 |
| Other receivables | 10,12 | 13 403 | 5 225 | |||
| Revenues from investments in associates 9, 27 |
96 136 | 157 980 | Total non-current financial assets | 539 225 | 408 749 | |
| Total non-current assets | 5 455 443 | 4 732 131 | ||||
| FINANCIAL ITEMS | ||||||
| Interest income | 9 057 | 9 958 | CURRENT ASSETS | |||
| Financial income 27 |
2 044 | 374 357 | Biological assets | 13,20 | 3 114 684 | 3 077 150 |
| Interest expenses 17 |
124 193 | 168 053 | Other inventory | 13,20 | 206 454 | 171 539 |
| Financial expenses 27 |
902 | 1 596 | Total inventory | 3 321 138 | 3 248 689 | |
| Net financial items | -113 994 | 214 666 | ||||
| Profit before tax | 1 628 841 | 2 322 071 | RECEIVABLES | |||
| Tax 18 |
413 364 | 418 695 | Trade receivables | 10,12,20 | 888 219 | 662 149 |
| Net profit for the year | 1 215 477 | 1 903 376 | Other receivables | 10,11,12 | 292 644 | 217 584 |
| Total receivables | 1 180 863 | 879 733 | ||||
| COMPREHENSIVE INCOME | ||||||
| Items which may subsequently be reclassified to profit & loss | Bank deposits, cash & cash equivalents | 10,15,17 | 166 963 | 1 070 998 | ||
| Translation differences and items of comprehensive income in associates | 58 751 | 73 352 | Total current assets | 4 668 964 | 5 199 420 | |
| Translation differences in subsidiaries | 3 312 | 1 051 | TOTAL ASSETS | 10 124 407 | 9 931 551 | |
| Items which may not susequently be reclassified to profit & loss | ||||||
| Year's deviation in pension liability estimates | 0 | 242 | ||||
| Total comprehensive income for the year | 1 277 540 | 1 978 021 | ||||
| Non-controlling interests' share of net profit for the year | 22 977 | 113 335 | ||||
| Controlling interests' share of net profit for the year | 1 192 500 | 1 790 041 | ||||
| Non-controlling interests' share of comprehensive income | 22 977 | 113 335 | ||||
| Majority's share of comprehensive income | 1 254 563 | 1 864 686 | ||||
| Earnings per share/diluted earnings per share 28 |
10,53 | 15,80 | ||||
NOK 1000
| NON-CURRENT ASSETS | |||
|---|---|---|---|
| INTANGIBLE ASSETS | |||
| Licences, patents, etc | 4,20 | 2 451 271 | 2 030 710 |
| Goodwill | 4 | 447 372 | 433 348 |
| Total intangible assets | 2 898 643 | 2 464 058 | |
| PROPERTY, PLANT & EQUIPMENT | |||
| Land, building & other real property | 5,20 | 489 496 | 473 408 |
| Plant, equipment & operating consumables | 5,20 | 1 336 126 | 1 248 820 |
| Vessels, vehicles, etc | 5,20 | 191 953 | 137 096 |
| Total property, plant & equipment | 2 017 575 | 1 859 324 | |
| NON-CURRENT FINANCIAL ASSETS | |||
| Investments in associates | 9 | 523 711 | 402 338 |
| Investments in shares & other securities | 10 | 519 | 384 |
| Pension fund assets | 10,12,19 | 1 592 | 802 |
| Other receivables | 10,12 | 13 403 | 5 225 |
| Total non-current financial assets | 539 225 | 408 749 | |
| Total non-current assets | 5 455 443 | 4 732 131 | |
| CURRENT ASSETS | |||
| Biological assets | 13,20 | 3 114 684 | 3 077 150 |
| Other inventory | 13,20 | 206 454 | 171 539 |
| Total inventory | 3 321 138 | 3 248 689 | |
| RECEIVABLES | |||
| Trade receivables | 10,12,20 | 888 219 | 662 149 |
| Other receivables | 10,11,12 | 292 644 | 217 584 |
| Total receivables | 1 180 863 | 879 733 | |
| Bank deposits, cash & cash equivalents | 10,15,17 | 166 963 | 1 070 998 |
| Total current assets | 4 668 964 | 5 199 420 | |
| ASSETS | NOTE | 2014 | 2013 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| INTANGIBLE ASSETS | |||
| Licences, patents, etc | 4,20 | 2 451 271 | 2 030 710 |
| Goodwill | 4 | 447 372 | 433 348 |
| Total intangible assets | 2 898 643 | 2 464 058 | |
| PROPERTY, PLANT & EQUIPMENT | |||
| Land, building & other real property | 5,20 | 489 496 | 473 408 |
| Plant, equipment & operating consumables | 5,20 | 1 336 126 | 1 248 820 |
| Vessels, vehicles, etc | 5,20 | 191 953 | 137 096 |
| Total property, plant & equipment | 2 017 575 | 1 859 324 | |
| NON-CURRENT FINANCIAL ASSETS | |||
| Investments in associates | 9 | 523 711 | 402 338 |
| Investments in shares & other securities | 10 | 519 | 384 |
| Pension fund assets | 10,12,19 | 1 592 | 802 |
| Other receivables | 10,12 | 13 403 | 5 225 |
| Total non-current financial assets | 539 225 | 408 749 | |
| Total non-current assets | 5 455 443 | 4 732 131 | |
| CURRENT ASSETS | |||
| Biological assets | 13,20 | 3 114 684 | 3 077 150 |
| Other inventory | 13,20 | 206 454 | 171 539 |
| Total inventory | 3 321 138 | 3 248 689 | |
| RECEIVABLES | |||
| Trade receivables | 10,12,20 | 888 219 | 662 149 |
| Other receivables | 10,11,12 | 292 644 | 217 584 |
| Total receivables | 1 180 863 | 879 733 | |
| Bank deposits, cash & cash equivalents | 10,15,17 | 166 963 | 1 070 998 |
| Total current assets | 4 668 964 | 5 199 420 | |
| TOTAL ASSETS | 10 124 407 | 9 931 551 |
AS AT 31 DECEMBER NOK 1000
AS AT 31 DECEMBER NOK 1000
Gustav Witzøe Director
Frøya, 16th April 2015
Tove Elin Nedreberg Director
Pål Georg Storø Director/Employee representative
Bjørn Flatgård Chair
Kjell A. Storeide
Director
Merethe Helene Holte Director
Leif Inge Nordhammer President & CEO
Hanne Kristine Tobiassen Director/Employee representative
| EQUITY AND LIABILITIES | NOTE | 2014 | 2013 | CASH FLOW FROM OPERATING ACTIVITIES NOTE |
2014 | 2013 |
|---|---|---|---|---|---|---|
| EQUITY | Profit before tax | 1 628 841 | 2 322 071 | |||
| PAID-IN EQUITY | Tax paid in the period 18 |
-25 843 | -6 528 | |||
| Share capital | 16 | 28 325 | 28 325 | Non-recurring gains on acquisitions 7 |
0 | -161 755 |
| Treasury shares | -325 | -325 | Depreciation and write-downs 4, 5 |
278 164 | 225 820 | |
| Share premium fund | 415 286 | 415 286 | Options charged to expenses 24 |
5 459 | 11 400 | |
| Other paid-in equity | 34 834 | 32 822 | Share of profit/loss from associates 9 |
-96 136 | -157 980 | |
| Total paid-in equity | 478 120 | 476 108 | Gains/losses on sale of non-current assets 5 |
628 | 2 455 | |
| Realised gains/losses on sale of non-current financial assets 27 |
0 | -259 047 | ||||
| RETAINED EARNINGS | Unrealised gains/losses associated with non-current financial assets 27 |
0 | -82 781 | |||
| Fair value adjustments 14 |
232 349 | -528 176 | ||||
| Distributable reserve | 4 598 535 | 4 246 867 | Change in inventory/biological assets | -198 512 | -179 677 | |
| Total retained earnings | 4 598 535 | 4 246 867 | Change in trade receivables | -219 863 | 34 593 | |
| Change in trade payables | -46 510 | -319 610 | ||||
| Non-controlling interests | 60 622 | 337 808 | Change in other time-limited items | 88 427 | 205 166 | |
| Total equity | 5 137 277 | 5 060 784 | Net cash flow from operating activities | 1 647 004 | 1 105 951 | |
| NON-CURRENT LIABILITIES | CASH FLOW FROM INVESTING ACTIVITIES: | |||||
| Deferred tax | 18 | 1 262 594 | 1 199 557 | Receipts from sale of property, plant & equipment 5 |
500 | 3 735 |
| Debt to credit institutions | 2,10,17 | 1 780 174 | 1 974 521 | Payments for purchase of property, plant & equipment and intangible assets4, 5 | -1 040 058 | -299 223 |
| Leasing liabilities and other non-current liabilities | 2,5,10,17 | 411 388 | 471 716 | Payments for acquisitions of businesses, net of cash acquired 7 |
-28 563 | -173 780 |
| Total non-current liabilities | 3 454 156 | 3 645 794 | Receipts from sale of shares and securities 27 |
0 | 1 190 113 | |
| Payments for purchase of shares and securities | 0 | -87 107 | ||||
| Dividend from associates and TRS shares 9 |
36 250 | 59 987 | ||||
| CURRENT LIABILITIES | Net receipts/payments from change in non-current financial assets | 0 | 4 975 | |||
| Debt to credit institutions | 2,10,17 | 276 667 | 397 186 | Net cash flow from investing activities | -1 031 871 | 698 700 |
| Trade payables | 10 | 409 485 | 515 856 | |||
| Tax payable | 18 | 321 839 | 25 843 | CASH FLOW FROM FINANCING ACTIVITIES: | ||
| Public charges payable | 10 | 143 757 | 93 532 | New long-term borrowings 17 |
1 804 874 | 50 000 |
| Other current liabilities | 10,11,22 | 381 226 | 192 556 | Repayment of long-term borrowings 17 |
-2 143 244 | -316 218 |
| Total current liabilities | 1 532 974 | 1 224 973 | Net change in overdraft 17 |
-18 989 | -274 595 | |
| Total liabilities | 4 987 130 | 4 870 767 | Interest received | 9 057 | 9 958 | |
| Total equity and liabilities | 10 124 407 | 9 931 551 | Interest paid 17 |
-124 193 | -168 053 | |
| CASH FLOW FROM OPERATING ACTIVITIES | NOTE | 2014 | 2013 |
|---|---|---|---|
| Profit before tax | 1 628 841 | 2 322 071 | |
| Tax paid in the period | 18 | -25 843 | -6 528 |
| Non-recurring gains on acquisitions | 7 | 0 | -161 755 |
| Depreciation and write-downs | 4, 5 | 278 164 | 225 820 |
| Options charged to expenses | 24 | 5 459 | 11 400 |
| Share of profit/loss from associates | 9 | -96 136 | -157 980 |
| Gains/losses on sale of non-current assets | 5 | 628 | 2 455 |
| Realised gains/losses on sale of non-current financial assets | 27 | 0 | -259 047 |
| Unrealised gains/losses associated with non-current financial assets | 27 | 0 | -82 781 |
| Fair value adjustments | 14 | 232 349 | -528 176 |
| Change in inventory/biological assets | -198 512 | -179 677 | |
| Change in trade receivables | -219 863 | 34 593 | |
| Change in trade payables | -46 510 | -319 610 | |
| Change in other time-limited items | 88 427 | 205 166 | |
| Net cash flow from operating activities | 1 647 004 | 1 105 951 | |
| CASH FLOW FROM INVESTING ACTIVITIES: | |||
| Receipts from sale of property, plant & equipment | 5 | 500 | 3 735 |
| Payments for purchase of property, plant & equipment and intangible assets4, 5 | -1 040 058 | -299 223 | |
| Payments for acquisitions of businesses, net of cash acquired | 7 | -28 563 | -173 780 |
| Receipts from sale of shares and securities | 27 | 0 | 1 190 113 |
| Payments for purchase of shares and securities | 0 | -87 107 | |
| Dividend from associates and TRS shares | 9 | 36 250 | 59 987 |
| Net receipts/payments from change in non-current financial assets | 0 | 4 975 | |
| Net cash flow from investing activities | -1 031 871 | 698 700 | |
| CASH FLOW FROM FINANCING ACTIVITIES: | |||
| New long-term borrowings | 17 | 1 804 874 | 50 000 |
| Repayment of long-term borrowings | 17 | -2 143 244 | -316 218 |
| Net change in overdraft | 17 | -18 989 | -274 595 |
| Interest received | 9 057 | 9 958 | |
| Interest paid | 17 | -124 193 | -168 053 |
| Payments for redemption of options | 24 | -10 219 | -20 553 |
| Cash effect exit of non-controlling interests | 8 | -133 373 | -70 445 |
| Cash effect exit of subsidiaries | 8 | -7 538 | 0 |
| Payment of dividend | -898 208 | -133 | |
| Other changes | -648 | 0 | |
| Net cash flow from financing activities | -1 522 481 | -790 039 | |
| Net change in bank deposits, cash & cash equivalents | -907 348 | 1 014 612 | |
| Foreign exchange effects | 3 312 | 1 051 | |
| Bank deposits, cash & cash equivalents as at 1 Jan | 1 070 998 | 55 336 | |
| Bank deposits, cash & cash equivalents as at 31 Dec | 166 963 | 1 070 998 | |
| Unused drawing rights | 17 | 3 136 193 | 2 039 288 |
Restricted funds account for NOK 129,627,000 of the company's cash & cash equivalents of NOK 166,963,000, cf. Note 15.
AS AT 31 DECEMBER NOK 1000
The farming of fish for human consumption takes place in net-pens, large enclosed nets suspended in the sea by flotation devices. In addition to a solid anchorage, net-pens require regular cleaning and adequate measures to prevent the farmed fish from escaping. Growth in the net-pens is affected by feeding, light and water quality. Here too the fish are sorted as they develop and grow. Statement of Equity
| NOK 1000 | Share | Other | Distri- | Non | |||||
|---|---|---|---|---|---|---|---|---|---|
| 2013 | NOTE | capital | Share Treasury premium shares |
fund | paid-in Translation equity differences |
reserve | butable controlling interests |
Total equity |
|
| Equity as at 1 Jan 2013 | 28 325 | -325 415 286 49 957 | 93 2 338 076 136 300 2 967 713 | ||||||
| Net profit for the year | 1 790 041 | 113 335 1 903 376 | |||||||
| COMPREHENSIVE INCOME | |||||||||
| Translation differences | |||||||||
| in associates | 9 | 82 163 | 82 163 | ||||||
| Items of comprehensive | |||||||||
| income in associates | 9 | -8 811 | -8 811 | ||||||
| Translation differences in subsidiaries | 1 051 | 0 | 1 051 | ||||||
| Reclassification of pensions Total comprehensive income |
1 051 | 242 73 595 |
0 | 242 74 645 |
|||||
| Total comprehensive income for the year | 1 051 1 863 635 113 335 1 978 021 | ||||||||
| TRANSACTIONS WITH SHAREHOLDERS | |||||||||
| Options granted | 24 | 1 296 | 1 296 | ||||||
| Reclassification of options | 24 | -18 430 | 1 210 | -17 221 | |||||
| Additions of non-controlling | |||||||||
| interests | 7 | 0 | 201 086 | 201 086 | |||||
| Buyout of non-controlling interests | 8 | 42 468 -112 913 | -70 445 | ||||||
| Other changes | 334 | 334 | |||||||
| Total transactions with shareholders | 0 | 0 | 0 -17 134 | 0 | 44 011 | 88 173 | 115 051 | ||
| Equity as at 31 Dec 2013 | 28 325 | -325 415 286 32 822 | 1 145 4 245 724 337 808 5 060 784 |
| 6 0 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SA LM |
2014 | NOTE | capital | Share Treasury premium shares |
Share fund |
Other | paid-in Translation equity differences |
Distri- reserve |
Non butable controlling interests |
Total equity |
| AR AN |
Equity as at 1 Jan 2014 | 28 325 | -325 415 286 32 822 | 1 145 4 245 724 337 808 5 060 784 | ||||||
| NU AL RE |
Net profit for the year | 1 192 500 | 22 977 1 215 477 | |||||||
| PO RT |
COMPREHENSIVE INCOME | |||||||||
| 20 | Translation differences in associates | 9 | 58 911 | 58 911 | ||||||
| 14 | Items of comprehensive income | |||||||||
| in associates Translation differences in subsidiaries |
9 | 3 312 | -160 0 |
-160 3 312 |
||||||
| Total comphrehensive income | 3 312 | 58 751 | 0 | 62 063 | ||||||
| Total comphrehensive income for the year | 3 312 1 251 251 | 22 977 1 277 540 | ||||||||
| TRANSACTIONS WITH SHAREHOLDERS | ||||||||||
| Award of options | 24 | 0 | 0 | 2 012 | 0 | 0 | 2 012 | |||
| Payment of dividend | 24 | 0 | -896 000 | -2 208 | -898 208 | |||||
| Additions non-controlling interests | 7 | 0 | 27 656 | 27 656 | ||||||
| Exit non-controlling interest | ||||||||||
| and subsidiaries | 8 | -6 392 -325 612 | -332 003 | |||||||
| Other changes | -509 | 0 | -509 | |||||||
| Total transactions with shareholders | 0 | 0 | 0 | 2 012 | 0 -902 900 -300 164 -1 201 044 | |||||
| Equity as at 31 Dec 2014 | 28 325 | -325 415 286 34 834 | 4 458 4 594 077 | 60 622 5 137 277 |
SALMAR
SalMar ASA is registered and domiciled in Norway, and the company's shares are traded on the Oslo Stock Exchange. The company's head office is located in Frøya. The consolidated financial statements were formally approved by the board of directors on 16 April 2015.
The most important accounting principles used in the preparation of the consolidated financial statements are presented below. These principles are applied in the same way in all the periods presented unless otherwise indicated.
The consolidated financial statements have been drawn up in accordance with IFRS and interpretations determined by the International Accounting Standards Board that have been approved by the EU.
The consolidated financial statements are based on the principles of historic cost, with the exception of the following accounting items, which are recognised at fair value:
IFRS 10 Consolidated Financial Statements replaces parts of IAS 27 Consolidated and Separate Financial Statements, and deals with the definition of subsidiaries. IFRS 10 places greater emphasis on actual control that the previous regulations. Pursuant to the new standard, control is deemed to exist when the investor has power over relevant activities performed by the object of the investment, there is a risk of variable returns, and force may be used to influence returns on the investment. Implementation of the standard has had no impact on the Group's profit/loss or financial position.
IFRS 11: Joint Arrangements. The standard replaces IAS 31 Interests in Joint Ventures, and regulates the recognition of businesses in which the company has joint control along with other entities. The Group has no investments covered by IFRS 11, and implementation of the standard will therefore have no impact on the Group's profit/loss or financial position.
IFRS 12 Disclosure of Interest in Other Entities. The standard replaces the requirements relating to notes to financial statements in IAS 28 Investments in Associates and Joint Ventures, and contains new disclosure requirements with respect to financial interests in subsidiaries, associates and jointly controlled entities. The purpose of the standard is to provide information on the properties and risks associated with the Group's investments in such companies, and what effect this has on the Group's balance sheet, income statement and cash flows. Implementation of the standard has had no impact on the Group's profit/loss or financial position, but the notes to the financial statements for 2014 comply with the standard.
IAS 36 Impairment of Assets. The amendment to the standard results in a requirement to provide information on the recoverable amount of assets that have been written down, if it is set to fair value less sales costs. The change must be seen in conjunction with IFRS 13 Fair Value Measurement. The implementation of the standard has had no impact on the Group's profit/loss or financial position.
as equity transactions. In connection with the purchase of shares from non-controlling interests, the difference between the consideration paid and the shares' relative share of the book value of the subsidiary's net assets is recognised in the parent company's equity. Gains and losses deriving from the sale of shares to noncontrolling interests is recognised correspondingly in equity.
The consolidated financial statements have been prepared in accordance with uniform accounting principles for similar transactions in all the companies included in the consolidated accounts. All material transactions and balances between group companies have been eliminated. The acquisition method is used in connection with the recogni-The Group has investments in associates. Associates are entities over whose financial or operational management the Group has significant influence, but not control or joint control. The factors used to determine whether the Group has a decisive influence over a company correspond to those used to assess control of subsidiaries – see the discussion above.
Standards, amendments to and interpretations of existing standards that have not come into force and that the Group has elected not to implement ahead of time
Standards and interpretations which have been adopted prior to publication of the consolidated financial statements, but which will come into effect at a future date, are listed below. Only standards that are expected to affect the consolidated financial statements are presented.
tion of business combinations. Subsidiaries are consolidated from the date on which the Group achieves control, and are excluded from consolidation when control is ceded. This means that the acquired company's assets and liabilities are reported at fair value on the date of acquisition, with any excess value being classified as goodwill. IAS 27 and IFRS 3 build largely on the entity perspective in connection with acquisitions where control is established. The exception is goodwill, where for each acquisition it is optional whether to recognise only the controlling owner's share or 100 per cent. For acquisitions undertaken by the Group up until 31 December 2014, only SalMar's share of goodwill is included in the balance sheet. With respect to future acquisitions, the allocation of goodwill will be assessed on an individual basis. In those cases where the fair value of the acquired assets exceeds the amount paid, the difference is treated as income in profit and loss. Deferred tax is capitalised to the extent to which identifiable excess values ascribed to assets and liabilities lead to an increase or decrease in future tax payable when these differences are reversed in future periods. Deferred tax is capitalised and calculated using a nominal, undiscounted tax rate. Associates are recognised in accordance with the equity method from the date on which significant influence is achieved until such influence is ceded. In connection with initial recognition, associates are valued at acquisition cost. The Group's share of the profit/loss from associates is recognised in the capitalised value of the unit, while the Group's share of profit/loss is recognised in the Group's profit and loss. Goodwill relating to associates is included in the capitalised value of the investment, and is not tested individually for impairment. The Group's share of profit/loss from investments in associates is presented on a separate line in the Income Statement. Correspondingly, the Group's share of sums recognised directly in equity in underlying investments is presented in the Group's statement of equity. Unrealised gains associated with transaction with associates are eliminated against the Group's share of the business.
IFRS 9 Financial Instruments introduces new requirements for the classification and measurement of financial assets. No assessment has been made of the extent to which the standard may affect the Group's accounting for financial assets. The standard continues the classification rules for financial liabilities, but changes the presentation of adjustments in value associated with own credit risk for liabilities that are voluntarily classified at fair value in profit and loss. The standard is compulsory with effect from 1 January 2018.
IFRS 15 Revenues from Contracts with Customers is a new shared standard for revenue recognition, and replaces all existing standards and interpretations relating thereto. The standard applies to all revenue contracts, and contains a model for recognition and measurement of sales of certain non-financial assets. The standard is not likely to have any material impact on the Group's revenue recognition principles. It is expected to be implemented on 1 January 2017 at the earliest.
The consolidated financial statements include SalMar ASA and its subsidiaries as at 31 December 2014. The Group therefore controls an entity in which it has invested when, and only when the Group:
loss. Fair value subsequently represents acquisition cost in future accounting periods, either as an investment in an associated company, jointly controlled entity or financial asset. Amounts which were previously recognised in comprehensive income relating to this company are treated as if the Group had divested the underlying assets and liabilities. This may mean that amounts which have previously been recognised in comprehensive income are reclassi-If an investment ceases to be an associate, such that the equity method no longer applies, the remaining shareholding is measured at fair value. Important accounting estimates and evaluations Preparation of the financial accounts in accordance
• has power over the entity
When shares are acquired in stages, the value of the assets and liabilities on the date the Group was formed is utilised. Later acquisition of assets in existing subsidiaries will not affect the value of assets or liabilities. When the Group no longer has control, any remaining shareholding is measured at fair value, with changes recognised in profit and Should indications of impairment arise, the book value of the investment is written down. Any impairment in value is recognised in the share of profit/loss from associates in the financial statements. When the Group's share of losses exceeds the investment in an associate, the Group's capitalised value is written down to zero, and no further losses are recognised. 6 2 6 3
fied to profit and loss. The SalMar ASA Group See Note 6 for information on the consolidated companies. Non-controlling interests The share of the profit or loss after tax attributable to non-controlling interests is presented on a separate line after the Group's net profit for the year. The share of equity attributable to noncontrolling interests is presented on a separate line under group equity. Transactions with minority interests in subsidiaries are recognised with IFRS requires that management make evaluations, estimates and assumptions that affect the application of accounting principles and the book value of assets and liabilities in the balance sheet, as well as figures for revenue and expenses for the financial year. Estimates and their underlying assumptions are based on historical experience and other factors deemed relevant and probable at the time the evaluations are made. These evaluations affect the book value of the assets and liabilities where the valuation is not based on other sources. Estimates are reviewed continuously and final values and results may differ from these estimates. Changes in accounting estimates are included in the period in which the changes occur.
If the Group has a majority of the voting rights in an entity, the entity is presumed to be a subsidiary of the Group. To substantiate this presumption, and where the Group does not hold a majority of the voting rights, the Group considers all relevant facts and circumstances to evaluate whether the Group has control over the entity in which it has invested. This includes assessing the size of its shareholding, its voting share, the shareholder structure and its relative strength, as well as options controlled by the Group and shareholder agreements or other agreements. The assessment is performed for each investment. A reassessment is performed when facts and circumstances indicate that changes have taken place in one or more of the controlling elements. As at 31 December, SalMar ASA had a majority of voting rights in all its subsidiaries.
The evaluations and estimates deemed to be of greatest significance for the Group are as follows:
Fair value adjustment of the biomass In accordance with IAS 41, the Group measures live fish at fair value. The difference between the fair value of
the biological assets at the start of the period and at its close is recognised as a positive or negative adjustment. The estimate of fair value is based on market prices of the particular weight class on the balance sheet date. The sales prices used are based on external forward prices, contract prices and/or the most relevant information available for the period in which the fish is due to be harvested. The calculation of fair value is based on estimates for volume, quality and normal production, harvesting and sales costs.
Fair value adjustment of the biomass based on these estimates has no impact on cash flow and does not affect Operational EBIT.
Other biological assets (roe and smolt) are valued at cost price, since little biological transformation has occurred.
See Note 13 'Inventory and biological assets' for further details.
See Note 4 'Intangible assets' for further details.
In connection with an acquisition the cost price of the acquired en tity must be allocated such that the opening balance in the Group's accounts reflects the estimated fair value of the acquired assets and liabilities. To determine the fair value at acquisition alternative methods are used to determine the fair value of assets for which there is no active market. Value in excess of that which can be at tributed to identifiable assets and liabilities is recognised in the balance sheet as goodwill. If the fair value of equity in the acquired entity exceeds the consideration paid, the excess is immediately recognised as income. The allocation of cost price in connection with business combinations changes if new information is ob tained with respect to the fair value on the date of takeover and assumption of control, no later than 12 months after the acquisi tion took place.
See Note 7 'Business combinations' for further details.
The Group classifies leasing agreements in accordance with IAS 17. Operating assets which are leased on terms which transfer the bulk of the financial risk and control to the company (financial leasing) are recognised in the balance sheet as property, plant and equipment, and the corresponding leasing liability is included un der non-current liabilities at the present value of the leasing pay ments. The Group's most important leasing agreement is that with Nordskag Næringspark for the InnovaMar fish landing facility. For tion cycle or fall due for payment within 12 months are classified
the presentation currency are translated thus:
The book value of goodwill and intangible assets with an indeter minate lifespan is tested for impairment at least once a year, and more frequently if there are indications that a write-down may be necessary. This requires an estimate of the utility value of the cash-flow generating entity to which goodwill and intangible as sets can be ascribed. To determine the utility value the Group must estimate the expected future cash flows from the cash-flow gen erating entity and, moreover, select a suitable discount rate with which to calculate the present value of these cash flows. Expecta tions regarding future cash flows will vary over time. Changes in market conditions and expected cash flows may result in future write-downs. The most important assumptions with an impact on the present value of cash flows associated with investments are the applicable discount rate, the estimated price of salmon in the Group's markets, production costs, production volume and that there will continue to be a market for salmon in the geographical areas in which it operates. 6 4 6 5
as current liabilities. Other liabilities are classified as non-current. Any proposed dividend is not capitalised as a liability until the Group has assumed an irrevocable obligation to pay the dividend, normally after it has been authorised by the Annual General Meeting. Intangible assets that are purchased individually are capitalised at fair value. Intangible assets acquired in connection with the purchase of a business entity are capitalised at acquisition cost when the criteria for separate posting are met.
sets and liabilities in the acquired entity and are translated at the exchange rate in effect on the balance sheet date.
The next year's instalment on long-term debt is classified as a cur rent liability. Changes in the fair value of biological assets are presented on a Intangible assets with a limited economic lifespan are depreciated systematically. Intangible assets are writ ten down to their recoverable value if the expected fi nancial benefits do not cover their book value and any remaining production costs.
accounting purposes, this leasing agreement is treated as a financial leasing item, see Note 5 for further de tails. Important factors relating to a subjective assess ment of those elements in the agreement of signifi cance to its classification for accounting purposes are the present value of the minimum rent payable, includ ing the discount rate applied, as well as various stipula tions in the leasing agreement concerning the extent to which the bulk of risk and benefits associated with ownership lie with the lessor or the lessee.
separate line under operating profit/loss, along with the unreal ised value of Fish Pool contracts and any change in the unrealised value of forward currency contracts that have been entered into to hedge future deliveries. Operating profit/loss is reported before fair value adjustment of the biomass in order to show the Group's underlying sales performance during the period. Foreign currencies Costs relating to research and development are charged as expenses as they accrue. R&D costs are capitalised when specific criteria are met. Capitalised R&D costs are recognised at acquisition cost less ac cumulated depreciation and write-downs. Capitalised R&D costs are depreciated in a straight line over the asset's estimate period of use.
The consolidated financial statements are presented in Norwegian kroner (NOK), which is also the parent company's functional cur rency and the Group's presentation currency. All companies, with the exception of the wholly owned subsidiary SalMar Japan KK use NOK as their functional currency. All transactions in foreign cur rencies are translated into NOK at the time the transaction takes place. Realised foreign exchange gains/losses deriving from the settlement and translation of monetary items in foreign currencies at the rate in effect on the balance sheet date are recognised in operational EBIT. Any foreign exchange differences on monetary items that are part of the net investment in a foreign entity are recognised in comprehensive income. Breeding nuclei are capitalised at acquisition cost, less accumulated depreciation and write-downs. Licences are capitalised at cost. Licences are not depreciated, since the rights they confer are perpetual, but are tested annually for impairment. Any excess value identified in connection with the acquisition of licence leasing agreements is capitalised as an intan gible asset. Prepaid leasing costs associated with partnership
Revenues from the sale of goods are taken to income when both risk and control have been largely trans ferred to the customer. This will normally occur at the moment of delivery. Revenue is recognised at the value of the consideration when the transaction takes place. Operating revenues are recognised less public charges, discounts, bonuses and other sales costs. The timing of the transfer of risk to the customer depends on the delivery terms stipulated in the sales contract. Delivery terms vary from country to country and from customer to customer.
Dividend is taken to income when the shareholders' right to receive a dividend has been authorised by the Annual General Meeting.
Operating grants are recognised periodically and clas sified together with the revenue they are intended to augment or the expense they are intended to reduce. Investment grants are recognised as a deferred rev enue, and are taken to income in line with depreciation of the investment they are intended to cover.
The fair value of currency hedging instruments is calculated on the balance sheet date at the market price for contracts with a similar maturity profile. Changes in the fair value of such instruments are recognised in the profit and loss account under operational EBIT when they do not meet the requirements for hedge accounting. The exception is a change in the fair value of forward currency contracts which have been entered into to hedge future deliveries. These are recognised in profit and loss on the line for fair value adjustments. Financial derivatives are classified as current assets or current liabilities in the balance sheet. The profit and loss account and balance sheet of group companies (none with hyperinflation) with a functional currency other than asset. Leasing costs are charged as expenses over the period of the lease. When another business entity is taken over for a con sideration that exceeds the value of the individual assets, the difference is entered as goodwill in the balance sheet. Goodwill deriving from the purchase of subsidiaries is included under intangible assets, while goodwill deriving from the acquisition of associ ates is included under shares in associates. Goodwill is entered at historic cost less accumulated depreciation up to 2004.
Operating segments are reported in the same way as they are reported internally to the company's highest decision-making bodies. The company's highest deci sion-making body, which is responsible for the alloca tion of resources and the evaluation of the operating segments' earnings, is defined as group management. The Group has two business activities: the farming of salmon and trout on the one hand, and its processing and sale on the other. The fish farming segment is divided into three regions: Fish Farming Central Nor way, Fish Farming Northern Norway and Fish Farming Rauma. These three are defined as separate segments which are reported and administered as such internally. In addition, a Sales & Processing segment reports sep arately. Furthermore, the Group acquired 51.4 per cent of the shares in the Villa Group with effect from 30 June 2013. The Villa Group was reported and adminis tered internally as a separate segment up until 30 June 2014, when the company was demerged. See Note 3 for further details.
a) The balance sheet is translated at the exchange rate in effect on the balance sheet date. b) The profit and loss account is translated at the average exchange rate (if the average does not give generally reasonable estimate of the transaction rate, the actual transaction rate is used). c) Translation differences are recognised in comprehensive income and are specified as a separate item under equity. Translation differences relating to net investments in non-Nor wegian businesses and financial instruments designated as hedg ing instruments are recognised in comprehensive income and as a separate item under equity. In connection with the sale of all or part of a foreign business the associated translation difference is reclassified from comprehensive income to ordinary profit and loss as part of the gain/loss from the sale. Goodwill and excess values deriving from the acquisition of foreign entities are treated as as - Goodwill is not depreciated (after 1 January 2005), but is tested annually for impairment, or more often if there are indications that its value is lower than book value. When assessing the need to write down good will, it is assigned to relevant cash flow-generating entities or those groups which are expected to ben efit from the acquisition. Write-downs are performed in accordance with an assessment of the recoverable value of each of the cash flow-generating entities to which the goodwill is assigned. To identify the Group's cash flow-generating entities the assets are grouped according to the lowest level to which separate and independent cash flows may be ascribed. Recoverable value is calculated on the basis of value in use. This is arrived at by estimating future cash flows for the next three years based on approved budgets and forecasts. Cash flows after three years are assumed to equal the expected rate of inflation. Cash flows are discounted
Liquid assets consist of cash and bank deposits.
Assets which form part of the production cycle or fall due for payment within 12 months are classified as current assets. Other assets are classified as non-cur rent assets. Liabilities which form part of the produc -
agreements are deemed to confer the right to use of an intangible asset and are classified as an intangible by a rate of interest before tax which takes account of relevant market risk. If the calculated value in use is lower than the book value of the cash flow-generating entity, goodwill is written down first and then other assets as required.
Property, plant and equipment are capitalised at acquisition cost, less accumulated depreciation and write-downs. Interest on building loans is part of acquisition cost. When assets are sold or divested, the book value is deducted and any loss or gain posted to profit and loss. Ordinary depreciation commences from the date on which the asset goes into normal operation, and is calculated on the basis of its economic lifespan. Depreciation is assigned in a straight line over the expected economic lifespan of the asset, taking into consideration its estimated residual value. If an asset comprises significant components with varying lifespans, these components are depreciated separately. The scrap value of the property, plant and equipment, as well as the depreciation period and depreciation method employed, are reassessed annually.
Facilities under construction are not depreciated. Depreciation is charged to expenses when the facilities are ready for use.
If the situation or circumstances indicate that the book value of an asset cannot be recovered, an assessment is made about whether to write down its value. If the recoverable value of a non-current asset is lower than its book value and the impairment is not ex pected to be temporary, the asset is written down to recoverable value. The recoverable value is the higher of net sales price and value in use. Value in use is the present value of the future cash flows which the asset will generate.
In accordance with IAS 39, financial instruments falling within its remit are classified in the following categories: fair value with changes in value posted to profit and loss, hold until maturity, loans and receivables, available for sale, and other liabilities.
Financial instruments at fair value in profit and loss are financial assets held for trading purposes. A financial asset is classified in this category if it has been acquired primarily for the purpose of generating a gain from short-term price fluctuations. Derivatives are classified as being held for sale unless they are part of a hedg ing scheme. Assets in this category are classified as current assets.
Financial assets at fair value in profit and loss are recognised at fair value upon acquisition and the transaction costs charged as expenses. Following their initial capitalisation financial assets are recognised at fair value in profit and loss.
Loans and receivables are non-derivative financial assets with fixed or determinable payments which are not traded in an active market. They are classified as current assets unless they fall due for payment more than 12 months after the balance sheet date. Loans and receivables are presented in the balance sheet as trade receivables and other receivables, as well as cash and cash equiva lents.
Loans and receivables are capitalised initially at fair value plus transaction costs. In subsequent periods loans and receivables are valued at amortised cost using the effective interest method, less any losses deriving from impairment. Due to immaterial transac tion costs and short credit times, amortised cost equals nominal value less provisions for bad debts.
of biological assets for accounting purposes. The main rule is that such assets are recognised at fair value.
Roe and smolt are valued at cost.
fry, live fish in the sea and processed fish. Stocks of feed, packag ing materials, smolt and processed fish are valued at the lower of cost and net realisation value. The cost price of goods produced in-house is the full production cost. The FIFO principle is used in connection with the periodic assignment of inventory costs. Net realisation value is estimated sales price less variable finishing and sales costs. Live fish in the sea are recognised at fair value. Stocks of finished goods/frozen fish are valued at the lower of cost (fair (allocated to the parent company's shareholders) until the shares are cancelled or resold. If treasury shares are subsequently sold, the consideration received, less direct marginal transaction costs and associated tax effects, is recognised as an increase in equity allocated to the parent company's shareholders. Tax The tax expense is matched against the profit/loss
Borrowings are recognised at fair value when payment has been received, less transaction costs. In subse quent periods borrowings are recognised at amortised cost calculated using the effective interest method. The difference between the amount of the loan re ceived (less transaction costs) and its redemption value is posted to profit and loss over the term of the loan as part of the effective interest rate. Borrowing expenses are posted as deductions from the loan.
value at harvesting less sales costs) and net realisation value. Biological assets Biological assets (biomass) comprise salmon roe, smolt and fish in the sea. The way live fish are accounted for is regulated by IAS 41 Agri culture. IAS 41 contains a hierarchical method for the recognition before tax and comprises tax payable (tax on the year's direct taxable income) and changes in net deferred tax. Tax is recognised in profit and loss unless it refers to items which are posted in comprehensive income or are taken directly to equity. In this case tax is included in the net amount posted in comprehensive income or taken directly to equity.
The best estimate of the fair value of fish with a live weight of un der 1 kg is accumulated cost, while for harvestable fish with a live weight of more than 4 kg the fair value adjustment of the biomass is set to expected net profit/loss. For fish of between 1 kg and 4 kg live weight the fair value adjustment of the biomass is set to the proportional share of expected net profit/loss at harvest. As a result, this may lead to a downward adjustment in the fair value of biological assets. sheet date. Deferred tax in the balance sheet is a nominal amount calculated on the basis of temporary differences be tween accounting and tax values, as well as any tax loss carried forward at the end of the financial year.
Financial assets available for sale are non-derivative fi nancial assets which have been placed in this category by choice or because they do not belong in any other category. They are classified as non-current assets un less the investment falls due, or management intends to sell the investment, within 12 months of the bal ance sheet date. Financial assets available for sale are recognised at fair value, with any changes in fair value, apart from impairment loss, being recognised in comprehensive income. When securities classified as available for sale are sold or written down, the entire change in value that has been recognised in compre hensive income is reclassified as a financial item and posted to ordinary profit and loss.
Financial assets and liabilities are offset and presented net in the balance sheet when an enforceable offset ting entitlement exists and there is an intention to set tle net or realise the asset and settle the liability at the same time.
Changes in the fair value of the biomass are recognised in profit and loss on the line for fair value adjustments. Biomass farmed as part of partnership agreements is treated for accounting purposes as the Group's own fish, since the Group bears the risk associated with farming the fish. The net pension costs for the period are included under salaries and payroll costs. Pensions are recognised on the basis of a linear accrual profile and expected final salary. Estimate deviations are recognised in compre hensive income as they arise, and are amortised over the expected remaining accrual period.
Derivatives are capitalised at fair value on the date the derivative contract was entered into, and thereafter at the fair value in effect in subsequent periods. The way associated gains or losses are accounted for depends on the extent to which the derivative is designated as a hedging instrument, and if so what kind of hedging instrument.
The fair value of the biomass is calculated on the basis of mar ket price for the relevant weight class on the balance sheet date, corrected for sales costs, including harvesting costs and wastage. The market price is adjusted for quality variations. The sales prices used are based on external forward prices and/or the most rel evant price information available for the period in which the fish will be harvested. Deferred tax assets are capitalised when the probabil ity that a taxable income will be made, which will allow the asset to be utilised, can be documented. Deferred tax is calculated on the difference between the accounting and taxable values of licences. Deferred tax assets and liabilities are presented net in the balance sheet. 6 6 6 7
Fixed-price contracts The Group enters into sales contracts for salmon products on an ongoing basis. The contracts involve physical settlement, and de liveries associated with the contracts form part of the Group's nor mal business activities. The contracts are therefore not financial instruments under IAS 39. The contracts contain no built-in deriva tive elements. The Group switched from a defined-benefits to a de fined-contribution pension scheme with effect from May 2006. Any effects deriving from the change were posted to profit and loss. Pension premiums payable in connection with the defined-contribution scheme are charged to expenses as they accrue. The Group has no other liability over and above the annual contribution.
The Group classifies derivatives designated as hedg ing instruments as hedging of the fair value of an asset, liability or unrecognised binding pledge (fair value hedging). Derivatives not designated as hedging instruments are recognised at fair value in profit and loss. The Group has not employed hedge accounting in 2014.
Realised Fish Pool contracts are classified as operating items and unrealised changes in the value of Fish Pool contracts are classified as part of the fair value adjust ment of the biomass.
A provision is made with respect to fixed-price contracts resulting in an obligation on the part of the Group to sell harvestable fish at a lower price than that which forms the basis for an estimation of the fair value of the biomass. The impact on profit and loss for the year is posted to 'Fair value adjustments'. Share capital and share premium Ordinary shares are classified as equity. Transaction costs directly Share-based incentives The Group operates a share-based incentive scheme in which the companies receive services from the em ployees in return for equity instruments (RSU entitle ments) in the Group. The fair value of the services the entities received from employees in return for the RSU entitlements granted is recognised as a cost in profit and loss.
The fair value of a hedging derivative is classified as a non-current asset or non-current liability if the re maining term of the hedged object is longer than 12 months. If the remaining term is less than 12 months it is classified as a current asset or current liability. Deriv atives held for trading are classified as current assets or current liabilities.
related to equity transactions are recognised directly in equity, less tax. If a group company purchases shares in the parent com pany, the consideration paid for such treasury shares, including any transaction costs – less tax – is recognised as a reduction in equity The fair value of RSU entitlements is set on the date they are awarded. The fair value of the RSU entitle ments that are not at market terms is set as the share
Inventory consists of feed, packaging materials, roe,
Tax payable for the period is calculated in accordance with the tax legislation and regulations issued, or largely issued, by the tax authorities on the balance
price on the date the award was made. The probability of the performance criteria being met is taken into account when assessing how many RSU entitlements will be redeemed. The fair value of the RSU entitlements that are at market terms is calculated on the basis of a Monte-Carlo simulation. The most important input data when calculating the value of these RSU entitlements are the share price on the date of the award, volatility, risk-free interest, expected dividend and accrual period.
The value thus set is posted to profit and loss periodically over the options' accrual period, with a corresponding increase in paid-in equity. The accrual period is the period from the establishment of the scheme until the options are fully vested. Employer's national insurance contributions are recognised over the expected accrual period.
See Note 24 for further details of the Group's RSU scheme.
A provision is recognised when, and only when, the company has a valid liability (legal or self-imposed) deriving from an event which has occurred, and it is probable (more likely than not) that a financial settlement will take place as a result of that liability, and that the amount in question can be reliably quantified. Provisions are reviewed on each balance sheet date, and the level reflects the best estimate for the liability.
The Group classifies particular biological events on a separate line in profit and loss. Particular biological events means the culling of the entire salmon stock at sites suffering an outbreak of Pancreas Disease (PD), as ordered by the authorities, and individual incidents involving the escape of substantial numbers of salmon. The amount charged to expenses is a provision corresponding to the full production cost of the culled stock, and costs incurred in connection with the clean-up and closure of the site. In the event of escaped fish, the amount charged to expenses corresponds to the full production cost of the escaped fish, and costs incurred in connection with their recapture.
New information regarding the company's financial position on the balance sheet date which is received after the balance sheet date has been recognised in the year-end financial statements. Events after the balance sheet date which do not affect the company's financial position on the balance sheet date, but which will affect the company's future financial position are reported if material.
The Group's statement of cash flow shows a breakdown of the Group's overall cash flow into operating, investing and financing activities. The statement shows the individual activity's impact on liquid assets. Cash flow deriving from the acquisition and sale of businesses is presented under investing activities.
to foreign exchange risk in several currencies. This risk is particularly relevant with respect to the USD, EUR, GBP and JPY. Foreign exchange risk arises from future trading transactions, capitalised assets and liabilities, and net investments in foreign business operations.
Revenues and assets denominated in foreign currencies are partly hedged through the use of forward contracts and currency accounts. The use of forward currency contracts is described in Note 11.
Through its activities, the Group is exposed to various kinds of financial risk: market risk, credit risk and liquidity risk. The company's management assesses these risks on an ongoing basis and draws up guidelines for dealing with them. The Group makes use of financial derivatives to hedge against certain risks.
The Group has bank loans raised for the purpose of providing capital for investment in the company's business. In addition, the company has financial instruments such as trade receivables, trade payables, etc, which are ascribable directly to day-to-day business operations. For hedging purposes the company has certain forward currency contracts. The company does not make use of financial instruments, including financial derivatives, for the purpose of speculation.
Given the financial instruments in effect on 31 December 2014, a 10% fall in the value of the NOK would alter the Group's profit before tax by NOK 163,978,000 (NOK 147,045,000 in 2013). The Group's most important currencies are the USD, EUR, GBP and JPY. A 10% reduction in the exchange rate for each of these currencies as at 31 December 2014 would have had the following effect on the Group's profit before tax: EUR: NOK 122,648,000 JPY: NOK 18,259,000 GBP: NOK 22,816,000 USD: NOK 256,000 Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Cash flow forecasts are drawn up on a regular basis and the Accounts Dept monitors rolling forecasts of the Group's liquidity requirements to ensure that the Group has sufficient cash equivalents to meet operational liabilities, as well as at all times having adequate flexibility in the form of unused credit facilities (see Statement of Cash Flow), such that the Group does not infringe borrowing limits or specific borrowing conditions (if relevant). The Group's objective is to have sufficient cash, cash equivalents or medium-term credit facilities to meet its borrowing requirements in the short term. See Note 17 for details of the Group's available credit facilities.
| EUR: | NOK 122,648,000 | |
|---|---|---|
| JPY: | NOK 18,259,000 | |
| GBP: | NOK 22,816,000 | |
| USD: | NOK | 256,000 |
Operating assets which are leased on terms which transfer the bulk of the financial risk and control to the company (financial leasing) are recognised in the balance sheet as property, plant and equipment, and the corresponding leasing liability is included under noncurrent liabilities at the present value of the leasing payments. The asset is depreciated systematically and the liability is reduced by the leasing amount paid, less a calculated interest cost. The depreciation period is consistent with similar assets which are owned by the Group. Leasing payments with respect to operational leasing agreements are classified as operating expenses and are posted to profit and loss in a straight line over the term of the contract. 6 8 6 9
Since the Group has no material interest-bearing assets, its profit and loss and cash flow from operating activities are largely independent of changes in market rates.
The risk that counterparties do not have the financial strength to meet their obligations is considered low, since, historically, losses due to bad debts have been small. The Group has no material credit risk relating to individual counterparties or counterparties which may be considered a group due to similarities in the credit risk. The The table below details the Group's non-derivative financial liabilities classified by maturity structure. The figures presented in the table are undiscounted contractual cash flows. See Note 17 for details of the maturity structure.
Group has guidelines to ensure that sales are made only to customers that have not previously had payment problems, and that outstanding balances do not exceed fixed credit limits. Part of the total accounts receivable is insured. The gross credit risk on the balance sheet date corresponds to the Group's receivables portfolio on the balance sheet date. See Note 12.
The Group's interest rate risk derives from long-term borrowings. Borrowing at floating interest rates represents an interest rate risk for the Group's cash flow, which is partly reduced by the opposite effect on cash equivalents which earn floating interest. Fixed-rate loans expose the Group to fair value interest rate risk. The borrowing portfolio is currently at floating interest rates, which means that the Group is affected by changes in interest rates. Loans are capitalised at amortised cost, since the difference between amortised cost and fair value is negligible.
Given the financial instruments in effect on 31 December 2014, a 0.5% rise in the rate of interest would reduce the Group's profit by NOK 12,315,000 (NOK 13,965,000 in 2013), all other variables remaining constant.
The Group operates internationally, and is exposed
No changes were made in the guidelines covering this
area in 2014. The company monitors its capital management on the basis of the covenants stipulated. These are based on equity ratio and the ratio of net interest-bearing debt to EBITDA. See Note 17 for further details. The objective of the Group's capital management is to safeguard the Group's continued operations to secure a return on investment for shareholders and other stakeholders, and maintain an optimal structure for reducing capital costs. By ensuring a good debt-toequity ratio the Group will support its business operations, and thereby maximise the value of the Group's shares.
As at 31 December 2014 the Group's had an equity ratio of 50.7% (50.9% as at 31 December 2013). At the close of 2014 the Group had net interest-bearing debt of NOK 2,301,266,000 ( NOK 1,772,425,000 in 2013). The Group manages and makes changes to its capital structure in response to an ongoing assessment of the financial conditions under which the business operates, and its short and mediumterm outlook, including any adjustment in dividend payouts, buyback of treasury shares, capital reduction or issue of new shares.
| Maturity NOK 1000 | Total | 2015 | 2016 | 2017 | 2018 | 2019 After 2019 | |
|---|---|---|---|---|---|---|---|
| Long-term debt | 1 889 703 | 109 529 109 529 109 529 | 109 449 1 408 667 | 43 000 | |||
| Interest on long-term debt | 163 518 | 40 267 | 37 863 | 35 460 | 33 057 16 400 | 472 | |
| Financial leasing agreements | 450 070 | 43 989 | 28 613 | 19 869 | 16 581 13 421 | 327 596 | |
| Interest on financial | |||||||
| leasing agreements | 61 044 | 12 842 | 11 753 | 11 026 | 10 479 10 029 | 4 914 | |
| Other non-current liabilities | 5 308 | 1 635 | 3 271 | - | - | - | 402 |
| Short-term credit facilities | 123 149 | 123 149 | - | - | - | - | - |
| Interest on short-term debt | 1 231 | 1 231 | - | - | - | - | - |
| Trade payables | 409 485 | 409 485 | - | - | - | - | - |
| Total liabilities | 3 103 508 742 128 191 030 175 884 | 169 566 1 448 517 376 384 |
The table below presents the Group's assets and liabilities measured at fair value as at 31 December 2014. See Note 11 for details of forward contracts and Fish Pool contracts measured at fair value level 2. See also Note 13 for details of biological assets measured at fair value in level 3.
The table below shows financial instruments and liabilities at fair value in accordance with the valuation method. The various levels are defined as follows:
The fair value of trade receivables and trade payables is practically identical to their book value. The fair value of liabilities is practically identical to their book value. The Group has 'current terms', which is is considered to be the same as the market rate on the balance sheet date. Seen Note 17 for further details of interest terms.
| 31 Dec 2014 (NOK 1 000) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Assets | ||||
| Financial assets at fair value in profit and loss | ||||
| - Derivatives held for trading | - | 4 419 | - | 4 419 |
| Financial assets available for sale | ||||
| - Equity instruments | - | - | 519 | 519 |
| TOTAL assets | - | 4 419 | 519 | 4 938 |
| Liabilities | ||||
| Financial liabilities at fair value in profit and loss | ||||
| - Derivatives held for trading | - | 175 485 | - | 175 485 |
| Long-term debt to credit institutions | 1 780 174 | 1 780 174 | ||
| Leasing liabilities and other non-current liabilities | 411 388 | 411 388 | ||
| Short-term debt to credit institutions | 276 667 | 276 667 | ||
| TOTAL liabilities | - | 175 485 | 2 468 229 | 2 643 714 |
| The following table presents the changes in instruments classified in Level 3 as at 31 December 2014 |
Equity instruments available for sale |
Total |
|---|---|---|
| Opening balance | 384 | 384 |
| Investments during the period | 142 | 142 |
| Sales during the period | -7 | -7 |
| Gains/losses recognised in profit and loss | 0 | 0 |
| Closing balance | 519 | 519 |
| The following table presents the changes in instruments classified in Level 3 as at 31 December 2013 |
Equity instruments available for sale |
Total |
|---|---|---|
| Opening balance | 15 760 | 15 760 |
| Investments during the period | - | - |
| Sales during the period | -33 715 | -33 715 |
| Gains/losses recognised in profit and loss | 18 340 | 18 340 |
| Closing balance | 384 | 384 |
Operating segments are reported in the same way as they are reported internally to the company's highest decision-making bodies. The company's highest decision-making body, which is responsible for the allocation of resources and the evaluation of the operating segments' earnings, is defined as group management. Group management evaluates the segments' performance on the basis of Operational EBIT, as well as particular biological events. Depreciation and the realisation of excess value from tangible and intangible assets deriving from acquisitions are, with the exception of the acquisition of Villa Organic, not allocated to the segments. Costs relating to jointly operated licences and the results of the subsidiary SalMar Japan K.K. are also included in the column for eliminations.
| 31 Dec 2013 (NOK 1 000) | Level 1 | Level 2 | Level 3 | Total | See Note 8 for further details of the transaction. |
|---|---|---|---|---|---|
| Assets | |||||
| Financial assets at fair value in profit and loss - Derivatives held for trading |
- | 17 636 | - | 17 636 | |
| Financial assets available for sale - Equity instruments |
- | - | 384 | 384 | Fish farming Fish farming Fish farming Sales & Other/ Salmar |
| TOTAL assets | - | 17 636 | 384 | 18 020 | 2014 NOK 1000 Central Norway Northern Rauma Processing Villa eliminations Group Norway |
| Liabilities | External operating revenues 71 157 1 177 6 708 122 405 431 7 185 887 |
||||
| Financial liabilities at fair value in profit and loss | Internal operating revenues 2 863 511 1 371 957 780 871 139 643 122 097 -5 278 079 |
||||
| - Derivatives held for trading | - | 2 687 | - | 2 687 | TOTAL operating revenues 2 863 511 1 443 114 782 048 6 847 765 527 528 -5 278 079 7 185 887 |
| Long-term debt to credit institutions | 1 974 521 | 1 974 521 | Depreciation 113 589 59 605 35 075 53 345 13 720 430 275 764 |
||
| Leasing liabilities and other non-current liabilities | 471 716 | 471 716 | Write-downs 2 106 293 2 399 |
||
| Short-term debt to credit institutions | 397 186 | 397 186 | Operating expenses 1 803 675 906 297 532 319 6 654 614 349 308 -5 217 538 5 028 675 |
||
| TOTAL liabilities | - | 2 687 | 2 843 423 | 2 846 110 | Operational EBIT 946 247 477 212 214 654 137 700 164 500 -61 264 1 879 049 |
The Group has two business activities: the faming of salmon and trout on the one hand, and its processing and sale on the other. The fish farming segment is divided into three regions: Fish Central Norway, Fish Farming Northern Norway and Fish Farming Rauma. These three are defined as separate segments which are report and administered as separate internal business areas. In addition, a Sales & Processing segment reports separately. Furthermore, the SalMar Group acquired 51.4% of the shares in the Villa Group with effect from 30 June 2013. The Villa Group has been reported and administered internally as a separate segment. The Villa segment comprises both fish farming and processing activities. On 30 June 2014 SalMar and the other major shareholder in Villa Organic (Lerøy Seafood Group ASA) decided to divide Villa between themelves. This was accomplished with effect from 1 July 2014, and SalMar's operations in the Villa Group have been incorporated into SalMar Laksefjorden AS. Following the division of Villa, SalMar Laksefjorden owns eight licences, and with effect from 1 July 2014 its operations have been integrated into the segment Fish Farming Northern Norway. Information needed to restate comparable figures following the restructuring is not available. See Note 8 for further details of the transaction. Sales between segments are carried out in accordance with the arm's length principle. When revenues from external parties are reported to group management they are measured at the same amount recognised in profit and loss. Assets and liabilities allocated to segments are not reported to group management. In 2014 the company had no individual customers which accounted for more than 10% of the Group's sales revenues. In 2013 the Group had one customer who accounted for more than 10% of sales revenues. Sales to this customer in 2013 totalled NOK 786,525,000, and were included in the segement Sales & Processing.
| 2014 NOK 1000 | Central Norway | Fish farming Fish farming Fish farming Northern |
Sales & Rauma Processing |
Other/ Villa eliminations |
Salmar Group |
||
|---|---|---|---|---|---|---|---|
| Norway | |||||||
| External operating revenues | 71 157 | 1 177 6 708 122 405 431 | 7 185 887 | ||||
| Internal operating revenues 2 863 511 1 371 957 | 780 871 | 139 643 122 097 -5 278 079 | - | ||||
| TOTAL operating revenues 2 863 511 1 443 114 | 782 048 6 847 765 527 528 -5 278 079 7 185 887 | ||||||
| Depreciation | 113 589 | 59 605 | 35 075 | 53 345 | 13 720 | 430 | 275 764 |
| Write-downs | 2 106 | 293 | 2 399 | ||||
| Operating expenses | 1 803 675 | 906 297 | 532 319 6 654 614 349 308 -5 217 538 5 028 675 | ||||
| Operational EBIT | 946 247 | 477 212 | 214 654 137 700 164 500 | -61 264 1 879 049 | |||
| Fair value adjustments | 108 941 | -4 537 | -34 033 -193 385 -109 335 | -232 348 | |||
| Non-recurring gains on acquisitions | - | - | - | - | - | - | |
| Particular biological events | - | - | - | - | - | - | - |
| Operating profit | 1 055 188 | 472 675 | 180 621 | -55 685 55 165 | -61 264 1 646 699 | ||
| Share of profit/loss from associates | 96 136 | ||||||
| Net financial items | -113 994 | ||||||
| Profit before tax | 1 628 841 | ||||||
| Tax | 413 364 | ||||||
| Net profit for the year | 1 215 477 | ||||||
| Investments in PP&E | 241 522 | 179 678 | 47 058 | 39 793 | 24 026 | 3 457 | 535 535 |
| Investments in business entities 28 785 | 28 785 |
| Fish farming Fish farming Fish farming | Sales & | Other/ | Salmar | ||||
|---|---|---|---|---|---|---|---|
| 2014 NOK 1000 | Central Norway | Northern Norway |
Rauma Processing | Villa eliminations | Group | ||
| External operating revenues | 71 157 | 1 177 6 708 122 405 431 | 7 185 887 | ||||
| Internal operating revenues 2 863 511 1 371 957 | 780 871 | 139 643 122 097 -5 278 079 | - | ||||
| TOTAL operating revenues 2 863 511 1 443 114 | 782 048 6 847 765 527 528 -5 278 079 7 185 887 | ||||||
| Depreciation | 113 589 | 59 605 | 35 075 | 53 345 | 13 720 | 430 | 275 764 |
| Write-downs | 2 106 | 293 | 2 399 | ||||
| Operating expenses | 1 803 675 | 906 297 | 532 319 6 654 614 349 308 -5 217 538 5 028 675 | ||||
| Operational EBIT | 946 247 | 477 212 | 214 654 137 700 164 500 | -61 264 1 879 049 | |||
| Fair value adjustments | 108 941 | -4 537 | -34 033 -193 385 -109 335 | -232 348 | |||
| Non-recurring gains on acquisitions | - | - | - | - | - | - | |
| Particular biological events | - | - | - | - | - | - | - |
| Operating profit | 1 055 188 | 472 675 | 180 621 | -55 685 55 165 | -61 264 1 646 699 | ||
| Share of profit/loss from associates | 96 136 | ||||||
| Net financial items | -113 994 | ||||||
| Profit before tax | 1 628 841 | ||||||
| Tax | 413 364 | ||||||
| Net profit for the year | 1 215 477 | ||||||
| Investments in PP&E | 241 522 | 179 678 | 47 058 | 39 793 | 24 026 | 3 457 | 535 535 |
| Fish farming Fish farming Fish farming | Sales & | Other/ | Salmar | ||||
|---|---|---|---|---|---|---|---|
| 2013 NOK 1000 | Central Norway | Northern | Rauma Processing | Villa eliminations | Group | ||
| Norway | |||||||
| External operating revenues | 0 | 2 230 | 1 621 5 942 078 299 931 | 0 6 245 860 | |||
| Internal operating revenues 2 701 979 | 910 507 | 593 749 | 105 332 14 617 -4 326 184 | 0 | |||
| TOTAL operating revenues 2 701 979 | 912 737 | 595 370 6 047 410 314 548 -4 326 184 6 245 860 | |||||
| Depreciation | 92 927 | 41 923 | 30 074 | 37 059 16 330 | 2 507 | 220 820 | |
| Write-downs | 0 | 5 000 | 5 000 | ||||
| Operating expenses | 1 684 814 | 550 640 | 403 414 6 171 269 243 777 -4 293 367 4 760 547 | ||||
| Operational EBIT | 924 238 | 320 174 | 161 882 -160 918 54 441 | -40 324 1 259 493 | |||
| Fair value adjustments | 155 203 | 209 621 | 48 414 | 683 114 255 | 0 | 528 176 | |
| Non-recurring gains | |||||||
| on acquisitions | 0 | 0 | 0 | 0 | 0 | 161 755 | 161 755 |
| Particular biological events | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Operating profit | 1 079 441 | 529 795 | 210 296 -160 235 168 696 | 121 431 1 949 425 | |||
| Share of profit/loss from associates | 157 980 | ||||||
| Net financial items | 214 665 | ||||||
| Profit before tax | 2 322 071 | ||||||
| Tax | 418 695 | ||||||
| Net profit for the year | 1 903 376 | ||||||
| Investments in PP&E | 168 031 | 72 987 | 37 514 | 365 333 15 047 | 4 924 | 663 836 | |
| Investments in business entities | 5 516 | 204 563 | 91 | 210 170 |
Under 'Other intangible assets' excess value associated with the purchase of breeding nuclei is depreciated over 50 years. The cost price for this was NOK 30 million, and the residual book value of breeding nuclei is NOK 27.3 million. Remaining items under 'Other intangible assets' are depreciated over 5 years.
| Specification of fish farming licences 2014 NOK 1000 |
No. of licences |
Acquisition cost |
Book value 31.12.14 |
|---|---|---|---|
| Fish Farming Northern Norway | 32 | 849 193 | 844 193 |
| Fish Farming Central Norway | 52 | 1 047 746 | 1 042 746 |
| Fish Farming Rauma | 16 | 487 658 | 487 658 |
| Villa | 0 | 0 | |
| 100 | 2 384 597 | 2 374 597 |
| NUK TUUU | |
|---|---|
| SalMar Northern Norwav | |
| SalMar Central Norway | |
| Rauma | |
| villa |
| Specification of fish farming licences 2013 NOK 1000 |
No. of licences |
Acquisition cost |
Book value 31.12.13 |
|---|---|---|---|
| SalMar Northern Norway | 23 | 636 120 | 631 120 |
| SalMar Central Norway | 44 | 555 496 | 550 496 |
| Rauma | 14 | 487 658 | 487 658 |
| Villa | 16 | 303 000 | 303 000 |
| 97 | 1 982 274 | 1 972 274 |
Since the introduction of IFRS, goodwill is no longer depreciated, but is assessed for impairment annually, or more frequently if there are any indications that a write-down may be necessary. The difference between acquisition cost and book value is due to the depreciation of goodwill before the introduction of IFRS.
The Group has joint operating agreements/time-limited licences for a further 14 licences.
| Specification of goodwill 2014 NOK 1000 |
Acquisition year |
Acquisition cost |
Book value 31.12.14 |
|---|---|---|---|
| Fish Farming Northern Norway | 2006 | 95 114 | 95 114 |
| Fish Farming Central Norway | 1999-2014 | 131 742 | 125 275 |
| Fish Farming Rauma | 2011 | 226 983 | 226 983 |
| 453 839 | 447 372 | ||
| Specification of goodwill 2013 | |||
| Acquisition | Acquisition | Book value | |
| NOK 1000 | year | cost | 31.12.13 |
| SalMar Northern Norway | 2006 | 95 114 | 95 114 |
| SalMar Central Norway | 1999-2011 | 117 718 | 111 251 |
| Rauma | 2011 | 226 983 | 226 983 |
| VUN TUUU |
|---|
| SalMar Northern Norway |
| SalMar Central Norway |
| Rauma |
| Other intangible | |||||
|---|---|---|---|---|---|
| NOK 1000 | Licences | Goodwill | assets | Total | |
| Acquisition cost 1 Jan 2013 | 1 667 503 | 451 738 | 45 283 | 2 164 524 | |
| Additions | 771 | 0 | 2 926 | 3 697 | |
| Additions through business takeover | 314 000 | 0 | 19 152 | 333 152 | |
| Disposals | 0 | 0 | 0 | 0 | |
| 7 2 | Acquisition cost 31 Dec 2013 | 1 982 274 | 451 738 | 67 361 | 2 501 373 |
| Additions | 494 000 | 0 | 22 223 | 516 223 | |
| SA | Additions through business takeover | 60 000 | 14 024 | 0 | 74 024 |
| LM | Disposals through exit of subsidiaries | ||||
| AR | and non-controlling interests | 151 676 | 0 | 0 | 151 676 |
| AN | Acquisition cost 31 Dec 2014 | 2 384 597 | 465 762 | 89 584 | 2 939 944 |
| NU | Acc. dep. and write-downs 1 Jan 2013 | 5 000 | 18 390 | 5 637 | 29 028 |
| AL | Year's depreciation | 0 | 0 | 3 287 | 3 287 |
| RE | Year's write-downs | 5 000 | 0 | 0 | 5 000 |
| PO | Acc. dep. and write-downs 31 Dec 2013 | 10 000 | 18 390 | 8 925 | 37 315 |
| RT | Year's depreciation | 0 | 0 | 3 985 | 3 985 |
| 20 | Year's write-downs | 0 | 0 | 0 | 0 |
| 14 | Acc. dep. and write-downs 31 Dec 2014 | 10 000 | 18 390 | 12 909 | 41 299 |
| Book value as at 31 Dec 2014 | 2 374 597 | 447 372 | 76 674 | 2 898 643 | |
| Book value as at 31 Dec 2013 | 1 972 274 | 433 348 | 58 436 | 2 464 058 | |
| Book value as at 1 Jan 2013 | 1 662 503 | 433 348 | 39 649 | 2 135 500 | |
| Economic life Depreciation plan |
Unlimited | Unlimited | 5-50 years Straight-line |
ployed to calculate the recoverable value. A write-down in performed if the book value is lower than the recoverable value. Future net cash flows are estimated on the basis of the Group's budget and forecasts for the next three years. No real growth is assumed when calculating the terminal value, ie growth is stipulated at the expected rate of inflation. Value in use is calculated on the basis of a 6.55% return on investment after tax. As with all estimates, cash flow forecasts are sensitive to changes in underlying assumptions. Estimated value in use will be affected most strongly by the following assumptions: The assessment is based on a comparison of estimated future cash flows and the book value of each cash-flow generating entity. Sensitivity analyses are also carried out to assess estimated present values by looking at the change in salmon prices, production costs and, thereby, net margins and discount rates. The book value per licence is highest for the Rauma segment, such that the assessment for the Rauma segment is the least robust. The break-even level for EBIT per kg for the Rauma segment is NOK 5.23. The discount rate must increase by 2.9 percentage points before the calculated value would lead to the need for a write-down.
Discount rate: the discount rate used reflects management's estimate of the risk specified for each cash-flow generating entity. The discount rate is set using the 10-year government bond rate in effect at the time of the assessment. The discount rate after tax is calculated at 6.55%. This corresponds to a pre-tax requirement of 8.97%. The impairment test resulted in no requirement to write down the book value of fish farming licences and goodwill as at 31 December 2014.
The Group continuously monitors its financial performance with respect to the long-term assumptions used to determine whether the assumptions in the basic model are still valid.
| of which | |||||
|---|---|---|---|---|---|
| Land, buildings | Plant, operating | Vessels and | leased | ||
| & other real | equipment, other operating | operating | |||
| NOK 1000 | property | fixtures, etc | assets | TOTAL | assets |
| Acquisition cost 1 Jan 2013 | 318 081 | 1 571 178 | 125 879 | 2 015 139 | 378 518 |
| Additions | 231 344 | 391 947 | 40 545 | 663 836 | 367 539 |
| Additions through business takeovers | 30 472 | 89 050 | 31 130 | 150 652 | 53 718 |
| Disposals | 158 | 6 349 | 1 278 | 7 784 | 1 563 |
| Acquisition cost 31 Dec 2013 | 579 739 | 2 045 827 | 196 276 | 2 821 842 | 798 212 |
| Additions | 67 449 | 360 949 | 107 137 | 535 535 | 11 700 |
| Disposals via exit of subsidiaries | |||||
| and non-controlling interests | 44 447 | 203 561 | 51 555 | 299 564 | 33 159 |
| Disposals | 14 890 | 7 537 | 673 | 23 100 | 1 034 |
| Acquisition cost 31 Dec 2014 | 587 850 | 2 195 676 | 251 185 | 3 034 711 | 775 719 |
| Acc. dep. & write-downs 1 Jan 2013 | 84 349 | 623 354 | 38 631 | 746 335 | 130 533 |
| Year's depreciation 2013 | 22 003 | 173 972 | 21 558 | 217 533 | 49 015 |
| Year's write-downs | 0 | 0 | 0 | 0 | 0 |
| Reversed depreciation | 21 | 320 | 1 009 | 1 350 | 0 |
| Acc. dep. & write-downs 31 Dec 2013 | 106 331 | 797 006 | 59 181 | 962 517 | 179 548 |
| Year's depreciation 2014 | 29 285 | 210 048 | 32 446 | 271 780 | 69 927 |
| Year's write-downs | 25 | 2 081 | 293 | 2 399 | 0 |
| Reversed dep. on exit of subsid. | |||||
| and non-controlling interests | 22 572 | 139 702 | 32 687 | 194 961 | 0 |
| Reversed depreciation | 14 716 | 9 883 | 0 | 24 599 | 0 |
| Acc. dep. & write-downs 31 Dec 2014 | 98 353 | 859 550 | 59 233 | 1 017 136 | 249 476 |
| Book value 31 Dec 2014 | 489 496 | 1 336 127 | 191 953 | 2 017 575 | 526 243 |
|---|---|---|---|---|---|
| Book value 31 Dec 2013 | 473 408 | 1 248 821 | 137 095 | 1 859 325 | 618 662 |
| Book value 1 Jan 2013 | 233 732 | 947 825 | 87 248 | 1 268 805 | 247 984 |
| Gains/losses on sale of non-current assets Annual lease of off-balance sheet |
0 | 628 | 0 | 628 | |
| operating assets | 17 651 | 12 832 | 3 887 | 34 371 | |
| Capitalised interest | 0 | 0 | 0 | 0 | |
| Economic life Depreciation plan |
5-20 years straight-line |
3-10 years straight-line |
5-15 years straight-line |
As at 31 December 2014 capitalised leasing liabilities totalled NOK 450,070,000. Of the capitalised operating assets, NOK 217,671,000 was accounted for by plant and equipment, NOK 99,009,000 by vessels and other operating assets, and NOK 209,563,000 by land and buildings. All leasing agreements have been entered into at standard terms and conditions.
In 2013 the Group renegotiated the InnovaMar leasing agreement in connection with the sale of its shares in the company that owns the factory. The leasing period was extended from 15 to 20 years, with an option to extend after the expiry of the agreement in return for a reduced annual leasing cost. The lessor has, furthermore, the right but not the obligation to demand that SalMar, as tenant, acquires the property after the expiry of the agreement for the sum of NOK 70 million. The change in the terms of the leasing agreement means that the building and the leasing liability have been recognised in the balance sheet with effect from 1 October 2013. In total the property was capitalised to the value of NOK 294.2 million as at 31 December 2014. The leasing liability is correspondingly capitalised. The investment breaks down into a building, technical installation and land component. The portion allocated to buildings is depreciated over 30 years. Correspondingly, the portion allocated to technical installations is depreciated over 13 years. Land is not depreciated.
The consolidated financial statements for 2014 cover the following subsidiaries and associates:
| Land, buildings & other real |
Plant, operating | Vessels and equipment, other operating |
leased operating |
Subsidiary | Consolidated (YES/NO) |
Registered office |
Voting share |
||
|---|---|---|---|---|---|---|---|---|---|
| NOK 1000 | property | fixtures, etc | assets | TOTAL | assets | ||||
| Acquisition cost 1 Jan 2013 | 318 081 | 1 571 178 | 125 879 | 2 015 139 | 378 518 | SalMar Settefisk AS | YES | Kverva | 100,0 % |
| Additions | 231 344 | 391 947 | 40 545 | 663 836 | 367 539 | - Langstein Fisk AS | YES | Kverva | 100,0 % |
| Additions through business takeovers | 30 472 | 89 050 | 31 130 | 150 652 | 53 718 | - Straumsnes Settefisk AS | YES | Kverva | 100,0 % |
| Disposals | 158 | 6 349 | 1 278 | 7 784 | 1 563 | - Villa Smolt AS | YES | Kverva | 100,0 % |
| Acquisition cost 31 Dec 2013 | 579 739 | 2 045 827 | 196 276 | 2 821 842 | 798 212 | - Villa Settefisk AS | YES | Kverva | 100,0 % |
| Additions | 67 449 | 360 949 | 107 137 | 535 535 | 11 700 | Hitramat Farming AS | YES | Kverva | 51,0 % |
| Disposals via exit of subsidiaries | SalMar Farming AS | YES | Kverva | 100,0 % | |||||
| and non-controlling interests | 44 447 | 203 561 | 51 555 | 299 564 | 33 159 | - Salmar Rauma AS | YES | Ørskog | 100,0 % |
| Disposals | 14 890 | 7 537 | 673 | 23 100 | 1 034 | - Rauma Stamfisk AS | YES | Ørskog | 100,0 % |
| Acquisition cost 31 Dec 2014 | 587 850 | 2 195 676 | 251 185 | 3 034 711 | 775 719 | - Rauma Sætre AS | YES | Ørskog | 100,0 % |
| - Rauma Eik AS | YES | Ørskog | 100,0 % | ||||||
| Acc. dep. & write-downs 1 Jan 2013 | 84 349 | 623 354 | 38 631 | 746 335 | 130 533 | - Salmar Organic AS | YES | Ørskog | 100,0 % |
| Year's depreciation 2013 | 22 003 | 173 972 | 21 558 | 217 533 | 49 015 | - Vikenco AS | YES | Aukra | 51,0 % |
| Year's write-downs | 0 | 0 | 0 | 0 | 0 | - Atlantic Cod Farms AS | YES | Ørskog | 100,0 % |
| Reversed depreciation | 21 | 320 | 1 009 | 1 350 | 0 | Ocean Farming AS | YES | Kverva | 91,0 % |
| Acc. dep. & write-downs 31 Dec 2013 | 106 331 | 797 006 | 59 181 | 962 517 | 179 548 | SalMar Nord AS | YES | Senja | 100,0 % |
| Year's depreciation 2014 Year's write-downs |
29 285 25 |
210 048 2 081 |
32 446 293 |
271 780 2 399 |
69 927 0 |
- Troms Stamfiskstasjon AS | YES | Senja | 100,0 % |
| Reversed dep. on exit of subsid. | - Salmar Finnmark AS | YES | Senja | 100,0 % | |||||
| and non-controlling interests | 22 572 | 139 702 | 32 687 | 194 961 | 0 | SalMar Laksefjorden AS | YES | Senja | 100,0 % |
| Reversed depreciation | 14 716 | 9 883 | 0 | 24 599 | 0 | SalMar AS | YES | Kverva | 100,0 % |
| Acc. dep. & write-downs 31 Dec 2014 | 98 353 | 859 550 | 59 233 | 1 017 136 | 249 476 | - SalMar Japan KK | YES | Japan | 100,0 % |
| - Frøyas AS | YES | Kverva | 66,0 % | ||||||
| SalMar-Tunet AS | YES | Kverva | 100,0 % | ||||||
| Book value 31 Dec 2014 | 489 496 | 1 336 127 | 191 953 | 2 017 575 | 526 243 | ||||
| Book value 31 Dec 2013 | 473 408 | 1 248 821 | 137 095 | 1 859 325 | 618 662 | ||||
| Book value 1 Jan 2013 | 233 732 | 947 825 | 87 248 | 1 268 805 | 247 984 | Shareholding/voting share held | Profit/loss allocated | Non-controlling | |
| Gains/losses on sale of non-current assets Annual lease of off-balance sheet |
0 | 628 | 0 | 628 | by non-controlling interests | to non-controlling | interests | interests` accumulated share of equity |
|
| operating assets | 17 651 | 12 832 | 3 887 | 34 371 | |||||
| Capitalised interest | 0 | 0 | 0 | 0 | Non-controlling interests in subsidiaries | ||||
| Economic life | 5-20 years | 3-10 years | 5-15 years | Hitramat Farming AS 49 % |
1 540 | 29 196 | |||
| Depreciation plan | straight-line | straight-line | straight-line | Vikenco AS 49 % |
-5 971 | 26 280 | |||
| Ocean Farming AS 9 % Frøyas AS 34 % |
- 2 434 |
9 5 136 |
| Subsidiary | Consolidated (YES/NO) |
Registered office |
Voting share |
|
|---|---|---|---|---|
| SalMar Settefisk AS | YES | Kverva | 100,0 % | |
| - Langstein Fisk AS | YES | Kverva | 100,0 % | |
| - Straumsnes Settefisk AS | YES | Kverva | 100,0 % | |
| - Villa Smolt AS | YES | Kverva | 100,0 % | |
| - Villa Settefisk AS | YES | Kverva | 100,0 % | |
| Hitramat Farming AS | YES | Kverva | 51,0 % | |
| SalMar Farming AS | YES | Kverva | 100,0 % | |
| - Salmar Rauma AS | YES | Ørskog | 100,0 % | |
| - Rauma Stamfisk AS | YES | Ørskog | 100,0 % | |
| - Rauma Sætre AS | YES | Ørskog | 100,0 % | |
| - Rauma Eik AS | YES | Ørskog | 100,0 % | |
| - Salmar Organic AS | YES | Ørskog | 100,0 % | |
| - Vikenco AS | YES | Aukra | 51,0 % | |
| - Atlantic Cod Farms AS | YES | Ørskog | 100,0 % | |
| Ocean Farming AS | YES | Kverva | 91,0 % | |
| SalMar Nord AS | YES | Senja | 100,0 % | |
| - Troms Stamfiskstasjon AS | YES | Senja | 100,0 % | |
| - Salmar Finnmark AS | YES | Senja | 100,0 % | |
| SalMar Laksefjorden AS | YES | Senja | 100,0 % | |
| SalMar AS | YES | Kverva | 100,0 % | |
| - SalMar Japan KK | YES | Japan | 100,0 % | |
| - Frøyas AS | YES | Kverva | 66,0 % | |
| SalMar-Tunet AS | YES | Kverva | 100,0 % | |
| Shareholding/voting share held by non-controlling interests |
Profit/loss allocated to non-controlling interests |
Non-controlling interests` accumulated share of equity |
||
| Non-controlling interests in subsidiaries | ||||
| Hitramat Farming AS | 49 % | 1 540 | 29 196 | |
| Vikenco AS | 49 % | -5 971 | 26 280 | |
| Ocean Farming AS | 9 % | - | 9 | |
| Frøyas AS | 34 % | 2 434 | 5 136 | |
| Villa Organic | *) | 24 974 | - |
22 977 60 622
*) Villa Organic was demergerd with effect from 1 July 2014. Non-controlling interests have been allocated up until the date of demerger. See Note 8 for further details.
Hitramat Farming AS
On 1 October 2014 the Group agreed to purchase 51% of the shares in Hitramat Farming AS. The purpose of the acquisition is to secure access to production licences for SalMar. For accounting purposes, the transaction is treated as a business takeover, in which non-controlling interests are assessed at fair value. Measurement of the fair value of licences is based on cash flows after tax. In accordance with IFRS, deferred tax is calculated on the difference between allocated fair value and residual tax base. The opposite item to this deferred tax is goodwill. The allocation of consideration is presented below.
Analyses of excess value are based to a certain extent on management's experience and good judgement, with the underlying assumptions being verified through operations in the subsequent period.
In 2013 the Group undertook a stepwise acquisition of the shares in Villa Organic AS, which resulted, in June 2013, in SalMar acquiring the majority of the shares in the Villa Group. Following the final acquisition of shares, with effect from 30 June 2013, SalMar owned a total of 50.4% of the company's shares.
In 2012 SalMar acquired 8.4% of the shares in Villa Organic AS. At the start of April 2013 agreement was reached with a group of shareholders in Villa Organic AS for the purchase of a further 41.3% of the company's shares, bringing SalMar's total shareholding after this transaction to 49.7%. From this point in time, SalMar exercised a considerable influence over the Villa Group, which was therefore classified as an associate of SalMar. On 12 June 2013 a further 0.7% of the shares were acquired, bringing SalMar's shareholding to 50.4%. Villa Organic AS is a fully integrated aquaculture company, with 16 licences for the production of farmed fish, as well as locations in Laksefjord and Varangerfjord. In addition to its fish farming activities, the Group has its own smolt production, two processing plants and its own sales organisation. Since the company's acquisition, the sales organisation has been divested from the Group. From the date of its acquisition the company was consolidated into SalMar's group accounts and reported as a separate segment.
| NOK 1000 | Acquisition date | Acquisition cost | The allocation of consideration is presented below. The allocation is deemed to be final. | |
|---|---|---|---|---|
| Hitramat Farming AS | 01.10.2014 | 28 785 |
The total purchase price for the company was NOK 28,785,000. No material transaction costs were incurred in connection with the acquisition.
| NOK 1000 | Book | Adjustment to | |
|---|---|---|---|
| value | fair value | Fair value | |
| Intangible assets | 8 098 | 51 902 | 60 000 |
| Current assets | 31 063 | - | 31 063 |
| Cash and bank deposits | 223 | - | 223 |
| Deferred tax | -1 565 | -14 014 | -15 579 |
| Other liabilities | -33 289 | - | -33 289 |
| Net identifiable assets and liabilities | 4 530 | 37 889 | 42 418 |
| Goodwill | 14 024 | ||
| Non-controlling interests | -27 656 | ||
| Cash consideration | 28 785 |
| NOK 1000 | Book value | Adjustment to fair value | Fair value |
|---|---|---|---|
| Deferred tax assets | - | 103 380 | 103 380 |
| Intangible assets | - | 11 000 | 11 000 |
| Property, plant & equipment | 12 736 | - | 12 736 |
| Cash and bank deposits | 675 | - | 675 |
| Non-current liabilities | -34 484 | - | -34 484 |
| Other liabilities | - | -750 | -750 |
| Net identifiable assets and liabilities | -21 073 | 113 630 | 92 558 |
| Non-recurring gains relating to acquisition | -87 041 | ||
| Cash consideration | 5 516 |
Atlantic Cod Farms AS
On 22 April 2013 the Group agreed the purchase of 100% of the shares in Atlantic Cod Farms AS. For accounting purposes, the transaction was treated as a business takeover, and the company was included in the Rauma segment. The purpose of the acquisition was to obtain access to sites in the Møre district. In addition to sites, operating equipment in the area was also taken over.
Hitramat Farming AS has boosted Operational EBIT by NOK 4,375,000 in the period after acquisition. The Group's sales revenues have not been affected, because the company's operations comprise joint operation of a licence with SalMar Farming AS. The company's sales revenues are therefore eliminated in their entirety in the consolidated accounts. Hitramat Farming AS made an operating profit of NOK 10,510,000 for 2014 as a whole. Hitramat Farming AS is reported as part of Fish Farming Central Norway, cf. Note 3.
In the table above, the fair value of non-controlling interests comes to NOK 201,078,000. The value of non-controlling interests is calculated on the basis of the consideration payable for 50.4% of the company. Excess value/value shortfalls arise from an assessment of the fair value of identifiable assets and liabilities. Excess value associated with intangible assets relates to production licences. The acquired company owns 16 fish farming licences, of which seven are restricted to locations in Varangerfjord, Finnmark. The value of the licences is determined on the basis of comparable transactions and analyses using recognised valuation methods. Based on this, the value of licences in the excess value allocation is put at NOK 22,000,000 per licence, with the exception of those restricted to designated locations, which are valued at NOK 15,000,000 each. As a result of the excess value allocation, SalMar has derived a non-recurring gain of NOK 94,714,000 from the acquisition. The main reason for the surplus was that the seller of the shares was in a difficult financial position at the time the transaction was completed. 7 6 7 7
The total purchase price for the company came to NOK 40,000,000. A receivable amounting to NOK 34,484,000, which was owed to the company by a former shareholder of Codfarmers AS, was transferred to SalMar ASA. In addition, the sum of NOK 5,516,000 was paid for 100% of the company's shares. No material transaction costs were incurred in connection with the acquisition.
Villa Organic has boosted Operational EBIT by NOK 54,441,000 and sales revenues by NOK 314,548,000 in the period after acquisition. For 2013 as a whole Villa Organic generated operating revenues of NOK 680,785,000, and achieved an operational EBIT of NOK 69,894,000. Villa Organic is reported as a separate segment, cf. Note 3. Villa Arctic AS - Contingent consideration In 2012 the Group acquired 10 licences from Villa Arctic AS, see On 31 December 2013 the Group agreed to purchase 52% of the shares in Ocean Farming AS. After this transaction SalMar owns 91% of the company's shares. For accounting purposes the transaction is treated as a business takeover. The purpose of the acquisition is to secure access to technology developed by the company. Allocation of the consideration paid, as presented below, is deemed to be final. No transaction costs were incurred in connection with the acquisition.
Business activity in Atlantic Cod Farms has been low, and its impact on sales revenues and operating profit after its acquisition has been negligible.
The company is included in the Group with effect from 31 December 2013, and has therefore had no impact on the results for 2013. The entity is a development company which had no sales revenues in 2013.
No material external transaction costs have accrued in connection with the acquisition.
The acquired company also has a substantial tax loss carryforward which is of value to SalMar. The value of the carryforward resulted in a non-recurring gain from the acquisition. The non-recurring gain was taken to income in its entirety in 2013.
Allocation of the consideration is now deemed to be final.
| NOK 1000 | Acquisition date | Acquisition cost |
|---|---|---|
| Atlantic Cod Farms AS | 22.04.2013 | 5 516 |
| NOK 1000 | Acquisition date | Acquisition cost |
|---|---|---|
| Fair value of the shares in Villa Organic AS owned before acquisition | 202 063 | |
| Cash consideration re. increase in the shareholding from 49.7% to 50.4% | 12.06.2013 | 2 500 |
| Total consideration for the shares | 204 563 |
| NOK 1000 | Acquisition date | Acquisition cost | |
|---|---|---|---|
| Ocean Farming AS | 31.12.2013 | 91 | |
| Book value | Adjustment to fair value | Fair value | |
| Effect of the acquisition on the balance sheet: | |||
| Deferred tax assets | - | 588 | 588 |
| Intangible assets | - | 19 152 | 19 152 |
| Current assets | 6 034 | - | 6 034 |
| Other liabilities | -25 673 | - | -25 673 |
| Net identifiable assets and liabilities | -19 640 | 19 740 | 100 |
| Non-controlling interests | 9 | ||
| Cash consideration | 91 |
| NOK 1000 | Book value | Adjustment to fair value | Fair value |
|---|---|---|---|
| Effect of the acquisition on the balance sheet: | |||
| Intangible assets | 24 010 | 279 185 | 303 195 |
| Property, plant & equipment | 212 574 | -74 854 | 137 720 |
| Other financial assets | 5 014 | 0 | 5 014 |
| Inventory and biological assets | 233 220 | 18 224 | 251 443 |
| Current assets | 123 791 | 603 | 124 394 |
| Deferred tax | 25 785 | -65 170 | -39 385 |
| Interest-bearing debt | -196 981 | -1 000 | -197 981 |
| Other liabilities | -84 046 | 0 | -84 046 |
| Net identifiable assets and liabilities | 343 367 | 156 988 | 500 355 |
| Non-recurring gain on acquisition | -94 714 | ||
| Non-controlling interests | -201 078 | ||
| Cash consideration | 204 563 |
below. A condition attached to the takeover could result in an adjustment to the sales price should the price of salmon exceed a certain amount in 2013. As at 31 December 2012 a provision totalling NOK 15.0 million was made to cover this liability. The favourable price level through 2013 resulted in the provision being increased to NOK 50.0 million as at 31 December 2013. Villa Arctic AS is part of the Villa Organic Group, was included in the SalMar Group with effect from 12 June 2013. On the date of the Villa Organic Group's acquisition, the provision had increased to NOK 35.0 million. Since the acquisition of the Villa Organic Group, provisions totalling NOK 15.0 million have been eliminated from within the Group. The year's NOK 20.0 million increase in the provision, which has had an impact on the Group's results, is recognised on the line for nonrecurring gains in the financial statements.
In 2013 SalMar increased its shareholding in Villa Organic to 50.4%, giving it a controlling interest in the enterprise. Villa Organic was a fully integrated aquaculture group, with activities along the entire value chain. Its fish farming activities were located in Finnmark. Villa Organic had a total of 16 licences for the production of farmed salmon. On 30 June 2014, SalMar and Villa Organic's other major shareholder (Lerøy Seafood Group AS) decided to divide the company between them. This was accomplished with effect from 1 July 2014, and SalMar's interests in the Villa Group were incorporated into SalMar Laksefjorden AS, in which SalMar had a 99.94% shareholding as at 1 July 2014. Following the demerger, SalMar Laksefjorden owns eight licences, giving it control of the Laksefjord area in Finnmark. With effect from 1 July 2014, SalMar
In connection with the demerger of the Villa group, shareholdings in the companies Romsdal Prosessing AS and Kirkenes Prosessing AS were divided between SalMar Laksefjorden AS and Lerøy Finnmark AS. Any calculation of gain on the exit of subsidiaries is estimated on the basis of the fair value of the subsidiaries' assets and liabilities. Since the fair value of the companies' assets and liabilities is deemed to correspond to their book value, their exit has not resulted in either a gain or loss for the Group.
Non-controlling shareholders have been bought out with settlement in assets and liabilities. Assets and liabilities are assessed at fair value in connection with settlement. Fair value is deemed to equal the book value of the net assets which exit the group. The Laksefjorden has been integrated into the segment Fish Farming Northern Norway.
For accounting purposes the demerger of the Villa group has been implemented with effect from 1 July 2014. Non-controlling interests in the Villa group were bought out with settlement in assets and liabilities. As a result, the shareholdings in the subsidiaries Romsdal Processing AS and Kirkenes Processing AS will be divided between SalMar Laksefjorden AS and Lerøy Finnmark AS. This means that these two subsidiaries exit the Group with effect from 1 July 2014. The exit of subsidiaries and non-controlling interests has affected the SalMar Group as shown in the table below.
effect goes directly to a reduction in non-controlling interests' share of equity.
Acquisition of further shareholdings in subsidiaries On 22 March 2013 the Group agreed to buy out the remaining minority shareholders of SalMar Rauma AS. The Group acquired 24.46% of the shares in SalMar Rauma AS, bringing its shareholding to 100%.
On 21 October 2013 the Group agreed to buy out the minority shareholders of Langstein Fisk AS. The Group acquired 40% of the company's shares, bringing its shareholding to 100%.
NOK 1000
| Assets | |
|---|---|
| INTANGIBLE ASSETS | -151 676 |
| Property, plant & equipment | -106 110 |
| Financial assets | 2 475 |
| Total non-current assets | -255 311 |
| Inventory | -90 664 |
| Trade receivables | -13 546 |
| Other current receivables | -7 630 |
| Cash & cash equivalents | -140 911 |
| Total current assets | -252 750 |
| Total assets | -508 062 |
| EQUITY AND LIABILITIES | |
| Non-controlling interests | -332 003 |
| Total equity | -332 003 |
| Provisions | -42 295 |
| Interest-bearing long-term debt | -42 552 |
| Total non-current liabilities | -84 847 |
| Other current liabilities | -91 212 |
Total current liabilities -91 212 Total equity and liabilities -508 062
| NOK 1000 | SalMar Rauma | Langstein Fisk | Total |
|---|---|---|---|
| Book value of non-controlling interests | 112 343 | 571 | 112 913 |
| Cash consideration for shares | 69 696 | 750 | 70 445 |
| Excess charged against equity held by parent company's shareholders | 42 647 | -179 | 42 468 |
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Operating revenues | 1 384 613 | 1 189 140 |
| Operating expenses | 1 152 509 | 968 054 |
| Fair value adjustments | 8 306 | 57 011 |
| Profit after tax | 191 079 | 202 149 |
| Current assets | 991 365 | 818 352 |
| Non-current assets | 693 437 | 594 641 |
| Current liabilities | 227 043 | 222 975 |
| Non-current liabilities | 416 519 | 385 149 |
| Equity | 1 041 240 | 804 870 |
| The Group's share of equity | 520 620 | 402 435 |
| Book value 31 Dec 2014 | 520 423 | 402 238 |
Norskott Havbruk AS had no contingent liabilities or capital liabilities as at 31 December 2014.
Since none of the Group's associates are listed on a stock exchange, no observable market value therefore exists.
Based on an overall assessment, in which size and complexity has been taken into consideration, Norskott Havbruk AS is deemed to be a material associate. Further information relating to this company may be found below.
The following table shows a summary of financial information relating to Norskott Havbruk AS, based on 100% figures:
The Group has the following investments in associated companies:
NOK 1000
Norskott Havbruk AS is located in Bergen and owns 100% of Scottish Sea Farms Ltd, the second largest aquaculture company in the UK, with operations in mainland Scotland and Shetland. Norskott Havbruk is 50/50 owned by SalMar ASA and Lerøy Seafood AS. The board of directors has 4 members, with each shareholder represented by 2 directors. The shareholders alternate in having the board's chair. Since neither of the company's owners has overall control, it is considered to be an associate. 7 8 7 9
| Company | Registered office | Sector Shareholding Voting share | ||
|---|---|---|---|---|
| Norskott Havbruk AS | Bergen | Fish farming | 50,00 % | 50,00 % |
| Kirkenes Processing AS | Molde | Harvesting of farmed salmon | 50,00 % | 50,00 % |
| Romsdal Processing AS | Kirkenes | Harvesting and processing | 44,45 % | 44,45 % |
| Trøndersk Kystkompetanse AS | Dyrvik | Competence development | 20,00 % | 20,00 % |
All associates are recognised in accordance with the equity method.
| NOK 1000 | |
|---|---|
| Companies recognised in accordance | |
| with the equity method | Norskott Havbruk | Other | Total |
|---|---|---|---|
| Opening balance 1 Jan 2014 | 402 238 | 103 | 402 338 |
| Additions of shares/contributions | 0 | 2 592 | 2 592 |
| Share of the year's profit/loss | 95 540 | 597 | 96 136 |
| Items of comprehensive income | 58 895 | 0 | 58 895 |
| Dividend received | -36 250 | 0 | -36 250 |
| Closing balance 31 Dec 2014 | 520 423 | 3 292 | 523 711 |
The following principles for the measurement of financial instruments have been applied to financial instruments in the balance sheet:
| As at 31 December 2014 Assets |
Loans and receivables |
Assets at fair value in profit & loss |
Available for sale |
TOTAL |
|---|---|---|---|---|
| Investments in shares & securities | - | - | 519 | 519 |
| Derivatives | - | 4 419 | - | 4 419 |
| Trade and other receivables | 1 152 829 | - | - 1 152 829 | |
| Bank deposits, cash & cash equivalents | 166 963 | - | - | 166 963 |
| Total | 1 319 792 | 4 419 | 519 1 324 730 |
| As at 31 December 2013 Assets |
Loans and receivables |
Assets at fair value in profit & loss |
Available for sale |
TOTAL |
|---|---|---|---|---|
| Investments in shares & securities | 0 | 0 | 384 | 384 |
| Derivatives | 0 | 17 636 | 0 | 17 636 |
| Trade and other receivables | 816 287 | 0 | 0 | 816 287 |
| Bank deposits, cash & cash equivalents | 1 070 998 | 0 | 0 1 070 998 | |
| Total | 1 887 285 | 17 636 | 384 1 905 306 |
| As at 31 December 2014 Liabilities |
Liabilities at fair value in profit & loss |
Other financial liabilities at amortised cost |
TOTAL |
|---|---|---|---|
| Loans | - | 2 018 159 2 018 159 | |
| Financial leasing agreements | - | 450 070 | 450 070 |
| Derivatives | 175 485 | - | 175 485 |
| Trade and other payables, incl. statutory liabilities | - | 615 226 | 615 226 |
| Total | 175 485 | 3 083 455 3 258 940 |
| As at 31 December 2013 Liabilities |
Liabilities at fair value in profit & loss |
Other financial liabilities at amortised cost |
TOTAL |
|---|---|---|---|
| Loans | 0 | 2 313 936 2 313 936 | |
| Financial leasing agreements | 0 | 529 487 | 529 487 |
| Derivatives | 2 687 | 0 | 2 687 |
| Trade and other payables, incl. statutory liabilities | 0 | 705 725 | 705 725 |
| Total | 2 687 | 3 549 148 3 551 835 |
Derivatives entered into are measured at fair value. On the balance sheet date these are recognised in the balance sheet as follows:
The table below shows the company's forward currency contracts as at 31 December 2014. All contracts relate to the buying and selling of currencies against NOK. Forward contracts are entered into to reduce as far as possible the exchange rate risk on outstanding trade receivables and purchase/sales contracts entered into. Forward currency contracts are recognised at fair value in the balance sheet. The value of forward contracts is calculated on the basis of estimated forward exchange rates for the currencies concerned, the term of the contract, agreed currency amounts and the spot rate on the balance sheet date. The Group does not use hedge accounting in its recognition of forward currency contracts
| balance sheet: | 2014 | 2013 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| NOK 1000 | NOK 1000 | Other | Other current | Other | Other current | ||||
| Loans and | Assets at fair | Recognised fair value as at 31 Dec | receivables | liabilities | receivables | liabilities | |||
| As at 31 December 2014 | receivables | value in profit | Available for | Forward currency contracts | 0 | -147 437 | 0 | -582 | |
| Assets | & loss | sale | TOTAL | Financial fish trading contracts (Fish Pool) | 4 419 | -28 048 | 17 636 | -2 105 | |
| Investments in shares & securities | - | - | 519 | 519 | Total | 4 419 | -175 485 | 17 636 | -2 687 |
Financial fish sales/purchase contracts (derivatives) have been entered into on Fish Pool. The derivatives are recognised at fair value in profit and loss. Settlement of the contracts is due to take place in 2015. The fair value of the Fish Pool contracts calculated on the basis of the agreed settlement price in the contract, the fair value of the fish on the balance sheet date and the contract's term. The fair value of purchase contracts is calculated at NOK 4,419,000, based on the market price in effect on the balance sheet date. Correspondingly, the fair value of the sales contracts is calculated at NOK -28,048,000.
Realised Fish Pool contracts are classified in profit and loss under Operational EBIT, while unrealised changes in the value of the Fish Pool contracts are classified as part of the fair value adjustment.
Realised Fish Pool contracts classified under operations came to NOK 29,266,000 in 2014. The corresponding figure for 2013 was NOK 641,000.
| Derivatives Trade and other payables, incl. statutory liabilities Total |
175 485 - 175 485 |
- 615 226 |
175 485 615 226 3 083 455 3 258 940 |
Product | Type | Currency | Currency amount (1000) |
Term | Exchange rate interval |
Book value/ Fair value TNOK |
||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Forward | Sale | EUR | 173 739 | Q1 2015 - Q1 2016 | 7,874-9,489 | -90 754 | ||||||
| Forward | Sale | JPY | 3 651 608 | Q1 2015 - Q1 2016 | 5,775-6,369 | -8 573 | ||||||
| Forward | Sale | GBP | 22 942 | Q1 2015 - Q1 2016 | 10,090-11,774 | -21 907 | ||||||
| 8 0 | Loans and | Assets at fair | Forward | Sale | USD | 41 050 | Q1 2015 - Q1 2016 | 6,074-7,755 | -26 296 | |||
| As at 31 December 2013 | receivables | value in profit | Available for | Forward | Sale | SEK | 3 591 | Q1 2015 | 0,9141-1,0128 | -18 | ||
| SA | Assets | & loss | sale | TOTAL | Forward | Buy | USD | 1 467 | Q1 2015 | 7,416-7,431 | 35 | |
| LM | Investments in shares & securities | 0 | 0 | 384 | 384 | Forward | Buy | JPY | 146 133 | Q1 2015 | 6,187 | 76 |
| AR | Derivatives | 0 | 17 636 | 0 | 17 636 | Total | -147 437 | |||||
The Group's receivables are measured at amortised cost. Receivables denominated in foreign currencies are valued at the daily rate. Book value equals fair value.
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Trade receivables | 900 407 | 685 209 |
| Provisions for bad debts | -12 188 | -23 060 |
| Other short-term receivables | 292 644 | 217 584 |
| Other long-term receivables | 14 995 | 6 027 |
| Total | 1 195 858 | 885 760 |
| Included in the item Other short-term receivables above are | ||
| prepaid expenses in the amount of | 38 610 | 51 836 |
| Included in the item Other short-term receivables above | ||
| are derivatives in the amount of | 4 419 | 17 636 |
| Included in the item Other short-term receivables above are VAT | ||
| refunds due in the amount of | 212 918 | 23 259 |
| Included in the item Other long-term receivables above are the following, | ||
| falling due for payment in more than one year | 13 403 | 5 225 |
| Included in the item Other long-term receivables above are pension assets in the amount of | 1 592 | 802 |
Changes in provisions for bad debts and bad debts charged to expenses during the period are presented below
See Note 2 for further details of the credit risk and foreign exchange risk associated with trade receivables. As at 31 December the company had the following trade receivables that had fallen due, but had not yet been paid :
| NOK 1000 | Total | Not due | <30 d | 30-45d | 45-90d | >90d |
|---|---|---|---|---|---|---|
| 2014 | 900 407 | 683 844 | 145 716 | 12 868 | 12 443 | 45 536 |
| 2013 | 685 209 | 513 088 | 115 284 | 7 152 | 8 887 | 40 798 |
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Raw materials | 86 531 | 89 830 |
| Goods in progress (entirely biological assets) | 3 114 684 | 3 077 150 |
| Finished goods | 119 923 | 81 709 |
| Total | 3 321 138 | 3 248 689 |
Raw materials comprise mainly feed for smolt and marine-phase fish production. It also includes raw materials for use in processing, as well as packaging. Stocks of biological assets are associated with SalMar's fish farming activities on land and at sea. Finished goods comprises in its entirety whole salmon, fresh and frozen, as well as processed salmon products. Biological assets in more detail Valuation is performed for each segment and down to site level. The fair value of the biomass is estimated on the basis of an informed, but subjective judgement. The main factors affecting the valuation of the biomass are the status of the biomass on the balance sheet date, including quality and size distribution, as well as market prices on the reporting date.
The treatment of live fish for accounting purposes is regulated by IAS 41 Agriculture. IAS 41 contains a method hierarchy for the measurement of biological assets for accounting purposes. The main rule is that such assets shall be measured at fair value. The best estimate for the fair value of fish under 1 kg live weight is accumulated cost, while for harvestable fish over 4 kg live weight the fair value adjustment of the biomass is set to expected net profit/loss. For fish between 1 kg and 4 kg live weight the fair value adjustment of the biomass is set in accordance with IFRS 13. Biological assets valued in accordance with IFRS 13 are included in valuation level 3, under which the valuation is based on factors that do not derive from observable markets. See Note 2 for further information about valuation levels. The value of the biomass is determined quarterly, and is reviewed and verified at Group level. The market price on the balance sheet date for the specific weight category is adjusted for harvesting costs and wastage. The market price is also adjusted for quality variations. The sales prices used are based on external forward prices and/or the most relevant price information available for the period in which the fish is to be harvested. Smolt are valued at cost. The following table presents changes during the period for biological assets classified in level 3:
| NOK 1000 | 2014 | 2013 | NOK 1000 | 2014 | 2013 |
|---|---|---|---|---|---|
| Provisions for bad debt 1 Jan | 23 060 | 4 000 | Biological assets 1 Jan | 3 077 150 | 1 986 213 |
| Provisions for bad debts in acquired businesses | 0 | 14 658 | Increase due to production/purchase | 4 430 110 | 3 491 036 |
| Provisions for bad debts 31 Dec | 12 188 | 23 060 | Increase deriving from acquisitions | 0 | 216 148 |
| Change in provisions for bad debts during the period | -10 872 | 4 402 | Reduction due to exit of subsidiaries | -72 553 | 0 |
| Reduction resulting from sale/harvesting | -4 274 054 | -3 167 669 | |||
| 8 2 Actual bad debts |
16 108 | 3 174 | Fair value adjustments 1 Jan (reversed) | -874 833 | -323 410 |
| Change in provisions for bad debts | -10 872 | 4 402 | Fair value adjustment for exit of subsidiaries | -19 703 | 0 |
| Bad debts charged to expenses during the period | 5 236 | 7 576 | Fair value adjustments 31 Dec (new) | 848 567 | 874 833 |
| Biological assets 1 Jan | 3 077 150 | 1 986 213 |
|---|---|---|
| Increase due to production/purchase | 4 430 110 | 3 491 036 |
| Increase deriving from acquisitions | 0 | 216 148 |
| Reduction due to exit of subsidiaries | -72 553 | 0 |
| Reduction resulting from sale/harvesting | -4 274 054 | -3 167 669 |
| Fair value adjustments 1 Jan (reversed) | -874 833 | -323 410 |
| Fair value adjustment for exit of subsidiaries | -19 703 | 0 |
| Fair value adjustments 31 Dec (new) | 848 567 | 874 833 |
| Biological assets 31 Dec | 3 114 683 | 3 077 150 |
| 2014 | 2013 |
|---|---|
| 1 986 213 | |
| 4 430 110 | 3 491 036 |
| 0 | 216 148 |
| -72 553 | 0 |
| -4 274 054 | -3 167 669 |
| -874 833 | -323 410 |
| -19 703 | 0 |
| 848 567 | 874 833 |
| 3 114 683 | 3 077 150 |
| 3 077 150 |
| 2014 | 2013 | |
|---|---|---|
| Biomass fish < 4 kg live weight (tonnes) | 53 431 | 63 694 |
| Biomass fish > 4 kg live weight (tonnes) | 34 819 | 25 695 |
| Total biomass (tonnes) | 88 251 | 89 389 |
| Fair value adjustment fish < 4 kg live weight (NOK 1,000) | 380 353 | 538 711 |
| Fair value adjustment fish > 4 kg live weight (NOK 1,000) | 448 511 | 336 122 |
| TOTAL fair value adjustment of biological assets (NOK 1,000) | 828 864 | 874 833 |
| Cost price biological assets (NOK 1,000) | 2 285 820 | 2 202 317 |
| Book value of biological assets (NOK1,000) | 3 114 684 | 3 077 150 |
| The model rests on a weighted average of forward prices based on the estimated harvesting time for the biomass, and newly | ||
|---|---|---|
| entered into contracts. As at 31 December 2014 a price interval of NOK 41.34 to NOK 44.30 per kg has been stipulated. A | ||
| price sensitivity analysis as at 31 December 2014 gives the following effect on the Group's operating profit (NOK 1,000): | ||
| Price change + NOK 1/kg | + 52 458 | |
| Price change – NOK 1/kg | - 52 458 | |
The Group's overall volume of biomass on the balance sheet date is also a material factor in an assessment of fair value. An overview of the Group's overall biomass and the size distribution within it is presented below. A sensitivity analysis of the biomass on the balance sheet gives the following effect on the Group's operating profit (NOK 1,000):
| Change in biomass + 1% | + 18 723 |
|---|---|
| Change in biomass - 1% | - 18 723 |
| Total biomass (tonnes) | |
|---|---|
| Biomass fish > 4 kg live weight (tonnes) | |
| Biomass fish < 4 kg live weight (tonnes) |
Passion for Salmon
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Change in fair value of the biomass | -38 963 | 529 433 |
| Change in provisions for bad debts | -30 629 | -1 759 |
| Unrealised change in value of Fish Pool contracts | -39 160 | 13 680 |
| Unrealised change in value of forward currency contracts | -123 597 | -13 178 |
| Recognised fair value adjustments | -232 349 | 528 176 |
Fair value adjustments are part of the Group's operating profit/loss, but changes in fair value are presented on a separate line to provide a greater understanding of the Group's profit/loss on sold goods. The item comprises:
As at 31 December 2014 the item "Bank deposits, cash & cash equivalents" included restricted tax deductions amounting to NOK 38,406,000 (2013: NOK 36,184,000). The Group had additional restricted funds associated with Fish Pool contracts in the amount NOK 91,221,000 (2013: NOK 41,205,000).
As at 31 December 2014 the parent company's share capital comprised:
| Name | Position | No. of shares | Shareholding | Voting share |
|---|---|---|---|---|
| Bjørn Flatgård * | Board Chair | 1 525 162 | 1,35 % | 1,36 % |
| Gustav Witzøe ** | Director | 58 332 701 | 51,49 % | 52,08 % |
| Pål Georg Storø | Director | 12 400 | 0,01 % | 0,01 % |
| Leif Inge Nordhammer*** | CEO | 2 650 065 | 2,34 % | 2,37 % |
The board has been granted two authorisations to raise the share capital by a maximum of NOK 2,830,000, through the issue of up to 11,318,670 shares. The authorisations are valid until the 2015 AGM or 30 June 2015 at the latest.
* owned indirectly through the family-owned company GloMar AS, which has shares in the Kverva Group. Account taken of own shares in Kverva AS.
** owned indirectly through the parent company in the Kverva Group, and includes shares owned by companies controlled by related parties. Account taken of own shares in Kverva AS.
The board has also been authorised to acquire treasury shares with a face value of NOK 2,508,000, a total of 10,029,999 shares. A dividend of NOK 10 per share has been proposed, totalling NOK 1,120,000,000 as at 31 December 2014. No provision has been made for treasury shares.
*** owned indirectly through LIN AS, as well as shares in the Kverva Group. Account taken of own shares in Kverva AS
| The board's authorisation is valid until the 2015 AGM, |
|---|
| or 30 June 2015 at the latest. |
| NOK 1000 | No. Face value |
Book value | Leasing liabilities 450 070 529 487 |
|
|---|---|---|---|---|
| Ordinary shares | 113 299 999 | 0,25 | 28 325 | Other non-current liabilities 5 307 50 402 |
| Shareholders | Next year's instalment on long-term debt -153 518 -268 034 |
|||
| The 20 largest shareholders as at 31 December 2014 were: | No. | Shareholding | Voting share | Total long-term interest-bearing debt 31 Dec 2 191 562 2 446 237 |
| KVERVA AS | 60 500 000 | 53,40 % | 54,02 % | |
| FOLKETRYGDFONDET | 8 275 589 | 7,30 % | 7,39 % | Short-term interest-bearing debt |
| LIN AS | 2 005 200 | 1,77 % | 1,79 % | Debt to credit institutions 123 149 129 153 |
| PARETO AKSJE NORGE | 1 716 652 | 1,52 % | 1,53 % | Next year's instalment on long-term debt 153 518 268 034 |
| ODIN NORGE | 1 635 467 | 1,44 % | 1,46 % | Total short-term interest-bearing debt 31 Dec 276 667 397 186 |
| STATE STREET BANK AND TRUST CO. | 1 427 782 | 1,26 % | 1,27 % | |
| SALMAR ASA | 1 300 000 | 1,15 % | 0,00 % | |
| VERDIPAPIRFONDET DNB NORGE (IV) | 1 280 097 | 1,13 % | 1,14 % | Total interest-bearing debt 2 468 229 2 843 423 |
| STATE STREET BANK & TRUST CO. | 813 486 | 0,72 % | 0,73 % | Cash & cash equivalents 166 963 1 070 998 |
| PARETO AKTIV | 722 798 | 0,64 % | 0,65 % | Net interest-bearing debt 2 301 266 1 772 425 |
| THE BANK OF NEW YORK MELLON | 709 808 | 0,63 % | 0,63 % | |
| THE BANK OF NEW YORK MELLON | 669 323 | 0,59 % | 0,60 % | The book value of long-term debt is practically the same as fair value. Next year's instalments on bank loans and leasing |
| STOREBRAND NORGE I | 614 184 | 0,54 % | 0,55 % | agreements are classified as current liabilities in the balance sheet. |
| STATE STREET BANK AND TRUST CO. | 543 015 | 0,48 % | 0,48 % | See Note 2 for details of the maturity profile of the Group's liabilities. |
| RBC INVESTOR SERVICES BANK S.A | 492 524 | 0,43 % | 0,44 % | |
| SCHRODER INTERNATION.SELECTION FD | 467 809 | 0,41 % | 0,42 % | |
| KLP AKSJE NORGE INDEKS VPF | 460 736 | 0,41 % | 0,41 % | Financial covenants Interest-bearing debt in more detail |
| STATE STREET BANK & TRUST COMPANY | 449 271 | 0,40 % | 0,40 % | In 2014 SalMar entered into a new borrowing agreement with The most important financial covenants for the long term financing of SalMar ASA are, respectively, a sol a term of 5 years. The credit facility comprises a term loan of |
| JPMORGAN CHASE BANK, N.A | 446 716 | 0,39 % | 0,40 % | vency requirement, which stipulates that the Group's 1,000,000,000, which has a 10-year repayment profile maturing |
| THE NORTHERN TRUST CO. | 419 783 | 0,37 % | 0,37 % | after 5 years. There is also an investment and acquisition facility recognised equity ratio shall exceed 35%, and a profit |
| Total 20 largest shareholders | 84 950 240 | 74,98 % | 74,69 % | ability requirement, which stipulates that the Group's in the amount of NOK 2,000,000,000, which has a 33-year repay |
| Total other shareholders | 28 349 759 | 25,02 % | 25,31 % | ment profile maturing after 5 years. No drawdowns on this facility interest-bearing debt to EBITDA ratio shall, on aver |
| Total no. of shares | 113 299 999 | 100,00 % | 100,00 % | age, not exceed 4.5. However, under the terms of the had been made as at 31 December 2014. In addition to this, there |
This financing agreement covers all group companies with the exception of Vikenco AS and SalMar Japan K.K.
In 2014 SalMar entered into a new borrowing agreement with a term of 5 years. The credit facility comprises a term loan of 1,000,000,000, which has a 10-year repayment profile maturing after 5 years. There is also an investment and acquisition facility in the amount of NOK 2,000,000,000, which has a 33-year repayment profile maturing after 5 years. No drawdowns on this facility had been made as at 31 December 2014. In addition to this, there is a revolving credit facility amounting to NOK 1,500,000,000 and an agreed operating credit capped at NOK 500,000,000. Interest is based on so-called "current terms". The most important financial covenants for the longterm financing of SalMar ASA are, respectively, a solvency requirement, which stipulates that the Group's recognised equity ratio shall exceed 35%, and a profitability requirement, which stipulates that the Group's interest-bearing debt to EBITDA ratio shall, on average, not exceed 4.5. However, under the terms of the agreement, the company may have an NIBD/EBITDA ratio of up to 6.0 for up to three quarters.
Estimated annual instalments on leasing liabilities in 2015 amount to NOK 43,989,000. Leasing agreements have an original term of 60-84 months, apart from the capitalised leasing agreement for the InnovaMar facility which has a term of 20 years.
| Long-term interest-bearing debt | 2014 | 2013 |
|---|---|---|
| Debt to credit institutions | 1 889 703 | 2 134 382 |
| Leasing liabilities | 450 070 | 529 487 |
| Other non-current liabilities | 5 307 | 50 402 |
| Next year's instalment on long-term debt | -153 518 | -268 034 |
| Total long-term interest-bearing debt 31 Dec | 2 191 562 | 2 446 237 |
| Short-term interest-bearing debt | ||
| Debt to credit institutions | 123 149 | 129 153 |
| Next year's instalment on long-term debt | 153 518 | 268 034 |
| Total short-term interest-bearing debt 31 Dec | 276 667 | 397 186 |
| Total interest-bearing debt | 2 468 229 | 2 843 423 |
| Cash & cash equivalents | 166 963 | 1 070 998 |
| Net interest-bearing debt | 2 301 266 | 1 772 425 |
| Long-term interest-bearing debt | 2014 | 2013 |
|---|---|---|
| Debt to credit institutions | 1 889 703 | 2 134 382 |
| Leasing liabilities | 450 070 | 529 487 |
| Other non-current liabilities | 5 307 | 50 402 |
| Next year's instalment on long-term debt | -153 518 | -268 034 |
| Total long-term interest-bearing debt 31 Dec | 2 191 562 | 2 446 237 |
| Short-term interest-bearing debt Debt to credit institutions Next year's instalment on long-term debt Total short-term interest-bearing debt 31 Dec |
123 149 153 518 276 667 |
129 153 268 034 397 186 |
| Total interest-bearing debt Cash & cash equivalents |
2 468 229 166 963 |
2 843 423 1 070 998 |
| Net interest-bearing debt | 2 301 266 | 1 772 425 |
| Non-current liabilities | 0 | 0 |
|---|---|---|
| Profit & loss account | 46 374 | 106 178 |
| Losses carried forward | 0 | -436 397 |
| TOTAL temporary differences | 4 676 274 | 4 442 802 |
| Deferred tax liabilities (+) / deferred tax assets (-) | 1 262 594 | 1 199 557 |
| Change in deferred tax in the balance sheet: | 2014 | 2013 |
| Deferred tax 1 Jan | 1 199 557 | 872 398 |
| Change in deferred tax in profit and loss | 90 601 | 437 253 |
| Change in deferred tax resulting from changed tax rate - effect recognised in profit and loss | 0 | -44 574 |
| Deferred tax associated with acquisitions | 15 579 | -64 583 |
| Deferred tax association with demerger - exit of subsidiaries and non-controlling interests | -42 295 | 0 |
| Deferred tax associated with equity transactions | 0 | -937 |
| Other changes | -848 | 0 |
| Deferred tax 31 Dec | 1 262 594 | 1 199 557 |
| Reconciliation from nominal to actual tax rates | 2014 | 2013 |
| Profit before tax | 1 628 841 | 2 322 071 |
| Expected tax at nominal tax rate | 439 787 | 650 180 |
| Effect of change in tax rate | 0 | -44 574 |
| Permanent differences (27%) | -26 929 | -187 084 |
| Surplus/shortfall in tax provisions in previous years | 306 | 173 |
| Calculated tax expense | 413 164 | 418 695 |
| Effective tax rate | 25,4 % | 18,0 % |
| Permanent differences apply to the following: | ||
| Option expenses | 1 474 | 3 192 |
| Options redeemed | -2 759 | -5 476 |
| Share of profit/loss from associates | -25 957 | -44 234 |
| Derivatives (TRS agreement) | 0 | -7 471 |
Realisasion of shares and securities within the exemption method
0 -71 221
Change in value of financial assets at fair value in profit and loss
0 -23 179
Dividend received within the exemption method
0 -1 312
Non-recurring gains associated with acquisitions
0 -45 292
Other 313
7 908
Total -26 929 -187 084
| Deferred tax liabilities (+) / deferred tax assets (-) | 1 262 594 | 1 199 557 | |
|---|---|---|---|
| TOTAL temporary differences | 4 676 274 | 4 442 802 | |
| Losses carried forward | 0 | -436 397 | |
| Profit & loss account | 46 374 | 106 178 | Net pension assets 1 592 802 |
| Non-current liabilities | 0 | 0 | Capitalised pension liaibilities associated with unsecured scheme (AFP) 0 |
| Other | -244 094 | -17 429 | Capitalised pension assets associated with secured scheme 1 592 802 |
| Receivables | -8 017 | -16 119 | 2014 2013 |
| Inventory | 3 129 036 | 3 091 104 | |
| Non-current financial assets | 404 | 1 048 | Pension assets and liabilities recognised in the Group's balance sheet break down as follows: |
| Financial leasing | 46 868 | 72 243 | |
| Intangible and operating assets | 1 705 703 | 1 642 175 | Year's pension costs, incl. employers' national insurance contributions 27 986 25 984 |
| Breakdown of temporary differences | 2014 | 2013 | Accrued employers' national insurance contributions 1 148 1 061 |
| Costs relating to the defined-benefits plan 6 269 5 331 |
|||
| Tax payable in the balance sheet | 321 839 | 25 843 | Premiums paid into the defined-contribution scheme 20 569 19 592 |
| Change in tax payable in previous years | 0 | 0 | NOK 1000 2014 2013 |
| Tax payable in the year | 321 839 | 25 843 | and one benefits-based, as follows: |
| Tax payable in the balance sheet | 2014 | 2013 | Total pension costs for the Group break down into two parts, one contribution-based |
| Tax on ordinary profit | 413 364 | 418 695 | |
| Surplus/shortfall in tax provisions in previous years | 306 | 173 | |
| Tax paid abroad | 618 | 0 | liabilities associated with employees who were on sick leave or in lations. |
| Effect of change in tax rate | 0 | -44 574 | to a defined-contribution pension scheme. Only those assets and scheme are not included in the Group's pension calcu |
| Change in deferred tax | 90 601 | 437 253 | In 2006 the Group switched from a defined-benefits pension plan from 13 pensioners. Liabilities associated with this |
| Tax payable | 321 839 | 25 843 | a pension scheme that meets the requirements of this legislation. at 31 December 2014 the pension liability associated with the defined-benefits plan derives in its entirety |
| The year's tax expense breaks down as follows: | 2014 | 2013 | scheme, under the Mandatory Occupational Pensions Act, and has pensioners, remain in the defined-benefits scheme. As |
| NOK 1000 | The enterprise has a duty to provide an occupational pension receipt of disability benefits, in addition to the residual |
As at 31 December 2014 the Group had not issued guarantees with respect to third parties.
The Group has also entered into a 10-year lesaing contract with Romsdalsfisk AS, which expires 1 April 2017. The contract is for the lease of the Vikenco harvesting plant. The Group has a preferred right with respect to extending the lease. The leasing amount is divided into a fixed portion and a performance-related portion capped at NOK 300,000
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Premiums paid into the defined-contribution scheme | 20 569 | 19 592 |
| Costs relating to the defined-benefits plan | 6 269 | 5 331 |
| Accrued employers' national insurance contributions | 1 148 | 1 061 |
| Year's pension costs, incl. employers' national insurance contributions | 27 986 | 25 984 |
| 2014 | 2013 | |
|---|---|---|
| Capitalised pension assets associated with secured scheme | 1 592 | 802 |
| Capitalised pension liaibilities associated with unsecured scheme (AFP) | 0 | 0 |
| Net pension assets | 1 592 | 802 |
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Short-term debt to credit institutions | 123 149 | 129 153 |
| Long-term debt to credit institutions | 1 889 703 | 2 134 382 |
| Leasing liabilities and other non-current liabilities | 450 070 | 579 487 |
| Total | 2 462 922 | 2 843 021 |
| Book value of assets pledged as security | 2014 | 2013 |
|---|---|---|
| Property, plant & equipment and licences | ||
|---|---|---|
| Inventory and biological assets | ||
| Bank deposits | ||
| Total |
| Total | 8 601 529 | 8 248 521 |
|---|---|---|
| Bank deposits | 0 | 506 084 |
| Trade receivables | 888 219 | 662 149 |
| Inventory and biological assets | 3 321 138 | 3 248 689 |
| Property, plant & equipment and licences | 4 392 172 | 3 831 598 |
| NOK 1000 | Less than 1 year | 2-5 years More than 5 years | Total | |
|---|---|---|---|---|
| Total future leasing payments | 5 491 | 3 346 | 103 | 8 940 |
| 3 346 | 103 | 8 940 |
|---|---|---|
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Accrued holiday pay | 59 718 | 60 153 |
| Accrued interest | 2 931 | 16 450 |
| Derivatives | 175 485 | 2 687 |
| Provisions | 34 193 | 5 000 |
| Option liabilities | 0 | 6 771 |
| Other accrued costs and provisions | 108 899 | 101 495 |
| TOTAL other current liabilities | 381 226 | 192 556 |
| GROUP REVENUES BY GEOGRAPHIC MARKET: | 2014 | 2013 |
|---|---|---|
| Asia | 20,9 % | 25,1 % |
| Russia | 2,5 % | 5,2 % |
| Europe, excl. Norway | 41,6 % | 34,0 % |
| Norway | 28,3 % | 30,9 % |
| Other | 6,7 % | 4,8 % |
| Total | 100,0 % | 100,0 % |
| PAYROLL COSTS NOK 1000 | 2014 | 2013 |
|---|---|---|
| Salaries, incl. holiday pay and bonuses | 606 466 | 523 971 |
| Employers' national insurance contributions | 40 144 | 35 478 |
| Pension costs (see Note 19) | 26 838 | 19 592 |
| Options | 5 459 | 11 400 |
| Contract labour | 14 753 | 15 954 |
| Other benefits | 16 770 | 16 658 |
| Total | 710 430 | 623 053 |
| No. of full-time equivalents employed during the financial year. | 1 082,5 | 998,5 |
The SalMar Group has a management team comprising the CEO, CFO and the leaders of the largest business areas.
| 2014 NOK 1000 Senior executives |
Salary | Bonus, incl. extraordinary bonus |
Benefits-in kind |
Accrued costs |
pension Exercised options |
|---|---|---|---|---|---|
| Leif Inge Nordhammer, CEO * | 2 621 | 350 | 8 | 53 | 0 |
| Yngve Myhre, CEO ** | 2 886 | 0 | 60 | 49 | 3 704 |
| Trond Tuvstein, CFO | 1 737 | 350 | 8 | 60 | 0 |
| Bjørn Larsen, Director, Fish Farming *** | 1 036 | 0 | 5 | 54 | 0 |
| Olav-Andreas Ervik, Director, Fish Farming **** | 1 538 | 350 | 9 | 132 | 0 |
| Gustav Witzøe, Director, Business Development | 1 063 | 350 | 8 | 54 | 0 |
| Eva Haugen, Group Quality Assurance Manager | 1 130 | 350 | 8 | 77 | 0 |
* Took up post 20 January 2014
** Left post in January 2014
*** Left post 31 July 2014
****Took up post 1 August 2014
CEO Yngve Myhre stepped down in January 2014. He was entitled to salary payments during a 6-month period of notice, plus 6-months' severance pay.
| 2013 NOK 1000 Senior executives |
Salary | Bonus, incl. extraordinary bonus |
Benefits-in kind |
Accrued costs |
pension Exercised options |
|---|---|---|---|---|---|
| Leif Inge Nordhammer, CEO * | 0 | 0 | 0 | 0 | 0 |
| Yngve Myhre, CEO ** | 3 097 | 1 076 | 9 | 48 | 0 |
| Ulrik Steinvik, CFO *** | 1 582 | 560 | 9 | 47 | 2 194 |
| Trond Tuvstein, CFO **** | 1 691 | 604 | 9 | 47 | 3 017 |
| Bjørn Larsen, Director, Fish Farming | 1 722 | 612 | 9 | 51 | 3 017 |
| Gustav Witzøe, Director, Business Development | 1 047 | 335 | 61 | 46 | 0 |
| Eva Haugen, Group Quality Assurance Manager | 988 | 393 | 9 | 42 | 823 |
* Took over the position on 20 Jan 2014 and has thus not received salary in 2013.
** Stepped down in Jan 2014
*** Stepped down on 15 Oct 2013
**** Took over the position on 15 Oct 2013
The remuneration paid to the CEO and other senior executives at SalMar is based on the following main principles.
The company wishes to utilise forms of remuneration which result in senior executives receiving shares, subscription rights or options in accordance with a specified programme. No other forms of remuneration linked to shares or the development of the share price A statement relating to the determination of salaries and other benefits to senior executives at SalMar ASA has been approved by the board. For further details, please see the chapter on Corporate Governance.
| Geographic breakdown of sales revenues based on the location of the customer | The remuneration paid to the CEO and other senior executives at | are utilised by the company. The board may not waive | ||
|---|---|---|---|---|
| The Group's sales are primarily made through the subsidiaries SalMar Sales AS and Vikenco AS. | SalMar is based on the following main principles. | the guidelines relative to this matter. | ||
| GROUP REVENUES BY GEOGRAPHIC MARKET: | 2014 | 2013 | Basic salary | Pension schemes |
| Asia | 20,9 % | 25,1 % | Basic salary is determined on the basis of the duties and responsi | Senior executives shall at all times have competitive |
| Russia | 2,5 % | 5,2 % | bilities required of the position, as well as the expertise and length | pension schemes. |
| Europe, excl. Norway | 41,6 % | 34,0 % | of service of the individual concerned. Salaries are intended to be | |
| Norway | 28,3 % | 30,9 % | competitive. | Notice of termination and severance pay |
| Other | 6,7 % | 4,8 % | Senior executives have a basic period of notice of six | |
| Total | 100,0 % | 100,0 % | Annual bonus | months. In certain cases, and depending on the posi |
| The bonus shall be determined and paid on the basis of the level of | tion concerned, salary may be paid for a period of 6-12 | |||
| the position concerned and the added value which the individual or | months after employment has been terminated. | |||
| group of individuals has generated. | ||||
| NOTE 24 • Payroll costs, no. of employees, remunerations, employee loans, etc. | Other variable elements in the remuneration package | |||
| Benefits-in-kind | The above notwithstanding, the company shall not | |||
| The company does not offer benefits-in kind-over and above that | offer senior executives variable elements in the | |||
| PAYROLL COSTS NOK 1000 | 2014 | 2013 | which is normal for senior executives in comparable companies. | remuneration package or specific benefits in addition |
| Salaries, incl. holiday pay and bonuses | 606 466 | 523 971 | to their basic salary. | |
| Employers' national insurance contributions | 40 144 | 35 478 | Share-based incentive schemes | |
| Pension costs (see Note 19) | 26 838 | 19 592 |
| Director's fee | Director's fee | |
|---|---|---|
| Board of directors NOK 1000 | 2014 | 2013 |
| Bjørn Flatgård, Chair | 300 | 280 |
| Gustav Witzøe | 95 | 90 |
| Kjell A. Storeide * | 233 | 215 |
| Tove Nedreberg ** | 220 | 205 |
| Merethe Helene Holthe | 190 | 0 |
| Nina Udnes Tronstad | 0 | 180 |
| Pål Georg Storø (employee representative) | 95 | 0 |
| Hanne Tobiassen (employee representative) | 95 | 0 |
| Alf Jostein Skjærvik (employee representative) | 0 | 115 |
| Arnt Mjønes (employee representative) | 0 | 90 |
* Has received an additional NOK 42,500 in remuneration as chair of the Audit Committee. ** Has received an additional NOK 30,000 in remuneration as a member of the Nomination Commttee.
Directors' fees are not performance related.
Directors' fees payable to employee representatives are stated above. Total remuneration from the Group to employee-elected members of the board of directors, including directors' fees as stated above, was as follows in 2014:
| Pål Georg Storø: | NOK 1,167,000 |
|---|---|
| Hanne Kristine Tobiassen: | NOK 895,000 |
A total of 64 people in the company, including the entire group management team, received in 2010, 2011 and 2012 a total of 1,835,000 options to purchase the company's shares. In the period from the granting of the options until 31 December 2014, a total of 11 people left the company and 453,520 options have therefore lapsed. Members of the board of directors do not have options. The option scheme was terminated in 2014, and the remaining 264,609 options have been redeemed.
Movements in the number of options outstanding for the active option scheme have been as follows:
| NOK 1000 | Loans | Sureties |
|---|---|---|
| Employees | 1 953 | - |
| 2014 Average strike price per share |
Options | 2013 Average strike price per share |
Options | |
|---|---|---|---|---|
| As at 1 Jan | 74,00 | 264 609 | 54,30 | 1 325 000 |
| Granted during the year | - | - | - | |
| Lapsed during the year | - | - | - | |
| Exercised | 82,04 | -264 609 | 67,97 | -1 060 391 |
| Expired | - | - | - | |
| As at 31 Dec | - | - | 74,00 | 264 609 |
| Group management has the following RSU entitlements: | Holding 1 Jan | Year's award Holding 31 Dec | |
|---|---|---|---|
| Leif Inge Nordhammer, CEO | - | 12 110 | 12 110 |
| Trond Tuvstein, CFO | - | 7 099 | 7 099 |
| Olav-Andreas Ervik, Director, Fish Farming | - | 6 755 | 6 755 |
| Gustav Witzøe, Director, Business Development | - | - | - |
| Eva Haugen, Group Quality Assurance Manager | - | 4 662 | 4 662 |
| Auditor The fees paid to the Group's auditor (ex. VAT) break down as follows |
|||
| NOK 1000 | 2014 | 2013 | |
| Statutory auditing services | 1 923 | 1 839 | |
| Other certification services | 140 | 112 | |
| Tax advisory services | 110 | 96 | |
| Other services | 345 | 578 | |
| Total | 2 519 | 2 625 | |
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Gains on TRS agreement | 0 | 26 683 |
| Gains on shares | 0 | 254 360 |
| Change in value of financial assets at fair value in profit and loss | 0 | 82 781 |
| Dividend | 12 | 4 686 |
| Other financial income | 2 032 | 5 847 |
| Financial income | 2 044 | 374 357 |
| Other financial expenses | 902 | 1 596 |
| Financial expenses | 902 | 1 596 |
In accordance with the authorisation granted by the company's AGM on 4 June 2014, SalMar ASA's board of directors has introduced a share-based incentive scheme (Restricted Share Unit Plan) for senior executives and key personnel employed by the company and its subsidiaries. The plan encompasses up to 333,764 shares, and has a term of three years. The company's liabilities under the plan will be covered by its existing holding of treasury shares. The date on which entitlements under the plan were granted was 3 December 2014.
Participants of the plan are granted Restricted Share Units (RSUs) free of charge. These will be released and transferred as shares to participants after an accrual period subject to predefined performance criteria. The plan comprises three accrual periods of, respectively, one, two and three calendar years, with 2014 as the first year. Each accrual period covers 1/3 of the total annual RSUs in the plan. One RSU affords a contingent entitlement to one share. The award of RSUs in each of the three accrual periods rests on the following performance criteria:
1/3 of the RSUs will vest irrespective of the performance criteria. - 1/3 of the RSUs will vest provided that SalMar achieves a better EBIT/kg ratio than other aquaculture enterprises listed on the Oslo Stock Exchange during the accrual period.
1/3 of the RSUs will vest provided that SalMar's shares deliver a higher total shareholder return (TSR) than a defined group of comparable companies during the accrual period.
R&D costs include expenses relating to research and administrative personnel, technical equipment and facilities, and sums paid for external research services.
| As at 31 Dec - - 74,00 264 609 |
NOK 1000 | 2014 | 2013 |
|---|---|---|---|
| Maintenance | 201 929 | 136 016 | |
| A total of NOK 3,447,000 was charged to expenses in accordance with the scheme in 2014. | Operating equipment | 68 990 | 49 293 |
| Direct input factors | 209 743 | ||
| Delivery costs | 445 217 | 200 222 423 076 |
|
| Other operating costs | 217 074 | 277 692 | |
| Restricted Share Unit Plan (RSU): In accordance with the authorisation granted by the company's The plan stipulates that RSUs will vest only if the par |
Total | 1 142 953 | 1 086 299 |
The criteria for capitalisation are deemed to have been met with respect to the Group's salmon lice project, as well as the offshore
Group companies took to income NOK 6,672,000 in SkatteFUNN contributions in 2014. A further NOK 4,309,300 has been recognised as deferred revenues in the period. A total of NOK 3,187,000 in SkatteFUNN contributions was recognised in 2013.
The plan stipulates that RSUs will vest only if the participant is still an employee of the Group. The total gains from released RSUs during the course of one calendar year may not exceed 100% of the participant's basic salary.
The fair value of RSU entitlements is calculated on the date they are awarded. The total fair value for the entitlements is capped at NOK 36,254,800. The cost is periodised over the accrual period, and a total of NOK 2,011,900 was charged to expenses in connection with the scheme in 2014. Provisions for employer's national insurance contributions linked to the scheme have also been made. The expense will become real to the extent that the performance criteria are met.
The fair value of the RSU entitlements that are not at market terms is set as the share price on the date the award was made. The probability of the performance criteria being met is taken into account when assessing how many RSU entitlements will be redeemed. The share price on the date of the award was NOK 123.00.
The fair value of the RSU entitlements that are at market terms is calculated on the basis of a Monte-Carlo simulation. The most important input data when calculating the value of these RSU entitlements are the share price on the date of the award, volatility, risk-free interest, expected dividend and accrual period. Based on the Monte-Carlo simulation, each RSU entitlement is worth NOK 118.73.
| fish farm project (see Note 4). Other R&D costs are not |
|---|
| deemed to have met the criteria for capitalisation, and |
| those costs have therefore been charged to expenses. |
| A total of NOK 53,086,000 in R&D costs was charged |
| to expenses in 2014 (NOK NOK 17,708,000 in 2013). |
Passion for Salmon
Realisation of shares in Bakkafrost PF
On 15 May 2013 the Group agreed the sale of part of its shareholding in Bakkafrost, following which its shareholding in Bakkafrost was reduced from 25.2% to 10.2%. Less expenses, the total consideration for the shares sold came to NOK 506,084,000. A gain of NOK 170,103,000 was recognised in connection with the transaction.
As a result of the sale, Bakkafrost ceased to be an associate from the date of the transaction. For accounting purposes the entire shareholding was realised, and the remaining 10.2% shareholding was classified as a financial instrument at fair value in profit and loss. The new cost price for the remaining shareholding was its fair value on the date of the transaction. The share of profit/loss from the associate for the period up until the date of the transaction was recognised in the amount of NOK 40,667,000. For the period from then until 12 December 2013, the change in fair value came to NOK 82,781,000.
In addition to its shareholding in Bakkafrost, SalMar had also entered into a TRS agreement for a total of 4.66% of the company's shares. The TRS agreement has been consistently recognised at fair value, with changes in value included in "Other financial items". As at 15 July 2013 the TRS agreement was realised, and the entire shareholding acquired. The accumulated gain on the TRS agreement was NOK 76,706,000, of which NOK 26,683,000 was taken to income in 2013. After this SalMar's shareholding in Bakkafrost totalled 14.88%. The change in the value of the shares acquired on 15 July 2013 up until 12 December 2013 was included in the NOK 82,781,000 change in value mentioned above.
On 12 December 2013 the remaining 14.88% shareholding in Bakkafrost PF was realised. The net consideration for the remaining shareholding totalled NOK 616,443,000. A gain on this transaction of NOK 18,576,000 was recognised In 2013.
In 2013 the Group also realised its 42.5% shareholding in Nordskag Næringspark AS. The total consideration came to NOK 64,673,000, which generated a gain for the Group of NOK 40,755,000 in the period.
During the period 22 March to 2 April 2013 the Group agreed to acquire 41.3% of the shares in Villa Organic AS. The Group already owned 8.4% of the company's shares, and its 49.7% shareholding gave it a significant influence over the firm. The investment was classified as an associated company. For accounting purposes the investment was treated as an associate in accordance with the equity method from this point until 12 June 2013, when the SalMar Group achieved a controlling interest in the company. NOK 12,855,000 in profit shares from the investment in the associate was recognised in revenue in 2013. On the dates that both significant influence and controlling influence were achieved, the entire gain on the shares was deemed to have been realised and a new cost price established. On the date of transfer from financial instrument held for sale to associated company, this generated a gain of 15,000,000. Correspondingly, in connection with the transfer from associate to subsidiary a gain of NOK 6,587,000 was recognised in revenue. For further details of the transactions, please see Note 7.
The effect of the above-mentioned transactions is included in financial income as Gains on TRS agreement, Gains on shares and Changes in the value of financial assets at fair value in profit and loss. In addition, effects have been recognised on the line for Income from investments in associates.
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Net profit for the year (controlling interest's share) | 1 192 500 | 1 790 041 |
| Ordinary shares 1 Jan | 113 299 999 | 113 299 999 |
| Effect of share issue | - | - |
| Effect of buyback of treasury shares | - | - |
| Average no. of shares outstanding through the year | 113 299 999 | 113 299 999 |
| Diluting effect of RSU entitlements granted (see Note 24) | 801 | - |
| Average no. of diluted shares outstanding through the year | 113 300 800 | 113 299 999 |
| Earnings per share | ||
| Basic | 10,53 | 15,80 |
Diluted 10,53 15,80
The Group's parent company is SalMar ASA. The overall parent company is Kverva AS, which owns 53.4% of the shares in SalMar ASA. The ultimate parent company is Kvarv AS, which prepares its own consolidated accounts in accordance with NGAAP. .
| Transactions with related parties: | Sales | Purchases | Receivables | Liabilities | |
|---|---|---|---|---|---|
| Kverva AS | Owns 53.4% of Salmar ASA | 0 | 32 | 0 | 0 |
| Romsdal Processing AS | Associate - see Note 9 | 0 | 4 242 | 0 | 42 |
| Kirkenes Processing AS * | Associate - see Note 9 | 0 | 25 725 | 0 | 0 |
| Total | 0 | 29 999 | 0 | 42 |
* Services provided by Kirkenes Processing AS relate to the harvesting of salmon from SalMar Laksefjorden. Production at SalMar Laksefjorden is a joint operation with Lerøy Finnmark, where Lerøy Finnmark undertakes the actual operational management.
Transactions between the Group and related parties are undertaken on market terms and conditions.
Dividends have also been received from associates. See Note 9 for further details.
9 4 9 5
SALMAR
ANNUAL REPORT
| OPERATING REVENUES AND OPERATING EXPENSES | Note | 2014 | 2013 | ASSETS | Note | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| NON-CURRENT ASSETS | |||||||
| Sales revenues | 2 | 56 696 | 52 170 | Intangible assets | |||
| Total operating revenues | 56 696 | 52 170 | Deferred tax assets | 12 | 10 460 | ||
| Total intangible assets | 10 460 | ||||||
| Salary and payroll costs | 3 | 40 976 | 42 814 | ||||
| Depreciation of property, plant & equipment | 4 | 1 697 | 772 | Property, plant & equipment | |||
| Other operating expenses | 3,10 | 66 581 | 35 957 | Land, buildings and other real property | 4 | 2 159 | 2 159 |
| Total operating expenses | 109 254 | 79 543 | Plant, equipment and operating consumables | 4 | 8 783 | 7 022 | |
| Operating profit/loss | -52 559 | -27 373 | Total property, plant & equipment | 14 | 10 942 | 9 181 | |
| FINANCIAL INCOME AND FINANCIAL EXPENSES | Non-current financial assets | ||||||
| Income from investments in subsidiaries | 5 | 1 108 218 | 436 235 | Investments in subsidiaries | 5, 14 | 1 000 754 | 953 422 |
| Income from investments in associates | 6 | 36 250 | 565 905 | Loans to group companies | 7, 11, 14 | 2 175 924 | 2 371 596 |
| Interest received from group companies | 91 250 | 98 267 | Investments in associates | 6 | 162 890 | 162 890 | |
| Other interest income | 10 720 | 5 512 | Investments in shares and other securities | 10 | |||
| Other financial income | 125 | 890 | Other receivables | 7 | 786 | 1 896 | |
| Interest paid to group companies | 5 106 | 0 | Total non-current financial assets | 3 340 363 | 3 489 813 | ||
| Other interest expenses | 71 636 | 118 017 | Total non-current assets | 3 361 765 | 3 499 406 | ||
| Other financial expenses | 32 801 | 52 170 | |||||
| Net financial items | 1 137 019 | 936 622 | CURRENT ASSETS | ||||
| Ordinary profit/loss before tax | 1 084 461 | 909 249 | Receivables | ||||
| Tax | 12 | 281 317 | 93 910 | Trade receivables | 14 | 6 | |
| Profit after tax | 803 144 | 815 339 | Short-term receivables from group companies | 11,14 | 1 279 297 | 497 524 | |
| Other receivables | 14 | 20 659 | 11 308 | ||||
| NET PROFIT/LOSS FOR THE YEAR | 803 144 | 815 339 | Total receivables | 1 299 963 | 508 831 | ||
| ALLOCATIONS | Bank deposits, cash & cash equivalents | 14,16 | 14 790 | 916 937 | |||
| Dividend provisions | 8,9 | 1 120 000 | 896 000 | Total current assets | 1 314 753 | 1 425 768 | |
| Transferred to/from other equity | 9 | -316 856 | -80 661 | TOTAL ASSETS | 4 676 517 | 4 925 174 | |
| TOTAL allocations | 803 144 | 815 339 | |||||
| Group contributions received before tax | 1 108 218 | 436 235 | |||||
| Group contributions paid before tax | -22 740 | -312 151 |
| NON-CURRENT ASSETS | |
|---|---|
| Intangible assets | |
| Property, plant & equipment | |
| Non-current financial assets | |
| CURRENT ASSETS | |
| Receivables | |
| ASSETS | Note | 2014 | 2013 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Intangible assets | |||
| Deferred tax assets | 12 | 10 460 | 412 |
| Total intangible assets | 10 460 | 412 | |
| Property, plant & equipment | |||
| Land, buildings and other real property | 4 | 2 159 | 2 159 |
| Plant, equipment and operating consumables | 4 | 8 783 | 7 022 |
| Total property, plant & equipment | 14 | 10 942 | 9 181 |
| Non-current financial assets | |||
| Investments in subsidiaries Loans to group companies |
5, 14 7, 11, 14 |
1 000 754 2 175 924 |
953 422 2 371 596 |
| Investments in associates | 6 | 162 890 | 162 890 |
| Investments in shares and other securities | 10 | 10 | |
| Other receivables Total non-current financial assets |
7 | 786 3 340 363 |
1 896 3 489 813 |
| Total non-current assets | 3 361 765 | 3 499 406 | |
| CURRENT ASSETS | |||
| Receivables | |||
| Trade receivables | 14 | 6 | 0 |
| Short-term receivables from group companies | 11,14 | 1 279 297 | 497 524 |
| Other receivables | 14 | 20 659 | 11 308 |
| Total receivables | 1 299 963 | 508 831 | |
| Bank deposits, cash & cash equivalents | 14,16 | 14 790 | 916 937 |
| Total current assets | 1 314 753 | 1 425 768 | |
| TOTAL ASSETS | 4 676 517 | 4 925 174 |
| EQUITY AND LIABILITIES | Note | 2014 | 2013 |
|---|---|---|---|
| EQUITY | |||
| Paid-in equity | |||
| Share capital | 8, 9 | 28 325 | 28 325 |
| Treasury shares | 9 | -325 | -325 |
| Share premium fund | 9 | 415 285 | 415 285 |
| Other paid-in equity | 9 | 27 528 | 25 516 |
| Total paid-in equity | 470 813 | 468 801 | |
| Retained earnings | |||
| Other equity | 9 | 744 073 | 1 060 929 |
| Total retained earnings | 744 073 | 1 060 929 | |
| Total equity | 9 | 1 214 887 | 1 529 731 |
| LIABILITIES | |||
| Other non-current liabilities | |||
| Debt to credit institutions | 13,14 | 1 800 000 | 1 991 682 |
| Long-term debt to group companies | 11 | 10 012 | 0 |
| Total other non-current liabilities | 1 810 012 | 1 991 682 | |
| CURRENT LIABILITIES | |||
| Debt to credit institutions | 13,14 | 75 202 | 0 |
| Trade payable | 2 152 | 1 920 | |
| Tax payable | 12 | 285 225 | 0 |
| Dividend | 8, 9 | 1 120 000 | 896 000 |
| Public charges payable | 59 441 | 35 981 | |
| Short-term payables to group companies | 11 | 55 615 | 436 163 |
| Other current liabilities | 53 984 | 33 697 | |
| Total current liabilities | 1 651 618 | 1 403 762 | |
| Total liabilities | 3 461 631 | 3 395 443 | |
| TOTAL EQUITY AND LIABILITIES | 4 676 517 | 4 925 174 |
| CASH FLOW FROM OPERATING ACTIVITIES: | Note | 2014 | 2013 |
|---|---|---|---|
| Ordinary profit before tax | 1 084 461 | 909 249 | |
| Tax paid during the period | 12 | 0 | 0 |
| Depreciation | 4 | 1 697 | 772 |
| Income from investments in subsidiaries | 5 | -1 108 218 | -436 235 |
| Income from investments in associates | 6 | -36 250 | -565 905 |
| Options charged to expenses | 3 | 3 761 | 10 429 |
| Gains/losses on the sale of non-current assets | 0 | 66 | |
| Gains/losses on the sale of non-current financial assets | 0 | -890 | |
| Change in trade receivables | -11 173 | 146 | |
| Change in trade payables | -47 045 | 231 | |
| Change in other time-limited items | 34 785 | 12 658 | |
| Net cash flow from operating activities | -77 982 | -69 478 | |
| CASH FLOW FROM INVESTING ACTIVITIES: | |||
| Receipts from the sale of property, plant & equipment | 4 | 0 | 200 |
| Payments for the purchase of property, plant & equipment | 4 | -3 458 | -4 924 |
| Change in intra-group balances | 11 | 48 990 | 314 686 |
| Net receipts of group contributions and dividends from subsidiaries | 5 | 138 294 | 270 293 |
| Receipts of dividends from associates and other investments | 6 | 36 250 | 60 071 |
| Net receipts from the sale of non-current financial assets | 0 | 1 188 222 | |
| Net payments for the purchase of non-current financial assets | 5 | -29 034 | -240 359 |
| Net change in other investmens | 1 165 | 0 | |
| Net cash flow from investing activities | 192 207 | 1 588 190 | |
| CASH FLOW FROM FINANCING ACTIVITIES: | |||
| Long-term debt raised | 1 800 000 | 0 | |
| Long-term debt repaid | -1 991 682 | -152 873 | |
| Net change in overdraft | 75 202 | -431 615 | |
| Options redeemed | -3 893 | -20 553 | |
| Dividend (paid) | -896 000 | 0 | |
| Net cash flow from financing activities | -1 016 372 | -605 040 | |
| Net change in bank deposits, cash & cash equivalents | -902 147 | 913 672 | |
| Bank deposits, cash & cash equivalents as at 1 Jan | 916 937 | 3 264 | |
| Bank deposits, cash & cash equivalents as at 31 Dec | 14 790 | 916 937 | |
| Unused drawing rights | 3 124 798 | 1 970 000 |
| EQUITY | |||||||
|---|---|---|---|---|---|---|---|
| Paid-in equity | Ordinary profit before tax | 1 084 461 | 909 249 | ||||
| Share capital | 8, 9 | 28 325 | 28 325 | Tax paid during the period | 12 | 0 | |
| Treasury shares | 9 | -325 | -325 | Depreciation | 4 | 1 697 | 772 |
| Share premium fund | 9 | 415 285 | 415 285 | Income from investments in subsidiaries | 5 | -1 108 218 | -436 235 |
| Other paid-in equity | 9 | 27 528 | 25 516 | Income from investments in associates | 6 | -36 250 | -565 905 |
| Total paid-in equity | 470 813 | 468 801 | Options charged to expenses | 3 | 3 761 | 10 429 | |
| Gains/losses on the sale of non-current assets | 0 | ||||||
| Gains/losses on the sale of non-current financial assets | 0 | -890 | |||||
| Retained earnings | Change in trade receivables | -11 173 | |||||
| Other equity | 9 | 744 073 | 1 060 929 | Change in trade payables | -47 045 | ||
| Total retained earnings | 744 073 | 1 060 929 | Change in other time-limited items | 34 785 | 12 658 | ||
| Net cash flow from operating activities | -77 982 | -69 478 | |||||
| Total equity | 9 | 1 214 887 | 1 529 731 | ||||
| CASH FLOW FROM INVESTING ACTIVITIES: | |||||||
| LIABILITIES | Receipts from the sale of property, plant & equipment | 4 | 0 | ||||
| Other non-current liabilities | Payments for the purchase of property, plant & equipment | 4 | -3 458 | -4 924 | |||
| Debt to credit institutions | 13,14 | 1 800 000 | 1 991 682 | Change in intra-group balances | 11 | 48 990 | 314 686 |
| Long-term debt to group companies | 11 | 10 012 | 0 | Net receipts of group contributions and dividends from subsidiaries | 5 | 138 294 | 270 293 |
| Total other non-current liabilities | 1 810 012 | 1 991 682 | Receipts of dividends from associates and other investments | 6 | 36 250 | 60 071 | |
| Net receipts from the sale of non-current financial assets | 0 | 1 188 222 | |||||
| CURRENT LIABILITIES | Net payments for the purchase of non-current financial assets | 5 | -29 034 | -240 359 | |||
| Debt to credit institutions | 13,14 | 75 202 | 0 | Net change in other investmens | 1 165 | ||
| Trade payable | 2 152 | 1 920 | Net cash flow from investing activities | 192 207 | 1 588 190 | ||
| Tax payable | 12 | 285 225 | 0 | ||||
| Dividend | 8, 9 | 1 120 000 | 896 000 | CASH FLOW FROM FINANCING ACTIVITIES: | |||
| Public charges payable | 59 441 | 35 981 | Long-term debt raised | 1 800 000 | |||
| Short-term payables to group companies | 11 | 55 615 | 436 163 | Long-term debt repaid | -1 991 682 | -152 873 | |
| Other current liabilities | 53 984 | 33 697 | Net change in overdraft | 75 202 | -431 615 | ||
| Total current liabilities | 1 651 618 | 1 403 762 | Options redeemed | -3 893 | -20 553 | ||
| Total liabilities | 3 461 631 | 3 395 443 | |||||
| Dividend (paid) | -896 000 |
STATEMENT OF CASH FLOW
Frøya, 16th April 2015
Tove Elin Nedreberg Director
Pål Georg Storø Director/Employee representative
Bjørn Flatgård Chair
Kjell A. Storeide Director
Merethe Helene Holte Director
Leif Inge Nordhammer President & CEO
Hanne Kristine Tobiassen Director/ Employee representative
Gustav Witzøe Director
SALMAR ANNUAL REPORT2014
The financial statements have been prepared in accordance with the Norwegian Accounting Act of 1998 and generally accepted accounting principles in Norway. The accounting principles described below apply only to the parent company SalMar ASA. The notes relating to the SalMar Group are presented along with the Group's consolidated financial statements.
Preparation of the financial statements in accordance with generally accepted accounting principles requires that management make assessments, estimates and assumptions that affect the application of accounting principles, the recognised value of assets and liabilities in the balance sheet, revenues and expenses for the financial year, as well as information relating to uncertain assets and liabilities on the balance sheet date. Estimates and their underlying assumptions are based on historic experience and other factors which are deemed to be relevant and probable at the time the assessment is made. These assessments affect the book value of assets and liabilities where the valuation is not based on other sources. Estimates are assessed continually, and final values and results may deviate from these estimates. Changes in accounting estimates are recognised in the period in which the change takes place.
Revenue from the sale of goods is recognised when it is earned, ie when the majority of both the risk and control of the item sold has been transferred to the customer. This will normally be when the item has been delivered to the customer. Revenues are recognised at the value of the consideration payable at the time the transaction took place. Services are taken to income as they are performed. Operating revenues are recognised less public charges, discounts, bonuses and other sales costs.
Trade receivables and other receivables are recognised at par less provisions for bad debts. Provisions for bad debts are determined on the basis of an assessment of the individual receivable.
Items of property, plant and equipment are capitalised at historic cost price and are depreciated over the asset's expected lifespan. Costs directly relating to maintenance of property, plant and equipment are charged to operating expenses as they arise, while enhancements or improvements are added to the asset's cost price and depreciated in line with the asset itself. If the recoverable portion of an item of property, plant and equipment is lower than its book value, the asset is written down to its recoverable value. The recoverable value is the higher of net sales value and value in use. Value in use is the present value of future cash flows which the asset will generate.
Fair value includes the effect of any market terms, but does not take account of the impact of any vesting terms that are not market terms. However, vesting terms that are not market terms affect the number of RSU that can be expected to be earned. The total expense is periodised over the vesting period. On the balance sheet date, the company recalculates its estimates for the number of options that are expected to be earned. The company recognises the effect of any changes in the original estimates in profit and loss, with a corresponding adjustment in equity. The value of options relating to employees of subsidiaries is posted to investments in subsidiaries. Tax The tax expense is matched against profit/loss before tax. Tax relating to equity transactions is recognised in equity. The tax expense comprises tax payable (tax on the company's taxable income for the year as it appears in the income statement), and any change in net deferred tax. Deferred tax is calculated at the rate of 27 per cent on the temporary differences between accounting and tax values, as well as tax losses carried forward at the end of the financial year. Deferred tax liabilities and deferred tax assets are presented net in the balance sheet.
Subsidiaries, associates and other shares classified as non-current assets are valued in accordance with the cost method. Subsidiaries are companies in which Sal-Mar ASA has a controlling influence, as a result of either legal or actual control. In principle, a controlling influence is deemed to exist when the company's direct or indirect shareholding exceeds 50 per cent of the voting capital. Associates are companies in which SalMar has a considerable influence. Considerable influence is normally deemed to exist when the company owns 20-50 per cent of the voting capital. Investments are valued at the shares' acquisition cost unless a writedown has been necessary. Write-downs to fair value are performed when the impairment is due to reasons that are not deemed to be of a temporary nature and are required under generally accepted accounting principles. Write-downs are reversed when the reason for the write-down no longer applies.
Assets intended for permanent ownership or use are classified as non-current assets. Other assets are classified as current assets and normally include items falling due for payment within one year, as well as items associated with the production cycle. The classification of current and non-current liabilities is based on the same criteria. 102 103
In the event of a decision to permit the cash settlement of options, the option liability will be reclassified from equity to liabilities. From the same date, the value of the option liability will be measured anew at the close of each period, with any changes recognised in profit and loss. The company's statement of cash flow shows a breakdown of the company's cash flow by operating, investing and financing activity. The statement shows the individual activity's impact on liquidity. The statement of cash flow has been drawn up in accordance with the indirect method.
The company has a defined-contribution occupational pension scheme. Pension premiums are charged to expenses as they arise, and the Group has no other liabilities over and above this annual payment.
The company has share-based incentive schemes, under which the company receives services from the employees in return for equity instruments (RSUs). The fair value of the services rendered by the employees in return for the RSUs awarded is recognised as an expense, with a corresponding increase in paid-in equity. The total amount charged to expenses over the vesting period is determined on the basis of fair value at the time the RSUs were granted, and the number of RSUs which are expected to accrue.
The parent company SalMar ASA is a holding company primarily engaged in the provision of administrative services to its subsidiaries. Consequently, the parent company's revenues derive solely from one business area, and are divided between revenues from intragroup services and other revenues as specified below.
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Revenues from provision of administrative services to group companies | 56 654 | 52 119 |
| Revenues from provision of adminstrative services to associates | 0 | 0 |
| Other revenues | 42 | 50 |
| Total | 56 696 | 52 170 |
Remuneration paid to senior company officers and the auditor Please see Note 24 to the consolidated financial statements for details of the remuneration paid to senior executives.
| SA | well as items associated with the production cycle. The classification | that are not deemed to be of a temporary nature and | Total | 56 696 | 52 170 |
|---|---|---|---|---|---|
| LM AR |
of current and non-current liabilities is based on the same criteria. | are required under generally accepted accounting prin | |||
| AN | ciples. Write-downs are reversed when the reason for | ||||
| NU AL |
Non-current assets are valued at acquisition cost. If the recover | the write-down no longer applies. | NOTE 3 • Payroll costs, no. of employees, remuneration, employee loans, etc | ||
| RE | able portion of the non-current asset is lower than its book value, | ||||
| PO | and the impairment is not expected to be temporary, the asset is written down to its recoverable value. Non-current assets with a |
Dividend and other payouts are recognised as other | PAYROLL COSTS NOK 1000 | 2014 | 2013 |
| RT | limited economic life are depreciated systematically. | financial income. If the dividend exceeds the share of withheld profit/loss after acquisition, the surplus |
Salaries, incl. holiday pay & bonuses | 30 494 | 26 347 |
| 20 | amount represents a repayment of invested capital, | Employers' national insurance contributions | 2 615 | 2 579 | |
| 14 | Current assets are valued at the lower of acquisition cost and fair | and the payouts are deducted from the value of the | Pension costs | 1 190 | 857 |
| value. | investment in the balance sheet. | Options/RSU | 3 761 | 10 429 | |
| Other benefits | 2 916 | 2 602 | |||
| Other non-current liabilities are valued at par. | Pensions | Total | 40 976 | 42 814 | |
| The company has a defined-contribution occupational | No. of people employed (full-time equivalents) during the financial year | 28 | 21 |
Options 8 company employees received a total of 502,500 options to acquire company shares in the period 2010 to 2012. The option scheme came to an end in 2014, and the remaining 131,575 options were redeemed during the year. SalMar ASA recognised an expense of NOK 3,447,300 in connection with this scheme in 2014. ber 2014, with 1/3 vesting annually. The fair value of the cost to SalMar ASA calculated on the date of the award is NOK 5,675,000, with the expense periodised over the vestingperiod. The periodised expense in 2014 comes to NOK 314,100. A provision for employers' national insurance contributions on the expense has also been made.
11 company employees were awarded a total of 50,106 RSUs with respect to company shares in 2014. The RSUs are earned over a 3-year period from the date they were awarded, 3 Decem-Please see Note 24 to the consolidated financial statements for further details regarding the share-based incentive schemes.
| Auditor NOK 1000 | ||
|---|---|---|
| The fee paid to the auditor, excl. VAT, breaks down as follows: | 2014 | 2013 |
| Statutory auditing services | 178 | 417 |
| Other certification services | 3 | 5 |
| Tax advisory services | 3 | 2 |
| Other services | 78 | 238 |
| Total | 261 | 662 |
| COMPANY NOK 1000 | Registered office |
Voting share/ shareholding |
Book value 2014 |
Book value 2013 |
|---|---|---|---|---|
| SalMar Settefisk AS | Kverva | 100 % | 114 273 | 113 856 |
| SalMar Farming AS | Kverva | 100 % | 89 889 | 89 050 |
| SalMar Nord AS | Finnsnes | 100 % | 316 794 | 316 509 |
| SalMar AS | Kverva | 100 % | 241 650 | 88 696 |
| SalMar - Tunet AS | Kverva | 100 % | 7 278 | 7 183 |
| SalMar Sales AS | Kverva | 100 % | 0 | 152 550 |
| Villa Organic AS | Molde | 50,4 % | 0 | 170 122 |
| SalMar Laksefjorden AS | Finnsnes | 100 % | 170 370 | 0 |
| Hitramat Farming AS | Hitra | 51 % | 28 785 | 0 |
| Ocean Farming AS | Frøya | 91 % | 31 706 | 15 447 |
| TOTAL subsidiaries | 1 000 754 | 953 422 | ||
| SalMar ASA has recognised group contributions from the following subsidiaries (TNOK) | : 2014 |
2013 | ||
| - SalMar Farming AS | 592 000 | 394 442 | ||
| - SalMar Nord AS | 341 309 | 41 793 | ||
| - SalMar Laksefjorden AS | 12 233 | 0 | ||
| - SalMar Organic AS | 162 676 | 0 | ||
| Totalt recognised income from investments in subsidiaries | 1 108 218 | 436 235 | ||
Investments in subsidiaries are recognised in accordance with the cost method.
| SalMar Sales AS Kverva 100 % 0 |
152 550 | ||||
|---|---|---|---|---|---|
| Operating | Villa Organic AS Molde 50,4 % 0 |
170 122 | |||
| Real | equipment, | SalMar Laksefjorden AS Finnsnes 100 % 170 370 |
0 | ||
| NOK 1000 | property | fixtures, etc | TOTAL | Hitramat Farming AS Hitra 51 % 28 785 |
0 |
| Acquisition cost 1 Jan 2014 | 2 159 | 10 586 | 12 745 | Ocean Farming AS Frøya 91 % 31 706 |
15 447 |
| Additions | 0 | 3 458 | 3 458 | TOTAL subsidiaries 1 000 754 |
953 422 |
| Disposals | 0 | 0 | 0 | ||
| Acquisition cost 31 Dec 2014 | 2 159 | 14 044 | 16 203 | SalMar ASA has recognised group contributions from the following subsidiaries (TNOK) : 2014 |
2013 |
| - SalMar Farming AS 592 000 |
394 442 | ||||
| Acc. depreciation & write-downs 1 Jan 2014 | 0 | 3 565 | 3 565 | - SalMar Nord AS 341 309 |
41 793 |
| Year's depreciation | 0 | 1 697 | 1 697 | - SalMar Laksefjorden AS 12 233 |
0 |
| Acc. depreciation disposals | 0 | 0 | 0 | - SalMar Organic AS 162 676 |
0 |
| Acc. depreciation 31 Dec 2014 | 0 | 5 262 | 5 262 | Totalt recognised income from investments in subsidiaries 1 108 218 |
436 235 |
| Book value 31 Dec 2014 | 2 159 | 8 783 | 10 942 | ||
| As at 31 December 2013, SalMar ASA owned 50.4 per cent of the shares in Villa Organic AS. SalMar ASA and the other major | |||||
| Economic lifespan | 5-10 years | shareholder in Villa Organic AS decided, with effect from 1 July 2014, to split Villa Organic between them. SalMar's activities in | |||
| Depreciation plan | straight-line | the Villa group have been incorporated into SalMar Lakseforden AS, in which SalMar ASA had a 99.94 per cent shareholding as | |||
| Annual leasing of off-balance sheet operating assets | 2 686 | 132 | 2 818 | at 1 July 2014. SalMar ASA's shares in Villa Organic AS as at 31 December 2013 were incorporated into SalMar Laksefjorden |
As at 31 December 2013, SalMar ASA owned 50.4 per cent of the shares in Villa Organic AS. SalMar ASA and the other major shareholder in Villa Organic AS decided, with effect from 1 July 2014, to split Villa Organic between them. SalMar's activities in the Villa group have been incorporated into SalMar Lakseforden AS, in which SalMar ASA had a 99.94 per cent shareholding as at 1 July 2014. SalMar ASA's shares in Villa Organic AS as at 31 December 2013 were incorporated into SalMar Laksefjorden AS in 2014. The non-controlling interests in SalMar Laksefjorden AS were, moreover, bought out at a cost of NOK 248,000. As at 31 December 2014, SalMar ASA owned 100 per cent of the company's shares.
| NOK 1000 COMPANY |
Registered office |
Voting share/ shareholding |
Book value 2014 |
Book value 2013 |
|---|---|---|---|---|
| Norskott Havbruk AS | Bergen | 50 % | 162 787 | 162 787 |
| Trøndersk Kystkompetanse AS | Dyrvik | 20 % | 103 | 103 |
| TOTAL associates | 162 890 | 162 890 |
Investmenets in associates are recognised in accordance with the cost method.
| NOK 1000 COMPANY |
Recognised dividend |
finan. stat. | Equity in Profit/loss in last year-end last year-end finan. stat. |
|---|---|---|---|
| Norskott Havbruk AS | 36 250 | 1 041 240 | 191 079 |
| Trøndersk Kystkompetanse AS | 0 | 1 764 | 248 |
| 36 250 |
| NOK 1000 | 2014 | 2013 |
|---|---|---|
| Other receivables | 201 | 146 |
| Loans to employees | 585 | 1 750 |
| Loans to group companies | 2 175 924 | 2 371 596 |
| NOK 1000 | No. | Face value | Book value |
|---|---|---|---|
| Ordinary shares | 113 299 999 | 0,25 | 28 325 |
Please see Note 16 to the consolidated financial statements for details of the largest shareholders and senior executives' holdings of company shares.
A provision hs been made with respect to a dividend payout of NOK 10 per share, totalling NOK 1,120,000,000 as at 31 December 2014. No provision is made for dividends on the company's own treasury shares.
| NOK 1000 | Share capital |
Treasury | Share shares premium fund |
Other paid-in equity |
Other equity |
Total equity |
|---|---|---|---|---|---|---|
| Equity as at 31 Dec 2013 | 28 325 | -325 | 415 285 | 25 516 | 1 060 929 | 1 529 731 |
| Year's change in equity: | ||||||
| Profit/loss in the period | 0 | 0 | 0 | 0 | 803 144 | 803 144 |
| Dividend provision | 0 | 0 | 0 | 0 | -1 120 000 | -1 120 000 |
| Option cost recognised in equity | 0 | 0 | 0 | 2 012 | 0 | 2 012 |
| Equity as at 31 Dec 2014 | 28 325 | -325 | 415 285 | 27 528 | 744 073 | 1 214 887 |
A share-based incentive scheme has been entered into with senior company executives. For further details, please see Note 3.
Provisions with respect to dividend payouts are discussed in Note 8.
The company has a statutory obligation to provide an occupational pension scheme under the Compulsory Occupational Pensions Act, and has a pension scheme that meets the requirements thereof.
The company has no defined-benefits pension schemes.
Premiums under the defined-contribution scheme are charged to expenses as they fall due. NOK 1,189,500 was charged to expenses in connection with the defined-contribution pension scheme in 2014 (NOK 811,100 in 2013).
Other short-term receivables from group companies, which totalled NOK 1,279,297,000 as at 31 December 2014, includes NOK 1,108,218,000 in group contributions receivable from subsidiaries (NOK 436,235,000 in 2013). The figure for 2014 also includes NOK 98,624,000 in receivables from group companies participating in the group account scheme. Other short-term receivables over and above this were ordinary trade receivables.
| NOK 1000 | 2014 | Non-current receivables 2013 |
Other short-term receivables 2014 |
2013 |
|---|---|---|---|---|
| Group companies | 2 175 924 | 2 371 596 | 1 279 297 | 497 524 |
| Associates | 0 | 0 | 0 | 0 |
| Total | 2 175 924 | 2 371 596 | 1 279 297 | 497 524 |
| Long-term debt | Other short-term payables | |||
| NOK 1000 | 2014 | 2013 | 2014 | 2013 |
| Group companies | 10 012 | 0 | 55 615 | 436 163 |
| Associates | 0 | 0 | 0 | 0 |
| Total | 10 012 | 0 | 55 615 | 436 163 |
NOTE 11 • Intra-group balances, etc
The NOK 55,615,000 in other short-term payables to group companies as at 31 December 2014 includes NOK 22,740,000 in group contributions payable (NOK 312,151,000 in 2013). The figure for 2013 also includes NOK 43,660,000 in payables to group companies participating in the group account scheme. Apart from this, the remaining short-term payables to group companies were ordinary trade payables.
In 2014 SalMar entered into a new loan agreement with a 5-year term. The credit facility comprises a term loan amounting to NOK 1,000,000,000, which has a 10-year repayment profile, maturing after 5 years. In addition, there is an investment and acquisition facility amounting to NOK 2,000,000,000, which has a 33-year repayment profile, maturing after 5 years. As at 31 December 2014, no drawdowns had been made on this facility. Apart from this, there is a revolving credit facility amounting to NOK 1,500,000,000, as well as an operating credit capped at NOK 500,000,000. Interest rates are based on so-called 'current terms'.
| NOK 1000 | ||
|---|---|---|
| Breakdown of the year's tax expense: | 2014 | 2013 |
| Tax payable | 291 365 | 87 402 |
| Change in deferred tax | -10 048 | 6 492 |
| Tax provisions (shortfall/excess) in previous years | 0 | 0 |
| Effect of change in tax rate from 28% to 27% | 0 | 15 |
| Tax on ordinary profit/loss | 281 317 | 93 910 |
| Breakdown of the year's taxable income | 2014 | 2013 |
| Profit before tax | 1 084 461 | 909 249 |
| Permanent differences | -42 548 | -573 910 |
| Change in temporary differences | 37 215 | 2 900 |
| Tax-loss carryforward employed | 0 | -26 087 |
| Group contributions paid | -22 740 | -312 151 |
| Year's taxable income | 1 056 388 | 0 |
| Tax payable in the balance sheet Tax payable for the year |
2014 291 365 |
2013 87 402 |
| Tax on group contributions paid | -6 140 | -87 402 |
| Tax payable in the balance sheet | 285 225 | 0 |
| Breakdown of temporary differences | 2014 | 2013 |
| Operating assets, incl. goodwill | 1 867 | 1 822 |
| Non-current financial assets | 54 | 3 |
| Profit & loss account | 171 | 214 |
| Provisions | -40 519 | -3 564 |
| Other differences | -314 | 0 |
| TOTAL temporary differences | -38 740 | -1 525 |
| Deferred tax liabilities (+) / deferred tax assets (-) | -10 460 | -412 |
| Deferred tax recognised in equity | 0 | 0 |
| Reconciliation from nominal to actual tax rate | 2014 | 2013 |
| Profit before tax | 1 084 461 | 909 249 |
| Expected tax on income at nominal tax rate | 292 804 | 254 590 |
| Permanent differences (27%) | -11 488 | -160 695 |
| Tax provisions (shortfall/excess) | 0 | 15 |
| Estimated tax expense | 281 316 | 93 910 |
| Effective tax rate | 25,9 % | 10,3 % |
The most important financial covenants for the long-term financing of SalMar ASA are, respectively, a solvency requirement, which stipulates that the Group's recognised equity ratio shall exceed 35%, and a profitability requirement, which stipulates that the Group's interest-bearing debt to EBITDA ratio shall, on average, not exceed 4.5. The agreement does, however, allow the Group to have an NIBD/EBITDA ratio of up to 6.0 for up to three quarters.
| Recognised debt secured through liens, etc | 2014 | 2013 |
|---|---|---|
| Short-term debt to credit insitutions | 75 202 | 0 |
| Long-term debt to credit institutions | 1 800 000 | 1 991 682 |
| Total | 1 875 202 | 1991 682 |
| Book value of assets pledged as security for recognised debt | 2014 | 2013 |
| Operating assets | 10 942 | 9 181 |
| Shares | 1 000 754 | 953 422 |
| Trade receivables | 6 | 0 |
| Receivables | 3 475 886 | 2 880 427 |
| Bank deposits | 0 | 506 084 |
| Total | 4 487 588 | 4 349 114 |
| NOK 1000 | ||
|---|---|---|
| Debt falling due more than five years after the close of the financial year: | 2014 | 2013 |
| Debt to credit institutions | 0 | 0 |
| Other non-current liabilities | 0 | 0 |
| Total long-term debt | 0 | 0 |
SalMar ASA has assumed joint and several liability in connection with a bank overdraft scheme, limited upwards to NOK 500,000,000.
SalMar ASA has issued guarantees totalling NOK 17,000,000 on behalf of SalMar AS and NOK 80,000,000 on behalf of SalMar Farming AS with respect to a credit facility granted by SG Finans AS.
SalMar ASA has issued a guarantee totalling NOK 95,000,000 with respect to a long-term loan to SalMar AS from Innovation Norway.
SalMar ASA has issued a guarantee totalling NOK 5,000,000 to Nord-Trøndelag E-verk on behalf of SalMar Settefisk AS. The guarantee agreement was entered into on 1 January 2004, and is reduced by NOK 250,000 per year. As at 31 December 2014 the remaining amount guaranteed totalled NOK 2,250,000.
Please see Note 2 to the consolidated financial statements for further details relating to the management of financial and market risks to which the company and the Group are exposed.
SalMar ASA has issued a guarantee to Nordskag Næringspark AS for any and all amounts which SalMar AS owes Nordskag Næringspark AS under the leasing agreement between SalMar AS and Nordskag Næringspark AS. The guarantee is valid during the leasing period, as stipulated in the leasing agreement, plus a further three months. 108 109
As at 31 December 2014, the item Bank deposits, cash and cash equivalents, included restricted funds totalling NOK 3,053,000, all of which related to employee tax deductions. The corresponding figure the year before was NOK 127,686,000, of which employee tax deductions accounted for NOK 7,686,000.
| NOK 1000 | ||
|---|---|---|
| Pa | |
|---|---|
| ssi on |
|
| fo | |
| r S alm |
|
| on |
SalMar produces a wide variety of fresh and frozen salmon products. The customer base is global and includes small and large importerts/ exporters, Passion for Salmon
ANNUAL REPORT
Passion for Salmon
Gustav Witzøe Director
Tove Elin Nedreberg Director
Pål Georg Storø Director/Employee representative
Bjørn Flatgård
Chair
Kjell A. Storeide Director
Merethe Helene Holte
Director
Leif Inge Nordhammer President & CEO
Hanne Kristine Tobiassen Director/Employee representative
We confirm, to the best of our knowledge, that
the group financial statements for the period from I January to 3l December 2014 have
the financial statements of SalMar ASA for the period from 1 January to 3l December 2014 have been prepared in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.
| Pa ssi on |
|
|---|---|
| fo | |
| r S alm |
|
| on |
114 115
SALMAR
ANNUAL REPORT
SalMar ASA
N-7266 Kverva - Norway Phone +47 72 44 79 00 Fax +47 72 44 79 01
www.salmar.no
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.