Annual Report (ESEF) • Mar 28, 2023
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Download Source FileIf there’s one word to describe 2022 for Aker BioMarine it would be “turnaround”. After a challenging 2021, we drew on our “can do and grind through” attitude to focus our efforts and seize opportunities that support our mission to improve human and planetary health. I am pleased to say that that Aker BioMarine was able to turn the ship around and show growth in 2022. Years of hard work, investments and patience has finally gotten the company to scale, and our course is now set for further growth. Our improved performance stems from growing sales, improved harvesting and a concerted effort across Aker BioMarine to streamline our operations and uncover efficiencies. The improvement program that was initiated in late 2022 is targeting to significantly reduce cost, in addition to strengthen the core business platform and create a more robust company set for further growth.
During 2022, the Human Health & Nutrition team executed their sales acceleration plan. A great deal of effort has been put into re-organizing this line of business launching new products, publishing new science and driving regulatory approvals, and we expect to return to growth in 2023-24.
Harvesting delivered a new all-time high production record, exceeding production the year before by 19%. Thanks to an efficient supply chain and logistics operation, we also made significant strides in Animal Health & Nutrition in 2022. Feed producers, as well as fish and shrimp farmers, are benefiting from the proven advantages of the QRILL products in terms of the growth and health of their marine species. With a competent team of sales and marketing resources locally in all the key markets we operate, we grew our Aquaculture sales significantly last year.
Our brand business also saw good developments in 2022. Our own consumer brand, Kori, continued its growth throughout the year, with both increase in distribution and same store sales. In the private label business, we transitioned in new management during 2022, as the founders exited the business. With the new management in place, we have laid the foundation for the next growth phase.
As a company, we are only able to grow as long as we take care of the ecosystem in which we harvest. We are proud to report that in 2022, new research concluded that the Antarctic krill fishery is the cleanest in the world based on its extremely low bycatch rate. We also received the results of Sustainable Fisheries Partnership’s 2021 review showing that Aker BioMarine is an A- rated fishery for the seventh consecutive year. One of our core priorities is to contribute to a thriving Antarctic ecosystem, which is why in 2022, we pledged an additional USD 1 million to support of the Antarctic Wildlife Research Fund and its work to ensure a resilient Antarctica and up-to-date information.
We believe that scientific research is key to building better understanding of krill and its potential for both human and animal health. During the year, we participated in several scientific studies that documented the impact and potential of krill on both humans and animals. Among others we learned, through a study with Oslo University Hospital, the University of Oslo, and Akershus University Hospital, that krill can slow down aging at a cellular level and improve quality of life in humans. We also confirmed, through a review of more than a decade’s worth of data and research, that krill has a positive impact on growth performance, feed intake, filet quality and organ health in salmonids. In addition, we participated in a breakthrough study with CSIRO, Australia’s national science agency, to investigate the effects of krill oil on osteoarthritis of the knee. After the six-month trial, scientists concluded that krill oil significantly reduced knee pain and improved stiffness and physical function.
At Aker BioMarine, we are investing in technology and innovation. We made significant progress in 2022 with Aion, a company spun out of Aker BioMarine to focus on scaling circular plastics, starting with Aker BioMarine`s own challenges with plastic waste. We announced during the year that Ocean 14 Capital Ltd., a private equity firm, will jointly finance Aion along with us, to support the company during its initial growth phase. It was also a year of progress for our new plant in Ski, Norway, where we plan to produce a new protein product and host our own protein innovation center. The plant is currently on track for a mid-2023 opening. In addition, we signed our first commercial agreement for Lysoveta in 2022, with the aim to develop products for important areas like Alzheimer and Gestational diabetes.
When I look back on 2022, I see a year of extraordinary achievements, due to our extraordinary people. Together, we have weathered all the challenges that we faced. We continue to be a ‘can do and grind through’ organization, meeting each challenge head on and staying laser focused on growing our company because of our strong belief in the health benefits of krill. I want to thank our people, our investors, our partners, our customers, and everyone out there cheering us on for the past 16 years. We’ve come a long way on our krill journey, but we have just started to tap into the great potential that lies ahead.
Matts Johansen CEO Aker BioMarine
Aker BioMarine is a biotech innovator and Antarctic krill harvesting company, created because of our strong belief in the positive health effects of krill. 16 years later, we continue to develop our business as we take care of the ecosystem from which we harvest. Our fully integrated value chain stretches from sustainable krill harvesting in pristine Antarctic waters through our Montevideo logistics hub, Houston production plant, to customers around the world. The company has a strong position in its industry and is the world's leading supplier of krill.
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| Adjusted EBITDA¹ and margin | USD million and % |
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Aker BioMarine is present all over the world from Australia to the US, with headquarters in Oslo, Norway.
Aker BioMarine is a company with two primary business segments: Ingredients and Brands. The ingredients segment involves offshore harvesting and production, logistical operations, and onshore manufacturing and sales of krill- derived products. These products are distributed globally to the nutraceutical, pet food, and aquaculture industries. The Brands segment focuses on human consumer goods, with Lang Pharma Nutrition (Lang) and Epion as its two main components.
As of March 2023
Matts Johansen
Chief Executive Officer (CEO)
Matts Johansen has been CEO of Aker BioMarine since 2015. He first joined the company in 2009 as Chief Operating Officer. Prior to his career in Aker BioMarine, Johansen served as the Chief Marketing Officer at Telefónica O2. He studied at Oslo University College and completed executive education at Columbia University.
Tone Lorentzen
EVP Supply Chain
Tone Lorentzen joined Aker BioMarine in 2015 and currently oversees Aker BioMarine’s entire supply chain, including global logistics, customer care, production at the krill oil factory in Houston, third party production, product quality and HSSE. Prior to joining the company, she held roles at Nycomed, Amersham, GE Healthcare and Trygg Pharm.
Katrine Klaveness
Chief Financial Officer (CFO)
Katrine Klaveness became CFO of Aker BioMarine in 2018. Prior to joining Aker BioMarine, she spent the first part of her career in McKinsey & Company, followed by several years in senior positions in Aker ASA’s investment team and Aker BP. Klaveness holds a master’s degree from BI Norwegian Business School.
Simon Seward
EVP Human Health and Nutrition
Simon Seward joined Aker BioMarine in 2019. He is responsible for global sales and marketing of the company’s Human Nutrition & Health products. Prior to joining Aker BioMarine, he was SVP Sales & Marketing at Algalif and Commercial Director at NutraQ. Seward has a master’s degree in Marketing from Staffordshire University.
Trond Atle Smedsrud
EVP Strategic Investments
Trond Atle Smedsrud joined Aker BioMarine in 2015. He is responsible for exploring, securing, and growing corporate investments. Smedsrud has also served as head of Aker BioMarine’s Marketing and Innovation department. Previously, he held senior positions at Coca-Cola and PwC. He has a master’s degree from BI Norwegian Business School.
Hege Spaun
Chief Officer People & External Affairs
Hege Spaun joined Aker BioMarine in 2016. She is responsible for the People and Culture, as well as ensuring that the company is in the forefront of driving the sustainability agenda and transitioning our operations accordingly. She previously held various positions in DNV. Spaun holds a master’s degree in Psychology from the University of Oslo.
Webjørn Barstad
EVP Offshore
Webjørn Barstad joined Aker BioMarine in 2020 as Executive Vice President Offshore. Previously, he served as CEO for Lerøy Havfisk and Lerøy Norway Seafoods, and as COO at Lerøy Seafood Group. Barstad has a master’s degree in International Banking and Financial Studies from HeriotWatt University Business School, Edinburgh
Sigve Nordum
EVP Animal Health and Nutrition
Sigve Nordrum joined Aker BioMarine in 2007. He is responsible for the global sales and marketing of krill products for animal and aquaculture markets. Previously, he worked at BioMar and the Norwegian Ministry of Fisheries. He has a master’s degree from the Norwegian School of Life Sciences and a PhD from the Norwegian Veterinary College.
Our business is categorized into four main sectors: Human Health and Nutrition, Animal Health and Nutrition, Consumer Brands and Innovations.
Omega-3s have recognized health benefits for dogs and humans alike. A pet food that contains omega-3 is the first step to ensuring that pets can benefit from this important nutrient on a regular basis. QRILL Pet is a functional marine ingredient made from whole Antarctic krill that is rich in marine omega-3s and is naturally rich in choline, astaxanthin and marine proteins. It is also sustainable, traceable, and sourced from some of the cleanest waters on Earth. Krill supports the health of several vital organs, including the heart, kidney, liver, brain, skin, and coat. QRILL™ Pet comes from one of the most sustainable fisheries. The Aker BioMarine krill fishery is MSC certified.
Krill meal is a well-known, sustainable source of nutrition that improves feed quality for farmed fish and shrimp. Harvested from one of the world’s most well-managed fisheries (CCAMLR), QRILL Aqua ingredient for formulated feeds leaves a low marine footprint and a continually declining carbon footprint, in addition to being fully traceable and certified by MSC. Antarctic krill that is rich in marine omega-3s and is naturally rich in choline, astaxanthin and marine proteins. It is also sustainable, traceable, and sourced from some of the cleanest waters on Earth. Scientific studies show that krill products, such as QRILL Aqua, QRILL High Protein and AstaOmega Oil, have high potential to improve aquaculture feeds, enhancing their nutritional composition and attractability, and in turn stimulating the growth and health of both shrimp and fish.
Omega-3s are an essential part of the diet for human health and wellbeing. However, an estimated 97 percent* of the population has less than optimal omega-3 levels, exposing them to an increased risk of various lifestyle diseases. Superba krill oil is a marine phospholipid complex of choline, omega-3s and the powerful antioxidant astaxanthin. Clinical data shows that Superba krill has multiple health benefits for heart, joint, skin, cognitive health and active lifestyle and can significantly increase the omega-3 index level after just one month when consumed daily. Superba will contribute to improving general health and support the efforts to alleviate lifestyle diseases by delivering 5 billion doses of health promoting nutrients by 2030.
*A 2016 study published in Progress in Lipid Research
Aker BioMarine have an independent company in the US, named Epion Brands Inc. Epion distributes the company’s Kori krill oil product to large retail chains, including Walmart, Target, CVS and Costco. Kori krill has established a large retailer footprint in a short period of time, at an unprecedented pace in the US supplement industry. Through its market presence, Epion gets first-hand consumer information and provides valuable insight into consumer behavior and needs for Aker BioMarine. Through an innovative and positive-oriented market approach, with a focus on younger generations, Epion maintains a solid footprint on US retail shelves.
Aker BioMarine acquired Lang Pharma Nutrition, Inc. in 2019, a company with more than 35 years of history and experience in the nutrition and dietary supplement industry. Lang Pharma is a key partner to the world’s leading mass market retail chains, with close to 200 different products on shelves of retailers, including Costco, Sam’s Club, Walmart, Target, CVS and Walgreens. The US vitamin and supplement industry is growing. Lang Pharma, with its lean, yet flexible market approach and responsive culture, is uniquely positioned to support Aker BioMarine’s ambitions to expand the company’s footprint in the US market.
LYSOVETA™ is the new supplement product from Aker BioMarine, specifically targeting brain health. It contains essential nutrients for brain function, that are important across the whole lifespan. In 2022 the first commercial agreement was signed with Trofi Nutritional Inc. Trofi aim to develop medical food products based on Lysoveta™ targeting brain health and reproductive health. Pilot production capabilities has been established at the Houston factory, and Aker BioMarine is expecting regulatory approval for sale in the US market in 2023.
Understory, formerly called INVI, is a range of high purity protein peptides products with complete amino acid profile and naturally rich in nutritionally important minerals. These protein peptides are ideal for incorporation into ready-to-mix and ready-to-drink beverages, as well as other premium formats for brands targeting the beauty, wellness, and sports/active consumer segments. Understory has received regulatory approval for sale in the Unites States, Australia, and New Zealand with processes on-going in the EU and other target geographies. Aker BioMarine plans to ramp up production in a new launch plant with first product in the market in 2023.
AION is an Aker BioMarine spinoff within plastic circularity and circular tech. AION is a business model innovation that grew out of Aker BioMarine’s own ambition to see own plastic waste being repurposed into new value chain, driving both environmental impact and cost efficiencies. Today AION helps companies within different sectors turn their plastic problems into impactful solutions. AION’s digital platform AION Loop collects data in all parts of the value chain, providing AIONs customers and the recycled plastics industry with traceability and documented environmental effects of plastic circularity. Per December 2022, AIONs customer list included McDonalds, Veidekke, American Seafoods, HAVI, Sodexo, KAOS, NorgesGruppen, Circmar and Surfact.
As the world’s largest krill harvester and supplier, we are committed to exploring and investigating krill oil nutrients and their biological effects. Since Aker BioMarine was founded in 2006, we have taken a leading role in the development and utilization of Antarctic krill resources through science and innovation.We harvest krill, study its biological effects, isolate important nutrients, and develop krill-derived products for the consumer health and animal nutrition markets. Over the years, we have played a leading role in the growing krill industry, building a company filled with passionate people who put innovation at the core of our business. We invest significantly in science, with the aim to build fundamental knowledge about krill and to research the biological effects of krill nutrients. As a result, Aker BioMarine has taken several new and important products to market, with more on the way.
A key part of our strategy Science and innovation are key elements of our strategy. We currently employ 14 scientists, all of whom hold PhDs, to help drive our research agenda. Since 2006, krill products from Aker BioMarine have been involved in approximately 200 studies, primarily through research or by donating krill oil or meal. In 2022, 35 scientific articles on krill oil/meal were published in total. Refer to the section titled “Our scientific publications on krill oil and meal in 2022” for the list of studies that Aker BioMarine has invested in and/or donated product, or was otherwise involved in, during the year.
Our patents Since day one, Aker BioMarine has been fully committed to scientific research and business development in the nutritional marine lipid field, specifically related to krill products. This commitment has led us to patent our own technology and to acquire other technology. As a result, we currently have the world’s largest and most innovative patent portfolio in our field. This includes harvesting technology and production methods, through patents covering today’s commercially available krill products, as well as nutraceutical innovations that will be available to consumers in the years to come. By the end of 2022 we held 101 patents in total, of which 25 were granted in 2022.
Research and innovation center Following a delay in the project in 2022, Aker BioMarine is now back on track to open its pilot plant in 2023. We plan to develop a highly concentrated protein isolate at this factory, located in Ski Business Park, Norway, and it will also be home to an adjacent research and innovation center focused on long-term product development. Through this, we aim to strengthen the local environment for marine biotechnology and create high-competence jobs within a sustainable and innovative industry.
Research funding In 2022 alone, our contribution to marine science in Antarctica, through in catch or in kind, has been in excess of USD 1 million. This includes our annual contribution to Antarctic Wildlife Research Fund (AWR), co-founded in 2015 with environmental NGOs to promote science on the Antarctic ecosystem and a more resilient Antarctica. AWR has since its inception financed 22 scientific projects with total funding of approximately USD 1.4 million.
Our scientific publications on krill oil and meal in 2022:
A recent study conducted at the University of Oslo, Oslo University Hospital, and Akershus University Hospital, revealed that krill oil can slow down aging processes in cells and tissues in nematode worms and human cells. The next step for the scientists will be to investigate if we see similar results in humans.
Published in Aging
A new study by CSIRO, Australia’s national science agency (sponsored by Swisse’s H&H Research) investigated the effects of krill oil on adults suffering from knee osteoarthritis. The scientists concluded that krill oil resulted in improvements in knee pain, stiffness, and physical function in the participants.
Published in the American Journal of Clinical Nutrition
A newly published study by the Institute of Cardiovascular and Medical Sciences, University of Glasgow, found that just four grams per day of krill oil can have beneficial effects on skeletal muscle strength and size in healthy, older people.
Published in Clinical Nutrition
Leading university aquaculture research teams in Brazil evaluated the digestibility of crude protein and essential amino acids of different feed ingredients. Digestibility is an important quality parameter that defines the value of raw materials and allows formulating on a digestible protein and amino acid basis. The study concluded that aquatic ingredients, yielded higher digestibility compared to plant and terrestrial animal by- products, with krill meal exhibiting the highest values.
Published in Revista Brasileira de Zootecnia (RBZ).
In a review article from 2022, Aker BioMarine researchers concluded that Antarctic krill products, when included in feed, have a positive impact on feed intake, growth performance, fillet quality and organ health in salmonids.
Published in Hindawi.
ICAR and Aker BioMarine concluded that krill meal is a beneficial functional ingredient for shrimp dietary feed. The trial showed that inclusion of 4 to 6% krill meal in the diet can lead to higher body weight and greater survival among shrimp and that already 2% dietary krill meal increases immune gene expression in the hepatopancreas of shrimp.
Published in Aquaculture.
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Annual Report – 2022
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We take responsibility for our operations in Antarctic waters and support efforts to protect precious marine resources. This requires constructive relationships with governmental and regulatory agencies, industry peers, the research community, and environmental NGOs. We actively engage and collaborate with these key stakeholders.
Aker BioMarine holds Antarctic krill fishing licenses issued by Norway, our home country. Our long-term access to the krill fishery depends on the responsible development of the krill industry. We must continue to ensure that there is scientific evidence and confidence that krill harvesting remains sustainable and closely aligned with global efforts to combat climate change.
In 2021, Aker BioMarine transferred from Euronext Growth to the Oslo Stock Exchange. Strong financial backing is crucial for our company’s growth and essential for across-the-board excellence. At Aker BioMarine, we believe that financial and sustainable performance are interlinked and serve to reinforce each other, requiring both to be in equal focus.
Aker BioMarine has made several major infrastructure investments throughout its value chain. We are boosting supply chain efficiency through capital investments in our Antarctic factory vessels, as well as at our port facilities in Montevideo and factory in Houston. We lease warehouses and office space at our headquarters in Oslo and our sales offices in the United States, Latin America, Australia, and Asia. Our krill vessels, support vessel, and the manufacturing plant in Houston are wholly owned by us.
Innovation is part of our DNA. From pioneering the Eco-Harvesting system to developing new products verticals, we are proud of our in-house spirit of invention. We believe that transparency helps our industry evolve. That is why we share our catch data and technology to further research efforts and promote our way of thinking. However, we protect our intellectual property rights through our patent and copyright strategy.
At Aker BioMarine, we aim to do things that no one has ever done before. When confronted with challenges, many companies choose to bring in outside expertise. But for us – a company that operates on the frontiers of a niche industry – we believe in building and developing our own expertise in-house. Our people are our most valuable asset.# Human Capital
Our Mission is to improve human and planetary health. We take care of the resources on which our business depends, providing a clear strategy and building a culture of autonomy and trust.
Operational risk & opportunities
Below is an overview of the company’s operational risks and opportunities. For a comprehensive risk and opportunity view, please also see the financial risk in chapter 3 (Note 19 and the Board of Directors` Report).
| Risks | Impact | Risk mitigation and management* # Sustainability
We aim to deliver krill products that support nutritious and sustainable diets and have set a path towards 50% reduction of CO2-emissions intensity by 2030, with the long-term target being carbon neutrality by 2050. To fully succeed with its ambitions to significantly reduce CO2-footprint AKBM will, along with the systematic implementation of measures to increase energy efficiency, also depend on available technology, and infrastructure in a hard-to-abate industry and market development. We are on track to eliminate product waste and be fully circular in our principal waste streams by 2026. The vision of circularity inspired the launch of AION in 2020, a circularity company dedicated to helping companies recycle and reuse waste. In our efforts towards reaching our ESG ambitions we benchmark ourselves internally, while embracing transparency and external scrutiny of the progress we make. We are part of the solution to feed a growing population in a sustainable way, and continuously innovate to ensure that we maximize the utilization and value of our resources while causing minimal footprint.
The following company divisions and reporting frameworks have been used in Aker BioMarine’s ESG-reporting 2022. In the financial reporting, the company has divided its operations into two segments: Ingredience and Brands. However, it should be noted that for our ESG (Environmental, Social, and Governance) reporting, we present a comprehensive view of the company as a whole. This ESG-reporting is structured into three sections: Environmental, Social and Governance. Under each section, we discuss relevant material topics. The following frameworks have been used:
Aker BioMarine has a wide range of stakeholders that are mapped and identified based on their criticality for operations and business continuity. A close dialogue with our stakeholders gives us increased knowledge and understanding of our impact on our surroundings – and also how our surroundings might impact us.
| STAKEHOLDER GROUP | MATERIALITY AND PURPOSE | RELATED RISK | KEY POINTS OF MEANINGFUL ENGAGEMENT |
|---|---|---|---|
| GOVERNMENTS AND POLITICIANS | National legislation (fishery licenses) and international legislation (Antarctic marine management) decides the framework in which krill harvesting, logistics and market access all depend on. | - Acute transitional policy towards low-emission society - Regulations that do not favour krill harvesting - Lack of knowledge of and interest in Antarctica as a place of sustainable food production - Lack of progress in regulations can impact reputation and independent certification schemes |
- Annual participation in CCAMLR meetings and working groups - Regular dialogue and input to Governments |
| NON-GOVERNMENTAL AND INDUSTRY ORGANIZATIONS | Environmental advocacy can sway public opinion, customers and policy. Industry affiliations and organizations can protect interests. | - Campaigns in the interest of protecting intrinsic value of protecting Antarctica may have no place for fishery - Biased advocacy can devaluate an otherwise working Antarctic marine management system - Too low industry standard |
- Venues of collaboration with NGOs in AWR and governance of Industry Voluntary Measures - Regular contact meetings with environmental NGOs to exchange points of view - Regular meetings in ARK to secure industry best practice |
| FINANCIAL AND INVESTORS | Financial institutions, owners and investors need to see profitability and growth in the company to keep up investments long-term. | - Long term view of company not attuned to short term investments - Dip in markets |
- Owner dialogue and investor relations activities - Quarterly reports and Capital Markets Updates |
| CUSTOMERS AND CONSUMERS | A strong customer and consumer base drives profitability in the company. | - Loss of confidence in krill products - Lack of belief in omega-3 supplements - Consumer chooses cheaper options |
- Communication of news, data and messaging on the benefits of krill |
| LOGISTICS AND SUPPLIERS | Third-party suppliers of goods and services are key to business continuity. | - Disruptions in supply chain or untrustworthy suppliers impair delivery of product - Non-compliance or lack of transparency in supply chain may lead to breaches of national/international regulations and/or breach internal codes |
- Supplier screening and tight procurement policies |
| SCIENCE AND ACADEMIA | Generate knowledge, science and qualified opinion on sourcing and effects of krill as material and product. Fundamental for sustainability and product claims. | - Too little science generated to support the niche of krill harvesting and production - Science that is critical or non-supportive, with or without solid grounds and data |
- Collaboration and partnerships with academic institutions built around studies - Communication of krill-related science findings |
| EMPLOYEES | Attracting and retaining the right people is key for growth. | - Competence and knowledge loss - Delayed results, growth targets not achieved |
- Dialog and involvement of employee representatives, managers, relevant strategies for attraction and retention, strong Employer Value Proposition |
| PUBLIC AND SOCIETY | Public perception and legitimacy. | - Risk of losing footing and social legitimacy in society - Awareness of the wider public interests beyond key markets and consumers |
- Educating public on health benefits of Omega 3 and importance of blue foods |
To us, it makes no sense to take something out of the ocean to improve our health, if it simultaneously compromises the health of the ocean or the planet. In this section, we focus on the following material topics that represent our environmental impact and how we approach them:
Aker BioMarine will systematically implement, track progress, and publicly disclose climate-related efforts in alignment with the Task Force on Climate-related Financial Disclosures (TCFD). Aker BioMarine is committed to implementing the recommendations of the TCFD, and we will provide investors and other stakeholders with decision-useful information on climate-related risks and opportunities that are relevant to our business through the pillars of TCFD's framework for disclosure. The principal channel for Aker BioMarine’s TCFD disclosure to external stakeholders is our Annual Report. As part of our risk review, we conducted an updated climate risk analysis using the TCFD framework. In this process, we involved stakeholders from all parts of the organization and systematically mapped and assessed our exposure to climate risk. We are tracking our exposure to climate risk on an annual basis, and our company strives to cut carbon intensity in half by 2030, which is an essential metric for climate risk exposure. We continuously take climate risks and opportunities into account in our strategic decision-making. Climate-related risks and opportunities are described in the “Operational risks and opportunities” table on page 17. Our ESG metrics and targets are addressed on page 21 - page 34.# Governance
The Board of Directors in Aker BioMarine has strong oversight over climate-related risks and opportunities, with most Board members possessing knowledge about climate effects, ESG targets and governance. Aker BioMarine has identified climate-related operational and financial risks through the systematic mapping of operations and related risks, as well by identifying risk mitigation opportunities through internal and stakeholder collaboration.
| Unit / Role | Responsibility |
|---|---|
| Chief Executive Officer | Overall responsibility for climate-related risks and opportunities, necessary strategic alignment, and updates to the Board of Directors. |
| Sustainability Team | Responsible for disclosing the actual and potential impact of climate-related risks and opportunities for the business model and operations, setting the frames for strategic alignment. Ensures continuous follow-up on targets and metrics across business units as chair for Climate and Decarbonization Committee and by reporting quarterly into the Board of Directors’ Audit Committee |
| Climate and Decarbonization Committee | Responsible for ongoing oversight of climate- related issues, monitoring quarterly progress on climate-related targets and metrics. Presents and evaluates new initiatives from the business units. Provides advice on significant investment decisions. Provides input on climate-related strategic alignment. |
| Chief Financial Officer | Responsible for the annual climate-related risk management, as an integrated part of Aker BioMarine’s overall risk management procedure. |
The Aker BioMarine management team functions as the steering group of the climate and decarbonization committee. This group monitors all climate-related activities and prioritizes and aligns climate strategy with the business strategy. The climate and decarbonization committee is structured as a dedicated project within the company, consisting of an internal working group, an advisory board with key internal and selected external advisors, and steered by the executive management team. The company’s ESG targets are monitored and tracked through our Power BI reports, where goals are reported bi-monthly, semi-annually, or annually, depending on available granularity. Progress on ESG targets is reported bi-annually to the Board of Directors and presented to the audit committee quarterly. In addition to our ESG targets, we have committed to a sustainability linked loan with four ESG related KPIs on CO 2 reduction, circularity, water consumption in our production and a HSSE score on LTIFR (Lost Time Injury Frequency Rate). The progress on these KPIs is linked to the interest rate of the loan and provides additional governance for our efforts to ensure that we meet our environmental and sustainability targets.
Annual Report – 2022 26
When we first launched the Aker BioMarine krill fishery, we had the opportunity to build our business from the ground up and getting it right from the start. Our ambition was clear: to become the most sustainable fishery in the world and ingrain sustainability thinking throughout our operations and within our corporate vision. Along on our journey, we’ve prided ourselves in being a pioneer in the aquaculture industry, and the first krill company to receive an MSC certification back in 2011. We’ve never lost focus on driving best practices for the entire industry. We constantly strive to do better. This has served as a steadfast principle in the Aker BioMarine playbook, and is what will help us maintain our position as a front-runner among sustainable fisheries into the future.
A sustainable fishery is not an end point for Aker BioMarine. Rather, it’s a process of continuous improvement and learning. It’s a process that began more than 15 years ago, and it is still our focus today. This is what we have achieved within the field of sustainable fisheries in 2022:
Aker BioMarine has three active vessels in the krill fishery, all of which operates under licenses granted by Norwegian authorities. The company maintains its status as a leader in the krill industry through its volume (accounted for 71% of total krill catches in the 2021/2022 season) and quality of operations. We increased our harvest with 23% from the previous season.
As a result of its precautionary and science based management of krill, the krill fishery has received consecutive A-ratings from Sustainable Fisheries Partnership. Aker BioMarine was MSC re-certified in 2020 for 5 years. During the reporting year, we also received Friends of the Sea (FoS) full recertification, following an external audit of our fisheries operation, management, and chain of custody.
Our guidelines/principles:
| Result 2022 | |
|---|---|
| 100% fulfilment | USD 1 043 million spent, which is a 90% increase from last year |
| KPI | MSC certification, independent observer coverage on board while fishing |
| USD spent on marine science and feedback management |
ESG 2030 ambitions
We aim to improve sustainability of fisheries through contributing to data and science driven regulation and ocean management
Sustainability | Environmental
Annual Report – 2022 27
In 2022, Aker BioMarine continued to participate in Voluntary Restricted Zones (VRZs) measures in area 48.1 of the Antarctic Peninsula, which provided spatial protection to breeding penguin colonies and improved the sustainability of the krill fisheries. We also worked to strengthen measures to avoid bycatch of marine mammals during operations on all vessels. The latest successful improvement resulted from learnings after a humpback whale became entangled on the mouth of the trawl in January 2022. We introduced new measures and increased monitoring to avoid incidental mortality of birds. In 2022, the extensive offshore trials to assess the use of net monitoring cable were finalized according to CCAMLR protocol, and they concluded that there was low risk of incidental mortality of birds. Aker BioMarine’s measures to avoid bycatch of marine mammals and incidental mortality of birds is now considered best practice by CCAMLR.
During 2022, AKBM consulted extensively with CCAMLR on a revised krill management system. A CCAMLR scientific working group (WG-FSA) reached an agreement that krill quotas may be increased in the future if spread out across fishing grounds in Area 48.1 of the Antarctic Peninsula, and subjected to more consistent biomass monitoring. We also continued close monitoring of the fishing ground through the increased use of our unmanned ocean vehicle. This enables our fleet to detect krill more easily. In addition, we continued our partnership with Hub Ocean in 2022, working to structure and share vital acoustic data collected from fishery vessels during fishing operations. Our cargo vessel, Antarctic Provider, was in 2022 equipped to facilitate scientific studies with its fit- for-purpose echo sounder and research trawl that collects scientific information. We allocated 12 days of vessel time specifically and entirely to the purpose of conducting krill biomass science, led by the Institute of Marine Research (IMR).
In 2023, Aker BioMarine targets several milestones that will substantially lift the company’s performance within Sustainable Fisheries. These include:
CCAMLR is reaching the next step of the krill feedback management process marked by the further consolidation of the scientific milestones that will inform its policies. We will support this work in several different ways, including the collection and sharing of acoustic data.
Maintain voluntary measures with ARK
Aker BioMarine will maintain support across countries and companies in ARK to ensure compliance and continuation of the voluntary measures for seasonal penguin protection in Antarctica.
Increase oversight with drones
We will strengthen our unmanned ocean drone initiative, as these are critical tools for locating krill and increasing our efficiency. Aker BioMarine will maintain transparency in vessel operations through 100% international observer coverage and by engaging with stakeholders to ensure industry-leading safety and transshipment practice.
Reduce bycatch.
We will strive to maintain our low bycatch levels and incidental mortality during our operations, and we will work to improve other mitigation measures according to best practices
Krill harvesting is restricted to the area around the Antarctic Peninsula, called CCAMLR Area 48.1- 48.4. While this area constitutes only a small part of Antarctica, it amounts to 3.5 million km2 in size, which is roughly 5% bigger than India.
Antarctic krill is a free swimming, shrimp-like crustacean with a hugely abundant biomass. It is considered a keystone species in the Antarctic. Scientists have estimated there to be about 500 million tons of krill in Antarctica, the highest densities of which are found in the area around the Antarctic Peninsula (Area 48).# 2. Sustainability | Environmental
Who regulates Antarctic krill? The Antarctic krill fishery is managed by Commission on the Conservation of Antarctic Marine Living Resources (CCAMLR), an international treaty organization established in 1982. Aker BioMarine serves as observer to the CCAMLR through the Association of Responsible Krill Harvesters (ARK).
In the 2021/22 fishing season, five countries (Norway, Chile, Korea, China and Ukraine) were engaged in the krill fishery. The total recorded krill catch for all vessels was 415 000 mt.
While climate is changing in Antarctica, krill is resilient, abundant and can sustain the increasing global demand for low carbon blue foods. To manage this valuable resource going forward, the CCAMLR plans to increase krill data collection, monitoring and analysis through a new system called “feedback management”. The krill industry, spearheaded by Aker BioMarine, will acoustically monitor the krill biomass at the appropriate scales set by CCAMLR.
Antarctic krill has been a focus of systematic scientific studies for more than 100 years. While earlier research points to the decline of the krill biomass, the acoustic monitoring conducted over the past quarter century suggests that krill is stable in density and distribution. In 2019, Norway led a large-scale, international synoptic krill survey that estimated a standing krill stock of 62.6 million metric tons in Area 48. These scientific estimates are higher than the previous large-scale krill survey conducted in 2000.
Aker BioMarine operates three vessels: Saga Sea, Antarctic Sea, and Antarctic Endurance, in addition to the cargo vessel, Antarctic Provider. All vessels are owned by Aker BioMarine and licensed to Norway.
CCAMLR has established a network of Marine Protected Areas in the waters around Antarctica. Aker BioMarine believes that this will help enable both Antarctic wildlife and the krill fishery activity to thrive long-term. To support these efforts, Aker BioMarine and ARK adopted the voluntary restricted zones (VRZs) in 2019 to protect penguin colonies during breeding season. In 2020, these seasonal voluntary measures were expanded to a year-round permanent closure of a 4,500 square- kilometer area of ocean to ensure protection of the largest Adélie penguin colony in the region.
Antarctic krill are a vital source of food for marine predators in Antarctica. Though the krill biomass remains healthy and abundant, the krill fishery adheres to strict catch limits to protect biodiversity in the ocean. As a result of this precautionary approach, few other fisheries in the world have as low catch limits in proportion to the biomass, with actual catch rates below the limit. Precaution is not explicitly written in the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) treaty, but it is an all-important principle in krill fishery management. At Aker BioMarine, we strive to generate new knowledge about krill and its ecosystem, in an effort to stimulate a thriving fishery and protect nature and biodiversity in the region.
Since its inception, Aker BioMarine has built strong awareness about the Antarctic ecosystem and continuously works to minimize any negative impact. This approach has made Aker BioMarine and the krill fishery ‘best in practice’ when it comes to biodiversity and nature. Our primary focus is on these key topics:
Aker BioMarine’s fishers know what many scientific studies also confirm: there is no such thing as a typical krill year. The variability of the krill biomass is consistently high. During some years, the krill swarms are easy to find; in other years, it is harder work. “A good krill year” is signified by an abundance of krill for both fisheries and the surrounding ecosystem. However, large swarms of krill can disperse just as unpredictably as they form, in response to currents, tides, and storms. Neither scientists nor fishermen fully understand the root cause of these changes, and so, they keep chasing the answer to the question, “What makes a good krill year?”. Another variable is related to global warming and its effect on the Antarctic climate. This makes it especially important to observe any changes to sea ice. Larval krill are dependent on this ice as their nursery ground, where they feed on the ice- trapped algae. Our science and fisheries operations have also observed that krill density in winter is higher than in summer. This makes it more logical to conduct intensive krill harvesting during winter, when the Antarctic breeding season is over.
Most of the large Antarctic animals that depend on krill as a food source are relatively healthy, with some variation in local populations. The size of penguin populations has changed over time, due to factors such as food supply, adaptation to a changing climate, and retreating sea ice that separate colonies from their food source. Scientists have also spotted these population changes in the areas where fisheries operate as well as the areas that are untouched.
We aim to improve sustainability of fisheries through contributing to data and science driven regulation and ocean management
| KPI | USD spent on marine science and feedback management | Result 2022 |
|---|---|---|
| USD 1 043 million spent, which is a 90% increase from last year |
Antarctic whale populations are on the rebound, following near depletion due to whaling activities in the early 1900s. The reported abundance of whales is a clear sign that krill, a primary food source for whales, is not in short supply. Whales are efficient feeders, and an adult whale can eat several tons of krill per day. Scientists have yet to establish what the increased feeding competition from whales will mean for other krill-dependent species in the ecosystem, including penguins. There is no compelling evidence at present to suggest that the krill fishery is adversely affecting the krill population or that it serves as a threat to biodiversity. However, at a time when nature is changing more rapidly than ever before, we must make sure that the krill fishery does not add pressure to an already delicate ecosystem. For Aker BioMarine, a mediating factor is to serve as a source of knowledge, which is why we work to generate new research and fill in the knowledge gaps about krill and the ecosystem.
In 2015, Aker BioMarine established the Antarctic Wildlife Research Fund (AWR), in collaboration with NGOs and under the advisory of Antarctic scientists. Since then, the Fund has awarded more than 1.4 million USD to Antarctic research projects on krill and the ecosystem. Aker BioMarine contributes 200,000 USD annually to AWR, which secures the continuation of the fund. In 2022, Aker BioMarine pledged 1 million USD in funding over the next 5 years to AWR. In addition, Aker BioMarine has supported AWR in the allocation of funding to two new science projects in 2022, focused on crabeater seals and baleen whale populations. Aker BioMarine has also collaborated with AWR on a study to detect possible bycatch of ice krill in the krill fishery.
Our approach to supporting scientific research on biodiversity and the krill ecosystem will continue in 2023. We plan to actively follow the developments in the Task Force for Nature Based Disclosures (TNFD). Aker BioMarine has a high awareness around EU Taxonomy (see page 35) and will report in line with Environmental Delegated Act 2023, which includes fisheries and biodiversity. We will continue to be an advocate for a krill management system that continuously evaluates new data on the functional relationships between the krill fishery and the krill-based ecosystem. A certain level of precaution is warranted and necessary to secure Antarctic biodiversity for the long-term, but an overly risk- adverse system will inhibit krill harvesting and its contribution to global food security and health
Krill, when included as an ingredient in feed and for human nutrition, has proven positive health benefits for both people and animals. At Aker BioMarine, we continuously work to innovate products and develop ingredients that deliver essential nutrients from krill, including omega-3 fatty acids. We believe that krill has far-reaching potential for human and animal health, and as such, we are dedicated to expanding and developing our product portfolio.
As a science-based organization, we have an in-house Research and Development department that collaborates with scientific institutions to develop new technologies and product innovations based on research and experimental trials. We also work closely with our customers to ensure that we design our products according to their needs, which can range from better growth performance in shrimp to reduced joint pain among arthritis sufferers.
Developing a sustainable source of protein, along with other important nutrients, has become an increasingly important mission. The world’s population is increasing and to remain on track towards ambitious global climate goals, we must reduce the impact of food production, specifically in terms of deforestation, water pollution, and greenhouse gas emissions. At the same time, we must also work to ensure the health and wellbeing of people through a stable supply of the right proteins and nutrients for the body.
Aker BioMarine owns the supply chain from harvesting of krill to the manufacturing of krill oil on land. We have implemented processes for food defense and safety across the whole supply chain. Access restrictions, closed manufacturing, sealed packed product and full testing of our products. All steps are followed up by our Quality department: Traceability and mass balance is inspected by 3-party certifying companies through ours MSC CoC and Friends of the Sea CoC program. We qualify suppliers and set up quality agreements with them that can affect food quality, safety and security.
Aker BioMarine’s new protein plant and innovation center in Norway experienced strong development in 2022, and construction is now well underway. We are simultaneously ramping up staffing and operational planning, and we are currently on track for operational start-up in mid- 2023. This new protein plant, funded in part by Innovation Norway, will enable rapid product and process development as well as commercial production.
In 2022, Aker BioMarine announced a new and unique delivery platform in the human health space, called PL+ by Aker BioMarine. The PL+ platform is based on phospholipids from krill oil, and it is intended as a product for the dietary supplement space. The primary benefit of PL+ is that it can be used to boost the uptake of other nutritional ingredients for human health, increasing cost effectiveness and enhancing overall product quality.
Research teams from the University of Oslo, Oslo University Hospital and Akershus University Hospital published a new scientific paper that concluded krill oil has the potential to inhibit many of the processes that drive aging. In a six-month trial conducted by CSIRO, Australia’s national science agency, scientists discovered that krill oil led to improvements in knee pain, stiffness, and physical function in adults with mild to moderate knee osteoarthritis.
The sustainability of ingredient sources is increasingly important for the aquaculture industry. Antarctic krill is a sustainable ingredient that enables the aquaculture industry to reduce reliance on costly and limited-in-supply marine products. In 2022, we continued to demonstrate the benefits of using QRILL™ AQUA products in aquaculture. We focused on the nutritional qualities of krill meal and oil, and how they support more efficient and robust aquaculture production. We have also published a cost- formulation tool that demonstrates the economic benefits of using QRILL AQUA in shrimp feed.
Increasing the omega-3 index is known to reduce inflammation and improve overall health across many species. For dogs, we have demonstrated that using krill meal in the feed increases the omega-3 index after only a few weeks of feeding. Our studies also show that krill increases in the omega-3 index significantly more than fish- and plant-derived omega-3 sources. We have also demonstrated through scientific research that krill oil is well-tolerated in horses and that the omega-3 index increased significantly after only a few weeks of use.
In Aker BioMarine, we have been active in the Raw Materials Pledge “Råvareløftet”. This pledge is an industry-formed and Bellona-led project that aims to identify sustainable ingredients for the growing salmon aquaculture industry in Norway. To speed up the inclusion of alternative ingredients in aquaculture feed, Aker BioMarine, in 2022, applied for salmon aquaculture trial licenses, along with Nofima and LetSea, and others. The goal of this project is to combine more sustainable, alternative ingredients in salmon feed, with the aim to reach a 25% inclusion level by 2030. This will help stimulate the growth of the local ingredient industry, as well as the aquaculture industry.
In 2022, Aker BioMarine has continued the work to fulfill our ambitious ESG ambitions. We have further developed our decarbonization agenda, and we have developed a EPD (environmental product declaration) report for the “2022 fisheries and production of krill meal” in collaboration with external verifiers. Since 2020, we have significantly reduced our CO 2 footprint, and we have achieved a combined reduction in all environmental stressors of more than 30% in this period.
We achieved significant regulatory wins in 2022, with the approval of the sale of krill meal to the aquaculture industry in Canada and USA. In addition, the Indian import duty for krill meal to shrimp aquaculture was significantly reduced, which has lowered the entry barrier to the Indian market.
Aker BioMarine has partnered with Terravera, a foundation rooted in academia with a mission to make sustainability values transparent, understandable, and accessible. Terravera will apply a data and modelling driven approach to investigate and showcase the real sustainability proposition behind krill meal.
Aker BioMarine will continue to focus on demonstrating the health, cost and sustainability benefits from using krill as a feed ingredient for farmed species.
| a) Percentage of significant product and service categories for which health and safety impacts are assessed for improvement. | None |
| a iii)Total number of incidents of non-compliance with regulations and/or voluntary codes concerning the health and safety impacts of products and services within the reporting # 2. Sustainability | Environmental |
This Committee is dedicated to ensuring, both strategically and tactically, the reduction of our carbon emissions. Collection and utilization of data We aim to continue reaping the benefits of our data management system. This system combines direct data gathered by drones with data from other sources, including weather, historical fishing, and ocean data, to detect and predict the location of krill. The goal is to verify krill availability, ensure higher asset utilization, meet our sustainability goals, and support a well-managed fishery.
Our targeted efforts to improve operational control and offshore procedures have resulted in a reduction in fuel use and energy consumption. As a result, our CO 2 intensity is reduced to 2.17 tCO 2 /ton krill meal, which is an almost 18% decrease compared to the last reporting year. We are committed to reducing our energy consumption. An important part of this work is to make the most out of every kWh of energy we consume. In 2022, we installed a heat recovery system that recovered waste heat from one of our processing steps and then re-used that heat in our factory. We estimate that we will save up to 500 MT of fuel or 1600 tons CO 2 through use of this technology in 2023.
By joining the First Movers Coalition, we have committed to powering at least 5% of our deep-sea shipping with zero-emission fuels by 2030, using ships that are zero-emission fuels compliant. As member of environmental NGO-led Råvareløftet (Raw Materials Pledge), Aker BioMarine co-delivered a report to Norwegian politicians on how to accelerate the identification, development, industrialization and phasing in of new and sustainable raw materials for fish feed. Through these efforts, we hope to reinforce krill’s role as an important part of a more sustainable aquaculture future.
In 2022, we made solid progress towards emissions reductions through use of technology and operational improvements. Throughout our operations, we see increased effort among our employees to save fuel and reduce emissions, as shown through innovative new ideas and initiatives stemming from all levels of Aker BioMarine. We will continue to prioritize our search for and implementation of fuel-saving technology going forward, and in 2023, we plan to report on our progress in terms of emissions reduction according to the EU taxonom.
| Emission | Global tonnes CO 2 e | Scope | 2021 | 2022 |
|---|---|---|---|---|
| Direct Emissions (Scope 1) | 96,750 | 96,864 | ||
| Fishery and offshore production | 92,493 | 94,082 | ||
| Production at Houston Plant | 4,124 | 2,641 | ||
| Production at Lang Pharma | 133 | 141 | ||
| Indirect Emissions (Scope 2 - location based) | 5,304 | 3,953 | ||
| Purchased electricity Houston | 5,190 | 3,849 | ||
| Purchased electricity India | 33 | 33 | ||
| Purchased electricity Lang Pharma | 25 | 25 | ||
| Purchased electricity Montevideo | 45 | 36 | ||
| Purchased electricity Oslo | 11 | 10 | ||
| Indirect Emissions (Scope 3) | 13,786 | 12,270 | ||
| Business travel | 41 | 234 | ||
| Crewing travel | 854 | 653 | ||
| Packaging used - bags | 1,132 | 1,227 | ||
| Packaging used - drums | 357 | 288 | ||
| Transport of goods | 11,403 | 9,868 | ||
| Total | 115,868 | 113,087 | ||
| Scope 2 (market based emissions) | 4,695 | 4,028 |
PwC has provided limited assurance on scope 1, 2, and 3 emissions for 2022. Reported according to the GHG protocol, as applied in methodology statement climate accounts (appendix 2). In 2021 we used marked based conversion factor for the norwegian locations.
- For more information on climate risk, please see Note 11
- There has been a slight increase in emission in 2022 due to increased production.
- The company’s KPI is CO 2 per ton krill produced, the intensity is reduced by 18% in 2022
| KPI | Result 2022 |
|---|---|
| Waste | 97% of annual recyclable waste recycled |
| 63% increase from last year |
We aim to ensure full circularity on all of our principal waste streams
As a biotechnology company dependent on ocean resources, Aker BioMarine is concerned about rising levels of plastic pollution and the detrimental effects this has on marine life. The World Bank says that the world will produce 70% more waste by 2050 than we do today. It’s a prediction that means that people and companies are failing to manage waste responsibly, which leads to harmful environmental consequences. We also see food and product waste as an increasingly prevalent issue. When products are deemed lower quality, they are often discarded. At Aker BioMarine, we believe that these products and commodities should be redirected into areas of use, to avoid landfill or incineration as an end point. With these key beliefs as our starting point, Aker BioMarine is committed to doing its part to move from a linear to a circular economy, while maintaining a strong focus on sound resource utilization.
In 2020, Aker BioMarine established a circular solution company called AION. AION recycles the company’s plastic streams and biological residue into new products, in alignment with Aker BioMarine’s zero-waste vision. In 2022, Aker BioMarine continued to improve product waste through circular sales and re-purposing of traditional products to eliminate waste from our production. Recycling our plastic waste through AION has helped ensure traceable and circular value chains.
In the reporting year, AION recycled 59% of our plastic waste and we have improved our routines for increased recycling going forward. We also reduced product waste by 48% from 2021, and by 96% from 2020. Combined we recycled 97% of our principal waste streams compared to 2021.
During the year, we implemented a new process for pretreating wastewater from our Houston plant. This has resulted in significant reductions in our effluent water concentrations for Carbonaceous biological oxygen demand (CBOD), total solids (TSS), and oil and grease. In 2022, we reduced our emissions to water by 4.62 tons.
| Water | 2021 | 2022 |
|---|---|---|
| Total water withdrawn, Mega liter | 126,59 ML | 96,23 ML |
| Total water consumed | 38,84 ML | 33,80 ML |
| Emissions to water | 4,73 MT | 4,62 MT |
Aker BioMarine's have conducted a voluntary taxonomy report. Aker BioMarine has completed the taxonomy with the best intention and a focus on transparency and an explanation of the interpretation of the taxonomy criteria. The interpretation of the criteria is based on both the explicit information available at the time of the assessment and the understanding of the purpose of the requirement. The criteria related to minimum social safeguards are still not adopted by the EU. Still, Aker BioMarine has mapped its operations against the process of due diligence on responsible business by the OECD Guidelines for Multinational Enterprises. Through this assessment we have identified some areas of improvements where we have defined mitigating actions being implemented within 2023. Based on this, we have concluded that we comply with the minimum social safeguards. The taxonomy regulation is still in a phase of early adoption and Aker BioMarine is closely following any clarifications from the EU Commission or any changes in industry best-practice when it comes to interpreting the activity descriptions or technical screening criteria
The key performance indicators presented in the report includes turnover, OpEx and CapeX. Aker BioMarine has calculated the KPIs according to the Annex 1 of Art 8 Delegated act. Aker BioMarine has one asset defined as eligible from the taxonomy requirements, transport, that you can see on the KPIs presented. See appendix 2 for more information.
According to the Non-Financial Reporting Directive (NFRD) article 19(a) and 29(a), non- financial undertakings which are public-interest entities (i.e., listed) with more than 500 employees, in the case of a group on a consolidated basis, are required to report on the taxonomy. As of 2023, the undertakings are required to report on the proportion of their taxonomy-eligible and taxonomy-aligned activities. As a Norwegian company, Aker BioMarine is not covered by the taxonomy regulation, since the regulation has not yet come into effect in Norway. This report is therefore Aker BioMarine's voluntary taxonomy report.
| CapEx | Turnover | OpEx |
|---|---|---|
Annual Report – 2022 36
We take pride in our passionate employees who always go the extra mile. We believe diversity is a prerequisite for innovation and this is reflected in our workforce, from our fishermen to our science team. In this section we focus on three material topics that represent our social impact and our approach:
The rich diversity among our employees is vital to ensure that we stay innovative and successful as a company. You can read more about this in Equality and non-discrimination.
Sustainability | Social
Annual Report – 2022 37
Diversity at Aker BioMarine means all the differences and similarities that make us unique as individuals. The rich variety we have among our employees both reflected in the number of different nationalities and professions is vital to ensure we stay innovative and successful as a company.
Women comprise 44,4% of our Executive Management Team (EMT). In addition, the CEOs of Houston Manufacturing and Epion Brands LLC are women. Overall, we have good gender balance in our offices, with 53.44% female employees in Norway, and 50,26% of our sales organization globally. The female ratio in middle management positions is 44,11%. This is a significant improvement from the previous year (24,13%). We will continue to have focus on maintaining this improvement trend in the following years. Fishery is generally a heavily male-dominated industry, as is the case in Aker BioMarine. We have 6 females working onboard our vessels in key crew positions. Additionally, 17 women are working in other positions in the fleet among our global employees.
Employee surveys for our onshore personnel include questions on fair treatment, respect and valuation of differences, unpleasant comment(s) or conduct(s) that was offensive, embarrassing, or hurtful. Employees can anonymously raise a concern on misconduct, breaches, or potential violations through our webpage. The Whistleblower function is handled by an external party to secure anonymity. The employee survey results show that 8% of our responding employees (61% of onshore personnel) have experienced unpleasant comment(s) or conduct(s) they felt was offensive, embarrassing, or hurtful. This is a decrease by 4 % from 2021. We do not know the severity of these experiences and there have been no formal reports requiring a follow up from management and HR; however, we take this seriously and will inform and ensure that employees know where to seek support and how and where to report it, so we can manage the situation in a proper way and continue to work towards our goal of zero discrimination. One case was reported through our anonymous Whistleblower function during 2022, but the case was found not to be in breach of our Code of Conduct. There have been no reports of discrimination related to gender, pregnancy, maternity leave or adoption, care responsibilities, ethnicity, religion, disability, sexual orientation or gender identity.
The headquarter office building is built in compliance with regulations on access for all and is wheelchair accessible with elevator access to all levels, low thresholds, automatic door openers and dedicated toilet rooms. We have initiated a closer collaboration with Stiftelsen Vi, a foundation with the aim to give people with disabilities equal opportunities for success. Together we will work to increase the chances of including people with disabilities in the work-life. This collaboration will be further detailed in 2023 We celebrated Pride Month with several activities both via our online community and in the various offices. Throughout the month of October, we put a focus on mental health, reflecting on the importance of mental wellbeing by sharing our own stories internally to decrease the stigma on mental health issues.
We will continue having a particular focus on reducing gender pay gaps and to improve the gender balance in management levels this and the following years. For 2023 we will keep our ambitious goal of having 50% of vacant leadership positions filled by women. We will ensure that employees know where to seek support and how and where to report it, so we can manage the situation in a proper way and continue to work towards our goal of zero discrimination.
The ”AKBM Balance” is still valid as our policy supporting a hybrid work model. Our employees are trusted to structure their work in a way that balances their work and family life.
Sustainability | Social
Annual Report – 2022 38
| State of gender equality | Gender balance | Temporary employees** | Parental leave | Part-time workers** | Involuntary part- time |
|---|---|---|---|---|---|
| Organization | Women | Men | Women | Men | Women |
| Offshore Harvesting | 6 | 95 | – | 2 | – |
| Brands | 48 | 30 | 1 | – | NA* |
| Houston Manufacturing | 11 | 34 | – | 2 | NA* |
| North America | 8 | 7 | – | – | NA* |
| Norway | 70 | 61 | 7 | 3 | 48 |
| Rest of the world | 18 | 27 | 4 | 1 | NA* |
| Total | 161 | 254 | 12 | 8 | 5 |
*Not tracked for our global employees, as different national laws apply
**Part-time employees are interns who combine work with studies and employees working part-time on their own will. Temporary employees are mainly substitution for those who are on parental- or sick leave.
| Gender pay gap overview | Gender balance | Gender pay gap* | ||||
|---|---|---|---|---|---|---|
| Number of employees | Cash reward | Non-cash reward | ||||
| Women | Men | Women | Men | Women | ||
| Group 1 (EMT)** | 4 | 4 | 96% | 100% | 46% | 100% |
| Group 2*** | 2 | 5 | ||||
| Group 3*** | 3 | 13 | ||||
| Group 4 | 15 | 10 | 89% | 100% | 85% | 100% |
| Group 5 | 18 | 15 | 93% | 100% | 87% | 100% |
| Group 6 | 18 | 10 | 85% | 100% | 101% | 100% |
| Group 7 | 9 | 1 | 100% | 100% | ||
| Total | 69 | 58 | 90.75% | 100% | 91.00% | 100% |
* Analysis for all Norway-based permanent employees. Cash reward includes salary, annual leave allowance, bonus. Non-cash reward include pension, insurance, newspaper, electronic communication.
** Women percentage shows women's pay in relation to men
*** CEO excluded
**** Privacy regulations. At least 5 employees of each gender needs to be represented in order to include in report. Exception is made for Group 1 (EMT), as this is reported in the Management Remuneration report.# Sustainability | Social Annual Report – 2022 39
| HR area | Background for measures | Description of measures | Goals and KPIs for measures | Responsible | Deadline/ Status | Result |
|---|---|---|---|---|---|---|
| Recruitment | Majority of men in management- and senior level positions | Implement policy of 50% women among qualified candidates in recruitment processes for leadership positions | 50% women among qualified candidates | HR | 2023/In process | In 2022, 67% of vacant leadership positions were filled by women. |
| 50% of vacant leadership positions are filled by women in the period 2022-2023 | Policy implemented | |||||
| Promotion- and development opportunities | Majority of men in management- and senior level positions | Encourage and promote women to pursue leadership career | 50% of vacant leadership positions are filled by women in the period 2022-2023 | HR | 2023/In process | 67% of vacant leadership positions are filled by women, of which 75% were internal promotions. |
| Compensation terms | Gender difference in pay on all levels for onshore positions in Norway | Analysis of job complexity and -requirements | Reduce gender difference during recruitments and salary adjustment process | HR | In process | Reduction of gender difference by 6% in Norway |
| Equal pay for equal work of same quality | ||||||
| Harassment | 8% of respondents have experienced unpleasant comment(s) or conduct(s) they felt was offensive, embarrassing, or hurtful. | Monitor and measure Respond to complaints Encourage reporting | Harassment claims are reported and managed appropriately | HR/Compliance Officer | Started | 8% vs 2021 result of 12%, (4% reduction) |
| Work/life balance | Implemented ‘AKBM Balance’ policy on flexibility of work place | Stress levels remain at current level | HR | Complete | Stress levels remain at same level as previous years | |
| Discrimination factors | gender, pregnancy, maternity leave or adoption, care responsibilities, ethnicity, religion, disability, sexual orientation, gender identity and gender expression and combinations of these factors |
People are at the core of everything we do in Aker BioMarine, and our approach to HSSE reflects our strong people-first culture. We are in pursuit of HSSE excellence, which has led us to implement our own management system to anticipate, assess, plan, prepare, train, and equip our personnel and the environment we work in. We do this to protect our people, our assets, our reputation, and stakeholders. This system gives us the ability to respond and recover in a coordinated, proactive, robust, and effective way to prevent damaging or potentially damaging incidents, regardless of cause, wherever we operate in the world.
Our approach is documented in our HSSE management system, which was created in 2022. It is a set of integrated principles underpinned by procedures, designed to be robust enough to:
From the Antarctic waters we fish, to the complex business environments we navigate, Aker BioMarine is not without risk. We see this as a positive challenge, and we embrace the idea that some risk is essential if we are to continually innovate. That means that for us, the correct adoption of HSSE should be a business enabler rather than a restrictive measure. We strive to be resilient and strong in our HSSE approach. Here are some examples of what we have accomplished in 2022:
Creation and analysis were in focus in 2022, as we laid the groundwork to build a management system and a full recovery process, enabling us to correctly identify, report, capture, investigate and share learning across our global organization for any incident, accident, or event that may occur. This groundwork is fundamental to our continued success. It has and will continue to align the organization according to one way of working. It will also give us continuity in the way HSSE is handled globally. In addition, it also provides us with true and comprehensive information about the state of our vessels, sites, office safety, and the human occupational safety and health practice in our organization. By using the information gathered, we will develop and promote innovative health and safety outcomes that will improve the safety and wellbeing of our entire organisation and others within our industry.
Our Houston site has achieved great HSSE improvements this year, with zero reportable incidents of note. The Houston-based HSSE manager has raised awareness on these topics and serves as a single point of contact to champion HSSE on a permanent basis. One example is the innovative audit and HSSE walk program that this manager created. It is a program that invites employees from office-based roles and others (who typically would not be in an operational environment) to view and
Our guidelines/principles:
assess the operations. This initiative not only builds understanding and cooperation between departments, it also has enabled “fresh eyes” on our business to better assess safety risks and seek improvements.
Aker BioMarine’s vessels have undergone a series of inspections and audits this year, all of which resulted in only minor findings. The total recordable accidents/incidents declined since 2021, and we met all our targets. The chief officers (with safety responsibility) are embarking on training to further develop their skills and awareness around reporting and investigation for any incident on board our vessels.
In 2022, security was highlighted as part of our information security improvement program, which helped us improve our maturity on the topic. The program involved procedure and framework improvements, a complete training and awareness schedule, which included our executive team, and an overall increase in preventative and protective measures of both technical and human nature.
The coming year will consist of training and implementation in terms of our HSSE evolution. The HSSE responsible(s) for each site / office location will be provided training on all areas of HSSE, and they will be used to champion and lead all activities. This will help to create excitement and build a positive culture towards safety across our company in 2023. The vessels and offload will be the operational focus, as we continue to train and engage the chief officers, captains, and key crew at all available opportunities. In 2023, we will also continue to improve and focus specifically on building the foundations for risk management. Through this work, we aim to address strategic risk management, including operational risk management and documentation at the sites.
(GRI 403-2) Number of serious incidents reported (onshore and offshore)
| 2021 | 2022 | |
|---|---|---|
| Sick leave | 0.76% | 0.49% |
| LTI | 3 | 2.34 |
| Fatalities | 0 | 0 |
| 2021 | 2022 | |
|---|---|---|
| (AKBM KPI) Number of reported whistleblowing incidents | 0 | 2 |
| (AKBM KPI) Number of reported incidents concluded to constitute a breach in governing rules and regulations | 0 | 0 |
People are the heart of Aker BioMarine, which means that attracting, fostering, and building talent are critical to our success. Given the challenging labor market conditions through 2022, our primary focus was on developing ways to attract and retain employees. As part of these efforts, we hosted focus groups with our employees to better understand what makes us an attractive employer. We also implemented a process to more closely follow-up with new hires and their managers, and we reviewed and improved our employee benefits packages.
In 2022, we kicked off the work to create our employer branding strategy. We sought input from employees across the company and through this process, we increased our knowledge about our different employee segments, what they appreciate about our culture, and where we should focus going forward to attract the right talent in the current (and future) labor market.
To give our new employees a solid starting point to deliver and succeed, we added a few key milestones to the first six months of employment. The HR team now follows up with each new employee after six weeks on the job, and then again at three and six months. These follow-ups are run with both the employee and the direct manager to assess the overall employee experience.
GRI 405-1 i. Gender
| 2021 | 2022 | |||||
|---|---|---|---|---|---|---|
| Female | Male | % Female | Female | Male | % Female | |
| Offshore harvesting | 7 | 95 | 6.86% | 6 | 95 | 5.94% |
| Brands | - | - | 0.00% | 48 | 30 | 61.54% |
| US Houston manufacturing | 18 | 58 | 23.68% | 11 | 34 | 24.44% |
| Sales Organisation US | 52 | 35 | 59.77% | 8 | 7 | 53.33% |
| Norway | 70 | 62 | 52.67% | 70 | 61 | 53.44% |
| Rest of the world * | 13 | 19 | 40.63% | 18 | 27 | 40.00% |
| Total | 160 | 269 | 37.30% | 161 | 254 | 37.53% |
A competitive labor market with a high number of job openings has given workers greater opportunities, while making it more challenging for companies to hire. This situation motivated the kick-off of our assessment and subsequent update of the company’s global benefit packages (monetary and non-monetary). Our aim was to ensure that Aker BioMarine’s benefits are attractive and competitive going forward, helping us to successfully recruit and retain our employees.## Performance enablement
Inspired by our Norwegian values, many of our locations offer health and wellness grants, training and development support, generous paid vacation, and parental leave, in addition to flexible working hours. Our offshore operation unit has implemented a loyalty program that offers a salary increase every second year until the employee completes 10- years with the company.
We implemented an OKR (Objectives and Key Result) framework in 2022 across the organization to track progress, create alignment, and encourage engagement around measurable goals.
During the reporting year, we launched “People Syncs”, an experience exchange group for people managers to align on people matters, share goals, challenges, and concerns, and lean on each other for support and other perspectives. This has proven to be a valuable initiative that has helped us to continually improve the employee experience. As of 2022, all employees entering their first people manager roles are enrolled in “Leadership Fundamentals”, our online training program that covers key aspects of leadership in Aker BioMarine. In addition, several of our more experienced people managers attended external communication and leadership training based on individual needs during the year.
Our people managers play an important role in ensuring a great employee experience. Going forward, we will continue to emphasize leadership development and work closely with all people managers to create a global common practice, which will include how we motivate employees to continuously develop and grow. (GRI 401)
| 2021 | 2022 | |
|---|---|---|
| New hires | 19% | 20% |
| Turn over | 14% | 27%* |
*Largely impacted by the company downsizing in Houston
| 2021 | 2022 | |
|---|---|---|
| Offshore harvesting | A process to implement performance review will be initiated in 2022 | 100% |
| Brands | 100% | 100% |
| Houston Manufacturing | 42% | 100% |
| US (Sales organization) | 100% | 100% |
| Norway | 100% | 100% |
| Rest of the word | 100% | 100% |
Aker BioMarine firmly believes that sustainability, transparency, and accountability, backed by robust governance, are crucial for our operations. These values ensure our profitability in the long run and allow us to operate with integrity. In this section you will find our Corporate governance report.
Effective corporate governance provides the foundation for long-term, sustainable value creation. Corporate governance is therefore a key concern for Aker BioMarine ASA (“Aker BioMarine” or “the Company”). As a portfolio company within the Aker family, we believe in active ownership. Our main shareholder is active in setting clearly defined strategic goals for the Company and is involved through the boardroom and direct dialogue with company management, promoting shareholder value.
Pursuant to section 3-3b of the Norwegian Accounting Act and the recommendations in the Norwegian Code of Practice for Corporate Governance, most recently revised in the autumn of 2021, the board has reviewed and updated the Company’s corporate governance principles. The individual recommendations of the Norwegian Corporate Governance Board (NUES) are discussed below. Aker BioMarine’s principles are largely consistent with the recommendations.
Aker BioMarine’s corporate governance principles are established by the board. The purpose is to ensure a productive division of roles and responsibilities among Aker BioMarine’s owners, board and executive management, as well as to ensure satisfactory controls of the Company’s activities.
Aker BioMarine’s business purpose is expressed in the Company’s Articles of Association: “The company’s purpose is to carry out sustainable krill fishing, develop, produce, transport, commercialize and market products from krill and other raw materials for use within human and animal health and nutrition, including investments in and operation of other businesses with similar purpose.”
The board has prepared clear goals, strategies and a risk profile for the company’s business activities such that the Company creates value for shareholders in a sustainable manner. The Company has defined sustainability as a foundation for the entire operation, with an overall mission to “improve human and planetary health”. The Company reports on ESG - Environmental, Social, Governance – as part of its Annual Report. The board evaluates targets, strategies and its risk profile on an annual basis, at a minimum.
The Aker BioMarine group had USD 378.7 million in book equity as of 31 December 2022, corresponding to an equity ratio of 46.0 per cent. The capital structure is appropriate and adapted to the objectives, strategy, and risk profile.
The Company has not established any dividend policy to date but will strive to follow a dividend policy favorable to the shareholders. The Company has not paid any dividends on its shares during the financial years ended 31 December 2022, 2021 or 2020.
The board’s proposals for board authorizations comply with the relevant recommendation in the Norwegian Code of Practice for Corporate Governance. Board authorizations are limited to defined purposes and are dealt with as separate items at the annual general meeting. Board authorizations are limited in time to no later than the date of the next annual general meeting.
The Company has a single class of shares, and all shares carry equal rights. Aker BioMarine has developed principles and guidelines for transaction agreements and other agreements not forming part of ordinary operations involving companies in which Aker BioMarine and/or entities within the Aker group has significant ownership interests. Transactions involving own shares are executed on Oslo Børs. Buybacks of own shares are executed at the current market rate. Additional information on transactions with related parties can be found in Note 21 to the 2022 consolidated accounts.
There are no restrictions on owning, trading or voting for shares in Aker BioMarine. Oslo Stock Exchange has granted a waiver from the requirement of having at least 25% free float of shares when listed on OSE per Section 6.3 of the Continuing Obligations.
Aker BioMarine encourages all its shareholders to participate in general meetings. Through the general meeting, shareholders exercise the highest authority in the Company. The annual general meeting in 2023 will take place on 20 April. Aker BioMarine has decided to hold its general meeting as a digital meeting to ease participation both for foreign and national shareholders compared to a physical meeting. Shareholders unable to attend the general meeting live during the digital event may use electronic voting to vote directly on individual agenda items during the pre-meeting registration period. Shareholders unable to attend the meeting may also vote by proxy. The procedures for electronic voting and the proxy voting instructions are described in the meeting notification and published on the Company’s website.
The Public Companies Act stipulates that a general meeting must be declared open by the chairman of the board of directors, or a person nominated by the board of directors. The general meeting then elects a chairman for the meeting. The NUES Code of Practice further stipulates that the board of directors should ensure that the general meeting is able to elect an independent chairman. Aker BioMarine follows this principle.
The leader of the nomination committee and the Company’s auditor shall normally attend general meetings in order to present the committee’s proposal. The general meeting elects the members of the nomination committee and shareholder-elected board members. The nomination committee focuses on composing a board that works optimally, and on ensuring that board members’ experience and qualifications complement each other, and that statutory gender representation requirements are met. The general meeting will be requested to vote for board members individually.
Aker BioMarine has a nomination committee as required by its articles of association. The nomination committee must comprise at least two members, and each member is normally elected for a two-year period. The members and chairman of the nomination committee are elected by the Company’s general meeting, which also determines the remuneration payable to committee members. Instructions for the nomination committee’s operations were adopted by the annual general meeting in 2021. The primary responsibilities of the nomination committee are to recommend candidates and remuneration for the Company’s board of directors and nomination committee, and remuneration for members of the audit committee. Svein Oskar Stoknes, CFO of Aker ASA, is Aker BioMarine’s current chairman of the nomination committee. The instructions to and the current composition of the nomination committee is in line with NUES’ Code of Practice. Shareholders who wish to contact the nomination committee can do so using the following email address: [email protected].
The employees’ rights to representation and participation in the current composition of the board is presented on the Company’s web pages and in our annual reports, as are board members’ qualifications and expertise. The current members of the board were elected in 2021 for a term of two years and are up for election in 2023.
The Company has established an audit committee comprising of two members from the board of directors. The composition of the audit committee fulfils the required qualifications and competence in accounting and auditing under the Norwegian Public Limited Liability Companies Act. The Company has resolved a mandate for the work to be carried out by the audit committee. The function of the audit committee is to prepare matters to be considered by the board of directors and to support the board of directors in the exercise of its management and supervisory responsibilities relating to financial reporting, statutory audit, and internal control. The audit committee shall report and make recommendations to the board of directors, but the board of directors retains responsibility for implementing such recommendations.
The board of Aker BioMarine has established board instructions that regulate areas of responsibility, tasks, and the division of roles between the board, the board chairman, and the CEO. Furthermore, the audit committee has been granted a mandate which regulates its areas of responsibilities, tasks, relations with the external auditor and reporting routines to the board of directors. The composition of the committee is presented in the Annual Report. The board has considered whether Aker BioMarine should have a separate compensation committee but has concluded that it is currently not necessary. The board carries out an annual self-evaluation.
The board of Aker BioMarine establishes the overall principles for governance and control in the Company through the adoption of various governing documents. For particularly important areas of group-wide relevance, the board ensures that governing documents of Aker BioMarine are aligned with the broader Aker group. For example, Aker’s Code of Conduct also expresses Aker’s expectations of the portfolio companies’ respective codes of conduct. The same applies to important areas such as human rights, anti-corruption, and supplier conduct. Aker BioMarine has established a compliance officer function with dual reporting duties to the Company’s CEO and audit committee. The compliance officer’s main task is to ensure that Aker BioMarine is compliant with relevant laws and regulations, including the internal regulations and guidelines of Aker BioMarine. Aker BioMarine has chosen a risk-based approach to the compliance officer’s mandate. The compliance officer contributes to and benefits from effective information and knowledge sharing between the various compliance departments in the broader Aker group. Aker BioMarine has implemented a whistleblowing channel for reporting of serious matters, such as potential breaches of ethical guidelines and violations of the law. Information about the whistleblowing channel, including contact information and the procedure for dealing with whistle blows, is available on the Company’s website. Furthermore, the Company seeks to promote diversity and prevent gender discrimination in the workforce through clear recruitment requirements and the development of individuals and programs that support equal opportunity. This means that the Company is committed to both promoting and paying employees fairly, regardless of individual characteristics, and that individuals with the same jobs, with equal professional experience, who perform equally well, shall receive the same pay in Aker BioMarine.
The board carries out a bi-annual risk-based review of the Company’s operations. Prior to the bi-annual risk reporting to the board, the audit committee reviews the reported main risks and relevant risk-mitigating measures. The audit committee also reviews the Company’s internal controls and overall risk management. Aker BioMarine has established a procedure for internal control over financial reporting (ICFR). The ICFR framework is based on COSO Internal Control Integrated Framework. The ICFR framework is implemented through a risk-based and top-down approach, to provide appropriate organization of the financial reporting, ensuring that Aker BioMarine’s activities, accounts and management are subject to adequate control. In connection with the process of preparing Aker BioMarine’s financial statements, clearing meetings are held with Aker ASA with the main purpose of ensuring the quality of the financial reporting. The clearing meetings focus on significant valuation items, off-balance sheet items, related transactions, new or modified accounting principles, ICFR, and special judgmental items in the annual report. External auditors are present at the meetings. The audit committee prepares a preliminary review to the board of the quarterly and annual financial statements, focusing on valuation items, judgmental items, and the application of new accounting principles, as well as any material related-party transactions.
Board remuneration reflects the board’s responsibilities and expertise, time spent and the complexity of the business. Remuneration does not depend on Aker BioMarine’s financial performance, and there are no option programs for any of the board members. The annual general meeting determines the board remuneration after considering recommendations by the Company’s nomination committee. The board members elected by and among the employees do not receive board remuneration. Additional information on remuneration paid to individual board members for 2022 can be found in the financial statements and in the 2022 Remuneration report.
The board has adopted a declaration on the remuneration of executive management in accordance with section 6-16a of the Norwegian Public Limited Liability Companies Act. Furthermore, the Company has drafted a remuneration report in accordance with section 6-16b of the Norwegian Public Limited Liability Companies Act. Both documents are available on the Company’s website, and the 2022 remuneration report is attached to the Company’s 2 Sustainability | Governance Annual Report – 2022 47 annual report for 2022. The annual general meeting will hold an advisory vote over the remuneration report. The employment contract of the CEO has been approved by the board. The remuneration paid to the CEO is approved by the board after considering recommendations from the chairman of the board. The CEO determines the remuneration payable to key executives in accordance with board guidelines. Aker BioMarine has no stock option programs.
Aker BioMarine’s reporting of financial figures and other information is based on transparency and equal treatment of stakeholders. All stock exchange notifications and press releases are published on the Company’s website, www.akerbiomarine.com. Stock exchange notices are also available at www.newsweb.no. The Company organizes presentations in connection with its financial reporting. These meetings are generally broadcasted directly via the internet (webcast) or run as a physical meeting. The Company’s financial calendar is published on Aker BioMarine’s website and www.newsweb.no.
Aker BioMarine does not have separate guidelines on how to respond in the event of a takeover bid. The Norwegian Code of Practice for Corporate Governance recommends the adoption of such guidelines. Aker Capital AS controls a total of 77.78 percent of Aker BioMarine’s shares. In view of this, the board has deemed separate takeover guidelines as recommended by the Code to be unnecessary.
The external auditor makes an annual presentation of the auditing plan to the audit committee. The external auditor participates in all meetings of the audit committee and in the board meeting when the annual accounts are approved. The minutes from the audit committee meetings are distributed to the board. The external auditor reviews, with the audit committee, any material changes in the Company’s accounting principles and assessments of material accounting estimates. There have been no disagreements between the external auditor and management on any material issues. The auditor reports to the audit committee on its assessment of the internal controls over financial reporting process. The outcome of this review is presented to the audit committee and the board. The audit committee meets with the auditor without representatives of executive management being present. The audit committee receives an overview of services rendered by the auditor to the Company. The audit committee also approves the fees paid to the auditor for material additional services. The remuneration paid to the auditor in 2022 for both audit and other services is presented in the financial statements. These details are also presented to the annual general meeting. Further, the external auditor has provided the audit committee with written confirmation that the requirement of independence is met. Extended tasks related to selection of an external auditor, purchase of audit services and follow-up of the external auditor are handled by the audit committee. With effect from the annual general meeting held in April 2022, PWC has been the auditor of the Group.
2022 AKER BIOMARINE GROUP CONSOLIDATED FINANCIAL STATEMENTS
Kimberly Mathisen is independent of the company’s management, and material business contacts.# Board of Directors
Sindre Skjong
Director, elected by the employee
Board member since 2019
Sindre Skjong, an employee-elected representative to the Board, has been in Aker BioMarine since 2005. He currently serves as the company’s VP Technical Operations of Offshore Operations. Skjong holds a Class I Chief Engineer degree from Aalesund Maritime Skole and was educated as a Coastal Captain at Aukra Maritime Skole. He is a Norwegian citizen.
Kjell Inge Røkke is independent of the company’s management and material business contacts.
Board member since 2016
Kjell Inge Røkke, Aker ASA’s main owner, has been a driving force in the development of Aker since the 1990s. In 1996, the Røkke controlled company, RGI, became Aker's largest shareholder, which later merged with Aker. Røkke is currently chairman of Aker ASA, The Resource Group TRG AS, TRG Holding AS. He is a Norwegian citizen.
Lise Wiger
Director, elected by the employee
Board member since 2021
Lise Wiger, an employee-elected representative to the Board, has been a part of Aker BioMarine since 2017. Wiger started her Aker BioMarine career as part of the accounting team, and she now serves as FRC Manager for the company. Wiger studied at Santa Barbara City College and BI Norwegian Business School. She is a Norwegian citizen.
Anne Harris is independent of the company’s management, material business contacts and main shareholder.
Board member since 2021
Anne Harris has been the Chief Financial Officer (CFO) of Statkraft since 2019, and has previously held leadership roles in Norsk Hydro ASA, Entra Eiendom AS and Multiconsult ASA. She has been on the Board at the Institute for Energy Technology (IFE) (2015-2021) and COWI Holding from 2021. Harris holds an MSc from BI Norwegian Business School. She is a Norwegian citizen.
Kimberly Mathisen became CEO of HUB Ocean in January 2022, after serving as GM Norway for Microsoft. She is on the Board of Bayer and Aize and is on the Advisory Board of Nysnø and Sintef. She has served on the Boards of e.g Yara, Abelia, NHST and Kappa Bioscience. Mathisen has a bachelor’s degree from the University of Illinois and MBA from Harvard Business School. She is an American and Norwegian citizen.
Board member since 2021
Cilia Holmes Indahl leads the foundation for EQT, a global investment company. She is also the Co-founder of Sustainability Hub Norway. Indahl holds an Economics degree with a double master's degree in International Business and Sustainable Innovation from the Norwegian School of Economics (NHH) and HEC Paris. She is a Norwegian citizen.
Ola Snøve has served as Aker BioMarine’s Chair of the Board since 2014. Previously, he was Investment Director of Aker ASA for more than ten years, and he is the former President & CEO of Epax. Snøve holds a MSc and a PhD from the Norwegian University of Science and Technology, and an MBA with Distinction from INSEAD. He is a Norwegian citizen.
Aker BioMarine increased Net sales to USD 277.2 million for 2022 and improved Net profit substantially, reaching USD 10.0 million. The adjusted EBITDA for 2022 was USD 69.0 million with a solid margin of 25%. The increase in sales from the previous year is largely explained by both higher volumes and higher prices of Qrill Aqua. Aker BioMarine has a relatively high fixed cost base with high operational leverage, yielding higher earnings growth as the top line increases. Harvesting operations for the year were good, with all three vessels in full operation. Offshore production was 52,000 tons, 19% up from 2021. Although offshore production still not reflects the full capacity of the fleet, 2022 volume was the highest in the company’s history. Aker BioMarine’s competitive position remains solid. In krill harvesting, the company accounts for around 70% of all the global krill catch, even while holding a minority of the total number of fishing vessels. The onshore operation in Houston, US, produced at high efficiency in the first half of the year. As planned, the plant closed 1 June to allow for upgrades and improvements of the facility, rebalancing inventory levels, as well as preparing the plant for production of new products. Towards the end of the year, a particular krill oil quality was produced to prepare for the planned re-entry to South Korea for Superba.
In the animal health and nutrition business, QRILL Aqua ingredients continued with good sales development. Sales volume increased 15% in 2022 compared to the year before, and with higher product prices, revenues increased 27% for the year. Good customer demand and higher offshore krill meal production were the main reasons for the high growth. In the human health and nutrition business, total krill oil sales are still impacted by the shortfall of volumes in South Korea. Aker BioMarine’s own krill oil brand, Kori, is sold on the shelves of the largest retailers in the US. Kori sales increased to USD 14.1 million in 2022 from USD 7.5 million compared to 2021, which is an 88% increase. During the year Aker BioMarine introduced two new Kori stock-keeping units currently sold direct to consumers through Amazon.
Aker BioMarine has for many years invested in innovation and research and development (R&D). Innovation is an integral part of the company’s DNA and is at the core of the company culture. In 2022, Aker BioMarine and others published several studies documenting the benefits of both krill oil for human consumption and krill meal for animal feed. These studies equip Aker BioMarine and customers with more information about their krill- based products, which enables greater awareness and sales. In 2022 there were good progress in the ongoing strategic innovation projects. At the plant in Houston, US, preparation and commissioning for producing Lysoveta in small scale were completed and the product is waiting for US regulatory approval expected in the first half of 2023. Customer outreach and dialog has started to prepare for market launch. In September, Aker BioMarine signed an agreement with Trofi Nutritional Inc. with the aim to develop medical foods products based on Lysoveta, targeting Alzheimer’s disease, male infertility and gestational diabetes, in addition to pre-natal supplements in the US. The INVI protein product was in 2022 rebranded “Understory”. The protein plant in Norway is close to completion, and subject to commissioning, first commercial production is expected mid-2023.
In 2022, Aker BioMarine completed a spin-off of AION and transferred the operational control and majority of the voting rights and board representatives in Aion AS to Ocean 14 Capital Ltd. Aker BioMarine further developed the company’s ESG framework with ambitious targets for 2030 and 2050. The company’s ambition is a reduction of CO 2 emissions by 50% in 2030 and to be net zero in 2050. The probability of successfully meeting these targets is dependent on systematic implementation of measures to increase energy efficiency as well as external factors such as market willingness to pay premium for low- emission products, available technology, and infrastructure in a hard-to-abate industry. In its 2022 review, Sustainable Fisheries Partnership awarded Aker BioMarine’s Antarctic krill fishery an A-rating for the 7 th consecutive year, and hence, it is rated as one of the world’s most sustainable fisheries.
Aker BioMarine is a biotech innovator and Antarctic krill-harvesting company, dedicated to improving human and planetary health. The company has a strong position in its industry and is the world's leading supplier of krill-based ingredients for nutraceutical (Superba), aquaculture (QRILL Aqua), and animal feed applications (QRILL Pet). In addition, the company develops a new potential product, Lysoveta, for targeted transporter of EPA and DHA from krill. Aker BioMarine is also targeting the protein market with the new product Understory, a highly concentrated protein isolate from krill. The company’s business is supported by research, and there are around 200 published studies showing the benefits of krill for humans and animals.
Aker BioMarine’s fully integrated value chain starts with sustainable krill harvesting in Antarctica. The catch technology ensures very limited bycatch and utilizes 100% of the raw material. The three harvesting vessels are outfitted to simultaneously produce ingredients while catching krill. From the logistics hub in Montevideo, Uruguay, Aker BioMarine distributes products to customers globally, and ships ingredients to Houston for the production of krill oil. The company has inhouse sales and distribution teams locally in the important markets where it operates, selling products to customers in more than 60 countries. The Company has its own private label business in the US, Lang Pharma Nutrition, and a krill oil brand, Kori, through Epion Brands LLC. Both companies are US based in Rhode Island and New York.
Aker BioMarine’s purpose is to improve human and planetary health, and this guides all employees and management when making decisions and setting priorities. Aker BioMarine adapted its strategy to UN’s Sustainable Development Goals (SDG) in 2015, and the company focuses on four of the SDGs:
by building the most sustainable fishery in the world, and being transparent, responsible, and contributing to science in Antarctica. Aker BioMarine owns and operates three krill harvesting vessels under Norwegian flag: Saga Sea, Antarctic Sea and Antarctic Endurance. The vessels produce krill feed products and intermediates onboard. In addition, the company owns the newbuilt support vessel Antarctic Provider (under Norwegian flag), that was delivered in 2021. Antarctic Provider transports krill products, crew, fuel and consumables between the harvesting vessels and the logistics hub in Montevideo, Uruguay. Aker BioMarine holds four krill harvesting licenses issued by the Norwegian Government, three of which are in use today. The company also owns and operates its onshore krill oil plant in Houston, US. The Aker BioMarine headquarters are located at Fornebu, Norway. The shares of the company trades on Oslo Børs.
In 2022, Net sales increased by 6% to 277.2 million, from 262.1 million in 2021, mainly driven by higher sales in the Ingredients segment. Net profit for the year was USD 10.0 million, up from a loss of USD 8.0 million in 2021. The significant improvement in Net profit is driven by higher offshore production and gross margins for the QRILL category as well as a gain following the Aion transaction of USD 5.8 million recognized as ‘Other operating income’ and USD 3.4 reported as ‘Other financial Income’. Adjusted Group Earnings before Interest, Tax, Depreciation, Amortization and special operating items (“Adjusted EBITDA”) was USD 69.0 million in 2022, compared to USD 47.9 million in 2021.
Cash flow from operations was USD 15.1 million in 2022, an increase from USD 2.6 million in 2021, mainly due to release of receivables and several effects in 2021 not recurring in 2022. The difference between cash flow from operations and the operating profit (loss) in the statements of profit or loss mainly represents changes in working capital, depreciation and amortization, as well as financial expenses such as interest and guarantee fees included in cash flow from operations. Cash flow from investing activities includes cash investments in the protein plant, as well as growth and maintenance capital expenditures on existing assets. Total investments for the year were USD 56.4 million compared to USD 81.1 million in 2021, where 2021 was impacted by the delivery of the transport vessel Antarctic Provider. Net cash flow from financing activities was USD 52.5 million compared to USD 78.9 million in 2021.
As of 31 December 2022, the equity ratio was 46%, compared to 49% at year-end 2021. Cash and cash equivalents amounted to USD 22.3 million, compared to USD 11.1 million as of year-end 2021. In addition, the company’s fuel hedge amounted to USD 11.0 million, USD 12.5 million last year. Total assets amounted to USD 822.4 million and total equity was USD 378.7 million. Corresponding 2021 figures were USD 757.5 million in total assets and USD 370.4 million in total equity. The increased asset base mainly comprised of investments into the protein plant as well as higher inventory values following build-up of krill oil inventory. Interest-bearing debt amounted to USD 381.2 million as of 31 December 2022, of which USD 333.6 million is long-term interest-bearing debt and USD 47.6 million is short-term interest-bearing debt. Total interest-bearing debt was USD 324.8 million last year. The available liquidity under the company’s debt facilities amounted to USD 48.9 million as of 31 December 2022.
The parent company Aker BioMarine ASA is a holding company, with financial activities and with corporate functions. Aker BioMarine ASA had a Net gain of USD 25.8 million in 2022, compared to USD 5.2 million in 2021. The increase in Net gain is primarily driven by lower operating expenses as well as gain following the Aion transaction. Total assets were USD 548.2 million as of 31 December 2022, compared to USD 523.5 million in 2021. Cash and cash equivalents were USD 3.9 million as of 31 December 2022, up from USD 0.5 million in 2021. The Board of Directors has proposed that the Net profit for the period is allocated to retained earnings.
Aker BioMarine is exposed to credit, liquidity and interest risk in addition to operational risks and uncertainties related to harvesting and offshore processing technologies, fluctuations in annual krill harvesting, onshore production processes and product quality, ability to develop new products, and general market risk, which includes product sales.
The company’s activities create exposure to various types of risk which are associated with the financial instruments and markets in which it operates. The most significant types of financial risk are credit risk, liquidity risk, and market risks. Risk management is carried out in order to create predictability and stability for operating cash flows and values. The Company can use financial derivatives to hedge against risk relating to operations, financing, and investment activities. In 2020 the company entered into a fuel hedge contract with DNB for hedging of bunkers oil for the period 2021-2024.
The Group has adopted a risk management policy to identify, measure, and mitigate risks.
The krill-harvesting vessels, as well as the support vessel, operate in rough waters in Antarctica. Crew health and the working environment are important concerns for the company. Despite the demanding conditions, illness and accident rates onboard are low. ‘Safety first’ is key focus throughout the company’s different operations. Sick leave rates are low onboard the vessels, at the plant in Houston, and in the other office locations. In 2022, the company implemented a global and holistic approach for health and safety to integrate the production sites, vessels, and office spaces, in addition aligning strategic, tactical, and operational needs.# ESG
The key achievement has been the establishment of a management system and a full recovery process, enabling us to correctly identify, report, capture and investigate any incident, accident, or event that may occur. The company has established an emergency preparedness manual for the total business and an emergency response notification telephone system, which allows employees to report/notify an emergency incident anywhere in the world at any time. Aker BioMarine has put in place systems to ensure that crew members have access to medical attention, in case of injury or illness when vessels are operating far from shore. The onboard working environment is reported as good, as evidenced by the low crew turnover rate. The company aims to minimize personnel injuries, environmental harm, and vessel or property damage, and conducts systematic safety drills that prepare crew and onshore personnel for handling demanding scenarios that may occur on board or onshore. Personnel safety is important and efforts to further improve safety are ongoing. During 2022 the offshore operations had four employee injuries leading to lost time. In total, the offshore operations experienced 29 recordable incidents of various nature. At the plant in Houston, US there were no recordable incidents in 2022. There are no reports of significant injuries caused by other conditions associated with the company’s operations. The company views accidents and hazardous conditions with great concern. Incidents and procedures are reviewed regularly, and measures are implemented to avoid recurrence. The registered sick leave in the company’s offshore operation was 0.9% in 2022, up from 0.6% in 2021. At the Houston plant sick leave was 1.2% in 2022, up from 0.5% in 2021. In the other offices, the sick leave was 1.3% in 2022, up from 1.0% in 2021.
Aker BioMarine targets to reduce its operational footprint in all parts of the value chain. The main resources Aker BioMarine utilize are krill, energy, water, and land, where the most significant environmental impacts of the company’s activities relate to climate change, biodiversity and nature, recycling and waste management. The activities mostly impacting the environment are the capture of krill, energy consumption and emissions from the three vessels. Two vessels fishing in Antarctica and the support vessel that transports krill, supplies and crew from the fishing vessels. Energy consumption and emissions from the manufacturing facilities that produce krill products and the transport of these products to customers mainly in the US, Europe and Asia. Environmental sustainability has always been an integral part of Aker BioMarine’s operations and business model. Known for its transparent operations and voluntary measures to set industry best practice and contributions to Antarctic science, the company was the first krill fishery to receive the Marine Stewardship Council (MSC) certification in 2010, and its second re- certification 2020 for another 5 years, once again rated as state-of-the-art both on sustainability of the stock, limited ecosystem impact of operations and effective management of krill. Aker BioMarine’s Eco-Harvesting technology was designed and patented to efficiently harvest krill and reduce by-catch to a minimum compared to conventional trawling. The technology has evolved significantly and played an important role for krill fisheries being recognized by a scientific study in 2022 as one of the world’s cleanest fisheries. .Aker BioMarine’s ESG framework details our ambition to reach targets, such as reduction of CO 2 intensity by 50% in 2030 and the aim to be net zero in 2050. Targets also include 100% circularity in principal waste streams by 2030 and dedicated efforts to protect marine biodiversity and environment. In 2022, the company has developed an improved internal control procedure to secure progress along ESG indicators, and continued the work of the Climate and Decarbonization Committee (CDC), overseen by the Executive Management, dedicated to work strategically and tactically to ensure CO 2 emission reduction. The CO 2 emissions are disclosed in a separate section of the Annual Report. For Aker BioMarine, environmental sustainability is also about positive impact. The Company is committed to utilize its platforms and resources to increase scientific knowledge to the best for krill management and conservation. Examples are annual allocation of vessel days dedicated to scientific surveys and investigations of krill by marine scientists. Furthermore annual cash contributions secures the running of the Antarctic Wildlife Research Fund (AWR) which from 2015 to date has funded 22 Antarctic krill and ecosystem projects with the total of USD 1.4 million. Aker BioMarine established the circular solution company AION, which recycles the company’s own plastic streams and biological residue into new products and hence driving the company towards its zero-waste vision. In 2022, Aker BioMarine has continued to improve product waste through circular sales and re-purposing of traditional products. Aker BioMarine maintains an extensive stakeholder collaboration with authorities, science institutions and environmental NGOs that are engaged in the Antarctica specifically, as well as the broader community, in order to position marine resources as an important component into future foods and nutrients. For further information, see chapter 2 in the Annual report.
Driving equality and diversity through an engaged and well-respected workforce is a key enabler to delivering on the company’s overall strategy. Therefore, it is fundamental for Aker BioMarine to maintain a working environment with equal opportunities for all based on qualifications, regardless of gender, ethnicity, religion, age, sexual orientation, or disability. Aker BioMarine’s diverse workforce consists of approximately 40 nationalities and includes a wide range of competencies and insights, which serves to benefit both customers and the overall business. Aker BioMarine seeks to promote diversity and prevent gender discrimination in the workforce through clear recruitment requirements and the development of individuals and programs that support equal opportunity. This means that the company is committed to both promote and pay employees fairly, regardless of individual characteristics, and that individuals with the same jobs, with equal professional experience, who perform equally well, shall receive the same pay in Aker BioMarine. Salary reports identified certain differences with respect to equal pay, and the company is making necessary adjustments to align the identified differences, and in 2022 Aker BioMarine was able to reduce the gap by 6 % through the salary adjustment process. Further analysis is conducted to evaluate whether any differences in salary are linked, directly or indirectly, to gender. The female ratio in middle management positions is 44%, a significant improvement from the year before (24%). The management continue focus on improving and maintaining the gender balance in leadership positions in the years coming. Aker BioMarine has a low percentage of women in its fisheries in Antarctica and manufacturing in Houston. However, the company has a balanced mix of women and men in its other offices where 54% are women among the 269 employees. In 2022, Aker BioMarine invited employees to participate in an employee share purchase program. The program offers employees on active payroll in the Norwegian Group Companies to purchase ordinary shares in the company at a reduced offer price conditional upon a lock-up period of two years. The main purpose of the program is to align the interest between the shareholders and the Aker BioMarine employees and encourage participation in the long-term 3. Finance | Board of Directors Report Annual Report – 2022 54 value creation of Aker BioMarine. In 2022, a total of 51 647 shares were subscribed to by a total of 45 employees. For further details see section 2 in the Annual Report. The report on Corporate Social Responsibility, which is approved by the Board of Directors, is included in the Environmental, Social and Governance chapter.
Aker BioMarine is a public limited liability company organized under Norwegian law and with a governance structure based on Norwegian corporate law and other regulatory requirements. The company's corporate governance model is designed to provide a foundation for long-term value creation and to ensure good oversight. Aker BioMarine has seven board members, none of whom are members of the company's management and two of whom are employee representatives. Three of the board members are female and four are male. A majority of the board members are independent of the company management and significant business partners, and two of the shareholder-elected board members are independent of Aker ASA. The Chairman is elected by the General Meeting. The Board of Aker BioMarine establishes the overall principles for governance and control in Aker BioMarine ASA through the adoption of various governing documents. Aker BioMarine follows the Norwegian Code of Practice for Corporate Governance. The company's practice is largely in accordance with these recommendations. Aker BioMarine ASA holds a Directors and Officers Liability Insurance on behalf of the Board of Directors and the CEO As of 31 December 2022, Aker Capital AS held 77.7% of the shares in Aker BioMarine, and the CEO, through his wholly owned subsidiary KMMN Invest II AS, held 1.2%. Reference is made to the Corporate Governance Report (see chapter 2 in the Annual Report), which is approved by the Board of Directors.
The Company have published its Transparency Act Report on the company website; https://www.akerbiomarine.com/investor-other- reports-and-presentations .# Board of Directors Report
There have been no events after the balance sheet date.
The global omega-3 supplement market is, according to Grand View Research, expected to grow at an annual compounded rate of around 7- 8% towards 2030 largely attributable to the rising use of omega 3-based ingredients in the human diet to support brain and heart health. Further, krill and algae are expected to be the main growth drivers due to the declining availability of fish as the main ingredient. Aker BioMarine expects healthy demand in the aqua feed market. Aker BioMarine will continue to expand its sales and marketing efforts to develop the company’s existing and new markets with prospective leads and new customers, in addition to further increasing sales among its current customer-base. Asia is expected to be an important growth region for both Superba™ and QRILL Aqua. The company targets higher sales in its consumer brands business in the US. Aker BioMarine has historically observed annual variations in catch volumes, due to both weather conditions and the occurrence of krill in the various sub-areas in Antarctica. The company plans for average annual harvesting volumes of 55,000 – 60,000 metric tons, although there will still be seasonal and operational variations from year to year. Aker BioMarine aims long-term annual average company sales growth of around 15% p.a. The company continue to focus’ on the ongoing strategic innovation projects. For Lysoveta, the expected development includes scale-up of commercial and manufacturing activities in the US, that is the first target market. Aker BioMarine aims to have regulatory approval for product sale in the US by the end of 2023 with technical samples already available for research, and in 2022, the company signed an agreement with Trofi Nutritional Inc. with the aim to develop medical foods products based on Lysoveta. The Board recognizes that future events are uncertain in nature.
Aker BioMarine had at year-end a total equity of USD 378.7 million, implying an equity ratio of 46%. In addition there is available capacity under the debt facilities, and it is assessed that the entity is able to continue as a going concern. Management has close dialog with the bank group on financing and covenant levels for 2023. Therefore, pursuant to section 3-3a of the Norwegian Accounting Act, the Board of Directors confirms that the going concern assumption, on which the financial statements have been prepared, is deemed appropriate.
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Oslo 21 March 2023
The Board of Directors and CEO of Aker BioMarine
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AKER BIOMARINE GROUP ACCOUNTS
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
For the year ended 31 December
USD Millions
| Note | 2022 | 2021 | |
|---|---|---|---|
| Net sales | 2 | 277.2 | 262.1 |
| Cost of goods sold | 12 | -162.4 | -174.0 |
| Gross profit | 114.8 | 88.1 | |
| Selling, general and administrative expense | 4 | -86.5 | -85.7 |
| Depreciation, amortization and impairment (non-production assets) | 8, 9, 10 | -16.4 | -19.2 |
| Other operating income | 2 | 10.2 | 3.1 |
| Operating profit (loss) | 22.1 | -13.7 | |
| Financial income | 5 | 4.0 | 21.3 |
| Financial expenses | 5, 18 | -22.0 | -15.7 |
| Net foreign exchange gain/loss | 5, 18 | 8.1 | 0.6 |
| Profit (loss) before tax | 12.2 | -7.4 | |
| Tax expense | 7 | -2.2 | -0.6 |
| Net profit (loss) | 10.0 | -8.0 | |
| Earnings per share to equity holders of Aker BioMarine ASA | |||
| Basic | 0.11 | -0.09 | |
| Diluted | 0.11 | -0.09 |
AKER BIOMARINE GROUP ACCOUNTS
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the year ended 31 December
USD Millions
| Note | 2022 | 2021 | |
|---|---|---|---|
| Net profit (loss) | 10.0 | -8.0 | |
| Change in fair value cash flow hedges | 19 | -1.9 | 5.2 |
| Total items that may be reclassified to profit and loss | -1.9 | 5.2 | |
| Total other comprehensive income (loss) | -1.9 | 5.2 | |
| Total comprehensive income (loss) | 8.1 | -2.8 |
AKER BIOMARINE GROUP ACCOUNTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As per 31 December
USD Millions
| Note | 2022 | 2021 | |
|---|---|---|---|
| ASSETS | |||
| Property, plant and equipment | 8, 10, 19 | 333.2 | 327.9 |
| Right-of-use assets | 18 | 9.9 | 11.3 |
| Intangible assets and goodwill | 9, 10 | 162.7 | 171.5 |
| Contract cost | 2 | 5.2 | 7.2 |
| Non-current interest-bearing receivables | 2.5 | - | |
| Investments in equity-accounted investee | 1 | 10.2 | 0.1 |
| Total non-current assets | 523.7 | 518.0 | |
| Inventories | 12 | 182.7 | 138.2 |
| Trade receivable and other current assets | 13, 19 | 82.7 | 77.7 |
| Derivative assets | 19 | 11.0 | 12.5 |
| Cash and cash equivalents | 14, 19 | 22.3 | 11.1 |
| Total current assets | 298.7 | 239.5 | |
| Total assets | 822.4 | 757.5 | |
| LIABILITIES AND OWNERS' EQUITY | |||
| Share capital | 23 | 75.9 | 75.9 |
| Other paid-in equity | 493.7 | 493.6 | |
| Total paid-in equity | 569.6 | 569.4 | |
| Translation differences and other reserves | 3.5 | 5.4 | |
| Retained earnings | -194.4 | -204.4 | |
| Total equity | 378.7 | 370.4 | |
| Interest-bearing debt | 15, 18, 19 | 333.6 | 294.1 |
| Deferred tax liability | 7 | 5.4 | 4.9 |
| Other non-interest-bearing non-current liabilities | 16 | 0.1 | 10.8 |
| Total non-current liabilities | 339.0 | 309.8 | |
| Interest-bearing current liabilities | 15, 18, 19 | 47.6 | 30.7 |
| Accounts payable and other payables | 17, 19 | 57.1 | 46.6 |
| Total current liabilities | 104.7 | 77.3 | |
| Total liabilities | 443.7 | 387.1 | |
| Total equity and liabilities | 822.4 | 757.5 |
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CONSOLIDATED STATEMENTS OF CASH FLOW
for the year ended 31 December
USD Millions
| Note | 2022 | 2021 | |
|---|---|---|---|
| Net profit (loss) | 10.0 | -8.0 | |
| Tax expenses | 7 | 2.2 | 0.6 |
| Net interest and guarantee expenses | 5 | 19.7 | 13.7 |
| Interest paid | -17.6 | -12.8 | |
| Interest received | 0.3 | - | |
| Taxes paid | 7 | -2.8 | 3.3 |
| Other P&L items with no cash flow effect | -10.7 | -21.1 | |
| Impairment charges | 10 | - | 5.8 |
| Depreciation and amortization | 8, 9 | 51.4 | 53.0 |
| Foreign exchange loss (gain) | 0.6 | -0.3 | |
| Change in accounts receivable, other current receivables, inventories, accounts payable and other | -38.0 | -31.6 | |
| Net cash flow from operating activities | 15.1 | 2.6 | |
| Payments for property, plant and equipment | 8 | -40.5 | -78.7 |
| Payments for intangibles | 9 | -5.6 | -2.4 |
| New long-term receivable interest bearing | -2.0 | - | |
| Instalment short/long-term receivable, interest bearing | 2.8 | - | |
| Earn Out payment | 16 | -11.1 | - |
| Net cash flow from investing activities | -56.4 | -81.1 | |
| Proceeds from issue of debt and change in overdraft facility | 15, 19 | 16.5 | 4.2 |
| Instalment interest-bearing debt | 15, 19 | -14.2 | -260.3 |
| Proceeds from issue of external interest-bearing debt | 15, 19 | 50.0 | 335.0 |
| Net funds from issue of shares | 15 | 0.2 | - |
| Net cash flow from financing activities | 52.5 | 78.9 | |
| Net change in cash and cash equivalents | 11.2 | 0.4 | |
| Cash and cash equivalents as of 1 January | 14 | 11.1 | 10.7 |
| Cash and cash equivalents as of 31 December | 14 | 22.3 | 11.1 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share | Share | Other paid-in | Other | Retained | Total
USD Millions | capital | premium | capital | reserves | earnings | equity
Balance as of 1 January 2021 | 75.9 | 529.9 | -36.3 | 0.1 | -196.4 | 373.2
Net profit (loss) for the year | - | - | - | - | -8.0 | -8.0
Other comprehensive income (loss) | - | - | - | 5.2 | - | 5.2
Total comprehensive income (loss) | - | - | - | 5.2 | -8.0 | -2.8
Balance as of 31 December 2021 | 75.9 | 529.9 | -36.3 | 5.4 | -204.4 | 370.4
Balance as of 1 January 2022 | 75.9 | 529.9 | -36.3 | 5.4 | -204.4 | 370.4
Net profit (loss) for the year | - | - | - | - | 10.0 | 10.0
Other comprehensive income (loss) | - | - | - | -1.9 | - | -1.9
Total comprehensive income (loss) | - | - | - | -1.9 | 10.0 | 8.1
Capital increase | - | 0.2 | - | - | - | 0.2
Total transactions with owners | - | 0.2 | - | - | - | 0.2
Balance as of 31 December 2022 | 75.9 | 530.1 | -36.3 | 3.5 | -194.4 | 378.7
These consolidated financial statements are for the reporting entity Aker BioMarine ASA (the “Company”) and its subsidiaries (together, the “Group”). The Company is a limited liability company domiciled in Norway with its registered office at Oksenøyveien 10, 1366 Lysaker, Norway. The Group is a global supplier of krill-derived products, with a fully owned supply chain. The operations of the Group spans from harvesting krill in the Antarctica with vessels owned by the Group, includes distribution world-wide from Uruguay, and further processing of the krill into oil-products in the United States. These consolidated financial statements were authorized for issue by the Board of Directors’ and the CEO on 21 March 2023. The consolidated financial statements will be submitted to Aker BioMarine’s annual General Assembly on 20 April 2023 for final approval.
The consolidated financial statements have been prepared in accordance with IFRS and the IFRS Interpretations Committee (IFRIC) interpretations as approved by the IASB and adopted by the EU as of 31 December 2022. The consolidated financial statements of Aker BioMarine AS have been prepared on a going concern basis under the historical cost convention, except as otherwise described in the sections below where fair value is required for derivatives and contingent consideration. Certain comparative figures may be reclassified to conform to the presentation adopted in the current year. In these consolidated financial statements amounts have been rounded to the nearest million USD, unless otherwise stated. As a result of rounding differences, amounts may not add up to the total.# Summary of Group accounting policies
Accounting policies that relate to the consolidated financial statements in general are set out below, while the accounting policies related to specific assets, liabilities or financial statements line items are included in the corresponding note disclosure. All accounting policies have been consistently applied to all the years presented, except for the accounting policies related to leasing agreements. IFRS 16 Leases was implemented as of January 1, 2019. See Note 18 for additional information.
Transactions recorded in the financial statements of each subsidiary are done in its functional currency, i.e. the currency that best reflects the primary economic environment in which the entity operates. The consolidated financial statements are presented in US Dollars (“USD”), which is the Group’s presentation currency as the Group’s cash flow and economic returns are principally denominated in USD and is the functional currency of each key subsidiary. The functional currency of the parent company Aker BioMarine ASA is USD.
The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities. The estimates and judgments are based on historical experience and other factors, including expectations of future events that are believed to be reasonable, and constitute management’s best judgment at the date of the consolidated financial statements. In the future, actual results may differ from those estimates. Where appropriate, present values are calculated using discount rates reflecting the currency and maturity of the items being valued. Further details of critical estimates and significant judgments are set out in the related notes to the consolidated financial statements.
The critical estimates that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year results relate to:
* Technical assessments when estimating the useful life of the Group’s vessels and machinery (see Note 8),
* Estimating the recoverable amount of the tangible and intangible assets, goodwill and RoU (not explained) assets allocated to the Krill cash generating unit when conducting impairment tests (see Note 9 and 10),
* Allocation of production cost between products produced in the Ingredients segment (see Note 12).
The significant judgements that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognized in the financial statements relate to:
* Expenses included as part of the indirect production costs capitalized as a part of the inventory and the measurement of the krill- based products held as Inventories at year end (see Note 12),
* Recognition and measurement of expenditure on vessels and machinery included in Property, plant and equipment (see Note 8).
There are no changes in the accounting policies for the consolidated financial statements for the year ending 31 December 2022 as compared to the accounting policies for the 2021 reporting year. The new IFRS standards applicable for reporting periods on or after 1 January 2022 adopted by the Group have not had a material impact for the Group’s financial reporting. None of the issued, not yet effective IFRS standards, amendments to such standards or IFRIC interpretations are expected to have significant effects for the Group’s financial reporting.
The financial position and performance of the group was particularly affected by the following events and transactions during the reporting period:
* Aion transaction: In April 2022, a third party obtained control of the Group’s investment in Aion AS leading to derecognition of consolidated assets and liabilities and a subsequent gain recognized as ‘Other operating income’ in the Statement of Profit or Loss (see Note 2). The Group’s involvement in Aion is limited to board participation and purchase of circular products on market terms. The investment in Aion is treated as ‘Investments in equity-accounted investees’ in the Statement of Financial Position.
* Construction of protein plant: During the year the Group has capitalized investments into the new protein plant (see Note 8). The plant will be finalized in 2023.
These financial statements have been prepared under the assumption of going concern. Prior to the authorization of these financial statements, Management has been in dialog with the bank group regarding additional financing alternatives and covenants for 2023.
Revenue primarily stems from the sale of Qrill™ branded ingredients, or Krill oil during the year, used either in the feed industry or within human health and nutrition. Lang, the distributor of private labels within the Brands segment operates within the human health and nutrition markets but also sells other natural supplements in addition to Krill oil. The Group’s main performance obligation is related to the delivery of agreed volumes of the above-mentioned products. Some customers have longer term frame agreements, agreeing the prices of the product per MT/KG, but all sales are based on individual purchase orders detailing the volume to be delivered at a certain point in time, at a designated location.
The Group recognizes as revenue the agreed transaction price in a contract with a customer at the time when the Group transfers the control of a distinct product or service to the customer. Ordinary purchase orders are normally the contracts with the customer which create enforceable rights and obligations. Volume discounts are the dominant sales incentives used by Aker BioMarine. Volume discounts with retrospective effect are systematically accrued and recognized as reduction of revenue based on the best estimate of the amounts potentially due to the customer.
Under IFRS 15 the Group’s revenue from sale of Krill oil and Qrill™ is recognized at a point in time, when the customer obtains control over the goods. Control is transferred to the customer according to agreed delivery terms, which is based on standardized contract templates as published by the International Chamber of Commerce (set forth in the Incoterms 2010). All sales are conducted using F-terms (delivery terms where the risk and responsibility for any cost of transport, insurance etc. are transferred to the buyer when the goods are on board the vessel/truck) or C-terms (delivery terms where seller pays the costs and freight to bring the goods to the port of destination), meaning the risk is transferred upon handing the goods over to the carrier engaged by either the customer or Group, respectively.
The main performance obligations for the Group are related to the sale of goods of specified amounts and quality to customers. For a significant part of the sales, the Group organizes and pays for shipping of the goods (C-terms). The Group has assessed that for these sales, there are two performance obligations, and that the Group acts as an agent for the shipping services. As a result, shipping revenue and related shipping costs are netted in the consolidated statement of profit or loss. The shipping commission for transport of goods is considered by the Group to be immaterial and further, the Group's delivery obligation is satisfied at the same time as the control of the goods is transferred to the customers. Consequently, the shipping commission is not separated from the revenues of sale of goods.
The goods are sold with standard warranties that the goods sold comply with agreed upon specification and condition. The Group does not have any significant obligations for returns or refunds, and any warranties would be accounted for using IAS 37 Provisions, contingent liabilities and contingent assets. Payment terms are usually between 30-60 days. The Group does not have any contracts with a significant financing component.
| Year ended 31 December | USD Millions | ||
|---|---|---|---|
| 2022 | 2021 | ||
| Norway | 26.8 | 22.9 | |
| EMEA | 50.9 | 54.0 | |
| Americas | 144.3 | 138.6 | |
| Asia Pacific | 55.2 | 46.6 | |
| Total | 277.2 | 262.1 |
During the reporting periods the Group has had one customer exceeding 16.1% of Net sales. In 2021, 12.6% of the Net sales was towards this customer. The revenue from this customer is attributable to the Ingredients segment. The Group’s three largest customers in terms of revenue accounted for 34.5% of the revenue in 2022 (2021: 32.8%). North America is the Group’s largest market which accounted for USD 134.8 million of total Net sales (2021: USD 130.7 million).
The Group has recognized an incremental cost of obtaining customer contracts, which the Group expects to recover. A success fee of USD 10 million was paid upon signing of a significant contract in the Brands segment in 2020 and this contract cost is being amortized over 5 years. The carried amount as of 31 December 2022 was USD 5.2 million. The Group expects to recover this cost from future sales and the Group would not have incurred these incremental costs if a certain contract had not been obtained.
Liabilities with customers is less than the reporting threshold as of 31 December 2022 (2021: USD 0.1 million), the liabilities relate to prepayments from customers. The timing of revenue recognition, billings, and cash collections results in billed trade receivables (Note 13 and 19) and prepayments from customers (contract liabilities).# 3. Finance | Notes to the consolidated financial statements
The Group discloses segment information and identifies reportable segments in accordance with IFRS 8 Operating Segments. IFRS 8 requires management to report segment information according to the organization and reporting structure used by the chief operating decision maker (CODM). The Group defines the CODM as the Executive Management Team (EMT) and the CEO.
The Group’s operations have historically occurred in one reportable segment with the production and sale of krill products. This is the Ingredients business segment. Following the acquisition of Lang on 1 March 2019, the Group has two reportable segments. The production and sale of krill products remains the same, but with Lang there is now a distribution segment, the Brands business. The two segments are operated and managed separately, and financial results are measured and reported on a stand- alone basis for the two operating segments.
The key financial metric that management uses for decision making is Adjusted EBITDA. Transactions between the two segments are eliminated in the ‘Adjustments’ column, as well as group adjustments in relation to financial items (such as changes in earn-outs) and depreciation and amortization on group assets (such as customer lists acquired in a transaction).
The Ingredients business consists of offshore harvesting and production activities, the logistical operations and the onshore manufacturing and sale of krill oil products globally to distributors and feed producers. This segment sells the products Krill oil and Krill Meal. This was the Group’s core business and only identified segment up until the acquisition of Lang on 1 March 2019.
The Brands segment is the human consumption distribution business. As of 31 December 2022, the Brands segment comprises the group legal entities Lang Pharma Nutrition LLC (Lang), Epion Brands LLC (Epion) and the holding company New Ride LLC. Lang acquires raw materials derived from krill, fish and plants. These raw materials are then processed and packaged, labeled and sold to retailers in the US market. The Brands segment sells the products under the brand name Qrill TM Pet and other brand names.
Recognition and measurement applied to the segment reporting is consistent with the accounting principles applied when preparing the financial statements. Transactions between segments and internally within the Ingredients segment follow recognized principals of transfer pricing. The geographical distribution of revenue is presented in Note 2. This is not part of the monthly/bi-monthly segment reporting to management.
Segment financial information is given in the tables below for the years 2022 and 2021.
Operating segments 2022:
| Unallocated & Eliminations | Ingredients | Brands | Total | USD Millions |
|---|---|---|---|---|
| External sales | 128.7 | 108.2 | - | 236.9 |
| Internal sales | 47.9 | 6.7 | -14.3 | 40.3 |
| Cost of goods sold | -101.2 | -81.7 | 20.5 | -162.4 |
| Gross profit | 75.4 | 33.2 | 6.2 | 114.8 |
| SG&A | -55.7 | -30.8 | - | -86.5 |
| Depreciation, amortization and impairment | -9.6 | -6.8 | - | -16.4 |
| Other operating income/(cost), net | 10.1 | 0.2 | - | 10.2 |
| Operating profit | 20.2 | -4.2 | 6.2 | 22.1 |
| Net financial items | -6.1 | -3.9 | - | -10.0 |
| Tax expense | -0.5 | -1.7 | - | -2.2 |
| Net profit (loss) | 13.6 | -9.8 | 6.2 | 10.0 |
| Depreciation, amortization and impairment (Note 8) | 44.6 | 6.8 | - | 51.4 |
| EBITDA | 64.8 | 2.6 | 6.2 | 73.6 |
| Adjusted EBITDA | 60.2 | 2.6 | 6.2 | 69.0 |
Unallocated & Balance sheet items 2022:
| Unallocated & Eliminations | Ingredients | Brands | Total | USD Millions |
|---|---|---|---|---|
| Property, plant and equipment | 332.9 | 0.3 | - | 333.2 |
| Right-of-use assets (leasing) | 9.7 | 0.2 | - | 9.9 |
| Intangible assets | 92.6 | 70.1 | - | 162.7 |
| Cash and cash equivalents | 9.9 | 12.4 | - | 22.3 |
| Interest-bearing debt | -311.8 | -69.4 | - | -381.2 |
| Inventory | 138.0 | 39.2 | 5.5 | 182.7 |
| Net interest free asset and liabilities | 53.6 | 1.0 | -5.5 | 49.1 |
| Total equity | 324.9 | 53.8 | - | 378.7 |
Operating segments 2021:
| Unallocated & Eliminations | Ingredients | Brands | Total | USD Millions |
|---|---|---|---|---|
| External sales | 83.3 | 104.1 | - | 187.4 |
| Internal sales | 86.3 | 6.3 | -17.9 | 74.7 |
| Cost of goods sold | -109.0 | -81.7 | 16.7 | -174.0 |
| Gross profit | 60.6 | 28.7 | -1.2 | 88.1 |
| SG&A | -59.2 | -26.5 | - | -85.7 |
| Depreciation, amortization and impairment | -17.2 | -2.0 | - | -19.2 |
| Other operating income/(cost), net | 3.1 | - | - | 3.1 |
| Operating profit | -12.7 | 0.2 | -1.2 | -13.7 |
| Net financial items | -10.6 | 16.9 | - | 6.3 |
| Tax expense | 1.2 | -1.8 | - | -0.6 |
| Net profit (loss) | -22.1 | 15.3 | -1.2 | -8.0 |
| Depreciation, amortization and impairment (Note 8) | 54.9 | 2.0 | - | 56.9 |
| EBITDA | 42.5 | 2.2 | -1.2 | 43.2 |
| Adjusted EBITDA | 45.4 | 2.5 | - | 47.9 |
Unallocated & Balance sheet items 2021:
| Unallocated & Eliminations | Ingredients | Brands | Total | USD Millions |
|---|---|---|---|---|
| Property, plant and equipment | 327.5 | 0.4 | - | 327.9 |
| Right-of-use assets (leasing) | 10.8 | 0.4 | - | 11.2 |
| Intangible assets | 104.7 | 66.9 | - | 171.6 |
| Cash and cash equivalents | 5.9 | 5.2 | - | 11.1 |
| Interest-bearing debt | -324.8 | - | - | -324.8 |
| Inventory | 104.2 | 39.4 | -5.4 | 138.2 |
| Net interest free asset and liabilities | 76.6 | -46.8 | 5.4 | 35.2 |
| Total equity | 304.9 | 65.5 | - | 370.4 |
The Executive Management Team (EMT) evaluates the performance based on Adjusted EBITDA. This metric is defined as operating profit before depreciation, amortization, write-downs and impairments, and special operating items. Special operating items include gains or losses on sale of assets, if material, restructuring expenses and other material items which are not primarily related to the period in which they are recognized or special in nature compared to ordinary operational income or expenses. See description of the Alternative Performance Measures (APM) attached to the consolidated financial statement.
The EMT has provided the following information:
| Year ended 31 December | USD Millions | |
|---|---|---|
| 2022 | 2021 | |
| Krill oil | 158.6 | 163.8 |
| Krill meal | 105.1 | 83.1 |
| Qrill™ Pet and other products | 13.0 | 15.4 |
| Other income | 10.6 | 3.1 |
| Total revenue and other income | 287.3 | 265.4 |
| Total operating expenses before depreciation, amortization and impairment | -213.8 | -222.2 |
| Special operating items | -4.5 | 4.7 |
| Adjusted EBITDA | 69.0 | 47.9 |
The following table reconciles Adjusted EBITDA to Net loss in the consolidated statements of profit or loss.
| Year ended 31 December | USD Millions | |
|---|---|---|
| 2022 | 2021 | |
| Net loss | 10.0 | -8.0 |
| Tax expense | 2.2 | 0.6 |
| Financial income | -4.0 | -21.3 |
| Financial expenses | 22.0 | 15.7 |
| Net foreign exchange gain/loss | -8.1 | -0.6 |
| Operating profit | 22.1 | -13.7 |
| Depreciation, amortization and impairment | 51.4 | 56.9 |
| EBITDA | 73.5 | 43.2 |
| Special operating items | -4.5 | 4.7 |
| Adjusted EBITDA | 69.0 | 47.9 |
The following table reconciles Special operating items.
| Year ended 31 December | USD Millions | |
|---|---|---|
| 2022 | 2021 | |
| La Mance operating cost and gain from sale | - | 0.4 |
| Restructuring and improvement program | 1.3 | -2.7 |
| Transaction related costs- SG&A | - | -1.3 |
| Oslo Børs listing | - | -1.1 |
| Aion transaction | -5.8 | - |
| Special operating items | -4.5 | -4.7 |
The presentation of operating expenses in the consolidated statements of profit or loss is based on function of the expenses. Production and operating expenses are recognized in the same period as the corresponding revenue from sale of product is recognized. Salaries and payroll expenses not related to production, sales and distribution costs, and other general and administrative costs are recognized when they occur or when the Group has a liability for future expenses. Production and operating expenses allocated to product is presented within Note 12 Inventories.
Selling, General and Administrative expenses consists of:
| Year ended 31 December | USD Millions | |
|---|---|---|
| 2022 | 2021 | |
| Sales and Distribution Costs | -67.7 | -63.5 |
| Research and Development | -4.0 | -3.0 |
| Administrative Costs | -14.8 | -19.2 |
| Total | -86.5 | -85.7 |
Sales and Distribution costs are all costs related to selling, marketing, and distributing and storing the goods world-wide. Research and Development costs represent the Innovation department where ongoing studies within the application and use of krill as an ingredient both for human and for animal feed is being expensed. The department also works on early phase product development, finding new application for the raw material, and bringing this out to the market. Administrative costs represent the head office costs which includes the management group, finance, and Transformation (sustainability, strategy and IT), providing services to the entire Group.
During 2022 the Group received grants of USD 0.36 million (2021: USD 0.68 million). The grants are partly included in the Research and Development and partly ‘Asset under construction’ to net the costs that the grants are intended to compensate. There are not any unfulfilled conditions or other contingencies on these grants.
The below schedule describes the total salary costs of the Group. Salaries from the onshore and offshore part of the Group is allocated to inventory, as presented in Note 12. Selling, general and administrative salaries specifies the salary part of the total expenses of USD 86.5 million (2021: USD 85.7 million), as also presented within Note 4.# 3. Finance
Annual Report – 2022 | 67
Remuneration to the Group auditors (excluding VAT):
PwC is the Group auditor of Aker BioMarine ASA (KPMG for 2021 and earlier years). The following table shows the fees to the appointed auditors for 2022 and 2021. For both categories the reported fee is the recognized expense for the year.
| Year ended 31 December | USD Millions | |
|---|---|---|
| 2022 | 2021 | |
| Audit fees | -0.3 | -0.3 |
| Other audit and attestation services | -0.1 | -0.1 |
| Fees for tax services | -0.1 | - |
| Total | -0.5 | -0.4 |
Note 5 – Financial income and expenses
Financial income comprises interest income on financial investments and foreign exchange gains recognized in the consolidated statement of profit or loss. Financial expenses include interest expense and guarantee fees.
| Year ended 31 December | USD Millions | |
|---|---|---|
| 2022 | 2021 | |
| Interest income, bank deposits | 0.2 | - |
| Interest income loans and receivables (amortized cost) | 0.4 | - |
| Subsidiaries- shares change in fair value, impairment, gain and losses | 3.4 | - |
| Earn Out adjustment | - | 21.1 |
| Other financial income | - | 0.2 |
| Total financial income | 4.0 | 21.3 |
| Interest expense on financial liabilities at amortized cost | -20.3 | -13.7 |
| Other financial expenses | -1.7 | -2.0 |
| Total financial expenses | -22.0 | -15.7 |
| Foreign exchange gains (realized and unrealized) | 14.3 | 6.0 |
| Foreign exchange losses (realized and unrealized) | -6.2 | -5.3 |
| Foreign exchange gains/losses net | 8.1 | 0.6 |
| Net financial expenses | -9.9 | 6.2 |
Other financial expenses include provision and guarantee expenses paid to DNB.
Capitalized borrowing costs
Borrowing and refinancing costs have been capitalized. The applied interest rate is the CIRR (Commercial Interest Reference Rates).
| Year ended 31 December | USD Millions | |
|---|---|---|
| 2022 | 2021 | |
| Endurance | 0.4 | 0.5 |
| Refinancing - New Bank Syndicate | 1.4 | 1.9 |
| Total | 1.8 | 2.4 |
Annual Report – 2022 | 68 | 3. Finance | Notes to the consolidated financial statements
Note 6 – Asset acquisition and business combinations
There have been no material business combinations or asset acquisitions during 2022 and 2021.
Note 7 – Income tax
The Group is headquartered in Norway and pays taxes according to the rates applicable in the countries and states in which it operates. All the vessels operate under Norwegian tax jurisdiction. Most taxes are recorded in the statement of profit or loss and relate to taxes payable for the reporting period (current tax), but also deferred taxes. Deferred tax is calculated based on the differences between the accounting value and tax value of assets and liabilities at the reporting period date using the applicable tax rate.
Reconciliation of nominal statutory tax rate to effective tax rate:
| Year ended 31 December | USD Millions | |
|---|---|---|
| 2022 | 2021 | |
| Profit (loss) before tax | 12.2 | -7.4 |
| Calculated income tax at statutory rate of 22% | -2.7 | 1.6 |
| Tax differential Norway and abroad | -0.5 | 0.2 |
| Unrecognized change in deferred tax assets | -5.8 | -6.9 |
| Permanent differences | - | -0.5 |
| Currency translation and other | 6.8 | 5.0 |
| Total tax expense | -2.2 | -0.6 |
| Effective tax rate | 18% | -8% |
* The Group files its tax return in NOK
Deferred tax assets comprise:
| Year ended 31 December | USD Millions | |
|---|---|---|
| 2022 | 2021 | |
| Property, plant and equipment and intangible assets | -10.6 | -12.6 |
| Inventory | - | 1.5 |
| Tax losses carried forward | 60.8 | 67.0 |
| Interest rate deductability carry forward | 13.0 | 11.0 |
| Other | 2.7 | - |
| Deferred tax assets | 65.9 | 66.9 |
| Unrecognized deferred tax assets | -71.3 | -71.8 |
| Recognized deferred tax asset ( liabilities) | -5.4 | -4.9 |
Current income tax expenses relate to subsidiaries in US (21% Federal tax rate) and Australia (30%). There were no changes in corporate tax rates in these countries over 2022 and 2021. In Norway the corporate tax rate was reduced from 23% to 22% in 2019 and is unchanged in 2022. The recognized deferred tax liability of USD 5.4 million relates to the entities in the US. The movement in deferred tax assets from USD 71.8 million in 2021 to USD 71.3 million in 2022 is mainly due to decrease in taxable losses, interests where deductibility has been denied, and temporary differences related to the Group’s fixed and intangible assets. Based on the historical losses of the Group, it was concluded that deferred tax assets could not be recognized in the consolidated statement of financial position as of 31 December 2022 or 2021. Of the Group’s tax losses carried forward, USD 0.7 million was in the US subsidiary Aker BioMarine Manufacturing LLC, whereas the remaining tax loss carried forward was with Aker BioMarine ASA and Aker BioMarine Antarctic AS, both Norwegian legal entities.
Annual Report – 2022 | 69 | 3. Finance | Notes to the consolidated financial statements
Note 8 – Property, plant and equipment
Property, plant and equipment are recorded at cost, less any accumulated depreciation and any accumulated impairment losses. Depreciation is recognized on a straight-line basis over the estimated useful lives of each major component of property, plant and equipment. Assets under construction are not depreciated until the items are available for use as intended by management. Expenditures to replace a component of property, plant and equipment are capitalized if it is probable that future economic benefits associated with the asset will flow to the Group and the costs can be measured reliably. Gains and losses are recognized upon asset de-recognition. The costs of consumables used, and day-to-day maintenance of property, plant and equipment are expensed as incurred. Costs incurred for major inspections and overhauls or to improve a vessel’s operating efficiency, functionality or safety are capitalized.
Movements in property, plant and equipment in 2022
| USD Millions | Vessels, transportation equipment, etc. | Machinery | Asset under construction | Buildings and Land | Total |
|---|---|---|---|---|---|
| Acquisition cost as of 1 January 2022 | 285.4 | 163.2 | 25.7 | 18.8 | 493.1 |
| Investments | 10.1 | 7.7 | 21.9 | 0.8 | 40.5 |
| Asset retirements | -12.6 | -21.3 | - | - | -33.9 |
| Deconsolidation | - | -0.4 | - | - | -0.4 |
| Other reclassifications | 0.8 | -0.2 | -1.0 | - | -0.4 |
| Acquisition cost as of 31 December 2022 | 283.7 | 149.0 | 46.5 | 19.6 | 498.8 |
| Acc. depreciation and impairment as of 1 January 2022 | -89.8 | -68.7 | -2.7 | -4.0 | -165.2 |
| Depreciation for the year | -18.9 | -15.2 | - | -0.7 | -34.8 |
| Asset retirements | 12.6 | 21.4 | - | - | 34.0 |
| Other reclassifications | - | 0.4 | - | - | 0.4 |
| Acc. depreciation and impairment as of 31 December 2022 | -96.1 | -62.1 | -2.7 | -4.7 | -165.6 |
| Book value as of 31 December 2022 | 187.6 | 86.9 | 43.8 | 14.9 | 333.2 |
| Depreciation period | 10-30 years | 3-20 years | 30-50 years | ||
| Depreciation method | Straight-line | Straight-line | Straight-line |
Annual Report – 2022 | 70 | 3. Finance | Notes to the consolidated financial statements
Major inspections of vessels are performed on a regular basis as required by the classification society, such as Det Norske Veritas and according to laws and regulations. The costs of such inspections are, including replacement spares and labor costs, capitalized and amortized over the average expected life between major inspections. All other costs relating to maintenance of vessels is charged to the statement of profit or loss on consumption or as incurred. Depreciation of vessels is included in the cost of inventory conversion (see Note 12).
Movements in property, plant and equipment in 2021
| USD Millions | Vessels, transportation, equipment, etc. | Machinery | Asset under construction | Buildings and Land 2) | Total |
|---|---|---|---|---|---|
| Acquisition cost as of 1 January 2021 | 206.6 | 157.3 | 12.5 | 18.6 | 395.0 |
| Investments | 6.7 | 6.4 | 65.5 | 0.2 | 78.8 |
| Sale of vessel | -1.4 | -0.5 | - | - | -1.9 |
| Other reclassifications 1) | 73.5 | - | -52.3 | - | 21.2 |
| Acquisition cost as of 31 December 2021 | 285.4 | 163.2 | 25.7 | 18.8 | 493.1 |
| Acc. depreciation and impairment as of 1 January 2021 | -69.7 | -52.9 | -2.7 | -3.2 | -128.5 |
| Depreciation for the year | -18.9 | -15.9 | - | -0.5 | -35.3 |
| Impairment | -1.8 | - | - | -0.3 | -2.1 |
| Other reclassifications 1) | 0.6 | 0.1 | - | - | 0.7 |
| Acc. depreciation and impairment as of 31 December 2021 | -89.8 | -68.7 | -2.7 | -4.0 | -165.2 |
| Book value as of 31 December 2021 | 195.6 | 94.5 | 23.0 | 14.8 | 327.9 |
| Depreciation period | 10-30 years | 3-20 years | 30-50 years | ||
| Depreciation method | Straight-line | Straight-line | Straight-line |
1) Net Other reclassifications include reclassifications payments related to construction of a new charter vessel from Asset under construction to prepayment. See Note 13 Trade receivable and other current assets.
2)
Reconciliation depreciation and amortization
| USD Millions | 2022 | 2021 |
|---|---|---|
| Depreciation for the year of Property, plant & equipment | (34.8) | (35.3) |
| Impairment Property, plant & equipment | - | (2.1) |
| Amortization for the year of Intangible assets | (10.2) | (11.9) |
| Amortization for the year of Contract cost | (2.0) | (2.0) |
| Leasing (ROU) depreciation | (4.4) | (5.6) |
| Total | (51.4) | (56.9) |
| Depreciation and amortization related to production assets and included in cost to inventory | (35.0) | (37.7) |
| Depreciation and amortization related to other assets | (16.4) | (19.2) |
| ## Annual Report – 2022 71 | ||
| The Group’s total depreciation, amortization, and impairment is presented in the above schedule. As compared to the consolidated statement of profit or loss the USD 16.4 million (2021: USD 19.2 million) relates to depreciation and amortization of assets not directly used in the production of goods, and therefore recognized as depreciation, amortization and impairment in the statement of profit or loss. Other assets primarily consist of the customer portfolios recognized following the business combinations /asset acquisitions of Lang, Neptune and Enzymotec, and the impairment of customer portfolios and trademarks. Inventoriable depreciation mainly consists of the Group’s operating harvesting vessels and the manufacturing plant in Houston, Texas, amounting to USD 35.0 million (2021: USD 37.7 million). |
Investments in 2022: Investments in machinery and vessels are mainly installments and harvesting equipment on the vessels. Assets under construction comprise the investments the Group has in Understory and Lysoveta initiatives. The Group has had its annual shipyard in Q4-22 where all the vessels were upgraded. Shipyard expenses amounted to USD 12 million in 2022.
Asset retirements in 2022: Asset retirements mainly include machinery and harvesting equipment. All components that have been retired were fully depreciated. See Note 18 Leasing of right-of-use assets. The decrease in depreciation of fixed asset from 2021 to 2022 is mainly related to asset retirement. As of 31 December 2022, the Group has USD 7.4 million in commitments for further investments in property, plant and equipment (2021: USD 10.0 million). For details on mortgages and pledging of security, see Note 15.
Intangible assets, acquired individually or as a group, are recognized at cost when acquired. Intangible assets with finite useful lives are carried at cost less accumulated amortization, recognized on a straight-line basis over their estimated useful lives, and accumulated impairment losses. The estimated useful life and amortization method are reviewed at the end of each reporting period, and assets are tested for impairment if impairment indicators exist. Intangible assets acquired in a business combination are recognized at fair value separately from goodwill when they arise from contractual or legal rights or can be separated from the acquired entity and sold or transferred. Intangible assets with indefinite useful lives are carried at cost less accumulated impairment losses. These assets are not amortized, but are tested for impairment annually, and more frequently if indicators of possible impairment are observed, in accordance with IAS 36.
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. Goodwill is not amortized, and thus tested for impairment annually, and more frequently if indicators of possible impairment are observed. Goodwill is allocated to the cash generating units ("CGU"), which are expected to benefit from synergies of the combination. Each unit to which goodwill is allocated represents the lowest level within the Group at which goodwill is monitored for internal management purposes and reporting.
Development Expenditures for research activities performed to gain new scientific, technical or other knowledge are expensed when incurred. Development expenditures are capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits probable and the Group intends to and has adequate resources to complete development and to use or sell the asset. The amount capitalized includes the cost of materials and direct attributable expenses. Additions to development in 2022 include Understory (protein product project) and development of other new products.
License agreements acquired separately are measured at cost. Following initial recognition, the Group’s license agreements are recorded less any accumulated amortization and impairment losses. The license relates to the Group’s technology to extract purified krill oil at the facility in Houston, Texas.
One of the Group’s fishing licenses is recognized at USD 10.5 million. The license relates to krill fishery in the Southern Ocean and will remain in the Group’s possession if all applicable requirements are met, and as such they are determined to have an indefinite life.
Customer relation (customer contracts) were acquired as part of business combinations recognized at fair value. Following initial recognition, the customer relations are recorded less any accumulated amortization and impairment losses.
Trademark are intangible assets with indefinite useful lives that are not amortized but carried at cost less accumulated impairment losses. The trademarks include NKO and KREAL.
| USD Millions | Goodwill | Development | License agreements | Fishing license | Customer relation | Trademark | Total |
|---|---|---|---|---|---|---|---|
| Acquisition cost as of 1 January 2022 | 94.6 | 8.2 | 2.4 | 10.5 | 91.7 | 5.7 | 213.1 |
| Additions - external cost | - | 5.7 | - | - | - | - | 5.7 |
| Deconsolidation | - | -4.0 | - | - | -0.3 | - | -4.3 |
| Reclassifications | - | -0.5 | - | - | 0.5 | - | - |
| Acquisition cost as of 31 December 2022 | 94.6 | 9.4 | 2.4 | 10.5 | 91.9 | 5.7 | 214.5 |
| Amortization and impairment losses as of 1 January 2022 | - | -5.3 | -1.5 | - | -33.9 | -0.9 | -41.6 |
| Amortization for the year | - | -0.2 | -0.5 | - | -9.5 | - | -10.2 |
| Reclassifications | - | 0.1 | -0.2 | - | 0.1 | - | - |
| Amortization and impairment losses as of 31 December 2022 | - | -5.4 | -2.2 | - | -43.3 | -0.9 | -51.8 |
| Book value as of 31 December 2022 | 94.6 | 4.0 | 0.2 | 10.5 | 48.6 | 4.8 | 162.7 |
| Amortization period | 5-10 years | 10-12 years | 7-10 years | - | - | - | - |
| Amortization method | Straight-line | Straight-line | Straight-line | - | - | - | - |
| USD Millions | Goodwill | Development | License agreements | Fishing license | Customer relation | Trademark | Total |
|---|---|---|---|---|---|---|---|
| Acquisition cost as of 1 January 2021 | 94.6 | 5.3 | 2.4 | 10.5 | 91.7 | 5.7 | 210.2 |
| Acquisition | - | 2.9 | - | - | - | - | 2.9 |
| Acquisition cost as of 31 December 2021 | 94.6 | 8.2 | 2.4 | 10.5 | 91.7 | 5.7 | 213.1 |
| Amortization and impairment losses as of 1 January 2021 | - | -5.3 | -1.0 | - | -23.4 | - | -29.7 |
| Amortization/ impairment for the year | - | - | -0.5 | - | -10.5 | -0.9 | -11.9 |
| Amortization and impairment losses as of 31 December 2021 | - | -5.3 | -1.5 | - | -33.9 | -0.9 | -41.6 |
| Book value as of 31 December 2021 | 94.6 | 2.9 | 0.9 | 10.5 | 57.8 | 4.8 | 171.5 |
| Amortization period | 5-10 years | 10-12 years | 7-10 years | - | - | - | - |
| Amortization method | Straight-line | Straight-line | Straight-line | - | - | - | - |
| USD Millions | Goodwill | Development | License | Fishing license | Customer relation | Trademark |
|---|---|---|---|---|---|---|
| Segment | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Ingredients | 66.4 | 66.4 | 1.8 | 2.4 | - | 0.9 |
| Brands | 28.2 | 28.2 | 3.0 | 0.6 | - | - |
| Total | 94.6 | 94.6 | 4.8 | 3.0 | - | 0.9 |
| *In 2021 the Group revised the internal allocation of goodwill and intangible assets between the 2 segments. |
Property, plant and equipment, RoU assets, intangible assets and goodwill are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with IAS 36 Impairment of Assets. Goodwill and intangible assets with indefinite life are required to be tested for impairment annually, in addition to any tests required when impairment indicators are determined to be present.
Identification of CGU's involves judgment, considering if an active market exists for the output produced by an asset or group of assets, independent cash inflows as well as how management monitors the Group's operations or how management makes decisions about continuing or disposing of the Group's assets and operations. Based on a thorough analysis, a CGU for goodwill impairment testing is assessed to be the krill business as a whole (the "Ingredients" segment) because the offshore harvesting and production, logistical operation, onshore manufacturing and sale of krill oil products globally to distributors and feed producers form an integrated value chain for which no independent prices for the intermediate products exist. This level is also the level at which management monitors, makes strategies, operates, allocates resources and makes decisions on acquisitions, continuation, or disposals. For the “Brands” segment, goodwill is monitored and tested at segment level which is a group of CGUs. The segment consists of the human consumption distribution business, which comprises of Lang and Epion. Lang acquires products derived from krill, fish and, plants then packages, labels, and sells the products onwards to retailers in the US market. Approximately 30% of Lang’s revenue is derived from sale of krill oil and part of this revenue is towards Epion. The Group sells Kori Krill oil (own national krill oil brand in the US) through Epion to the same retailers as Lang. The purpose of Kori krill oil is to increase the awareness of krill oil in the Omega-3 category, which also benefits the private label sale of krill oil from Lang. The Brands segment has management functions such as CEO and Finance Director (overlooking both Lang and Epion). Impairment testing has been done at the operating segment level.## 3. Finance | Notes to the consolidated financial statements Annual Report – 2022 74
Indicators that could trigger an impairment test includes such conditions as significant underperformance in sales volumes or margins relative to historical or projected results, significant changes in the Group's planned use of the assets, obsolescence or physical damage of an asset, or significant negative industry or economic trends. Fair value may be estimated based on recent transactions on comparable assets. Calculation of the value in use of an asset or CGU involves estimating the future cash inflows and outflows to be derived from continuing use of the asset/CGU and from its ultimate disposal. Impairment losses are only reversed to the extent that the asset’s carrying value does not exceed the carrying value that would have been determined, net of depreciation, if no impairment had been recognized.
Mandatory annual tests for impairment are performed for CGUs and operating segments with allocated goodwill or assets with indefinite useful life, and for assets/CGUs/operating segments where impairment indicators have been identified. Impairment tests are performed on Ingredients and Brands (the Ingredrients CGU and Brands operating segment both with allocated goodwill). The impairment test of the Ingredient segment also includes a fishing license and trademark assets with indefinite useful life.
The Group updates its Group Business Plan for the next five years on an annual basis. The purpose of the Group Business Plan process is to set overall goals for the business and define the steps necessary to achieve these goals. The plan facilitates the strategic planning process and provides the Board of Directors/Executive Management with a structure to monitor progress towards these goals. It is a result of a bottom-up involvement of the organization, and the key goals and objectives are in turn communicated to the broader organization to set the direction for departments and employees. In the value in use assessment used for impairment testing purposes, the business plan has been risk adjusted to reflect accuracy of previous budgets towards actual figures. The Group Business Plan uses sensitivities and scenarios to analyze and understand how changes in one or more internal/external variables impacts the future of the Group’s financials. Scenario planning and sensitivity analysis provides a rational and structured way to analyze the impact from altering key variables such as sales units, prices and timing, production volumes, COGS, etc. The scenarios and sensitivities are used by the Board of Directors/Executive Management to measure and manage the risk profile. The discount rates used reflect the current market assessment of the risks specific to each CGU or operating segment and are estimated based on the weighted average cost of capital. The discount rate is estimated based on a weighted average of equity return requirements and expected costs of debt, assuming a projected debt-to-equity ratio of 1. The basis for the discount rate is a risk-free interest rate set at 10 years US government bonds, and the credit risk premium has been set equal to the credit spread (compared to government bonds) for US corporate bonds with credit rating B. The Group has used different discount rates for the Ingredients CGU and the Brands operating segment to reflect the different market operations. Climate risk has been assessed when performing the value-in-use calculation, primarily in the Ingredients CGU. Any climate change affecting the krill biomass with regards to availability and nutrients composition could significantly impact the harvesting. In addition, ice and general weather conditions could create operational difficulties. In the value-in-use calculations the normal production capacity of krill meal considers these uncertainties.
Projected cash flows are based on management’s best estimates and the business plan for the Ingredients segment for the subsequent five years period. The estimates are based on detailed forecast prepared by the various departments in the ingredients segment. For subsequent periods, the model is based on an estimated terminal growth. In the forecast for the period 2023-2026, revenue projections are based on executed agreements, actual historical prices, and management’s evaluation of the potential for new agreements. The estimated operating margin is in accordance with management’s forecast which is based on the scalability in the business model. As approximately 65 per cent of the Group’s operating expenses are fixed costs (in line with IAS 2), increased sales levels will contribute to higher operating margins. Future product pricing has as per the above been based on historical prices and management’s expectation with regards to new arrangements. The Group expects slightly lower krill oil sales prices as well as a moderate increase in the krill meal sales prices in the forecast period, compared to the sales price levels in 2022. Sales volumes have been modelled to follow the production targets, however lagging as to allow for building and maintaining safety-stock. In the Ingredients impairment model the forecast period is 2023-2026. At the end of the forecast period there is an extrapolation period from 2027-2031 (as no detailed budget is prepared after 2026). In the extrapolation period growth has been set to 10.0%. The growth rate is set to 10% to reflect increased sale of krill oil in regions such as South Korea and China, combined with further increase of prices for premium products. The discount rate is based on a WACC of 9.6% and in the terminal value it is assumed a long-term annual growth equal to 2.0%. The discount rate has decreased from last year due to a reduction in the small stock premium when calculating the cost of equity,. Capital expenditure is based on the long-term technical and operations program and firm commitments. It is also assumed that the vessels will be replaced upon the end of the assumed useful life.
Projected cash flows are based on management’s best estimates and the business plan for the Brands segment for the subsequent five years period. The estimates are based on a detailed forecast prepared by management in Lang and Epion. For subsequent periods, the model is based on an estimated terminal growth, that does not exceed the growth for the products, industry or country (US) in which the segment operates. In the forecast for the period 2022-2025, revenue projections are based on executed agreements, actual historical prices, and management’s evaluation of the potential for new agreements. The estimated operating margin is in accordance with management’s forecast. In the Brands impairment model the forecast period is 2023-2026. At the end of the forecast period there is an extrapolation period from 2027-2031. In the extrapolation period growth has been set to 5.0%. The discount rate is based on a WACC of 10.4% and in the terminal value it is assumed a long- term annual growth equal to 2.0%.
| WACC post-tax | WACC pre-tax* | ||
|---|---|---|---|
| Segment | 2022 | 2021 | 2022 |
| Ingredients | 9.6 % | 10.0 % | 9.8 % |
| Brands | 10.4 % | 8.0 % | 10.7 % |
* The pre-tax discount rate is the discount rate without tax charge in the cash flow yielding the same recoverable amount.
The sensitivities of the value in use have been tested by using simulations of various combinations of discount rates, terminal value growth, changes in vessel production volumes, sales prices, krill production and sales in addition to fuel cost and EBITDA. The CGU’s value in use is significantly higher than the carrying amount. No reasonable possible change in any of the key assumptions would cause the unit’s recoverable amount to be lower than the carrying value.
The sensitivities of the value in use have been tested by using simulations of various combinations of discount rates, terminal value growth, sales, and EBITDA. The operating segment’s value in use is significantly higher than the carrying amount. No reasonable possible change in any of the key assumptions would cause the unit’s recoverable amount to be lower than the carrying value.
For customer relations, cash inflows can be monitored at a lower level than the identified CGU/operating segment for goodwill impairment testing. During 2022, Management has assessed that there was no impairment based on a separate impairment test per customer portfolio in 2022. All other intangible assets have been assessed for impairment with the conclusion that the value in use is higher than the book value.
The Group’s ambition on ESG is to be 100% circular in its principal waste streams by 2030, reduce CO 2 emission intensity by 50% by 2030, and be net zero in 2050. Given the increasing concerns globally regarding climate matters and the increasing demand for action, the Group has mapped the entire value chain to identify main sources of CO 2 emissions combined with a targeted approach to reduce emissions from these sources. The Group’s reporting on ESG follow the Task Force on Climate- Related Financial Disclosures (TCFD) framework. The Group has established a decarbonization committee responsible for ongoing oversight of climate-related issues as well as monitoring quarterly progress on climate-related targets and metrics. The Committee presents and evaluates new initiatives from different parts of the business, provides advice on significant investment decisions and provides input on climate-related strategic alignment.
The following assessment considers the financial impact of climate change on the Group’s main assets and its ability to continue as a going concern.
The Group’s property, plant and equipment primarily consists of three krill harvesting vessels, one service vessel, the protein facility in Ski, Norway and the extraction facility in Houston, US. Management has assessed if climate change could be an indicator of impairment or if climate change would require modifications to the useful life assessment of its assets.
In respect to the offshore activity, there was a large-scale research survey on krill biomass around the Antarctic Peninsula in 2019 which found more krill than what was found in the large-scale krill survey in 2000. Recent harvest figures also support the fact that krill availability is good. In addition, the Group’s Antarctic krill fishery was awarded an A-rating from the Sustainable Fisheries Partnership in 2021 and the fishery is also an MSC certified fishery. The increasing krill availability and A- rated/MSC certified fishery combined with increasing market demand for krill meal reduces the risk of climate related impact on the assets.
During 2022, the Group reassessed the useful life for one of the vessels and determined it could extend the end of useful life from 2025 to 2029.
In respect to the onshore activity, the extraction facility in Houston, Texas is in a geographical area which has from time to time been exposed to extreme weather. This has resulted in a few temporary shutdowns and increased maintenance requirements, especially for roofing and securing equipment outside factory walls (such as evaporators and skids). Based on Management’s assessment, the useful life assessment and residual value reflect weather conditions in the area. The level of repair and maintenance (R&M) costs are uncertain, and these costs are expensed when R&M activities occur.
For the Group’s assets, there are no known legal restrictions, government actions or natural climate events that indicate the need to reassess the useful lives or residual value of the Group’s property, plant, and equipment.
The Group’s intangible assets are mainly in relation to goodwill, customer portfolios, trademarks and licenses (see Note 9). Based on the current outlook, combined with all climate related activities that the Group performs, Management concludes that climate change has not impacted the Group’s assessment of value in use of these assets.
The Group has trade and other receivables towards feed producers, distributors, and retailers. The expected credit loss (ECL) model in IFRS 9 Financial Instruments requires the use of reasonable and supportable information that is available without undue cost or effort. Based on customer segmentation and business activity, Management has assessed that climate change does not affect the assumptions that are made to estimate ECL.
The Group’s inventory is primarily krill derived products sold to customers in the aforementioned industries. Based on studies done by the decarbonization committee, krill products perform well in life cycle assessment (LCA) analyses because the products are low on many stressors, including biotic resource use, land use, freshwater use, acidification, and eutrophication potential. Compared to other ingredients, krill has one of the lowest CO 2 footprints. This low CO 2 footprint is beneficial as it is expected that there will be a decline in demand for products that emit greenhouse gases, which could then indicate that inventories or assets might be impaired. Management confirms that no climate related matters impact the value of the Group’s inventory.
The Group has significant tax losses being carried forward which have not been recognized as deferred tax assets (see Note 7). Based on an overall assessment, the Group has not recognized any deferred tax assets. However, Management concludes that climate change does not impact the Group’s tax losses in carryforwards.
The Group’s goal is to be 100% circular in its principal waste streams by 2030. In 2022, 59% of all plastic waste in the Ingredients segment was recycled and prepared for circular products (pallets, trays, tags etc), increased from 50% in 2021. With respect to products, 14 MT was discarded, equivalent to 0.024% of produced volume in 2022, which is a decrease from 30 MT in 2021. Management confirms that the Group has systems and processes in place to reach the circularity goals.
The current CO 2 emission is 2.2 per tonn krill meal produced. The current reduction plan includes certain measures such as green electricity and gas in Houston, as well as heat recovery on one of the krill harvesting vessels (0.3 reduction), green transport (0.3 reduction), and green fuels on the service vessel (0.3 reduction). These measurements require limited additional investments. The remaining reduction would likely take form of abatement programs. The goal of these measures is to reduce the CO 2 emission per tonn produced by 50% in 2030, therefore reaching the first goal. To bring the CO 2 emission to net zero in 2050 will require additional efforts including technology yet unknown with related uncertain capital requirements.
As part of the reduction plan the costs associated with each activity have been estimated and certain costs have already been capitalized by the Group as part of the 2022 shipyard. Green electricity in Houston and green transport will be expensed as incurred as part of regular operating costs. The actual cost of green fuels on the service vessel is uncertain as there are no forward curves etc. indicating the market price when the transition will occur.
Given that the identified measurements do not require substantial capital expenditures or additions to property, plant, and equipment combined with significant uncertainty on future market prices on green fuels, Management has not identified future costs that meet the definition of a contingent liability under IAS 37 ‘Provisions, Contingent liabilities and contingent assets.’ Based on Management’s assessment, the cost of the different measures does not significantly impact the impairment testing or sensitivity analysis. Management confirms that climate related risks does not impact the Group’s ability to operate as a going concern.
Inventories are measured at the lower of cost and net realizable value. The cost of finished goods and raw material and goods under production comprises the costs of raw materials, direct labor and other direct costs, and related production overheads. Indirect costs allocated to inventories, include salaries, depreciation and certain other directly attributable operating expenses. The Group allocate cost of inventories using a weighted average cost formula. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The impairment from cost to net realizable value is recognized in ‘Cost of goods sold’ in the Consolidated statement of Profit or loss.
The production of krill derived products in the Ingredients segment is highly complex in several stages. First, the raw krill is harvested in the Southern Ocean using Eco-Harvesting. Then the raw krill is processed into krill meal and raw krill oil onboard the vessels. These products are subsequently shipped to the logistics hub in Montevideo, Uruguay. From Uruguay the meal is sent to feed customers or to the Group’s krill oil facility in Houston where krill oil is extracted from the meal. After the oil extraction, the Group has a low fat/ high protein krill meal and krill oil, where krill oil is the main product. As part of the reprocessing of krill oil the Group gets a neutral oil that can be blended into krill oil or used as ingredient into other applications. The low fat/ high protein krill meal is currently sold to feed customers. In future production this meal will be used as an ingredient to the Group’s novel protein product.
In the Brands segment, raw materials and goods under production and finished goods inventory include processing cost incurred by the Group from outside manufacturing service providers.
Inventory balances as of 31 December 2022 and 2021 are shown below:
| Year ended 31 December | ||
|---|---|---|
| USD Millions | 2022 | 2021 |
| Raw materials and goods under production | 20.5 | 24.4 |
| Finished goods | 162.2 | 113.8 |
| Total | 182.7 | 138.2 |
| Cost of inventories recognized at net realizable value | - | 37.2 |
| Carrying value of inventories recognized at net realizable value | - | 30.3 |
| Write-down of inventories recognized towards net change in inventories in the period* | - | -6.9 |
| Carrying value of inventories pledged as security | 182.7 | 138.2 |
*) Includes weight corrections, replacements to customers and obsolesence
The inventory balance is pledged as security at both 31 December 2022 and 2021 and is included in the book value of assets pledged as security, please refer to Note 15.# 3. Finance | Notes to the consolidated financial statements
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| USD Millions | Ingredients | Brand | Elim | Total |
|---|---|---|---|---|
| Inventory at 1 January 2022 | 104.2 | 39.4 | -5.4 | 138.2 |
| Acquired inventory for sale | - | 81.5 | -9.6 | 71.9 |
| Production | 164.5 | - | - | 164.5 |
| Sale | -101.2 | -81.7 | 20.5 | -162.4 |
| Consumption | -31.5 | - | - | -31.5 |
| Other changes | 1.3 | - | - | 1.3 |
| Freight | 0.6 | - | - | 0.6 |
| Inventory at 31 December 2022 | 137.9 | 39.2 | 5.5 | 182.7 |
| USD Millions | 2022 |
|---|---|
| Cost of goods sold before elimination of internal sales and internal profit | -182.9 |
| Produced inventory | 164.5 |
| Acquired inventory | 81.5 |
| Rework, consumptions and obsolete | -29.5 |
| Elimination of internal profit on stock | 10.9 |
| Net change in inventories | 44.5 |
| Cost of goods sold before elimination of internal sales and internal profit | -182.9 |
| Elimination of cost of internal sales | 20.5 |
| Cost of goods sold recognized in Profit and Loss | -162.4 |
| USD Millions | Ingredients | Brand | Elim | Total |
|---|---|---|---|---|
| Inventory at 1 January | 80.5 | 36.7 | -2.7 | 114.6 |
| Acquired inventory for sale | - | 84.4 | -19.4 | 65.0 |
| Production | 169.8 | - | - | 169.8 |
| Sale | -109.0 | -81.7 | 16.7 | -174.0 |
| Consumption | -38.9 | - | - | -38.9 |
| Other charges | 6.3 | - | - | 6.3 |
| Freight | 2.3 | - | - | 2.3 |
| NRV | -6.9 | - | - | -6.9 |
| Inventory at 31 December | 104.2 | 39.4 | -5.4 | 138.2 |
| USD Millions | 2021 |
|---|---|
| Cost of goods sold before elimination of internal sales and internal profit | -190.7 |
| Produced inventory | 169.8 |
| Acquired inventory | 84.4 |
| Rework, consumptions and obsolete | -37.2 |
| Elimination of internal profit on stock | -2.7 |
| Net change in inventories | 23.6 |
| Cost of goods sold before elimination of internal sales and internal profit | -190.7 |
| Elimination of cost of internal sales | 16.7 |
| Cost of goods sold recognized in Profit and Loss | -174.0 |
The total production value of goods manufactured can be specified as follows:
| Year ended 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Salaries | -32.2 | -35.7 | |
| Direct Production | -8.9 | -7.9 | |
| Fuel | -18.6 | -17.2 | |
| Consumables | -4.2 | -4.2 | |
| R&M | -8.0 | -6.7 | |
| Other | -12.7 | -15.3 | |
| Nutra | - | - | |
| Freight | -3.1 | -2.3 | |
| Capsulation | -5.0 | -4.9 | |
| Contract manufacturing | - | -0.7 | |
| Uruguay | -8.3 | - | |
| Depreciation | -35.0 | -37.7 | |
| Consumption of krill raw materials | -31.5 | -38.9 | |
| Total costs allocated to inventory | -167.5 | -171.5 |
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| As per 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Accounts receivable | 59.9 | 50.3 | |
| Prepaid expenses | 9.6 | 17.3 | |
| Other current receivables | 13.2 | 10.1 | |
| Total | 82.7 | 77.7 |
The change in prepayments relates mainly to stock of fuel, packing material and other equipment related to the operation of the vessels and the factory in Houston.
Cash and cash equivalents in the consolidated statement of financial position and statement of cash flow comprise cash at banks, including restricted deposits, and cash on hand.
| As per 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Cash and bank deposits | 21.0 | 9.1 | |
| Restricted bank deposits | 1.3 | 2.0 | |
| Cash and cash equivalents | 22.3 | 11.1 |
Restricted bank deposits relate to employee tax withholdings used to settle tax remittances with the tax authorities on a periodic basis. As of 31 December 2022, the Group had drawn USD 33.9 million (2021: USD 16.9 million) out of a total of USD 40.0 million available in an overdraft facility.
The Group recognizes interest-bearing debt initially at fair value, net of transaction costs incurred. Subsequently, the debt is carried at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statements of profit or loss over the period of the debt using the effective interest method.
| As per 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Non-current liabilities | |||
| Secured bank loans | 326.5 | 285.3 | |
| Non-current NOK-denominated loan from Antarctic Harvesting Holding AS | 1.3 | 1.3 | |
| Leasing liabilities | 5.8 | 7.5 | |
| Book value total interest-bearing non-current liabilities | 333.6 | 294.1 | |
| Current liabilities | |||
| Current portion of secured loans | 9.4 | 9.4 | |
| Overdraft facilities | 33.4 | 16.9 | |
| Leasing liabilities | 4.8 | 4.4 | |
| Book value total interest-bearing current liabilities | 47.6 | 30.7 | |
| Book value total interest-bearing liabilities | 381.2 | 324.8 |
Total interest-bearing debt was at USD 381.2 million, including IFRS 16 leasing commitments of USD 10.5 million as of 31 December 2022. Cash amounted to USD 22.3 million, implying net interest-bearing debt of USD 370.6 million, up from USD 313.7 million same period last year. The increase is mainly due to investments in the protein factory, upgrades at Houston Plant as well as shipyard.
Total available liquidity as of 31 December 2022 was USD 48.9 million (cash and available amounts under the debt facilities). The company signed and executed its new financing structure with a bank group consisting of DNB Bank, Cooperative Rabobank and Nordea Bank. The new facility has a more favorable structure with increased flexibility on covenants, dividends, and indebtedness. The amortization profile is changed as a result of moving from several term loans into a larger corporate revolving credit facility (RCF) and only one term loan for the Endurance vessel. The Group obtained a covenant waiver for the second quarter and the rest of 2022. The waiver was granted by the bank group prior to 30 June 2022 and sets out a new maximum threshold up to 6.5:1 (net interest-bearing debt / 12 month Adjusted EBITDA). For fourth quarter 2022 (and year 2022) the company is compliant with the loan Covenants.
79
| Loan | Currency | USD Millions | Nominal interest rate | Year of maturity | Instalments |
|---|---|---|---|---|---|
| Secured bank loan - Bank syndicate | USD | 77.3 | 3,13 % (fixed) | 2031 | Quarterly |
| Secured loan - Bank syndicate | USD | 258.6 | SOFR + margin 1) | 2024 | In full upon termination |
| Antarctic Harvesting Holding AS | NOK | 1.3 | 7.0% | - | - |
| Overdraft facility with DNB | USD | 33.4 | NOWA+0,13% yearly | framework agreement provision 2) | n/a |
| Leasing financing | NOK/USD | 10.5 | 6.4 - 7.3% | < 2026 | Monthly |
1) SOFR: Secured Overnight Financing Rate
2) NOWA: Norwegian Overnight Weighted Average
The following table displays debt secured by mortgaged assets:
| As per 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Secured bank loans | 335.9 | 294.7 | |
| Overdraft facility | 33.4 | 16.9 | |
| Total secured debt | 369.3 | 311.6 | |
| Book value of assets pledged as security | |||
| Operating assets | 731.9 | 721.1 |
Asset pledged as security per company as of 31 December 2022:
| USD Millions | Group total | Antarctic AS | AKBM US Holding | AKBM Manufacturing | New Ride Lang | Ships/Rigs |
|---|---|---|---|---|---|---|
| Shares | 261.7 | 108.2 | 100.6 | - | 52.9 | - |
| Inventory | 128.9 | 91.4 | - | - | - | 37.5 |
| Other assets | 107.8 | 50.4 | - | 57.0 | - | 0.4 |
| Total | 731.9 | 469.2 | 100.6 | 57.0 | 52.9 | 52.2 |
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The following table reconciles the movements in liabilities to cash flow from financing activities in 2022:
| Secured bank loans | Proceeds from owner | Lease | Bank overdraft | Total | |
|---|---|---|---|---|---|
| Balance | |||||
| Interest bearing debt at 31 December 2021 | 294.7 | 1.3 | 11.9 | 16.9 | 324.8 |
| Changes in Financing cash flows | |||||
| Secured bank loan - RCF - DNB/RABO | 50.0 | - | - | - | 50.0 |
| Instalment Secured bank loan DNB/GIEK/NEK | -9.4 | - | - | - | -9.4 |
| Lease payments | - | - | -4.8 | - | -4.8 |
| Overdraft facility with DNB/RABO | - | - | - | 16.5 | 16.5 |
| Net cash flow from financing activities | 40.6 | - | -4.8 | 16.5 | 52.3 |
| Non-Cash changes | |||||
| Leasing financing (IFRS16) | - | - | 3.5 | - | 3.5 |
| Other changes, liability related | |||||
| Interest/fees charged to loan | 0.6 | - | - | - | 0.6 |
| Total liability related changes | 0.6 | - | - | - | 0.6 |
| Balance | |||||
| Interest bearing debt at 31 December 2022 | 335.9 | 1.3 | 10.6 | 33.4 | 381.2 |
81
The following table reconciles the movements in liabilities to cash flow from financing activities in 2021:
| Secured bank loans | Proceeds from owner | Lease | Bank overdraft | Total | |
|---|---|---|---|---|---|
| Balance | |||||
| Interest bearing debt at 31 December 2020 | 215.0 | 1.3 | 13.8 | 12.7 | 242.8 |
| Changes in Financing cash flows | |||||
| Refinancing new bank syndicate | 210.0 | - | - | - | 210.0 |
| Secured bank loan - RCF + TL NewRide - DNB/RABO | 65.0 | - | - | - | 65.0 |
| Secured bank loan - DNB and Eksportkreditt (Provider) | 60.0 | - | - | - | 60.0 |
| Instalment Secured bank loan DNB/GIEK/NEK | -182.3 | - | - | - | -182.3 |
| Instalment bank loan Provider | -60.0 | - | - | - | -60.0 |
| Instalment Innovation Norway | -10.2 | - | - | - | -10.2 |
| Instalment Caterpillar Finance | -1.4 | - | - | - | -1.4 |
| Lease payments | - | - | -6.3 | - | -6.3 |
| Overdraft facility with DNB/RABO | - | - | - | 4.2 | 4.2 |
| Net cash flow from financing activities | 81.1 | - | -6.3 | 4.2 | 79.0 |
| Non-Cash changes | |||||
| Leasing financing (IFRS16) | - | - | 4.5 | - | 4.5 |
| Other changes, liability related | |||||
| Interest/fees charged to loan | -1.5 | - | - | - | -1.5 |
| Effect of changes in foreign exchange rates | 0.1 | - | -0.1 | - | - |
| Total liability related changes | -1.4 | - | -0.1 | - | -1.5 |
| Balance | |||||
| Interest bearing debt at 31 December 2021 | 294.7 | 1.3 | 11.9 | 16.9 | 324.8 |
| Year ended 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Contingent consideration | – | 10.6 | |
| Pension liabilities | 0.1 | 0.2 | |
| Total | 0.1 | 10.8 |
The earn-out period related to Lang Acquisition was from 2019 through 2021. The fair value of the earn- out (USD 10.2 million) was reevaluated per 31 December 2021 and paid out in 2022.
Accounts payable and other payment liabilities comprise the following items:
| Year ended 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Accounts payable | 39.0 | 25.3 | |
| Accrued expenses | 14.9 | 17.6 | |
| Other current liabilities | 3.2 | 3.7 | |
| Total | 57.1 | 46.6 |
Foreign exchange and liquidity risks are described in Note 19.
82
The Group leases various types of assets, with the most significant monetarily being the leases for office buildings, warehouses and a tramper vessel.The smaller leases comprise mainly leases for housing for employees, IT equipment and production-related equipment in the factory. Management determines the lease term as the non-cancellable term of the lease, as well as any additional periods covered by an option to extend the lease if it is reasonably certain to be exercised. Time periods in the lease covered by an option to terminate the lease are also included in the lease term if it is reasonably certain the termination clause will not to be exercised. Management applies judgement in evaluating whether it is reasonably certain to exercise a renewal option, considering all relevant factors as well as the potential economic incentives related to the exercise of the renewal option. The lease period in the current leases held by the Group varies from one to five years. Several of the leases have a lease term that includes the optional renewal period. Most of the leases include a clause for annual price increases during the term of the lease agreement. The Group has elected not to recognize right-of-use (ROU) assets and lease liabilities for the following types of leases, as allowed under IFRS 16: ● Short-term leases with a lease term of less than 12 months from commencement that does not include any purchase or renewal options, and ● Leases of low- value assets. The Group recognizes a ROU asset as of the lease commencement date. The ROU asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for certain remeasurements of the lease liability. The ROU asset is generally depreciated on a straight-line-basis over the shorter of the estimated useful life of the asset or the lease term and is subject to impairment assessments of non-financial assets. The lease liability is initially measured at the present value of the future lease payments at commencement date discounted using either: ● The rate implicit in the lease, or if that cannot be determined, or ● The leasing entity’s incremental borrowing rate. The Group is calculating the incremental borrowing rate in a model with an interest rate swap rate as a basis and adjustments reflecting: ● Credit worthiness of the lessee ● Lease term of the contract ● Acquisition cost of the ROU ● Type of asset and ● Jurisdiction and the contact’s currency.
The Group’s ROU asset as at 31 December 2022 include:
| USD Millions | Buildings and vessel | Machinery and equipment | Total |
|---|---|---|---|
| Balance as of 1 January 2022 | 11.0 | 0.3 | 11.3 |
| Depreciation for the year | -4.2 | -0.2 | -4.4 |
| Additions to ROU assets | 0.6 | - | 0.6 |
| Adjustment of ROU asset | 2.4 | - | 2.4 |
| Balance as of 31 December 2022 | 9.8 | 0.1 | 9.9 |
Additions to ROU assets relates to the new lease of offices in Bangkok, Beijing, and Uruguay; a new lease of a warehouse in Uruguay, and the annual CPI adjustments in some of the lease payments.
The Group’s ROU asset as at 31 December 2021 include:
| USD Millions | Buildings and vessel | Machinery and equipment | Total |
|---|---|---|---|
| Balance as of 1 January 2021 | 12.6 | 0.5 | 13.1 |
| Depreciation for the year | -5.3 | -0.2 | -5.5 |
| Additions to ROU assets | 3.5 | - | 3.5 |
| Adjustment of ROU assets | 0.2 | - | 0.2 |
| Balance as of 31 December 2021 | 11.0 | 0.3 | 11.3 |
Additions to ROU assets relates to the new lease of a factory in Ski, Norway, warehouses in India and Uruguay, and the annual CPI adjustments in some of the lease payments.
| Year ended 31 December USD Millions | 2022 | 2021 |
|---|---|---|
| Expenses related to short-term lease | -3.9 | -1.8 |
| Leasing expenses related to variable payments not included in lease liabilities | -2.0 | -0.1 |
| Interest on ROU lease liabilities | -0.7 | -0.9 |
| Effect of changes in foreign exchange rates | 0.2 | 0.1 |
| Total | -6.4 | -2.7 |
| ROU assets recognized in cash flow statement: | -4.8 | -6.3 |
Future lease liability payments as of year-end 2022 and 2021 (IFRS 16)
| USD Millions | 2022 | 2021 |
|---|---|---|
| Within one year | 4.9 | 4.2 |
| 1-2 years | 3.1 | 3.4 |
| 3-5 years | 0.7 | 4.0 |
| More than 5 years | 1.0 | 0.3 |
| Total | 9.7 | 11.9 |
Lease liabilities as of 31 December 2022 totaled USD 10.5 million (31 December 2021: USD 11.9 million) of which USD 4.8 million (31 December 2021: USD 4.4 million) was classified as current and USD 5.8 million (31 December 2021: USD 7.5 million) as non-current, see Note 15.
The Group's activities expose it to various types of risk which are associated with the financial instruments and markets in which it operates. The most significant types of financial risk the Group is exposed to are credit risk, liquidity risk, and market risks (including foreign exchange risk, interest rate risk and bunker risk. To manage these risks, risk management is carried out in order to create predictability and stability for operating cash flows and values. Management can use financial derivatives to hedge against risk relating to operations, financing, and investment activities if the financial derivative has been approved by the Board of Directors. In 2020 the company entered a fuel hedge contract with DNB, see further description of the contract below under iii) Fuel price risk.
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s main credit risk relates to receivables from customers. Exposure to that risk is monitored on a routine basis and credit evaluations are performed on customers as appropriate. When entering significant sales contracts, the sales department seeks to reduce credit risk through more stringent payment terms including requirement of up-front payments. The Group has had low losses on receivables as the sales department is maintaining close contact with each customer and routine billing and cash collection is performed. The book value of financial assets represents the maximum credit exposure. Receivables presented under Trade Receivables are ordinary account receivables generated through sales of goods, accounted for under IFRS 15. The Group does not grant any payment terms more than 12 months, meaning that if the Group were to estimate expected credit losses (ECL) as according to general or simplified approach, the ECL would (for all material purposes) represent the lifetime expected credit losses. The Group has determined to apply the practical expedient for measuring ECL of the Account Receivable, mainly due to the large extent of smaller clients, and the limited amount of losses over the past years. The Group has designed a provision matrix based on the assessment on historical data over the last years to identify whether there are either geographical or market (Qrill / Superba) indications of whether any additional breakdowns into sub-portfolios is required. The reasonability of the ECL accruals compared to prior years actual losses has also been assessed, to ensure it constitutes a reasonable expectation. The ECL rates per portfolio will be reviewed at each reporting date to assess if the matrix still reflects the current conditions, and if the provision still is at a reasonable and supportable level, reflecting the future economic conditions.
| As per 31 December USD Millions | 2022 | 2021 |
|---|---|---|
| Not at maturity | 46.5 | 28.2 |
| 0-30 days overdue | 10.1 | 10.2 |
| 31-120 days overdue | 2.0 | 9.5 |
| 121- 365 days overdue | 2.4 | 3.3 |
| More than one year overdue | 0.3 | - |
| Total trade receivable | 61.3 | 51.2 |
| Bad debt provision | -1.3 | -0.9 |
Write off and allocation for loss on trade receivable are included under operating expenses in the consolidated profit and loss.
| USD Millions | 2022 | 2021 |
|---|---|---|
| Balance at 1 January under IFRS 9 | -0.9 | -0.7 |
| Impairment loss (write-off) on trade and other receivables | -0.4 | -0.4 |
| Effects of changes in foreign exchange rates | - | 0.2 |
| Allocation to loss on trade receivable and contract assets | -1.3 | -0.9 |
The Group`s two most significant customers account for USD 10.7 million of the receivables carrying amount as of 31 December 2022 (2021: USD 12.1 million).
Liquidity risk is the risk that the Group will be unable to meet its financial liabilities as they mature. The Group does not hedge against exposure to interest-rate fluctuations on debt and is therefore exposed to fluctuations on the variable-rate amount of interest-bearing liabilities, which was USD 369.2 million as of 31 December 2022 (2021: USD 311.6 million).
| USD Millions | Book value at 31 December | Nominal values | Up to 6 months | 6-12 months | 1-2 years | 3-5 years | More than 5 years |
|---|---|---|---|---|---|---|---|
| Secured bank loans | 335.9 | -393.1 | -16.3 | -16.5 | -291.8 | -36.0 | -32.4 |
| Interest bearing debt, non-current, related parties | 1.3 | -1.8 | -0.1 | -0.1 | -0.1 | -0.1 | -1.4 |
| Overdraft facility | 33.4 | -33.4 | -33.4 | - | - | - | - |
| Leasing liabilities (IFRS16) | 10.5 | -9.7 | -2.5 | -2.4 | -3.1 | -0.7 | -1.0 |
| Total 2022 maturity of loans and interest on interest-bearing debt | 381.1 | -438.0 | -52.3 | -19.0 | -295.0 | -36.8 | -34.9 |
| Accounts payable and other current liabilities | 57.1 | -57.1 | -57.1 | - | - | - | - |
| Non-current non-interest-bearing liabilities | 5.5 | -5.5 | - | - | -0.0 | - | -5.5 |
| Total liabilities | 443.8 | -500.6 | -109.4 | -19.0 | -295.1 | -36.8 | -40.3 |
| USD Millions | Book value at 31 December | Nominal values | Up to 6 months | 6-12 months | 1-2 years | 3-5 years | More than 5 years |
|---|---|---|---|---|---|---|---|
| Secured bank loans | 294.7 | -325.8 | -9.3 | -9.2 | -18.1 | -248.0 | -41.2 |
| Interest bearing debt, non-current, related parties | 1.3 | -1.8 | -0.1 | -0.1 | -0.1 | -0.1 | -1.4 |
| Overdraft facility | 16.9 | -16.8 | -16.8 | - | - | - | - |
| Leasing liabilities (IFRS16) | 11.9 | -11.9 | -2.1 | -2.1 | -3.5 | -4.0 | -0.3 |
| Total 2021 maturity of loans and interest on interest-bearing debt | 324.8 | -356.3 | -28.3 | -11.4 | -21.7 | -252.0 | -42.9 |
| Accounts payable and other current liabilities | 46.6 | -46.6 | -46.6 | - | - | - | - |
The Group operates in a global market and is exposed to currency fluctuations, primarily through fluctuations in the USD, NOK and EUR exchange rates. In addition, the Group has operations with exposure to local currencies in Uruguay, Australia, India, Thailand, New Zealand, Canada and China, but these exposures are regarded minimal. The Group has USD as its presentation and functional currency in the main group companies. The Group has NOK denominated financial instruments thus the consolidated statement of financial position is exposed to changes in NOK/USD exchange rate. The Group seeks to ensure that revenues and expenses are in the same currency. Future cash flows are estimated and offset. The Group periodically assesses the need for foreign currency hedging. Currency risk is managed on an overall Group level. As of 31 December 2022 the Group recognized an asset of USD 11.0 million from a fuel hedge contract, see description under iii) Fuel price risk. The table below shows the Group's exposure to foreign exchange risk as per 31 December.
| 2022 | 2021 | |
|---|---|---|
| USD Millions | USD Millions | |
| Euro | NOK | |
| Accounts receivable | - | 6.2 |
| Cash | -0.3 | -2.3 |
| Other assets | - | - |
| Secured bank loan | - | - |
| Accounts payable | -1.1 | -13.2 |
| Other balance sheet items | - | -7.0 |
| Gross balance sheet exposure | -1.4 | -16.3 |
| Currency forwards | - | - |
| Net exposure | -1.4 | -16.3 |
A 10% increase or decrease in USD relative to the Euro and the NOK would have reduced or increased the Group’s profit before tax with USD 0.1 million related to Euro and USD 1.6 million related to NOK, respectively.
The Group’s borrowings and any surplus cash balances are held at variable and fixed interest rates linked to the Norwegian or London interbank offered rate (NIBOR and LIBOR, 3 or 6 months). A movement of 100 basis points in the interest rate on borrowings and surplus cash balances as of 31 December 2022 would have affected the Group’s profit before tax with USD 2.8 million (2021: USD 1.3 million). This analysis assumes that all other variables, especially the exchange rates, remain constant.
At the close of the year, the interest-rate profile for the Group's interest-bearing financial instruments was as follows:
| USD Millions | Year ended 31 December 2022 | Effective interest rate year ended 31 December 2022 | Year ended 31 December 2021 | Effective interest rate year ended 31 December 2021 |
|---|---|---|---|---|
| Fixed-interest instruments | ||||
| Loan from Antarctic Harvesting Holding AS | -1.3 | 7.0 % | -1.3 | 7.0 % |
| Secured bank loan - Bank syndicate | 77.2 | 3.1 % | -96.0 | 3.1 % |
| Net fixed interest instruments | 75.9 | -97.3 | ||
| Floating-interest instruments | ||||
| Financial assets | ||||
| Cash and cash equivalents | 22.3 | variable *) | 11.1 | variable *) |
| Financial liabilities | ||||
| Secured bank loan - Bank syndicate | -335.9 | 3,1%-7,1% | -198.7 | 3.1 % |
| Overdraft facility | -33.4 | variable **) | -16.9 | variable **) |
| Leasing liabilities (IFRS16) | -10.5 | variable **) | -11.9 | variable **) |
| Net variable interest instruments | -357.5 | -216.4 | ||
| Total net interest-bearing debt | -281.6 | -313.7 |
) different cash and cash equivalents carry different interest rates, as such no effective interest rate has been calculated
*) different loans/ receivables carry different interest rates, as such no effective interest rate has been presented
Marine Gasoil (“MGO”) fuel used for vessel propulsion and krill meal production is one of the Groups’ most significant operating costs. The profitability and cash flow of the Group will therefore be affected by the market price of MGO. To reduce Aker BioMarine’s exposure to fluctuations in the fuel price, the operating subsidiary Aker BioMarine Antarctic AS purchased call options on Gasoil 0.1% at barges FOB Rotterdam in 2020. These options give Aker BioMarine Antarctic AS the right to purchase Gasoil 0.1% at barges FOB Rotterdam at defined price (“the strike”) each month until December 2024. As of 31 December 2022, Aker BioMarine held 44,604 call option contracts giving the Group the right to purchase 44,604 MT of fuel between 2022 and 2024. The value of these options is reflected in the mark-to-market (“M2M”) value, which at 31 December 2022 was USD 11.0 million.
| Contracts (000) | Strike (USD/MT) | M2M 31 December 2022 (USDM) |
|---|---|---|
| 2023 | 22.3 | 550.0 |
| 2024 | 22.3 | 580.0 |
| Total | 44.6 | 11.0 |
The Group uses fuel options for economic hedging purposes and not as speculative investments. From 1 January 2021 the Company met the requirements for using hedge accounting on its fuel options which means that the options are recognized in the balance sheet under the line item ‘Derivative assets’. During 2022, the Group rebalanced its call option portfolio to align with an updated forecast of production and operations. As a result, the Group sold 7 454 call options. The sale has been recognized as a rebalancing effect of designated fuel volumes and have been accounted for in accordance with the requirements for discontinuation of hedge accounting. The gain from rebalancing was USD 2.9 million and was recognized as ‘Other operating income’ in the statement of profit or loss, see Note 2. Contracts not sold continue to follow hedge accounting. In addition to the USD 2.9 million recognized from the rebalancing exercise, the Group also recognized profits from cash-settling expiring option contracts throughout the year. In total, the Group realized a gain of USD 14.6 million on cash settled contracts.
Fuel hedge cash flow overview:
| USD Millions | 2022 | 2021 |
|---|---|---|
| Hedge settlements | 15.0 | 17.9 |
| Sale of surplus call options | 2.9 | |
| net cash impact | 17.9 | 17.9 |
| M2M Hedge value 2023-2024 calls | 11.0 | |
| Net cash equivalent 2023-2024 | 11.0 |
The Group’s hedging reserves mainly relate to fuel hedge contracts for hedging of bunkers oil for the period 2021-2024. Total hedge reserve was USD 5.4 million as of December 2021. The fair value of the hedging instrument decreased by USD 1.9 million in 2022, leading to a total hedge reserve of USD 3.5 million at the end of the year.
The Group determines hedge effectiveness at the inception of the hedge relationship, and through periodic prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument. As of 31 December 2022, the hedge was found effective.
Movements in the fuel hedge reserve for the year ended 31 December:
| USD Millions | 2022 | 2021 |
|---|---|---|
| Opening balance as per 1 January | 5.4 | 0.1 |
| Change in fair value of hedging instrument recognised in OCI | -1.9 | 5.2 |
| Reclassified to the cost of inventory – not included in OCI | -15.0 | -3.8 |
| Intrinsic value of options | 17.8 | 6.9 |
| Reclassified from OCI to profit or loss | -2.8 | -3.0 |
| Closing balance as per 31 December | 3.5 | 5.4 |
The Group had financial receivables that under IFRS 9, based on evaluation of business model applied, will be measured at fair value over the profit and loss; however, this is in line with how these assets previously have been accounted for, and the last applicable receivable was settled in 2019. Trade receivables are classified at amortized cost. An expected loss recognition process is used, utilizing the practical expedient. Expected credit losses (ECL) are calculated based on a matrix taking into consideration customer risk, and geographical segments and historical data. Based on the Group’s assessment, there were no new classification requirements following IFRS 9 implementation, which had material impact on accounting for financial assets or liabilities upon implementation in 2018. The fair values quoted in the table below are categorized within the fair value hierarchy, described below, and based on the lowest level input that is significant to the fair value measurement as a whole:
All fair values using Level 2 valuation techniques are based on discounted cash flow models. The short-term nature of financial instruments such as cash and bank deposits result in the book value approximating fair value. The same approach applies to receivables and debt associated with the business cycle. Financial assets that are classified as held for sale and financial assets at fair value through profit and loss are recorded at fair value.
The Group’s objectives when managing capital are to i) ensure the Groups ability to continue as a going concern, and ii) maintain an optimal capital structure to reduce the cost of capital and be in compliance with bank covenants. In order to maintain or adjust the capital structure, the group may obtain short term funding through supply chain financing, receivables purchase agreements, issue new shares or sell assets to reduce debt.# 3. Finance | Notes to the consolidated financial statements
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio as agreed with the bank syndicate which is net interest-bearing debt / 12 month Adjusted EBITDA (see Note 15).
The Group recognizes a provision when it has a legal or constructive obligation as a result of a past event, when it is probable that payment or the transfer of other assets will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. With worldwide operations, the Group is involved in disputes in the ordinary course of its business activities. Provisions to cover projected losses arising from such disputes are made to the extent negative outcomes are probable and reliable estimates can be prepared. However, the outcome of any such dispute is inherently uncertain, and the resulting liability may exceed any provision made. As per 31 December 2022 no provisions were made for legal claims.
The Group’s consolidated financial statements include the following transactions and intercompany balances with Aker ASA and companies controlled by Aker ASA. Refer to Note 22 for remuneration to key management. Aker ASA is the controlling shareholder of the Group. The guarantee fee relates to the guarantee provided from Aker ASA related to the Group’s long-term loan with DNB/Rabobank (see Note 15).
| USD Millions | 2022 | 2021 |
|---|---|---|
| Office Rent | ||
| Fornebu Næring | -1.0 | -1.1 |
| Recharge Rev | 0.1 | 0.1 |
| Ocean | ||
| Management fee | -1.3 | -0.8 |
| -2.3 | -1.8 | |
| Guarantee fee | ||
| Aker ASA | - | -0.3 |
| Total | -2.3 | -2.1 |
There is no remuneration paid to the Board members and Employee representative other than ordinary salaries. For details about board remuneration, refer to the Company’s Remuneration Report which is published on the Company’s website. https://www.akerbiomarine.com/investor-other-reports-and-presentations
The CEO is member of the defined contribution pension and insurance plans that cover all employees. The Group uses standard employment contracts. The CEO may be dismissed upon three months' notice. If the company terminates the employment, the CEO is entitled to three months' severance pay after the end of the notice period. The pension is capped at a salary of 12 times the National Social Security base amount. The Group implemented share incentive programs for employees in February 2022. In addition to the EMT bonus program also referred to in the Remuneration report, Aker BioMarine has established a bonus program for level two managers based on EBITDA performance. Sales resources have separate bonus programs linked to achievement of certain sales related KPIs. Based on the company’s performance in 2020, management team was awarded a bonus totaling USD 0.9 million that was accrued in 2021 and paid in 2022. No bonus awarded in 2021 or 2022, except for one member of the EMT. For details about remuneration paid to the CEO and EMT, refer to the Company’s Remuneration Report which is published on the Company’s website. https://www.akerbiomarine.com/investor-other-reports-and-presentations
As of 31 December 2022, Aker Capital AS held 77.7% of the shares in Aker BioMarine, and the CEO, through his wholly owned subsidiary KMMN Invest II AS, held 1.2%.
Assessment of non-controlling interests: Through its fully owned company Antarctic Harvesting Holding AS (AHH), The Resource Group TGR AS, subscribed to 555,900 new shares (the A-shares) in Aker BioMarine Antarctic AS for a cash consideration of NOK 11 million in September 2015. The shares subscribed to constitute a separate share class with rights to an annual preferential dividend of 7% of the invested capital, but with no economic rights to any profits above this level. The preferred shares are included as interest bearing debt in the statement of financial position. The structure enables the company to access foreign capital while remaining in compliance with its fishing licenses. Through the shareholders agreement, the company holds the majority of the voting rights for all matter except the reserved matters. The reserved matters give AHH some rights, but not power over the relevant activities. AHH’s rights are either protective or relates to activities that does not significantly affect the return. The company has power over the relevant activities, and has control over Aker BioMarine Antarctic AS. Based on the content of the shareholder agreement between the company and AHH, the company defines Aker BioMarine Antarctic AS as a subsidiary, even if the ownership is 40% (the B-shares). It has therefore been assessed that the shareholders agreement does not give rise to any non- controlling interests in the Group financial statements.
Investments in associates
The Group accounts for investments in associates under the equity method. As per 31 December 2022, the investment and share of results are immaterial to the Group’s financial statements.
The consolidated financial statements for the Group in 2022 included the following subsidiaries:
| Shareholding in % | Voting rights in % | Administrative headquarters | Location | Country | |
|---|---|---|---|---|---|
| Aker BioMarine Antarctic AS | 40 | 100* | Lysaker | Norway | |
| Aker BioMarine Antarctic US LLC | 100 | 100 | Issaquah | USA | |
| Aker BioMarine Antarctic Services AS | 100 | 100 | Lysaker | Norway | |
| Aker BioMarine Antarctic Australia Pty Ltd | 100 | 100 | Melbourne | Australia | |
| Aker BioMarine Manufacturing LLC | 100 | 100 | Houston | USA | |
| Aker BioMarine Antarctic SA (former Odalson S.A.) | 100 | 100 | Montevideo | Uruguay | |
| Aker BioMarine US Holding Inc | 100 | 100 | Issaquah | USA | |
| Complector Ship Management AS | 100 | 100 | Lysaker | Norway | |
| Aker BioMarine Asia Ltd | 100 | 100 | Hong Kong | China | |
| Aker BioMarine Shanghai International Trading Co Ltd | 100 | 100 | Shanghai | China | |
| Aker BioMarine Canada Inc | 100 | 100 | Vancouver | Canada | |
| Euphausia LLC | 100 | 100 | Wilmington | USA | |
| Aker BioMarine (Thailand) Ltd | 100 | 100 | Bangkok | Thailand | |
| Aker BioMarine India Private Ltd | 100 | 100 | Mumbai | India | |
| NewRide LLC | 100 | 100 | Issaquah | USA | |
| Epion Brands LLC | 100 | 100 | Issaquah | USA | |
| Lang Pharma Nutrion Inc | 100 | 100 | Middletown | USA | |
| Wanaka BioMarine Ltd | 100 | 100 | Nelson | New Zealand | |
| Aker BioMarine Japan K.K | 100 | 100 | Tokyo | Japan | |
| Aker BioMarine Chile S.A. | 100 | 100 | Puerto Varas | Chile | |
| Aion AS (until April 2022, see Note 1) | 100 | 100 | Lysaker | Norway |
*) Aker BioMarine ASA has all voting rights except for certain fundamental matters which require consent from both shareholders
The consolidated financial statements for the Group in 2021 included the following subsidiaries:
| Shareholding in % | Voting rights in % | Administrative headquarters | Location | Country | |
|---|---|---|---|---|---|
| Aker BioMarine Antarctic AS | 40 | 100* | Lysaker | Norway | |
| Aker BioMarine Antarctic US LLC | 100 | 100 | Issaquah | USA | |
| Aker BioMarine Antarctic Services AS | 100 | 100 | Lysaker | Norway | |
| Aker BioMarine Antarctic Australia Pty Ltd | 100 | 100 | Melbourne | Australia | |
| Aker BioMarine Manufacturing LLC | 100 | 100 | Houston | USA | |
| Aker BioMarine Financing LLC | 100 | 100 | Houston | USA | |
| Aker BioMarine Antarctic SA (former Odalson S.A.) | 100 | 100 | Montevideo | Uruguay | |
| Aker BioMarine US Holding Inc | 100 | 100 | Issaquah | USA | |
| Complector Ship Management AS | 100 | 100 | Lysaker | Norway | |
| Aker BioMarine Asia Ltd | 100 | 100 | Hong Kong | China | |
| Aker BioMarine Shanghai International Trading Co Ltd | 100 | 100 | Shanghai | China | |
| Aker BioMarine Canada Inc | 100 | 100 | Vancouver | Canada | |
| Euphausia LLC | 100 | 100 | Wilmington | USA | |
| Aker BioMarine (Thailand) Ltd | 100 | 100 | Bangkok | Thailand | |
| Aker BioMarine India Private Ltd | 100 | 100 | Mumbai | India | |
| NewRide LLC | 100 | 100 | Issaquah | USA | |
| Epion Brands LLC | 100 | 100 | Issaquah | USA | |
| Lang Pharma Nutrion Inc | 100 | 100 | Middletown | USA | |
| Wanaka BioMarine Ltd | 100 | 100 | Nelson | New Zealand | |
| Aion AS | 100 | 100 | Lysaker | Norway |
*) Aker BioMarine ASA has all voting rights except for certain fundamental matters which require consent from both shareholders
| USD Millions | 2022 | 2021 |
|---|---|---|
| Continued operations: | ||
| Net profit (loss) | 10.0 | -8.0 |
| Profit (loss) from continued operations attributable to Equity holders of the parent | 10.0 | -8.0 |
| Number of shares | ||
| Share outstanding as per 1 January | 87,586,086 | 87,586,086 |
| Capital increase | 51,647 | - |
| Shares outstanding as per 31 December | 87,637,733 | 87,586,086 |
| Weighted average number of shares as per 31 December | 87,629,125 | 87,586,086 |
| Earnings per share | ||
| Basic | 0.11 | -0.09 |
| Dilluted | 0.11 | -0.09 |
The Group performed a review of events after the balance sheet date through the date the financial statements were issued and determined that there were no such events requiring recognition or disclosure in the financial statements.
AKER BIOMARINE ASA
3. Finance | Financial statements
Aker BioMarine ASA Annual Report – 2022 92
AKER BIOMARINE ASA
FINANCIAL STATEMENTS 2022
3.# Finance
Aker BioMarine ASA Annual Report – 2022 93
For the year ended 31 December
| USD Millions | Note | 2022 | 2021 |
|---|---|---|---|
| Operating revenues | 2 | 0.2 | 0.2 |
| Revenues from Group companies | 12 | 16.9 | 16.8 |
| Total revenues | 17.1 | 17.0 | |
| Salaries and other payroll expenses | 3, 14 | -8.1 | -10.8 |
| Other operating expenses | 4 | -6.1 | -8.9 |
| Operating expenses Group companies | 12 | -0.3 | -0.6 |
| Operating profit/loss before depreciation, amortization and impairment | 2.6 | -3.3 | |
| Depreciation, impairment, and amortization | 7 | -0.1 | -0.1 |
| Operating profit (loss) | 2.5 | -3.4 | |
| Interest income from Group companies | 12 | 10.3 | 14.3 |
| Net foreign exchange gain / loss (-) | 3.6 | 0.5 | |
| Other interest income and financial income | 13 | 10.1 | - |
| Interest and guarantee expenses to Group companies | 12 | -0.3 | -2.5 |
| Other financial expenses | 13 | -0.3 | -3.7 |
| Net financial items | 23.4 | 8.6 | |
| Profit (loss) before tax | 25.8 | 5.2 | |
| Tax expense | 6 | - | - |
| Net profit (loss) | 25.8 | 5.2 | |
| Allocation of loss for the year | |||
| Profit (loss) for the year | 25.8 | 5.2 | |
| Transferred to accumulated loss | -25.8 | -5.2 |
As per 31 December
| Note | 2022 | 2021 | |
|---|---|---|---|
| ASSETS | |||
| Property, plant and equipment | 7 | 0.2 | 0.3 |
| Intangible assets | 7 | 0.2 | - |
| Shares in subsidiaries and other companies | 8 | 315.6 | 305.8 |
| Other interest-bearing receivables, external, non-current | 2.6 | - | |
| Long-term receivables from Group companies | 12 | 213.9 | 211.4 |
| Total non-current assets | 532.5 | 517.5 | |
| Accounts receivable and other non-interest-bearing receivables | 0.7 | 0.5 | |
| Current receivables from Group companies | 12 | 11.1 | 5.0 |
| Cash and cash equivalents | 11 | 3.9 | 0.5 |
| Total current assets | 15.7 | 6.0 | |
| Total assets | 548.2 | 523.5 | |
| LIABILITIES AND OWNERS' EQUITY | |||
| Share capital | 5 | 75.9 | 75.9 |
| Share premium | 5 | 472.9 | 472.7 |
| Total paid-in capital | 548.8 | 548.6 | |
| Accumulated loss | 5 | -5.1 | -30.9 |
| Total equity | 543.7 | 517.7 | |
| Pension liabilities | 10 | 0.1 | 0.2 |
| Total non-current liabilities | 0.1 | 0.2 | |
| Current debt to related parties | 12 | 0.1 | 0.3 |
| Accounts payable and other current liabilities | 4 | 4.3 | 5.3 |
| Total current liabilities | 4.4 | 5.6 | |
| Total liabilities | 4.5 | 5.8 | |
| Total equity and liabilities | 548.2 | 523.5 |
Oslo 21 March 2023
The Board of Directors and CEO of Aker BioMarine ASker
For the year ended 31 December
| USD Millions | Note | 2022 | 2021 |
|---|---|---|---|
| Profit (loss) before tax | 25.8 | 5.2 | |
| Net expensed interest, interest paid and received | 12,13 | -10.5 | 21.4 |
| Depreciation, impairment, and amortization | 7 | -9.6 | 0.1 |
| Unrealized foreign exchange (gain) / loss and other non-cash-generating items | 0.4 | - | |
| Changes in ordinary operating items | -7.9 | 18.4 | |
| Net cash flow from operating activities | -1.8 | 45.1 | |
| Payments for fixed and intangible assets | 7 | -0.3 | - |
| Net cash flow from long term receivables | 12 | 5.3 | 15.0 |
| Net cash flow from investment activities | 5.0 | 15.0 | |
| Capital Increase | 0.2 | - | |
| Proceeds, new short-term loans, related parties | 12 | - | - |
| Change in bank overdrafts | 9 | - | - |
| Change in bank loan | 9 | - | -59.9 |
| Net cash flow from financing activities | 0.2 | -59.9 | |
| Net change in cash and cash equivalents | 3.4 | 0.2 | |
| Cash and cash equivalents as of 1 January | 0.5 | 0.3 | |
| Cash and cash equivalents as of 31 December | 3.9 | 0.5 |
The annual report is prepared and presented according to the Norwegian Accounting Act of 1998 and generally accepted accounting practices in Norway.
Subsidiaries are valued according to the cost method. Investments are valued at acquisition cost for the shares, unless a write-down has been necessary. Investments are written down to market value if the decline is viewed as not transitory in nature and when deemed necessary according to generally accepted accounting principles. Write-downs are reversed if the basis for the write-down is no longer present. Associated companies and investments in joint venture are valued according to the equity method in the parent company accounts. The latter Investments are initially valued at acquisition cost for the shares, and subsequently adjusted to reflect the investor's share of the net assets of the associate.
Current assets and short-term liabilities include items that are due within one year. Other items are classified as non-current assets or long-term liabilities. Current assets are valued at the lower of acquisition cost or market value. Current liabilities are recorded in the balance sheet at face value at the time of the transaction. Non-current assets are recorded at acquisition cost. Upon a change in value not deemed to be temporary, the affected fixed asset is written down to market value. Long-term liabilities are recorded in the balance sheet at face value at the date they are assumed.
Accounts receivable and other receivables are recorded in the balance sheet at face value after provision for expected losses. Provisions for losses are made based on individual assessment of receivables.
Aker BioMarine ASA has US Dollars as functional currency and the financial statements are presented in US Dollars. Foreign-currency-denominated monetary items are valued at the year-end exchange rate, and currency translation effects are presented within net foreign exchange gain/loss in the financial statement.
Other acquired intangible assets are recognized in the balance sheet at acquisition cost, less any accumulated amortization and impairment losses. Estimated useful lives for the current and comparative reporting periods are as follows:
* Property, plant and equipment: 0–5 years
* Intangible assets: 0–3 years
Income arising from royalties and management services provided to subsidiaries shall be recognized if all the following conditions are satisfied:
* It is probable that the economic benefits associated with the transaction will flow to the Company; and
* The amount of revenue can be measured reliably.
Tax expenses in the profit and loss account comprise taxes payable for the period and any change in deferred tax/deferred tax benefit. In 2022, deferred tax is calculated as 22% of the temporary differences between accounting and tax values, as well as the tax deficit carryforward at the end of the accounting. Tax increasing and tax reducing temporary differences that are reversed or can be reversed in the same period, are offset. Net deferred tax benefit is recorded in the balance sheet to the extent it is likely that it will be used.
The cash flow statement has been prepared using the indirect method. Cash and cash equivalents comprise cash, bank deposits, and other short-term liquid placements.
Preparation of the financial statement in accordance with generally accepted accounting practices requires management to make estimates and assumptions that affect the reported amounts in the profit and loss statement, the measurement of assets and liabilities, and the disclosure of contingent assets and liabilities on the balance sheet date. Actual results may differ from estimates. Contingent losses deemed probable and quantifiable are expensed as incurred.
Operating revenues in 2022 are distributed as follows:
| USD Millions | North | Norway | EU | America | Other | Total |
|---|---|---|---|---|---|---|
| Other revenue | 0.2 | - | - | - | - | 0.2 |
| Management fee from Group companies | 16.9 | - | - | - | - | 16.9 |
| Total operating revenues | 17.1 | - | - | - | - | 17.1 |
Operating revenues in 2021 are distributed as follows:
| USD Millions | North | Norway | EU | America | Other | Total |
|---|---|---|---|---|---|---|
| Other revenue | 0.2 | - | - | - | - | 0.2 |
| Management fee from Group companies | 16.7 | - | - | - | - | 16.8 |
| Total operating revenues | 17.0 | - | - | - | - | 17.0 |
Salaries and payroll expenses comprise of the following:
| Year ended 31 December USD Millions | 2022 | 2021 |
|---|---|---|
| Salaries | -5.5 | -8.7 |
| Other personnel costs | -1.1 | -0.7 |
| Employer's social security contribution | -1.1 | -1.0 |
| Pension expenses | -0.4 | -0.4 |
| Total | -8.1 | -10.8 |
Average number of employees: 47.0 (2022), 54.0 (2021).
Other operating expenses comprise the following:
| Year ended 31 December USD Millions | 2022 | 2021 |
|---|---|---|
| Professional services | -1.8 | -4.9 |
| Office rent | -1.1 | -1.1 |
| Travel | -0.2 | -0.3 |
| Other operating expenses | -3.0 | -2.6 |
| Total other operating expenses | -6.1 | -8.9 |
Remuneration paid to auditor included in other operating expenses 1):
| Year ended 31 December USD Millions | 2022 | 2021 |
|---|---|---|
| Ordinary auditing services | -0.2 | -0.1 |
| Other services | -0.1 | -0.1 |
| Tax advisory | -0.1 | -0.1 |
| Total | -0.4 | -0.3 |
1) Remuneration to the auditor is presented excluding VAT.
The Company's share capital amounts to NOK 525 516 516 distributed as 87 637 733 shares issued, each with a par value of NOK 6.00. All shares are equal in all respects. As of 31 December 2022, Aker ASA owns 77.7% of the shares in the Company, 1.2% are owned by the Company’s CEO through a holding company, and the remaining 21.1% shares by other investors.
Changes in equity are set forth below:
| USD Millions | Share capital | Share premium | Accumulated loss | Total equity |
|---|---|---|---|---|
| Equity as of 1 January 2021 | 75.9 | 472.7 | -41.7 | 506.9 |
| Correction from prior year | - | - | 5.6 | 5.6 |
| Loss for the year | - | - | 5.2 | 5.2 |
| Equity as of 31 December 2021 | 75.9 | 472.7 | -30.9 | 517.7 |
| Capital Increase | - | 0.2 | - | 0.2 |
| Loss for the year | - | - | 25.8 | 25.8 |
| Equity as of 31 December 2022 | 75.9 | 472.9 | -5.1 | 543.7 |
The 20 largest shareholders as per 31 December 2022:
| Shareholder | Number of shares | Per cent |
|---|---|---|
| Aker Capital as | 68,132,830 | 77.7 % |
| Arctic Fund Management AS | 2,003,769 | 2.3 % |
| Danske Capital AS | 1,579,123 | 1.8 % |
| Strawberry Capital AS | 1,475,105 | 1.7 % |
| DNB Asset Management AS | 1,156,021 | 1.3 % |
| KMMN Invest II AS | 1,050,308 | 1.2 % |
| Storbrea AS | 665,000 | 0.8 % |
| VJ Invest AS | 604,902 | 0.7 % |
| Beck Asset Management AS | 600,000 | 0.7 % |
| OP Asset Management AS | 518,253 | 0.6 % |
| Tigerstaden Marine AS | 456,119 | 0.5 % |
| Handelsbanken Fonder | 426,128 | 0.5 % |
| Aktia Asset Management | 400,000 | 0.5 % |
| RAM Rational Asset Management | 395,000 | 0.5 % |
| Varner AS | 334,282 | 0.4 % |
| Centragruppen AS | 329,345 | 0.4 % |
| Mandatum Fund Management | 287,577 | 0.3 % |
| Haadem Invest AS | 250,000 | 0.3 % |
| Loe Equity AS | 240,000 | 0.3 % |
| DNB Asset Management AS | 197,264 | 0.2 % |
| Total | 81,101,026 | 93% |
Note 6 – Tax expense and deferred tax
| Year ended 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Income tax expense | |||
| Change in deferred tax | - | 2.9 | |
| Unrecognized change in deferred tax assets | - | -2.9 | |
| Tax base | |||
| Profit (loss) before tax | 25.8 | 5.2 | |
| Currency translation from USD to NOK | 23.5 | - | |
| Tax base (statutory tax purposes) | 49.3 | 5.2 | |
| Tax base (statutory tax purposes) | 49.3 | 5.2 | |
| Change in deferred tax | - | 0.6 | |
| Tax base | 49.3 | 5.8 | |
| Tax loss carried forward | -49.3 | -5.8 | |
| Temporary differences | |||
| Property, plant and equipment and intangible assets | -0.1 | - | |
| Gain and loss accounts | 0.1 | 0.1 | |
| Post employment benefit liabilities | -0.1 | -0.2 | |
| Net deferred tax assets | -0.1 | -0.1 | |
| Tax losses carried forward | -83.0 | -155.1 | |
| Interest rate deductability carry forward | -15.1 | -16.5 | |
| Basis for deferred tax asset | -98.1 | -171.6 | |
| Deferred tax asset (22%) | -21.6 | -37.8 | |
| Unrecognized deferred tax assets | 21.6 | 37.8 |
Deferred tax has not been capitalized as it is not considered probable that the Company will have future taxable profit available, against which the unused tax losses and unused tax credits can be utilized.
Movements in property, plant, and equipment in 2022
| Furniture & fixtures | Total | |
|---|---|---|
| USD Millions | ||
| Acquisition cost as of 1 January 2022 | 0.6 | 0.6 |
| Retirement | 0.1 | 0.1 |
| Acquistion cost as of 31 December 2022 | 0.7 | 0.7 |
| Accumulated amortization and impairment as of 1 January 2022 | -0.3 | -0.3 |
| Depreciation for the year | -0.1 | -0.1 |
| Retirement | -0.1 | -0.1 |
| Accumulated amortization and impairment as of 31 December 2022 | -0.5 | -0.5 |
| Book value as of 31 December 2022 | 0.2 | 0.2 |
Movements in property, plant, and equipment in 2021
| Furniture & fixtures | Total | |
|---|---|---|
| USD Millions | ||
| Acquisition cost as of 1 January 2021 | 0.6 | 0.6 |
| Acquistion cost as of 31 December 2021 | 0.6 | 0.6 |
| Accumulated amortization and impairment as of 1 January 2021 | -0.2 | -0.2 |
| Depreciation for the year | -0.1 | -0.1 |
| Accumulated amortization and impairment as of 31 December 2021 | -0.3 | -0.3 |
| Book value as of 31 December 2021 | 0.3 | 0.3 |
Movements in intangible assets in 2022
| Intangibles | Total | |
|---|---|---|
| USD Millions | ||
| Acquisition cost as of 1 January 2022 | - | - |
| Investments | 0.3 | 0.3 |
| Retirement | - | - |
| Acquistion cost as of 31 December 2022 | 0.3 | 0.3 |
| Accumulated amortization and impairment as of 1 January 2022 | - | - |
| Amortization for the year | - | - |
| Accumulated amortization and impairment as of 31 December 2022 | - | - |
| Book value as of 31 December 2022 | 0.3 | 0.3 |
All fixed assets are depreciated using the straight-line method and have estimated useful life of 5 years.
Operating lease expense amounted to USD 1.3 million in 2022 and USD 1.3 million in 2021. The Company’s lease commitments under non-cancellable leases amounts to approx. USD 1.4 million annually, until 2025. Operating lease costs are expensed as incurred. The Company has no financial lease arrangements.
Through its fully owned company Antarctic Harvesting Holding AS, The Resource Group Trg AS, owns 555,900 A-shares in Aker BioMarine Antarctic AS. The remaining 370,600 B-shares are held by Aker Biomarine ASA. Based on the content of the shareholder agreement between the Company and Antarctic Harvesting Holding, the Company defines Aker BioMarine Antarctic AS as a subsidiary for accounting purposes, even if the ownership is 40%.
Shares in subsidiaries and other companies comprised the following as of 31 December 2022:
| Ownership in % 1) | Headquarter | Equity | Profit/loss before tax | Book value | |
|---|---|---|---|---|---|
| USD Millions | |||||
| Aker BioMarine Antarctic AS | 40 | Bærum, Norway | -6.7 | -49.9 | 305.4 |
| Aion AS 2) | 100 | Bærum, Norway | -0.3 | -1.8 | 0.4 |
| Complector Ship Management AS | 100 | Bærum, Norway | - | - | - |
| Shares in subsidiaries and other companies | 305.4 |
1) Share of voting rights equals share of ownership.
2) Based on preliminary unaudited financials
Shares in subsidiaries and other companies comprised the following as of 31 December 2021:
| Ownership in % 1) | Headquarter | Equity | Profit/loss before tax | Book value | |
|---|---|---|---|---|---|
| USD Millions | |||||
| Aker BioMarine Antarctic AS | 40 | Bærum, Norway | 49.6 | -32.4 | 305.4 |
| Aion AS | 100 | Bærum, Norway | 0.1 | - | 0.4 |
| Complector Ship Management AS | 100 | Bærum, Norway | - | - | - |
| Shares in subsidiaries and other companies | 305.8 |
1) Share of voting rights equals share of ownership.
| As per 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Non-current liabilities | |||
| Loan from DNB ASA | - | - | |
| Current liabilities | |||
| Working capital facility from DNB ASA | - | - | |
| Total interest-bearing current liabilities | - | - |
In November 2021, Aker BioMarine Antarctic AS entered into a new sustainability-linked multicurrency term and revolving facility, and all loans in Aker BioMarine ASA were repaid.
The Company has a combination of defined contribution and defined benefit plans that cover virtually all employees. These schemes comply with laws and regulations set forth in the different countries of operations. The Company’s defined benefit obligation cover one employee. At the end of the year the defined benefit obligations were USD 0.5 million and the assets were USD 0.4 million. The fair value of the net obligation has been calculated using an appropriate discount rate. During the year the Company expensed USD 0.4 million, net of settlements and curtailment, on the defined benefit plan (2021: USD 0.4 million). In addition, USD 0.02 million related to changes in actuarial assumptions is expensed in other comprehensive income (2021: USD 0.02 million). Pension expenses and liabilities relating to the defined-benefit plan are discussed in Note 4 to the consolidated financial statements for Aker BioMarine Group. The Company complies with all requirements for coverage by a collective pension plan, and all relevant laws and regulations.
The Company has USD 0.3 million in restricted funds associated with employee tax withholdings as of 31 December 2022 (2021: USD 0.3 million).
In 2022 and at year-end 2022, Aker BioMarine ASA recognized the following transactions in the statement of profit and loss and the balance sheet with other Group companies and related parties:
| USD Millions | Aker ASA | Aker BioMarine Antarctic AS | Other subsidiaries | Fornebu Gateway Felleskost AS | Cognite | Other related parties | Total |
|---|---|---|---|---|---|---|---|
| Transactions recorded in profit and loss | |||||||
| Management fee (income) | - | 16.8 | 0.1 | - | - | 0.1 | 17.0 |
| Mangement fee (costs) | -0.1 | - | - | - | - | -0.2 | -0.3 |
| Interest income | - | 10.2 | 0.1 | - | - | - | 10.3 |
| Transactions recognized in balance sheet at year-end | |||||||
| Long-term interest bearing receivable | - | 213.9 | - | - | - | - | 213.9 |
| Current receivables | - | 11.0 | - | - | - | - | 11.0 |
In 2021 and at year-end 2021, Aker BioMarine ASA recognized the following transactions in the statement of profit and loss and the balance sheet with other Group companies and related parties:
| USD Millions | Aker ASA | Aker BioMarine Antarctic AS | Other subsidiaries | Fornebu Gateway Felleskost AS | Cognite | Other related parties | Total |
|---|---|---|---|---|---|---|---|
| Transactions recorded in profit and loss | |||||||
| Management fee (income) | - | 16.7 | 0.1 | - | - | 0.1 | 16.9 |
| Mangement fee (costs) | -0.1 | - | - | -0.2 | - | - | -0.3 |
| Interest income | - | 14.3 | - | - | - | - | 14.3 |
| Guarantee fee | -0.3 | -2.2 | - | - | - | - | -2.5 |
| Transactions recognized in balance sheet at year-end | |||||||
| Long-term interest bearing receivable | - | 209.4 | 2.0 | - | - | - | 211.4 |
| Current receivables | - | 4.9 | 0.1 | - | - | - | 5.0 |
| Current liabilities | 0.2 | - | - | - | 0.1 | - | 0.3 |
Other interest- and financial income:
| Year ended 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Interest income, bank | 0.1 | - | |
| Other financial income | 10.0 | - | |
| Total | 10.1 | - |
Other financial expenses:
| Year ended 31 December | USD Millions | 2022 | 2021 |
|---|---|---|---|
| Interest expenses | -0.3 | -3.2 | |
| Other financial expenses | - | -0.5 | |
| Total | -0.3 | -3.7 |
Board remuneration
There is no remuneration paid to the Board members and Employee representative other than ordinary salaries. For details about board remuneration, refer to the Company’s Remuneration Report which is published on the Company’s website. https://www.akerbiomarine.com/investor-other-reports-and-presentations
Remuneration paid to the CEO
The CEO is member of the defined contribution pension and insurance plans that cover all employees. The Group uses standard employment contracts. The CEO may be dismissed upon three months' notice. If the company terminates the employment, the CEO is entitled to three months' severance pay after the end of the notice period. The pension is capped at a salary of 12 times the National Social Security base amount. The Group implemented share incentive programs for employees in February 2022. In addition to the EMT bonus program also referred to in the Remuneration report, Aker BioMarine has established a bonus program for level two managers based on EBITDA performance. Sales resources have separate bonus programs linked to achievement of certain sales related KPIs.Based on the company’s performance in 2020, management team was awarded a bonus totaling USD 0.9 million that was accrued in 2021 and paid in 2022. No bonus awarded in 2021 or 2022, except for one member of the EMT. For details about remuneration paid to the CEO and EMT, refer to the Company’s Remuneration Report which is published on the Company’s website. https://www.akerbiomarine.com/investor-other-reports-and-presentations
Annual Report – 2022 103
Today, the board of directors and the chief executive officer reviewed and approved the board of directors’ report and the consolidated and separate annual financial statements of Aker BioMarine ASA, consolidated and parent company for the year ending and as of 31 December 2022. Aker BioMarine ASA’s consolidated financial statements have been prepared in accordance with IFRSs and IFRICs adopted by the EU as well as additional disclosure requirements in the Norwegian Accounting Act and as such are to be applied per 31 December 2022. The separate financial statements of Aker BioMarine ASA have been prepared in accordance with the Norwegian Accounting Act and Norwegian accounting standards as at 31 December 2022. The board of directors’ report for the group and the parent company satisfy with the requirements of the Norwegian Accounting Act and Norwegian accounting standard no. 16, as at 31 December 2022.
To the best of our knowledge:
Fornebu, 21 March 2023
The Board of Directors and CEO of Aker BioMarine ASA
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Alternative performance measures, meaning financial performance measures not included within the applicable financial reporting framework, are used by the Group to provide supplemental information by excluding items that in management’s view, does not give indications of the periodic operating results. Financial APMs are used to enhance comparability of the results from a period to the next, and management uses these measures internally when driving performance in terms of long- and short- term forecasts. The measures are adjusted IFRS measures, and are defined, calculated and consistently applied in the Group’s financial reporting. The Group focuses on EBITDA and Adjusted EBITDA when presenting the period’s financial result internally and externally. Adjusted EBITDA is adjusted for special operating items. Financial APMs should not be considered as substitute for measures of performance in accordance with applicable financial reporting framework.
The Group uses the following APMs in the reporting:
“EBITDA” and “Adjusted EBITDA” are used as APMs to facilitate operating performance comparisons from period to period, and the others are relevant key figures mainly in connection with the mentioned performance measures.
The significant items of income and expenditure represent the difference between EBITDA and Adjusted EBITDA and are labeled "Special operating items" (which is also the wording used in the Group’s financing agreements).
As per the Group’s APM guideline, Special operating items fall within these brackets:
As per the Group’s APM guidelines, the materiality level for recognizing a Special operating item is USD 1.0 million.
The following table reconciles Adjusted EBITDA to Operating profit and Net income (loss) in the consolidated statements of Profit or loss.
‘Depreciation, amortization and impairment non-production assets’ in the below table is derived directly from the Profit or loss line item ‘Depreciation, amortization and impairment’.
‘Depreciation, amortization and impairment production assets’ in the below table can be reconciled with information in Note 8 ‘Property, plant and equipment’ under line items ‘Depreciation for the year’ and ‘Impairment’.
The following items are included in Special Operating Items over 2022 and 2021.
| Year ended 31 December | 2022 | 2021 |
|---|---|---|
| Net loss | 10.0 | (8.0) |
| Tax expense | 2.2 | 0.6 |
| Financial income | (4.0) | (21.3) |
| Financial expenses | 22.0 | 15.7 |
| Net foreign exchange gain/loss | (8.1) | (0.7) |
| Operating profit | 22.1 | (13.7) |
| Depreciation, amortization and impairment | 51.4 | 56.9 |
| EBITDA | 73.5 | 43.2 |
| Special operating items | (4.5) | 4.7 |
| Consisting of: | ||
| La Manche operating costs and gain from sale | - | (0.4) |
| Restructuring costs | 1.3 | 2.7 |
| Legal expenses SG&A | - | 1.4 |
| Oslo Børs listing 'Transaction related costs' | - | 1.1 |
| Aion transaction | (5.8) | - |
| Adjusted EBITDA | 69.0 | 47.9 |
Alternative performance measures | Consolidated financial statements
Annual Report – 2022 115
Improvement program (2022): In Q4, the company initiated an improvement program to streamline operations, improve margins, cut costs, and optimize cash conversion. As a result of this program, USD 1.2 million in external costs as well as internal hours incurred by the project team has been recognized as APM.
Aion (2022): As a result of the Aion transaction, the Group’s investment in the plastic circularity company has been deconsolidated. The gain from the Aion transaction (fair value adjustment of the investment) of USD 2.8 million is a material transaction which is non-recurring in nature and special compared to ordinary operational income or expenses.
La Manche operating cost and gain from sale (2021): In October 2021, the Group sold the supply vessel La Manche with a resulting gain of USD 0.4 million.
Restructuring cost (2021): As part of the Superba turnaround and other initiatives, the Group incurred restructuring and legal related costs amounting to USD 2.7 million
Annual Report – 2022 116
Reporting period: 2022
The EU Taxonomy Regulation (Regulation 2020/852) came into effect on 12 July 2020. Since then, the EU has implemented Delegated Acts to further expand on the taxonomy framework. This includes the Climate Delegated Act (Regulation 2021/2139), the Disclosures Delegated Act (Regulation 2021/2178), and the Complementary Climate Delegated Act (Regulation 2022/1214). In addition, another delegated act, the Environmental Delegated Act, is currently being drafted. As of now, under the taxonomy regulation, large, public-interest undertakings are required to report on the proportion of their economic activities that meet taxonomy technical screening criteria.
Scores per activity
Please note that the alignment ratio in each row applies only to their respective row. Company total can be seen in the “Total” row 3.# Finance | Appendix Annual Report – 2022 117
According to the Non-Financial Reporting Directive (NFRD) article 19(a) and 29(a), non-financial undertakings which are public-interest entities (i.e., listed) with more than 500 employees, in the case of a group on a consolidated basis, are required to report on the taxonomy. As of 2023, the undertakings are required to report on the proportion of their taxonomy-eligible and taxonomy-aligned activities.
As a Norwegian company, Aker BioMarine is not covered by the taxonomy regulation, since the regulation has not yet come into effect in Norway. This report is therefore Aker BioMarine's voluntary taxonomy report.
Aker BioMarine has performed the taxonomy assessment using Celsia Taxonomy software solution. The methodology of taxonomy assessment has included the following steps:
Aker BioMarine has performed a taxonomy assessment for all activities in the company. This has been done with a bottom-up approach, assessing the lowest level of reporting units and aggregated to the top company level, enabling a taxonomy assessment for the company total, per activity and per business division.
A taxonomy-eligible activity means an economic activity that is included in the taxonomy regulation. All Aker BioMarine’s activities have been mapped out according to the activities defined in the Climate Delegated Act and categorized as either eligible or non-eligible following the description stated in the regulation. The eligible and non-eligible activities are listed in the table below:
| Activity | Comments |
|---|---|
| 6.10. Sea and coastal freight water transport, vessels for port operations and auxiliary activities | Antarctic Provider is our transport vessel, providing crew and supplies to and from Antarctica. |
| Taxonomy-non-eligible activities | No ready and approved criteria set that covers our fishing vessels and production plant in Houston. |
To conduct the assessment as accurately as possible, Aker BioMarine’s operations were split into reporting units that correspond with the above-mentioned scope (see point 1). The areas identified were fishery, transport and production. Assets identified as reporting units for the taxonomy reporting were the fishing vessels, plant and transportation vessel for Aker BioMarine.
Each of the activities listed under Aker BioMarine’s defined reporting units have been assessed against the technical screening criteria for the respective activities defined in the Climate Delegated Act. As the taxonomy regulation is still in an early phase of adoption, the focus has been on transparency, best intention, and providing explanation for choices made when interpreting the criteria. The interpretation of the criteria is based on both the explicit information available and the understanding of the purpose of the requirement.
The taxonomy regulation has not yet adopted explicit criteria for the minimum social safeguards beyond the references to OECD guidelines and UN Guiding Principles. Still, Celsia’s understanding is that defined requirements on minimum social safeguards need to be placed on the company and the activities in question in order to assess activity-alignment. Aker BioMarine has therefore based compliance with minimum social safeguards on an assessment of several requirements derived from the process of due diligence on responsible business conduct as described in OECD’s Guidelines for Multinational Companies and the UN Guiding Principles for Business and Human Rights. Please see Appendix 1 for the actual criteria.
Finally, by adding financial data to each activity in the reporting unit, the proportion of Aker BioMarine’s taxonomy-eligible and taxonomy-aligned activities were calculated. This was done by calculating the three key performance indicators (KPIs): turnover, capital expenditures (CapEx), and operational expenditures (OpEx). The results were calculated for each reporting unit and activity and then aggregated for the company level.
The proportion of taxonomy-eligible and taxonomy-aligned turnover, CapEx, and OpEx are calculated by dividing a numerator by a denominator. The definitions of the turnover, Capex, and Opex KPIs are set out in Annex I to the Disclosures Delegated Act. The following sections provide further information on how the denominators and numerators were derived for each KPI for the reporting period 2022.
The net turnover equals the external revenue according to the financial consolidated statement.
Aker BioMarine has completed the taxonomy with the best intention and a focus on transparency and an explanation of the interpretation of the taxonomy criteria. The interpretation of the criteria is based on both the explicit information available at the time of the assessment and the understanding of the purpose of the requirement.
The criteria related to minimum social safeguards are still not adopted by the EU. Still, Aker Biomarine has mapped its operations against the process of due diligence on responsible business by the OECD Guidelines for Multinational Enterprises. Through this assessment we have identified some areas of 3. Finance | Appendix Annual Report – 2022 118 improvements where we have defined mitigating actions being implemented within 2023. Based on this, we have concluded that we comply with the minimum social safeguards.
The taxonomy regulation is still in a phase of early adoption and Aker BioMarine is closely following any clarifications from the EU Commission or any changes in industry best-practice when it comes to interpreting the activity descriptions or technical screening criteria.
Please note: The taxonomy regulation has not yet adopted explicit criteria for the minimum social safeguards beyond the references to OECD guidelines and UN Guiding Principles. Still, Celsia’s understanding is that defined requirements on minimum social safeguards need to be placed on the company and the activities in question in order to assess activity-alignment. Celsia has therefore based compliance with minimum social safeguards on an assessment of several requirements derived from the process of due diligence on responsible business conduct as described in OECD’s Guidelines for Multinational Companies and the UN Guiding Principles for Business and Human Rights. Please see below for the actual criteria.
The following company divisions and reporting frameworks have been used in Aker BioMarine’s ESG-reporting 2022.
The climate reporting is based on a climate monitoring and tracking system developed by Aker BioMarine as it is crucial to have reliable and comprehensive data of our emissions that can be third party verified. This statement demonstrates the criteria and standards used to report CO2e. Aker BioMarine use the Greenhouse Gas Protocol Initiative (GHG protocol) as a framework to report on GHG emissions, to ensure as much as possible a complete, consistent, transparent and accurate account of the company’s GHG emissions. Aker BioMarine use operational control as the company has full authority to introduce and implement its operating policies of the operation. As part of this work Aker BioMarine has engaged DNV GL to identify, assess and document emission factors to be used in our climate accounting for annual operations. DNV GL has provided the emissions conversion factors based on publicly available sources (in 2021).
The metrics used to report data of our climate impact was selected after an assessment of how we impact the most. The company controls most of our value chain, and we have well identified emissions sources. We have documented processes to ensure a climate accounting system that is reliable. Aker BioMarine strive to be transparent in our climate reporting. We have internal control systems to ensure correct data and reporting. We strive to be consistent over time in the use of emission factors for climate accounting. This makes it possible to better understand the development in emissions.
This report includes the operations of Aker BioMarine such as vessel operations, land-based production and land-based offices and warehouses. The report also includes scope 3 emissions like packaging, travel and transport of goods to customers. The reporting data in this report includes data to the year ending 31 December 2022.
The calculations are based on various sources, coupled with a CO2e conversion factor which is described in the next chapter. All data is gathered from sub-systems to our centralized data warehouse. The CO2- calculations are made in the data warehouse.
We measure, monitor, and report our emissions derived from our fuel usage on vessels, daily. We use manual sounding to measure fuel usage on all vessels, except Antarctic Endurance which use sensor reading of fuel level. The fuel use is registered manually in ShipAdmin, daily by the crew. Shipadmin is a vessel management tool. It’s used on the ships to oversee all aspects of a ship operation. For sustainability, it delivers data related to fuel usage by the main and auxiliary engines, boilers, and electric energy generators. All vessels use the same fuel, MGO. The amount of fuel is multiplied with a CO2e conversion factor described below, in our climate accounting system. We receive gas usage from our gas provider on a monthly basis.
We pull data from our electricity providers on the electricity consumption, monthly. As required by the GHG Protocol, we report our scope 2 emissions using both the location based and the marked based approach. The location based method is considered our main reporting method.
Most suppliers to Aker BioMarine are based in Norway, Europe and USA, however, Aker BioMarine has selected suppliers based in low-cost countries defined with high (A) and medium (B) risk of breaching basic human rights and decent working conditions according to United Nations Environment Program. In order to minimize risk of negative social impact, Aker BioMarine has implemented a rigorous supplier qualification process in which all suppliers must confirm adherence to Aker BioMarine’s governing documents and submit a thorough supplier self-assessment topics on Anti-Corruption and Integrity, Human & Labor Rights and Health & Safety, and ultimately be subject to an audit if any information deviates from Aker BioMarine’s standards for its suppliers.
Risk of exposing employees and contractors to unsafe working conditions. Our operation – especially offshore – entails an inherent risk of negative social impact on the health and safety of our people if sufficient safety considerations are not made. This risk relates to both our own employees and to the hired crew. This risk is also present in our production plant in Houston, where there are manual processes combined with heavy loads and/or handling of chemicals. To mitigate this, Aker BioMarine complies with strict rules and standards and carries out trainings to promote a safety culture that ensures the safety of all people carrying out work on Aker BioMarine’s behalf, including employees, business partners or other suppliers.
Potential community impact. Aker BioMarine’s operations have the potential to cause harm to a sensitive ecosystem should any of our vessel incur spills or breakdowns in the South Antarctic Ocean. Similarly, with our production plant in Houston, there is an inherent risk of spills, waste, etc.
5. Can you provide information and documentation on the overall measures you have implemented to reduce, cease or prevent the risks identified?
Our risk-mitigating actions related to supply chain management are described above. A more detailed description is set out in Aker BioMarine’s 2022 Annual Report under the Transparency Act. To mitigate risk of unhealthy working conditions, Aker BioMarine complies with strict rules and standards and carries out trainings to promote a safety culture that ensures the safety of all people carrying out work on Aker BioMarine’s behalf, including employees, business partners or other suppliers. A more detailed description of the risks related to HSE-events and our preventive and mitigating actions can be found in in Aker BioMarine’s Annual Report 2022, chapter 2. To mitigate risks related to community impact, Aker BioMarine invests in its vessels and other assets both financially as well as in terms of competency by always ensuring that people are given the best training possible for proper handling and use. We furthermore invest in and implement technology where relevant to decrease the risk of error.
6. Do you have a whistle blower mechanism or similar in place, that is known and accessible for internal and external stakeholders?
Yes, accessible through our webpage, with separate instructions and procedure for use.
7. Do you track whether your policies and identified risks are properly managed through optimal implementation in your day-to-day business?
As part of our risk review process, we track Aker BioMarine’s salient risks. We report quarterly on KPIs within ESG such as emissions, spill, HSE-events, breaches of Code of Conduct, etc. See also question 9 below.
8. Does your company report on how it addresses adverse impact on human rights, labor rights and anti-corruption - where such risks exist - and the results of its actions taken?
Yes, as part of annual reporting and in line with the requirements of the Transparency Act.
9. Is the board and top management kept informed about risks, and progress and results reached in the management of these?
Yes, through separate risk review in our Audit Committee, with risks reported on a quarterly basis in addition to a more thorough review with the Board of Directors on annual basis.
10. Are the above-mentioned steps of policy commitment, risk assessment, implementation, tracking and reporting performed on a regular and iterative basis in order to cover changes in risk exposure that can trigger more in-depth assessment and enhanced mitigation?
Yes.
We calculate the emissions based on order weight, shipment method (air, road, sea), distance in a straight line between warehouse to warehouse and use the associated CO2 conversion factor.
Based on the input from Aker BioMarine and their supplier, it is regarded that the emission factor for “average container ship” is the most relevant and accurate option for the vessels Aker BioMarine charters for sea transport. Unit of measurement is in tonne.km, because Aker BioMarine’s transported goods do not necessarily make up 100% of the cargo on the vessels. This calculation is based on the distance (km) from our warehouse to the customer location in a straight line. Tonne is based on the actual customer order that has been shipped with packaging.
For transport by road, Aker BioMarine mostly uses heavy goods vehicles (HGV) for transporting their goods. An average HGV CO2 emissions factor based on km travelled for 100% laden trucks has been proposed to account for their CO2 emissions related to this activity. BEIS (2020) is the recommended source for the emission factor due to its applicability for use in several countries. DNV GL have also included CO2 factors for average HGV on empty hauls (0% laden), as well as a factor for average HGV based on CO2 emissions per tonne per kilometre. This is to account for cases where Aker BioMarine’s goods do not make up the total tonnage of the haul.
Unit of measurement is given in kgCO2/tonne.km due to Aker BioMarine’s goods not necessarily making up 100% of the total cargo.
| Emission source | Emission source | CO2e conversion factor | Reference |
|---|---|---|---|
| Transport of goods - Transport by sea | Average Container ship | 0,01614 kgCO 2 e/tonne.km | BEIS, 2020 |
| Transport of goods – by road | Average HGV (diesel) 100% laden | 1,00229 kgCO 2 e/km | BEIS, 2020 |
| Transport by road | Average HGV (diesel) 0% laden | 0,65811 kgCO 2 e/km | BEIS, 2020 |
| Transport by road | Average HGV (diesel, tonnage-based) | 0,10065 kgCO 2 e/tonne.km | BEIS, 2020 |
| Transport of goods - Transport by air | International (one way) | 0,59943 kgCO 2 e/tonne.km | BEIS, 2020 |
The emission from travel is based on travel agency information on trips booked with distance travelled and ticket class (economy/business).
| Business travel by air (one way) | kgCO 2 e/pax.km | Reference | |
|---|---|---|---|
| Economy class | 0,073615 | BEIS, 2020 | |
| Premium economy class | 0,11778 | BEIS, 2020 | |
| Business class | 0,21348 | BEIS, 2020 | |
| First class | 0,29445 | BEIS, 2020 | |
| Average passenger | 0.09612 |
Aker BioMarine has reported the information cited in this GRI content index for the period 01.01.22 to 31.12.22 with reference to the GRI Standards. GRI 1 used GRI 1: Foundation 2021.
| GRI STANDARD | DISCLOSURE | LOCATION |
|---|---|---|
| GRI 2: General Disclosures 2021 | 2-1 Organizational details | p. 52, 54 and 61 |
| 2-2 Entities included in the organization’s sustainability reporting | p. 22 | |
| 2-3 Reporting period, frequency and contact point | https://newsweb.oslobors.no/ | |
| 2-5 External assurance | p. 21, 25 and 46-47, 104.113 | |
| 2-6 Activities, value chain and other business relationships | p. 42-43, 51 | |
| 2-7 Employees | p. 37-38 and 42, 56, 65 | |
| Governance | 2-9 Governance structure and composition | p. 45-47, 50 and 54 |
| 2-10 Nomination and selection of the highest governance body | p. 45-47, 54 | |
| 2-11 Chair of the highest governance body | p. 50 | |
| 2-12 Role of the highest governance body in overseeing the management of impacts | p. 45 | |
| 2-13 Delegation of responsibility for managing impacts | p. 25, 46 | |
| 2-14 Role of the highest governance body in sustainability reporting | p. 25 and 113 | |
| 2-15 Conflicts of interest | p. 9-10 in Code of conduct | |
| 2-16 Communication of critical concerns | p. 17- 19, 25 | |
| 2-17 Collective knowledge of the highest governance body | p. 25 | |
| 2-19 Remuneration policies | p 88, Aker BioMarine Policy on Remuneration to the Executive Management Management remuneration report | |
| 2-20 Process to determine remuneration | p. 46,47 | |
| 2-21 Annual total compensation ratio | p. 88 | |
| Strategy, policies and practices | 2-22 Statement on sustainable development strategy | p. 4 and 53 |
| 2-23 Policy commitments | AKBM Code of Conduct https://www.akerbiomarine.com/corporate-social-responsibility | |
| 2-24 Embedding policy commitments | Code of conduct | |
| 2-25 Processes to remediate negative impacts | p. 17-18, 26 | |
| 2-26 Mechanisms for seeking advice and raising concerns | p. 46 in annual report + p. 18 in Code of conduct | |
| 2-27 Compliance with laws and regulations | p. 41 | |
| 2-28 Membership associations | https://www.akerbiomarine.com/sustainability/partnerships p. 27 in annual report | |
| 2-29 Approach to stakeholder engagement | p. 16, 20-47, 53 & 54 | |
| 2-30 Collective bargaining agreements | p. 37 | |
| GRI 3: Material Topics 2021 | 3-1 Process to determine material topics | P. 20-47 in annual report |
| 3-2 List of material topics | P. 20-47 in annual report | |
| 3-3 Management of material topics | p. 17-19, 20-47, and 53 | |
| GRI 201: Economic Performance 2016 | 201-2 Financial implications and other risks and opportunities due to climate change | p. 17-18 and 25 |
| GRI 205: Anti-corruption 2016 | 205-1 Operations assessed for risks related to corruption | Code of conduct from p. 14. |
| 205-2 Communication and training about anti-corruption policies and procedures | Code of conduct from p. 14. | |
| GRI 303: Water and Effluents 2018 | 303-1 Interactions with water as a shared resource | p. 5, 11, 19, 26-29 and 53, appendix 2 |
| 303-2 Management of water discharge-related impacts | p.34 | |
| 303-3 Water withdrawal | p.34 | |
| 303-5 Water consumption | p.34 | |
| GRI 304: Biodiversity 2016 | 304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas | p. 28 and 53 MSC Certification |
| 304-2 Significant impacts of activities, products and services on biodiversity | p. 17, 26- 29 and 53 MSC Certification | |
| 304-3 Habitats protected or restored | p. 10, 17, 24, 26-27 and 53 MSC Certification | |
| GRI 305: Emissions 2016 | 305-1 Direct (Scope 1) GHG emissions | p. 33, 22, appendix 2 |
| 305-2 Energy indirect (Scope 2) GHG emissions | p.22, 33, appendix 2 | |
| 305-3 Other indirect (Scope 3) GHG emissions | p. 22, 33, appendix 2 | |
| 305-4 GHG emissions intensity | p. 21,32, appendix 2 | |
| 305-5 Reduction of GHG emissions | p. 33, appendix 2 | |
| GRI 306: Waste 2020 | 306-1 Waste generation and significant waste-related impacts | p. 34 |
| 306-2 Management of significant waste-related impacts | p. 21 and 34 | |
| 306-4 Waste diverted from disposal | p. 5 and 34 | |
| GRI 401: Employment 2016 | 401-1 New employee hires and employee turnover | p 43 |
| 401-3 Parental leave | p. 43 | |
| GRI 403: Occupational Health and Safety 2018 | 403-1 Occupational health and safety management system | p. 40 and 53 |
| 403-2 Hazard identification, risk assessment, and incident investigation | p. 40 and 53 | |
| 403-3 Occupational health services | p. 37-39 p. 9 | |
| 403-5 Worker training on occupational health and safety | p. 53 | |
| 403-6 Promotion of worker health | p. | |
| 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships p. 40 and 53 | ||
| 403-8 Workers covered by an occupational health and safety management system p. 40 and 53 | ||
| 403-9 Work-related injuries p. 40 and 53 | ||
| 403-10 Work-related ill health p. 39, 53 |
GRI 404: Training and Education 2016
404-3 Percentage of employees receiving regular performance and career development reviews p.43
GRI 405: Diversity and Equal Opportunity 2016
405-1 Diversity of governance bodies and employees p. 37, 50
405-2 Ratio of basic salary and remuneration of women to men p 38
GRI 406: Non-discrimination 2016
406-1 Incidents of discrimination and corrective actions taken p. 37, 41
GRI 407: Freedom of Association and Collective Bargaining 2016
407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk p.52
GRI 408: Child Labor 2016
408-1 Operations and suppliers at significant risk for incidents of child labor 2022 TRANSPARENCY ACT REPORT FOR AKER BIOMARINE ASA, published on company website
GRI 409: Forced or Compulsory Labor 2016
409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor 2022 TRANSPARENCY ACT REPORT FOR AKER BIOMARINE ASA, published on company website
GRI 411: Rights of Indigenous Peoples 2016
411-1 Incidents of violations involving rights of indigenous peoples 2022 TRANSPARENCY ACT REPORT FOR AKER BIOMARINE ASA, published on company website
GRI 413: Local Communities 2016
413-2 Operations with significant actual and potential negative impacts on local communities 2022 TRANSPARENCY ACT REPORT FOR AKER BIOMARINE ASA, published on company website
GRI 414: Supplier Social Assessment 2016
414-1 New suppliers that were screened using social criteria 2022 TRANSPARENCY ACT REPORT FOR AKER BIOMARINE ASA, published on company website
414-2 Negative social impacts in the supply chain and actions taken 2022 TRANSPARENCY ACT REPORT FOR AKER BIOMARINE ASA, published on company website
GRI 415: Public Policy 2016
415-1 Political contributions AKBM Code of Conduct
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