Quarterly Report • Nov 16, 2022
Quarterly Report
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Q3'2022
16th of November 2022
Financial statements and notes
Key information
| Cautionary note regarding forward-looking statements 2 | |
|---|---|
| Arctic Fish Holding3 | |
| Important events 4 | |
| Principal activities 5 | |
| Q3'2022 Performance7 | |
| Outlook 13 | |
| Board declaration 15 | |
| Consolidated Income Statement 16 | |
| Statement of Financial Position 17 | |
| Statement of Equity 18 | |
| Statement of Cash Flow 19 | |
| Note 1 – Accounting Principles 20 | |
| Note 2 – Farming summary 22 | |
| Note 3 - Biomass 23 | |
| Note 4 – Non-recurring events 26 | |
| Note 5 – Fair Value Adjustments 26 | |
| Note 6 – Related parties 27 | |
| Note 7 – Financial Covenants 28 | |
| Note 8 – Shareholder List 30 | |
| Note 9 – Alternative Performance Measures 31 |
This quarterly report includes forward-looking statements that reflect the Company's current views with respect to future events and financial and operational performance. These forward-looking statements may be identified by the use of forward-looking terminology. These forward-looking statements are not historic facts. The forward-looking statements are not guarantees of future performance. The Company's actual financial position, operating results and liquidity, and the development of the industry in which the Company operates, may differ materially from those made in, or suggested, by the forward-looking statements. The Company cannot guarantee that the intentions, beliefs, or current expectations upon which its forward-looking statements are based will occur.
By their nature, forward-looking statements involve, and are subject to, known and unknown risks, uncertainties, and assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, the outcome may differ materially from those set out in the forward-looking statements.
These forward-looking statements speak only as at the date on which they are made. The Company undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on the Company's behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this report.
Arctic Fish Holding AS was incorporated on 1 October 2020. The Company is a holding company which owns 100% of the shares in Arctic Fish ehf, the former parent company of the Group, incorporated on 1 July 2011. Arctic Fish ehf. was founded in 2011 and is now one of the leading salmon farmers in Iceland, situated in the West Fjords, a region with favourable conditions for fish farming. The West Fjords are known for their pristine nature, good seawater conditions, low density, and high growth potential.
The Group has a modern and high capacity smolt facility with recirculating aquaculture systems ("RAS") technology, being currently the only RAS facility in Iceland with large-scale production capacity. 7,443 tonnes of head-on gutted ("HOG") salmon were harvested by the Group in 2020 and 11,479 tonnes HOG in 2021, or a 54% growth year over year. So far, for the first three quarters of 2022 the Group has harvested 7,218 tonnes which amounts to 63% of the volumes compared to 2021.
The Group has farming licences for a total of 27.1 thousand tonnes maximum allowed biomass ("MAB"), of which 5.3 thousand tonnes relate to licences for rainbow trout that are in the process of being converted to salmon licences. The Group also has applications for an additional 4.8 thousand tonnes of MAB for salmon. Additionally, the Group holds a license for land based smolt production on its own land in Norðurbotn, which is required for the Group's ongoing smolt production.
The Group's principal activity is salmon farming, producing smolt in its own freshwater hatchery and farming salmon at sea before the fish is harvested and finally sold to the market.
The Group has a modern freshwater hatchery in Norðurbotn (Tálknafjörður), using RAS technology. The hatchery is the largest single investment by the Group at NOK 300 million and is 100% owned by Arctic Fish. It has access to natural water temperatures of between 6°C and 22°C all year round and good geothermic conditions. The hatchery has a proven record of smolt production, with roughly 13 million smolt having been produced at the hatchery since 2017. The Group also owns a 36.3 km2 land area near the smolt facility, which it is using for a smolt facility expansion. The construction project continues to stay on track, with timing and cost estimations both in line with expectations.
The Group's seawater sites are strategically located in all fjords on the West Coast of Iceland, with ten sites with granted licenses, and another three sites with license applications pending. This ensures that production may be alternated to minimise biological risk with a proven low mortality rate and feed conversion ratio.
The Group currently holds licenses for a production capacity of 27,100 tonnes
MAB with additional applications for 4,800 tonnes MAB that the Group expects to receive in 2022. Existing licenses are divided into 21,800 tonnes MAB of salmon and 5,300 tonnes MAB of trout that is in process of being converted to salmon licenses in 2022 as well.
Q3'22 REPORT
All processing of the Group's salmon is currently handled externally through a contractor at a processing facility in Bildudalur, Arnarfjörður. When the fish are ready for harvesting, the fish are transported from different locations with well boats. The Group has already made decisions that relate to increasing harvesting capacity. The Group considers the current slaughtering price as high and there is ongoing work on new and more modern harvesting solutions that will decrease the slaughtering price.
The fish are currently sold "Free Carriage" through a sales agreement with Seaborn AS, a major distributor of Icelandic and Norwegian salmon. The Group has a global footprint with sales in all major markets, with strategic marketing activities focussing in the long term on more high paying markets. Current export routes have developed positively, and there is potential to enter new markets in the future efficiently.
The third quarter's performance will be broken down into the main operating categories, investments, and financing. In brackets some historical performance for the year 2021 is provided.
(Figures in brackets = 2021, unless otherwise specified).
Arctic Fish posted operating revenues of NOK 116.0 million (Q3'2021: NOK 161.0 million) in the third quarter of 2022, a decrease of 28.0% from the corresponding prior-year period. The Group achieved a positive operational EBIT of NOK 17.2 million (Q3'2021: NOK 26.9 million), a decrease of NOK 9.7 million year over year.
The Group recognised a negative fair value adjustment of NOK -10.7 million (Q3'2021: NOK -24.2 million) on the biomass in sea, an increase of NOK 13.5 million compared to the corresponding quarter in 2021. The negative fair value adjustment in the quarter can largely be attributed to lower forward price indications.
From farming operations, the company harvested 1,968 tonnes (Q3'2021: 2,924 tonnes) gutted weight in the quarter, a decrease of 32% from the corresponding quarter last year. The operations achieved a farming operational EBIT pr. kg of NOK 9.8 (Q3'2021: NOK 10.6 pr. kg). The decrease in operational EBIT pr. kg is due to higher production costs year over year.
Net financial losses were NOK -35.7 million in the quarter (Q3'2021: NOK -5.1 million). The losses in the quarter mostly relate to unfavourable forex rate development.
At the end of the reporting period, total assets amounted to NOK 1,834 million, an increase of NOK 294.3 million from the prior period (Q2'2022). The change
in total assets is attributable to several factors. Property, plant, and equipment increased by NOK 124.1 million. Receivables increased by NOK 97.6 million, and bank deposits decreased by NOK -6.5 million. Biological assets and other inventories increased by 71.8 million NOK.
The Group's net interest-bearing debt (NIBD) increased by NOK 248 million, from NOK 337 million at the end of the second quarter of 2022 to NOK 585 million at the end of the third quarter 2022. The increase is for the most part attributable to investments in fixed assets and working capital changes as well as finance related items.
At the end of the quarter, the Group's equity totalled NOK 976 million, a decrease of NOK 24.6 million from the end of the previous quarter. The equity ratio at the end of the quarter amounted to 53.2%.
Operating revenues for the first nine months of 2022 amounted to 485.5 MNOK, compared to 429.6 MNOK for the same period in 2021, this is due to a significant increase in overall market prices as harvested volumes were 15% less than in 2021 (7,218 tonnes 2022 and 8,541 tonnes 2021). Average price achievement in 2022 so far has been 67.3 NOK pr. kg, which is a 33% increase when compared to the same period last year, where price achievement was 50.3 NOK pr. kg.
Operational EBIT pr. kg increased by 143% year over year, with 2022 reaching 19.88 pr. kg harvested compared to 8.2 NOK pr. kg last year. The increase is due to the aforementioned increase in market prices, as production costs of sold fish increased by 10% year over year for the first nine months, from 42.1 NOK pr. kg in 2021 to 47.4 NOK pr. kg in 2022.
Other items on the income statement changed in the following way, with fair value adjustments decreasing by 14% year over year due to an increase in the discount factor, from 4% to 6%, used for risk assumptions in the discounting methodology. Financial items generated currency losses of 51.7 MNOK in the first nine months of 2022 compared to currency gains of 2.3 MNOK in the first nine months of 2021.
Total assets on the balance sheet increased by 41% year over year to 1,834 MNOK at the end of Q3'2022 due to heavy investments in property, plant, equipment and biomass growth. This subsequently affected the interest-bearing debt, which increased by 169% year over year and stands at 641.6 MNOK at the end of Q3'2022. In similar fashion, the cash amounts to 56.9 MNOK at the end of Q3'2022, which is an increase of 2% compared to Q3'2021. Liquidity is still good, with unused facilities that can be utilized for future growth.
| Financial performanc e summary Q3 YTD |
Unit | 2022 YTD | 2021 YTD | % YoY | Commentary on changes between years: |
|---|---|---|---|---|---|
| Operating revenue |
NOK '000 | 485.526 | 429.642 | 13,0% | Higher market prices result in increased revenue |
| Harvested volume |
Tonnes | 7.218 | 8.541 | -15,5% | Lesser harvesting volumes due to unfavourable development in the sea farming operations |
| Average price | NOK pr. kg | 67,27 | 50,30 | 33,7% | Substantial increase in market prices |
| Production cost of sold fish |
NOK pr. kg | 47,39 | 42,11 | -12,5% | Production costs increased due to unfavourable development of growth and mortality event in Q1 2022 & increased raw material prices |
| Operational EBIT |
NOK '000 | 17.236 | 26.904 | -35,9% | Mostly due to the mortality incident suffered in Q1 2022 and higher production costs |
| Operational EBIT/KG |
NOK pr. kg | 19,88 | 8,20 | 142,4% | High market prices impact the operational EBIT pr. kg positively |
| Fair value adjustment |
NOK '000 | 50.478 | 58.837 | -14,2% | Lesser Fair Value Adjustments due to increased risk factor in discounting methodology |
| Financial items | NOK '000 | -51.688 | 2.286 | - 2361,1% |
Currency development has been fluctuating substantially creating currency losses YTD |
| Assets | NOK '000 | 1.833.971 | 1.302.770 | 40,8% | Increased due to heavy investment in property, plant, equipment, and biomass growth |
| NIBD | NOK '000 | 584.741 | 182.824 | 219,8% | Increased interest bearing debt and less cash due to heavy capital expenditures cause an increase in NIBD |
| Cash | NOK '000 | 56.889 | 55.517 | 2,5% | Liquidity is good with unused facilities that can be utilized in future growth |
Q3'22 REPORT
The Group sells all harvested salmon FCA Bildudalur. The sold volume HOG was 1,968 tonnes in the quarter (in Q3'2021 2,924 tonnes. The average price in the quarter was 58.9 NOK pr.kg (in Q3'2021 the average price was 55.1 NOK pr. kg). The achieved salmon price therefore improved by 3.8 NOK pr. kg. compared to Q3'2021, or an increase of close to 7% year over year. The price achievement decreased by 25.7 NOK pr. kg from Q2'2022.
The biomass at the end of the quarter was 8,058 tonnes in the sea and the closing average weight was close to 1.9 kgs, resulting in more fish and more biomass in the sea compared to Q2'2022, at a greater average weight (at the end of Q2'2022 the biomass was 5,815 tonnes in the sea and the closing average weight was close to 1.7 kgs).
The production cost was 49.1 NOK pr kg in the quarter, which is an increase of 1.4 NOK pr. kg from the previous quarter.
In the smolt facility at the end of the period there are 4.9 million fry and smolt at an average weight of 18.7 grams, compared to 4.3 million fry and smolt at an average weight of 21.6 grams last year.
Arctic Fish Holding is listed on the Euronext Growth Oslo under the trading symbol "AFISH".
As of 30 th of September 2022 the company has 31,876,653 shares outstanding and Arctic Fish Holding does not own any of its own shares. The share price at the start of the quarter was 91.00 NOK pr. share. Closing price at the end of Q3'2022 was 94.60 NOK pr. share, or an increase of 3.60 NOK pr. share from last quarter. The stock traded at a high of 107.00 and a low of 93.00 within the quarter. 320 trades were executed, with the number of shares traded amounting to 902,264 shares.
Arctic Fish continues developing according to its growth plan. Harvesting volumes in 2022 are expected to be 18% lower than in 2021 overall, coming in at a total of 9.4 thousand tonnes. The group is yet very optimistic on continuing strong market performance moving forward and believes that it can generate a healthy margin on sold quantities throughout the year.
Construction project expenditure related to the smolt expansion in Tálknafjörður and the harvesting facility in Bolungarvík were the key investments in the quarter. Minor investments were made in farming and other smaller smolt production investments.
Within the course of 2022 the Group expects to receive the following salmon sea farming license:
▪ Conversion of 5,300 tonnes of trout licenses to salmon licenses and further expansion up to 10,100 tonnes in Ísafjarðardjúp.
We confirm, to the best of our knowledge, that the financial report for the first nine months of 2022 has been prepared in accordance with IAS 34 – Interim Financial Reporting, as adopted by EU, and gives a true and fair view of the Group's assets, liabilities, financial position and profits and loss for the period. We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the first nine months of the financial year and their impact on the condensed set of financial statements, a description of the principal risks and uncertainties for the remaining three months of the financial year, and major related parties transactions.
Svein Sivertsen
Chairman
Gunnthor Ingvason
Board member
Hildur Árnadóttir Board member
Stein Ove Tveiten CEO
Neil Shiran Thorisson CFO
| Q3 | Q 3 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| (NOK '000) | 2022 | 2021 | 2022 | 2021 | 2021 |
| Operating revenues | 116.000 | 161.000 | 485.526 | 429.642 | 595.895 |
| Cost of goods sold | 27.642 | 68.516 | 186.539 | 208.457 | 299.189 |
| Salaries | 16.461 | 17.253 | 50.056 | 42.624 | 54.151 |
| Depreciation | 13.822 | 11.961 | 39.671 | 33.562 | 46.501 |
| Other operating costs | 40.839 | 36.366 | 201.180 | 85.584 | 109.110 |
| Operational EBIT | 17.236 | 26.904 | 8.081 | 59.414 | 86.944 |
| Fair value adjustments | $-10.685$ | $-24.183$ | 50.478 | 58.837 | 44.897 |
| Production tax | $-1.676$ | $-818$ | $-6.108$ | $-3.054$ | $-3.843$ |
| EBIT | 4.875 | 1.904 | 52.450 | 115.198 | 127.998 |
| Other net financial items | $-35.655$ | $-5.141$ | $-51.688$ | 2.286 | 2.580 |
| Earnings before tax (EBT) | $-30.780$ | $-3.237$ | 762 | 117.484 | 130.578 |
| Taxes | 6.157 | 0 | $-152$ | 0 | 21.985 |
| Profit after tax from continuing operations | $-24.623$ | $-3.237$ | 610 | 117.484 | 152.563 |
| Profit after tax on discontinued operations incl. profit from sale | 0 | ||||
| Net profit/loss | $-24.623$ | $-3.237$ | 610 | 117.484 | 152.563 |
| Profit attributable to: | |||||
| Parent company shareholders | $-24.623$ | $-3.237$ | 610 | 117.484 | 152.563 |
| Minority interests | 0 | 0 | $\bf{0}$ | 0 | $\bf{0}$ |
| Earnings per share (NOK) | $-0.77$ | $-0.10$ | 0,02 | 3,69 | 4,79 |
| Earnings per share - diluted | $-0,77$ | $-0,10$ | 0,02 | 3,69 | 4,79 |
| Q 3 | Q3 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| (NOK '000) | 2022 | 2021 | 2022 | 2021 | 2021 |
| Net profit/loss | $-24.623$ | $-3.237$ | 610 | 117.484 | 152.563 |
| Total comprehensive income | $-24.623$ | $-3.237$ | 610 | 117.484 | 152.563 |
| Total comprehensive income attributable to: | |||||
| Parent company shareholders | $-24.623$ | $-3.237$ | 610 | 117.484 | 152.563 |
| (NOK '000) | 30.9.2022 | 30.6.2022 | 30.9.2021 | 31.12.2021 |
|---|---|---|---|---|
| Deferred tax assets | 19.327 | 13.170 | 0 | 19 479 |
| Intangible assets | 55.488 | 54.257 | 49.340 | 52.119 |
| Property, plant and equipment | 947.598 | 823.518 | 605.124 | 657.161 |
| Right of use assets | 3.940 | 4.098 | 0 | 4.435 |
| Non-current financial assets | 650 | 650 | 629 | 629 |
| Non-current assets | 1.027.003 | 895.693 | 655.094 | 733.823 |
| Biological assets | 506.041 | 439.584 | 496.880 | 512.010 |
| Other inventory | 29.195 | 23.881 | 18.800 | 33.785 |
| Receivables | 214.842 | 117.191 | 76.480 | 115.951 |
| Bank deposits | 56.889 | 63.369 | 55.517 | 38.126 |
| Current assets | 806.968 | 644.026 | 647.676 | 699.871 |
| TOTAL ASSETS | 1.833.971 | 1.539.719 | 1.302.770 | 1.433.695 |
| Share capital | 31.877 | 31.877 | 31.877 | 31.877 |
| Other equity | 944.241 | 968.865 | 908.552 | 943.631 |
| Equity | 976.118 | 1.000.742 | 940.429 | 975.508 |
| Deferred tax | 0 | 0 | 2.506 | 0 |
| Provisions | $\bf{0}$ | 0 | 2.506 | 0 |
| Long-term interest-bearing debt | 536.550 | 359.477 | 201.720 | 318.152 |
| Long term leasing liabilities | 3.057 | 3.420 | 0 | 3.424 |
| Total non-current liabilities | 539.607 | 362.897 | 201.720 | 321.576 |
| Short-term interest-bearing debt | 105.080 | 40.406 | 36.621 | 36.063 |
| Short term leasing liabilities | 1.252 | 1.252 | n | 1.138 |
| Trade payables | 208.633 | 119.224 | 112.110 | 91.052 |
| Other current liabilities | 3.280 | 15.198 | 9.384 | 8.357 |
| Current liabilities | 318.246 | 176.080 | 158.115 | 136.609 |
| TOTAL EQUITY AND LIABILITIES | 1.833.971 | 1.539.719 | 1.302.770 | 1.433.695 |
| 30.9.2022 | Equity allocated to parent company shareholders | |||
|---|---|---|---|---|
| (NOK '000) | Share capital | Share premium |
Accumulated earnings |
Total equity |
| Equity at 01.01.2022 | 31.877 | 1.001.740 | $-58.109$ | 975.508 |
| Total comprehensive income | 0 | 0 | 610 | 610 |
| Transactions with shareholders | ||||
| Dividend | 0 | 0 | 0 | |
| Total transactions with shareholders | 0 | 0 | 0 | |
| Equity at 30.09.2022 | 31.877 | 1.001.740 | $-57.499$ | 976.118 |
| 30.9.2021 | Equity allocated to parent company shareholders | |||
|---|---|---|---|---|
| (NOK '000) | Share capital | Share premium |
Accumulated earnings |
Total equity |
| Equity at 01.01.2021 | 689.476 | 0 | $-210.672$ | 478.805 |
| Total comprehensive income | 0 | 0 | 117.484 | 117.484 |
| Transactions with shareholders | ||||
| Reclassification due to new parent | $-689.476$ | 12.888 | 0 | $-676.588$ |
| Proceeds from issue of new share capital | 26.158 | 650.431 | 0 | 676.588 |
| Proceeds from issue of new share capital | 5.719 | 344 281 | 0 | 350,000 |
| Transaction costs | 0 | $-5.859$ | 0 | $-5.859$ |
| Total transactions with shareholders | -657.600 | 1.001.740 | 0 | 344.141 |
| Equity at 30.09.2021 | 31.877 | 1.001.740 | $-93.188$ | 940.429 |
| 31.12.2021 | Equity allocated to parent company shareholders | ||||||
|---|---|---|---|---|---|---|---|
| Share | Accumulated | ||||||
| (NOK '000) | Share capital | premium | earnings | Total equity | |||
| Equity at 01.01.2021 | 689.476 | 0 | $-210.672$ | 478.804 | |||
| Total comprehensive income | 0 | 0 | 152.563 | 152.563 | |||
| Transactions with shareholders | |||||||
| Reclassification due to new parent | -689.476 | 12.888 | 0 | -676.588 | |||
| Proceeds from issue of new share capital | 26.158 | 650.431 | o | 676.588 | |||
| Proceeds from issue of new share capital | 5.719 | 344.281 | 0 | 350,000 | |||
| Transaction costs | 0 | $-5.859$ | 0 | $-5.859$ | |||
| Total transactions with shareholders | -657.600 | 1.001.740 | 0 | 344.141 | |||
| Equity at 31.12.2021 | 31.877 | 1.001.740 | $-58.109$ | 975.508 |
| Q 3 | Q3 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| (NOK '000) | 2022 | 2021 | 2022 | 2021 | 2021 |
| Operational EBIT | 17.236 | 26.904 | 8.081 | 59.414 | 86.944 |
| Adjusted for: | |||||
| Depreciation | 13.822 | 11.961 | 39.671 | 33.562 | 46.501 |
| Production tax | $-1.676$ | $-818$ | $-6.108$ | $-3.054$ | $-3.843$ |
| Change in inventories/biological assets | $-82.456$ | $-39.117$ | 61.036 | $-27.605$ | $-71.661$ |
| Change in account receivables and accounts payables | $-8.242$ | 15.958 | 18.689 | $-30.545$ | $-91.074$ |
| Change in other current assets and liabilities | $-11.918$ | $-1.429$ | $-5.077$ | $-112$ | $-1.138$ |
| Net cash flow from operating activities | $-73.234$ | 13.459 | 116.292 | 31.660 | $-34.271$ |
| Cash flow from investing activities | |||||
| Payments for purchase of fixed assets and licenses (MAB) | $-138.975$ | $-12.476$ | $-333.003$ | $-93.745$ | $-160.846$ |
| Net cash flow from investing activities | $-138.975$ | $-12.476$ | $-333.003$ | $-93.745$ | $-160.846$ |
| Cash flow from financing activities | |||||
| Proceeds from borrowings | 215.204 | o | 269.763 | o | 119,797 |
| Repayment of borrowings | $-25.625$ | $-19.822$ | $-44.583$ | $-69.738$ | $-39.425$ |
| Installments on right to use liabilities | $-273$ | o | $-776$ | o | $-528$ |
| Interest payments for right to use liabilities | $-49$ | o | $-149$ | ٥ | $-153$ |
| Current debt change | 23.214 | $-2.848$ | 27.780 | $-219.472$ | $-247.450$ |
| Issued new share capital | o | ٥ | $\bf{0}$ | 344.141 | 344.140 |
| Net interest payments | $-6.740$ | $-5.496$ | $-16.559$ | $-16.499$ | $-22.311$ |
| Net cash flow from financing activities | 205.730 | $-28.166$ | 235.475 | 38.432 | 154.070 |
| Net increase in bank deposits | $-6.480$ | $-27.183$ | 18.763 | $-23.653$ | $-41.046$ |
| Bank deposits as of start of period | 63.369 | 82.701 | 38.126 | 79.171 | 79.171 |
| Bank deposits at the end of the period | 56.889 | 55.518 | 56.889 | 55.517 | 38.126 |
Arctic Fish Holding AS and its subsidiaries (collectively "the Group", or "Arctic Fish Group") is a publicly listed company on Euronext Growth, with the ticker symbol AFISH.
Arctic Fish Holding AS is a Company incorporated in Norway with headquarters in Iceland. The address of its registered office is Ferjemannsveien 10, 7014 Trondheim, Norway. Arctic Fish´s headquarter is located at Sindragata 10, 400 Isafjordur, Iceland.
The consolidated financial statements of the Group were authorised for issue in accordance with a resolution of the Board of Directors.
The structure of the Group was changed in 2021. Arctic Fish Holding AS is a newly established entity that owns 100% of the shares in Arctic Fish ehf. the Icelandic mother company of the Icelandic subsidiaries Arctic Oddi, Arctic Smolt and Arctic Sea Farm.
In the consolidated financial statements of Arctic Fish Group the values of Arctic Fish Iceland and subsidiaries are continued. The Group has accounted for the reorganization as a continuation of Arctic Fish ehf. The consolidated financial statements are presented as if the Group and Arctic Fish Holding AS as the parent company, had always existed.
Comparative financial information is provided for the preceding period in the Consolidated statement of comprehensive income, Consolidated statement of financial position and Consolidated statement of cash flows.
These condensed, consolidated interim financial statements have been drawn up in accordance with International Financial Reporting Standards (IFRSs) and such interpretations as are determined by the EU and published by the International Accounting Standards Board, including the interim reporting
standard (IAS 34). The interim financial statements do not include all the information required of an annual financial report.
The condensed consolidated interim financial statements have not been audited. As a result of rounding differences, numbers or percentages may not add up to the total.
The consolidated financial statements are presented in Norwegian Kroner (NOK) which is the functional currency of the Group as of 01.01.2021 and onwards.
The operating segment Farming is used by Group management to assess performance and profitability at a strategic level. The Group management is defined as the chief operating decision-makers. The fish farming business includes smolt production, salmon farming and sales of the harvested fish. All farming sites are located in the Westfjords of Iceland. Group management reviews monthly reports in connection with the production sites and operating segments. Performance is evaluated based on operating results (EBIT).
| TOTAL Farming Eliminations / other |
||||||
|---|---|---|---|---|---|---|
| (NOK '000) | Q3 2022 | Q3 2021 | Q3 2022 | Q3 2021 | Q3 2022 | Q3 2021 |
| Total sales revenues | 116.000 | 161.000 | 116,000 | 161.000 | ||
| Operating costs | 96.659 | 130.143 | 2.105 | 2.910 | 98.764 | 134.097 |
| Operational EBIT | 19.341 | 30.858 | $-2.105$ | $-2.910$ | 17.236 | 26,904 |
| Fair value adjustments Production tax |
$-10.685$ $-1.676$ |
$-24.183$ $-817$ |
$-10.685$ $-1.676$ |
$-24.183$ $-818$ |
||
| EBIT | 6.980 | 5.858 | $-2.105$ | $-2.910$ | 4.875 | 1.902 |
| Volume harvested (HOG) | 1.968 | 2.924 | 1.968 | 2.924 | ||
| Operational EBIT per kg Farming | 9,83 | 10,55 | 9,83 | 10,55 |
| Farming | Eliminations / other | TOTAL | ||||
|---|---|---|---|---|---|---|
| (NOK '000) | YTD 2022 | YTD 2021 | YTD 2022 | YTD 2021 | YTD 2022 | YTD 2021 |
| Total sales revenues | 485.526 | 429.642 | 485.526 | 429.642 | ||
| Operating costs | 342.051 | 359.642 | 135.394 | 10.586 | 477.445 | 370.228 |
| Operational EBIT | 143.475 | 70.000 | $-135.394$ | $-10.586$ | $-9.155$ | 59.414 |
| Fair value adjustments | 50.478 | 58.837 | 50.478 | 58.837 | ||
| Production tax | $-6.108$ | $-3.054$ | $-6.108$ | $-3.054$ | ||
| EBIT | 187.844 | 125.783 | $-135.394$ | $-10.586$ | 35.214 | 115.198 |
| Volume harvested (HOG) | 7.218 | 8.541 | 7.218 | 8.541 | ||
| Operational EBIT per kg Farming | 19.88 | 8.20 | 19.88 | 8,20 |
Q3'22 REPORT
In accordance with IAS 41, the biomass is recognised at fair value. The fair value is calculated in accordance with IFRS 13. Adjustments to the fair value of the biomass are presented on a separate line in the income statement. The technical model for calculating fair value is a present value model. Present value is calculated for the biomass on each site/project by estimating the future sales value less remaining production costs discounted to the present value at the balance sheet date.
The fair value of fish in the sea is calculated in the present value model as a function of the expected biomass at the time of harvest multiplied by the expected sales price. For fish that are not harvestable, estimated remaining costs to breed the fish to its harvestable weight are deducted. Cash flows are discounted monthly using a discount factor. The discount factor consists of three main components: 1) risk for events that affect cash flow, 2) hypothetical license and site rent and 3) the time value of money. The discount factor used is 6%. Expected biomass (volume) is based on the estimated number of individuals in the sea, adjusted for expected mortality until harvesting and multiplied by the expected harvest weight per individual at the time of harvest. The measuring unit is the individual fish, but for practical reasons the calculation is made on site level. Live weight of fish in the sea is translated into gutted weight to get the same measurement unit as the prices are set in.
The price is calculated based on forward prices from Fish Pool. The forward price for the period in which the fish expected to be harvested, is used in the calculation of expected cash flow. The price quoted by Fish Pool is adjusted to reflect an ex harvesting plant price achievement and is a reference price. This price is further adjusted for expected harvest costs (well boat, harvest and packing, sales commission), and the governmental production taxes. Adjustments for expected size differences and quality differences are also made. The adjustment in relation to the reference price is done at site level.
The principle of highest and best use, according to IFRS 13 is the basis for the valuation and classification. In the fair value calculation, optimal harvest weight is defined as harvest weight according to harvest plans.
| Book value of inventory: | ||||
|---|---|---|---|---|
| (NOK '000) | 30.9.2022 | 30.6.2022 | 30.9.2021 | 31.12.2021 |
| Raw materials | 29.195 | 23.881 | 18.800 | 33.785 |
| Biological assets - freshwater | 32.914 | 48.088 | 25.772 | 29.575 |
| Biological assets - seawater | 473.127 | 391.496 | 471.108 | 482.435 |
| Total inventory | 535.236 | 463.465 | 515.680 | 545.795 |
| Specification of the biological assets: | ||||
| (NOK '000) | 30.9.2022 | 30.6.2022 | 30.9.2021 | 31.12.2021 |
| Biological assets at cost | 403.332 | 318,408 | 430.708 | 459.778 |
| Fair value adjustments of the biomass | 102.709 | 121.176 | 66.172 | 52.232 |
| Book value biological assets | 506.041 | 439.584 | 496.880 | 512.010 |
| (NOK '000) | Q3 2022 | Q 2 2022 | Q3 2021 | FY 2021 |
|---|---|---|---|---|
| Opening balance biological assets | 5.851 | 5.315 | 9.205 | 10.513 |
| Increase due to fish put in the sea | 126 | 103 | 149 | 436 |
| Increase due to production in the period | 4.401 | 1.696 | 5.053 | 14.541 |
| Reduction due to mortality in the period | $-25$ | $-64$ | -53 | $-631$ |
| Reduction due to harvesting in the period | $-2.295$ | $-1.199$ | $-3.409$ | $-13.382$ |
| Non-recurring events and other | 0 | $\mathbf{0}$ | ||
| Closing balance biological assets | 8.058 | 5.851 | 10.945 | 11.477 |
| (NOK '000) | Q3 2022 | Q 2 2022 | Q3 2021 | FY 2021 |
|---|---|---|---|---|
| Opening balance biological assets | 439.584 | 335.904 | 469.847 | 402.191 |
| Increase due to production in the period | 160.327 | 98.869 | 152.025 | 447.558 |
| Non-recurring events and other at cost | 0 | 0 | $\mathbf{0}$ | |
| Reduction due to harvesting in the period | $-75.404$ | $-36.177$ | $-100.809$ | $-382.636$ |
| Fair value adjustments of the biological assets | $-18.466$ | 40.988 | $-24.183$ | 44.897 |
| Closing balance biological assets | 506.041 | 439.584 | 496.880 | 512.010 |
| Groups of biological assets | Number of | Biomass | Fair value | ||
|---|---|---|---|---|---|
| in sea, status as of 30.9.2022 | fish (1000) | (tonnes) | Costs | adjustments | Book value |
| Smaller than 1 kg | 1.847 | 779 | 38.993 | 9.930 | 48.923 |
| $1-4$ kg | 1.148 | 2.182 | 109.206 | 27.810 | 137.015 |
| Larger than 4 kg | 1.146 | 5.097 | 255.133 | 64.970 | 320.103 |
| Biological assets | 4.141 | 8.058 | 403.332 | 102.709 | 506.041 |
| Groups of biological assets | Number of | Biomass | Fair value | ||
| in sea, status as of 30.6.2022 | fish (1000) | (tonnes) | Costs | adjustments | Book value |
| Smaller than 1 kg | 1.807 | 902 | 41.673 | 18.681 | 60.354 |
| $1-4$ kg | 1.464 | 4.140 | 191.256 | 85.733 | 276.989 |
| Larger than 4 kg | 186 | 809 | 37.392 | 16.762 | 54.153 |
| Biological assets | 3.457 | 5.851 | 270.320 | 121.176 | 391.496 |
| Groups of biological assets in sea, status as of 31,3,2022 |
Number of fish (1000) |
Biomass (tonnes) |
Costs | Fair value adiustments |
Book value |
| THE SUGGEOUGE GO OF STRUCKLE | ,,,,,,,,,,,, | 110111001 | $\sim$ $\sim$ $\sim$ | auponnvno | book value |
|---|---|---|---|---|---|
| Smaller than 1 kg | 1.076 | 494 | 19.337 | 7.447 | 26.784 |
| 1-4 kg | 1.944 | 4.392 | 172.043 | 66.255 | 238.298 |
| Larger than 4 kg | 73 | 430 | 16.840 | 6.485 | 23.326 |
| Biological assets | 3.093 | 5.315 | 208.220 | 80.187 | 288.408 |
| Groups of biological assets in sea, status as of 30.9.2021 |
Number of fish (1000) |
Biomass (tonnes) |
Costs | Fair value adjustments |
Book value |
|---|---|---|---|---|---|
| Smaller than 1 kg | 2.291 | 1.432 | 52.962 | 8.655 | 61.617 |
| $1-4$ kg | 1.291 | 3.489 | 129.073 | 21.092 | 150.165 |
| Larger than 4 kg | 1.239 | 6.025 | 222.900 | 36.425 | 259.325 |
| Biological assets | 4.822 | 10.945 | 404.936 | 66.172 | 471.108 |
| in sea, status as of | Number of | Biomass | Fair value | ||
|---|---|---|---|---|---|
| 31.12.2021 | fish (1000) | (tonnes) | Costs | adjustments | Book value |
| Smaller than 1 kg | 1.145 | 444 | 16.702 | 2.028 | 18.730 |
| $1-4$ kg | 2.774 | 7.213 | 269.912 | 32.771 | 302.682 |
| Larger than 4 kg | 690 | 3.820 | 143.589 | 17.433 | 161.022 |
| Biological assets | 4.609 | 11.477 | 430.203 | 52.232 | 482.434 |
| 30.9.2022 | NOK/kg | 30.6.2022 | NOK/kg | 30.9.2021 | NOK/kg | 31.12.2021 | NOK/kg |
|---|---|---|---|---|---|---|---|
| Q4 22 | 76.27 | Q3 22 | 60.50 | Q4 21 | 55,77 | Q1 22 | 68.67 |
| Q1 23 | 88.10 | Q4 22 | 64.80 | Q1 22 | 60,97 | Q 2 2 2 | 68.23 |
| Q 2 23 | 94.22 | Q1 23 | 66.00 | Q 2 2 2 | 64.40 | Q3 22 | 56,43 |
| $Q3 + Q423$ | 79.25 | Q 2 23 | 57.70 | $Q3 + Q422$ | 56,60 | Q4 22 | 62.27 |
| $Q1 + Q224$ | 80.25 | $Q3 + Q423$ | 63.25 | $Q1 + Q222$ | 56,60 | $Q1 + Q223$ | 65,25 |
| Q3 2022 | Q3 2021 | |||||
|---|---|---|---|---|---|---|
| Fair value | Fair value | |||||
| Non-recurring event 1) | Cost | adjustments | Fair value | Cost | adjustments | Fair value |
| 0 | 0 | |||||
| Biological assets | 0 0 |
0 0 |
$\bf{0}$ | |||
| 1) Non-recurring events are not allocated to the segments. | ||||||
| YTD 2022 | YTD 2021 | |||||
| Fair value | Fair value | |||||
| Non-recurring event 1) | Cost | adjustments | Fair value | Cost | adjustments | Fair value |
| Fish mortality in Dyrafjordur | 129.072 | 129.072 | 0 | |||
| Biological assets | 129.072 | 129.072 | 0 0 |
0 |
Fair value adjustments which are a part of the Group's EBIT, is presented on a
separate line in order to give a better understanding of the Group's operating
profit from goods sold. The item consists of:
| (NOK '000) | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | FY 2021 |
|---|---|---|---|---|---|
| Change in fair value adjustments of the biomass | $-18.466$ | $-24.183$ | 49.939 | 58.837 | 45.435 |
| Change in provision for onerous sales contracts | 7.780 | 538 | ۵ | -538 | |
| Total fair value adjustments | $-10.685$ | $-24.183$ | 50,478 | 58,837 | 44.897 |
| (NOK '000) | 30.9.2022 | 30.6.2022 | 30.9.2021 | 31.12.2021 |
|---|---|---|---|---|
| Fair value adjustments biomass (biological assets) | 102.709 | 121.176 | 66.172 | 52.770 |
| Provision for onerous sales contracts (other current liabilities) | $-7.781$ | -538 | ||
| Net fair value adjustments in the balance sheet | 102.709 | 113.395 | 66.172 | 52.232 |
The Group conducts transactions on normal terms with associates and suppliers who are also Arctic Fish Holding shareholders.
All services and goods are purchased at arm length prices. The table below shows figures from continued operations. The Board is not aware of any changes or transactions in Q3'2022 associated with related parties that in any significant way have an impact on the Group's financial position and profit for the period.
| Goods and services purchased: | |||||
|---|---|---|---|---|---|
| (NOK '000) | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | FY 2021 |
| Companies controlled by large shareholder - products purchased | $\overline{\phantom{a}}$ | 135 | 2.115 | 14.301 | 17.784 |
| Companies controlled by large shareholder - services purchased | 800 | 991 | 2.987 | 2.663 | 3.526 |
| Total goods and services purchased from related parties | 800 | 1.126 | 5.102 | 16.964 | 21.310 |
The group has to fulfil the following covenants for the Group´s main borrowings: The Equity Ratio for each Relevant Period shall at all times be equal to or exceed 40%.
Leverage: Leverage in respect of any Relevant Period specified in column 1 below shall not exceed the ratio set out in column 2 below opposite that Relevant Period. Leverage means, in respect of any Relevant Period, the ratio of Total Net Interest Bearing Debt on the last day of that Relevant Period to EBITDA in respect of that Relevant Period. NIBD/EBITDA ratio cannot be higher 4.5, this covenant has been waived in the quarter. The Q1 results will not be used in further NIBD/EBITDA calculations in 2022.
| Relevant Period Expiring. | Ratio |
|---|---|
| 31 December 2021 | 5.0:1 |
| 31 March 2022 and all subsequent Relevant Periods |
4.5:1 |
Net interest-bearing debt is defined as the net of long-term debt, short-term debt and bank deposits. The measure is useful and necessary information to investors and other users of the financial statements to assess the net of the interest-bearing external capital used to finance the group. The measure is used to calculate return on capital employed and highlights the Group's ability to take on more debt.
| (NOK '000) | 30.09.2022 | 30.6.2022 | 30.09.2021 | 31.12.2021 |
|---|---|---|---|---|
| Reported long-term interest-bearing debt | 536.550 | 359.477 | 201.720 | 318.152 |
| Reported short-term interest-bearing debt | 105,080 | 40.406 | 36.621 | 36,063 |
| Reported bank deposits | $-56.889$ | $-63.369$ | $-55.517$ | $-38.126$ |
| Total net interest bearing debt | 584.741 | 336.514 | 182.824 | 316,090 |
| (NOK '000) | 30.09.2022 | 31.03.2022 | 30.06.2021 | 31.12.2021 |
|---|---|---|---|---|
| Reported equity | 976.118 | 1.000.742 | 940.429 | 975.508 |
| Reported total assets | 1.833.971 | 1.539.719 | 1.302.770 | 1.433.695 |
| Equity ratio | 53.2% | 65.0% | 72.2 % | 68,0 % |
At the end of the third quarter of 2022, the Group is in compliance with the amended terms and covenants of the loan agreement.
| Rank | Name | # of shares | % ownership |
|---|---|---|---|
| 1 | NORWAY ROYAL SALMON ASA | 16.346.824 | 51,28% |
| 2 | J.P. Morgan Bank Luxembourg S.A. | 12.925.224 | 40,55% |
| з | Landsbankinn hf. | 481.567 | 1,51% |
| 4 | KVERVA FINANS AS | 258,000 | 0,81% |
| 5 | CLEARSTREAM BANKING S.A. | 247.721 | 0,78% |
| 6 | VERDIPAPIRFONDET EIKA SPAR | 172.312 | 0,54% |
| 7 | MP PENSJON PK | 165,000 | 0,52% |
| 8 | İslandsbanki hf. | 159.964 | 0,50% |
| 9 | PACTUM AS | 152.751 | 0,48% |
| 10 | VERDIPAPIRFONDET PARETO INVESTMENT | 132,900 | 0,42% |
| 11 | VERDIPAPIRFONDET EIKA NORGE | 125.225 | 0,39% |
| 12 | State Street Bank and Trust Comp | 101.616 | 0,32% |
| 13 | ROTH | 80,000 | 0,25% |
| 14 | Euroclear Bank S.A./N.V. | 46.989 | 0,15% |
| 15 | RAMSFJELL AS | 40.849 | 0,13% |
| 16 | SKEIE ALPHA INVEST AS | 36,000 | 0,11% |
| 17 | VERDIPAPIRFONDET EIKA ALPHA | 34.693 | 0,11% |
| 18 | DNB Luxembourg S.A. | 25.231 | 0,08% |
| 19 | Saxo Bank A/S | 25.215 | 0,08% |
| 20 | VERDIPAPIRFONDET EIKA BALANSERT | 18.972 | 0,06% |
| Ownership of 20 largest shareholders | 31.577.053 | 99,06% | |
| Total number of shares | 31.876.653 | 100,00% |
Arctic Fish Holding AS does not own any of its own shares.
| (NOK '000) | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | FY 2021 |
|---|---|---|---|---|---|
| Operational EBIT continuing operations Non-recurring events (note 4) |
17.236 | 26.904 | 8.081 | 59.414 | 86.944 |
| Operational EBIT | 17.236 | 26.904 | 8.081 | 59.414 | 86.944 |
| Harvested volume (tonnes) | 1.968 | 2.924 | 7.218 | 8.541 | 11.479 |
| Operation EBIT pr. kg | 8,76 | 9,20 | 1.12 | 6,96 | 7,57 |
| (NOK '000) | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | FY 2021 |
|---|---|---|---|---|---|
| Operational EBIT (segment, note 2) | 19.341 | 30.858 | 143.475 | 70.000 | 99.527 |
| Operational EBIT | 19.341 | 30.858 | 143.475 | 70.000 | 99.527 |
| Harvested volume (tonnes) | 1.968 | 2.924 | 7.218 | 8.541 | 11.479 |
| Operational EBIT per kg | 9,83 | 10.55 | 19,88 | 8,20 | 8,67 |
| Production cost per ka FARMING | |||||
|---|---|---|---|---|---|
| (NOK '000) | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | FY 2021 |
| Production cost (segment, note 2) | 96.659 | 130.143 | 342.051 | 359.642 | 496.368 |
| Harvested volume (tonnes) | 1.968 | 2.924 | 7.218 | 8.541 | 11.479 |
| Production cost pr. ka | 49,11 | 44.50 | 47.39 | 42.11 | 43.24 |
| (NOK '000) | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | FY 2021 |
|---|---|---|---|---|---|
| Majority share of net result for the period | $-24.623$ | $-3.237$ | 610 | 117.484 | 152.563 |
| Majority share of fair value adjustments of biomass | 18.466 | 24.183 | $-49.939$ | $-58.837$ | $-45.435$ |
| Fair value of sales contracts and Fish Pool contracts | $-7.780$ | 0 | $-538$ | 0 | 538 |
| Majority share of fair value-adjusted result for the period | $-13.938$ | 20.946 | $-49.867$ | 58.647 | 107.666 |
| Weighted average number of ordinary shares outstanding | 31.876.653 | 31.876.653 | 31.876.653 | 31.876.653 | 31.876.653 |
| Fair value-adjusted earnings per share | $-0,44$ | 0.66 | (1,56) | 1,84 | 3.38 1 |
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