Quarterly Report • Aug 31, 2022
Quarterly Report
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Q2 2022
31st of August 2022
Financial statements and notes
Key information
Harvesting volume (HOG tonnes)
| Cautionary note regarding forward-looking statements 2 | |
|---|---|
| Arctic Fish Holding3 | |
| Important events 4 | |
| Principal activities 5 | |
| Q2 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 half of 2022 the Group has harvested 5,250 tonnes which amounts to 46% 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.
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 second 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 87.0 million (Q2 2021: NOK 99.8 million) in the second quarter of 2022, a decrease of 12.8% from the corresponding prior-year period. The Group achieved a positive operational EBIT of NOK 35.8 million (Q2 2021: NOK 14.7 million), an increase of NOK 21.1 million year over year.
The Group recognised a positive fair value adjustment of NOK 36.9 million (Q2 2021: NOK 42.7 million) on the biomass in sea, a decrease of NOK 5.8 million compared to the corresponding quarter in 2021. The positive fair value adjustment in the quarter can be attributed to higher forward price indications.
From farming operations, the company harvested 1,029 tonnes (Q2 2021: 1,824 tonnes) gutted weight in the quarter, a decrease of 44% from the corresponding quarter last year. The operations achieved a farming operational EBIT pr. kg of NOK 36.8 (Q2 2021: NOK 9.7 pr. kg). The increase in operational EBIT pr. kg is due to significantly higher market prices in the quarter, with production costs increasing year over year.
Net financial losses were NOK -24.9 million in the quarter (Q2 2021: NOK -9.9 million). The losses in the quarter mostly relate to unfavourable currency development.
At the end of the reporting period, total assets amounted to NOK 1,540 million, an increase of NOK 90.5 million from the prior period (Q1 2022). The change in
total assets is attributable to several factors. Property, plant, and equipment increased by NOK 82.5 million. Receivables decreased by NOK -12.0 million, and bank deposits decreased by NOK -70.6 million. Biological assets and other inventories increased by 98.8 million NOK.
The Group's net interest-bearing debt (NIBD) increased by NOK 125 million, from NOK 212 million at the end of the first quarter of 2022 to NOK 337 million at the end of the second 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 1,001 million, an increase of NOK 37.5 million from the end of the previous quarter. The equity ratio at the end of the quarter amounted to 65.0%.
Operating revenues for the first six months of 2022 amounted to 369.5 MNOK, compared to 268.6 MNOK for the same period in 2021, this is due to a significant increase in overall market prices as harvested volumes were 7% less than in 2021 (5.250 tonnes 2022 and 5.617 tonnes 2021). Average price achievement in 2022 so far has been 70.4 NOK pr. kg, which is a 47% increase when compared to the same period last year, where price achievement was 47.8 NOK pr. kg.
Operational EBIT pr. kg increased by 240% year over year, with 2022 reaching 23.6 pr. kg harvested compared to 6.97 NOK pr. kg last year. The increase is due to the aforementioned increase in market prices, as production costs of sold fish increased by 14% year over year for the first six months, from 40.9 NOK pr. kg in 2021 to 46.7 NOK pr. kg in 2022. The production costs increased due to unfavourable development of growth and mortality event in Q1 2022.
Other items on the income statement changed in the following way, with fair value adjustments decreasing by 26% 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 16.0 MNOK in the first six months of 2022 compared to currency gains of 7.4 MNOK in the first six months of 2021.
Total assets on the balance sheet increased by 17% year over year to 1,540 MNOK at the end of Q2 2022 due to heavy investments in property, plant, equipment and biomass growth. This subsequently affected the interest bearing debt, which increased by 88% year over year and stands at 336.5 MNOK at the end of Q2 2022. In similar fashion, the cash amounts to 63.4 MNOK at the end of Q2 2022, which is a decrease of 23% compared to Q2 2021. Liquidity is still good, with unused facilities that can be utilized for future growth.
| Financial performance summary Q2 YTD |
Unit | 2022 YTD | 2021 YTD | % YoY | Commentary on changes between years: |
|---|---|---|---|---|---|
| Operating revenue |
NOK '000 | 369.526 | 268.641 | 37,6% | Higher market prices result in increased revenue |
| Harvested volume |
Tonnes | 5.250 | 5.617 | -6,5% | Lesser harvesting volumes due to unfavourable development in the sea farming operations |
| Average price | NOK pr. kg | 70,39 | 47,83 | 47,2% | Substantial increase in market prices |
| Production cost of sold fish |
NOK pr. kg | 46,74 | 40,86 | -14,4% | Production costs increased due to unfavourable development of growth and mortality event in Q1 2022 |
| Operational EBIT |
NOK '000 | -9.155 | 32.510 | -128,2% | Mostly due to the mortality incident suffered in Q1 2022 |
| Operational EBIT/KG |
NOK pr. kg | 23,64 | 6,97 | 239,3% | High market prices impact the operational EBIT pr. kg positively |
| Fair value adjustment |
NOK '000 | 61.163 | 83.021 | -26,3% | Lesser Fair Value Adjustments due to increased risk factor in discounting methodology |
| Financial items | NOK '000 | -16.033 | 7.427 | -315,9% | Currency development has been fluctuating substantially creating currency losses YTD |
| Assets | NOK '000 | 1.539.719 | 1.311.356 | 17,4% | Increased due to investment in property, plant, equipment, and biomass growth |
| NIBD | NOK '000 | 336.514 | 178.666 | 88,3% | Increased interest bearing debt and less cash due to heavy capital expenditures cause an increase in NIBD |
| Cash | NOK '000 | 63.369 | 82.701 | -23,4% | Liquidity is good with unused facilities that can be utilized in future growth |
The Group sells all harvested salmon FCA Bildudalur. The sold volume HOG was 1,029 tonnes in the quarter (in Q2 2021 1,824 tonnes. The average price in the quarter was 84.6 NOK pr.kg (in Q2 2021 the average price was 54.7 NOK pr. kg). The salmon prices developed positively due to strong market conditions and a demand shift following Covid-19 related issues in 2021. The achieved salmon price therefore improved by 29.9 NOK pr. kg. compared to Q2 2021, or an increase of close to 55% year over year. The price achievement increased by 17.7 NOK pr. kg from Q1 2022. The price achievement in the quarter was indirectly impacted by the incident in Dyrafjordur suffered in Q1 2022, with smaller average weight being harvested and despite the good market conditions the price achievement was not optimal as consequent price parameters based on size category distribution impacted sales efforts.
The biomass at the end of the quarter was 5,851 tonnes in the sea and the closing average weight was close to 1.7 kgs, resulting in more fish and more biomass in the sea compared to Q1 2022, at a less average weight (at the end of Q1 2022 the biomass was 5,315 tonnes in the sea and the closing average weight was close to 1.8 kgs).
The production cost was 47.7 NOK pr kg in the quarter, which is an increase of 1.2 NOK pr. kg from the previous two quarters.
In the smolt facility at the end of the period there are 6.0 million fry and smolt at an average weight of 28.8 grams, compared to 4.2 million fry and smolt at an average weight of 41.6 grams last year.
Arctic Fish Holding was admitted to trading on the Euronext Growth Oslo under the trading symbol "AFISH" with an Initial Public Offering (IPO) on the 19th of February 2021. The listing and private placement before attracted very strong interest from Norwegian, Icelandic, Nordic, and international high-quality institutional investors.
As of 30 th of June 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 90.00 NOK pr. share. Closing price at the end of Q2 2022 was 93.80 NOK pr. share, or an increase of 3.80 NOK pr. share from last quarter. The stock traded at a high of 95.00 and a low of 77.60 within the quarter. 423 trades were executed, with the number of shares traded amounting to 392,777 shares and a turnover of 33.5 MNOK.
The groups future outlook for 2022 harvesting predictions is still lower than for 2021 actual harvesting quantities by 8%, impacted by the mortality event in Q1 2022. 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 half 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 six 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 six months of the financial year, and major related parties transactions.
Svein Sivertsen
Chairman
Charles Hoestlund
Board member
Gunnthor Ingvason
Board member
Bjørn Kleven Board member
Hildur Árnadóttir Board member
The Management of Arctic Fish Holding AS
Stein Ove Tveiten CEO
Neil Shiran Thorisson CFO
| Q 2 | Q2 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| (NOK '000) | 2022 | 2021 | 2022 | 2021 | 2021 |
| Operating revenues | 87.001 | 99.798 | 369.526 | 268.641 | 595.895 |
| Cost of goods sold | $-15.794$ | 35.429 | 158.897 | 139.941 | 299.189 |
| Salaries | 16.432 | 13.352 | 33.595 | 25.371 | 54.151 |
| Depreciation | 13.355 | 11.211 | 25.849 | 21.601 | 46.501 |
| Other operating costs | 37.177 | 25.095 | 160.340 | 49.219 | 109.110 |
| Operational EBIT | 35.832 | 14.710 | $-9.155$ | 32.510 | 86.944 |
| Fair value adjustments | 36.913 | 42.748 | 61.163 | 83.021 | 44.897 |
| Production tax | $-897$ | $-602$ | $-4.432$ | $-2.236$ | $-3.843$ |
| EBIT | 71.849 | 56.856 | 47.576 | 113.295 | 127.998 |
| Other net financial items | $-24.951$ | $-9.855$ | $-16.033$ | 7.427 | 2.580 |
| Earnings before tax (EBT) | 46.898 | 47.001 | 31.543 | 120.722 | 130.578 |
| Taxes | $-9.380$ | 0 | $-6.309$ | 0 | 21.985 |
| Profit after tax from continuing operations | 37.518 | 47.001 | 25.234 | 120.722 | 152.563 |
| Profit after tax on discontinued operations incl. profit from sale | 0 | ||||
| Net profit/loss | 37.518 | 47.001 | 25.234 | 120.722 | 152.563 |
| Profit attributable to: | |||||
| Parent company shareholders | 37.518 | 47.001 | 25.234 | 120.722 | 152.563 |
| Minority interests | 0 | 0 | 0 | 0 | $\bf{0}$ |
| Earnings per share (NOK) | 1.18 | 1.47 | 0.79 | 3.79 | 4,79 |
| Earnings per share - diluted | 1,18 | 1,47 | 0,79 | 3,79 | 4,79 |
| Q 2 | Q2 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| (NOK '000) | 2022 | 2021 | 2022 | 2021 | 2021 |
| Net profit/loss | 37.518 | 47.001 | 25.234 | 120.722 | 152.563 |
| Total comprehensive income | 37.518 | 47.001 | 25.234 | 120.722 | 152.563 |
| Total comprehensive income attributable to: | |||||
| Parent company shareholders | 37.518 | 47.001 | 25.234 | 120.722 | 152.563 |
| (NOK '000) | 30.6.2022 | 31.3.2022 | 30.6.2021 | 31.12.2021 |
|---|---|---|---|---|
| Deferred tax assets | 13.170 | 22.550 | $\bf{0}$ | 19.479 |
| Intangible assets | 54.257 | 53.136 | 48.243 | 52.119 |
| Property, plant and equipment | 823.518 | 741.014 | 605.706 | 657.161 |
| Right of use assets | 4.098 | 4.234 | $\overline{0}$ | 4.435 |
| Non-current financial assets | 650 | 629 | 629 | 629 |
| Non-current assets | 895.693 | 821.563 | 654.579 | 733.823 |
| Biological assets | 439.584 | 335.904 | 469.846 | 512.010 |
| Other inventory | 23.881 | 28.725 | 30.900 | 33.785 |
| Receivables | 117.191 | 129.175 | 73.331 | 115.951 |
| Bank deposits | 63.369 | 133.926 | 82.701 | 38.126 |
| Current assets | 644.026 | 627.730 | 656.777 | 699.871 |
| TOTAL ASSETS | 1.539.719 | 1.449.293 | 1.311.356 | 1.433.695 |
| Share capital | 31.877 | 31.877 | 31.877 | 31.877 |
| Other equity | 968.865 | 931.347 | 911.791 | 943.631 |
| Equity | 1.000.742 | 963.223 | 943.668 | 975.508 |
| $\bf{0}$ | 0 | |||
| Deferred tax Provisions |
$\bf{0}$ | 0 | 2.506 2.506 |
0 0 |
| Long-term interest-bearing debt | 359.477 | 308.021 | 221.242 | 318.152 |
| Long term leasing liabilities | 3.420 | 3.254 | $\mathbf{0}$ | 3.424 |
| Total non-current liabilities | 362.897 | 311.275 | 221.242 | 321.576 |
| Short-term interest-bearing debt | 40.406 | 37.914 | 40.125 | 36.063 |
| Short term leasing liabilities | 1.252 | 1.165 | $\bf{0}$ | 1.138 |
| Trade payables | 119.224 | 123.479 | 93.003 | 91.052 |
| Other current liabilities | 15.198 | 12.237 | 10.812 | 8.357 |
| Current liabilities | 176.080 | 174.795 | 143.941 | 136.609 |
| TOTAL EQUITY AND LIABILITIES | 1.539.719 | 1.449.293 | 1.311.356 | 1.433.695 |
| 30.6.2022 | 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 | 25.234 | 25.234 |
| Transactions with shareholders | ||||
| Dividend | 0 | 0 | 0 | 0 |
| Total transactions with shareholders | 0 | 0 | 0 | 0 |
| Equity at 30.06.2022 | 31.877 | 1.001.740 | -32.876 | 1.000.741 |
| 30.6.2021 | 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 | 120.722 | 120.722 |
| 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 30.06.2021 | 31.877 | 1.001.740 | -89.950 | 943.667 |
| 31.12.2021 | Equity allocated to parent company shareholders | ||||||
|---|---|---|---|---|---|---|---|
| Accumulated | |||||||
| (NOK '000) | Share capital | Share 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 | 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 31.12.2021 | 31.877 | 1.001.740 | -58.109 | 975.508 |
| Q2 | Q 2 | YTD | YTD | FY | |
|---|---|---|---|---|---|
| (NOK '000) | 2022 | 2021 | 2022 | 2021 | 2021 |
| Operational EBIT | 35.833 | 14.710 | $-9.155$ | 32.510 | 86.944 |
| Adjusted for: | |||||
| Depreciation | 13.355 | 11.211 | 25.849 | 21.601 | 46.501 |
| Production tax | $-897$ | $-602$ | $-4.432$ | $-2.236$ | $-3.843$ |
| Change in inventories/biological assets | $-61.924$ | $-36.769$ | 143.492 | 11.512 | $-71.661$ |
| Change in account receivables and accounts payables | 7.728 | $-4.876$ | 26.931 | $-46.503$ | $-91.074$ |
| Change in other current assets and liabilities | 2.961 | 2.869 | 6.841 | 1.317 | $-1.138$ |
| Net cash flow from operating activities | $-2.943$ | $-13.457$ | 189.526 | 18.201 | $-34.271$ |
| Cash flow from investing activities | |||||
| Payments for purchase of fixed assets and licenses (MAB) | $-96.865$ | $-43.738$ | $-194.028$ | $-81.269$ | $-160.846$ |
| Net cash flow from investing activities | $-96.865$ | $-43.738$ | $-194.028$ | $-81.269$ | $-160.846$ |
| Cash flow from financing activities | |||||
| Proceeds from borrowings | 31.591 | 0 | 54.559 | 0 | 119.797 |
| Repayment of borrowings | $-15$ | $-19.579$ | $-18.958$ | $-49.916$ | $-39.425$ |
| Installments on right to use liabilities | $-360$ | $\bf{0}$ | $-503$ | 0 | $-528$ |
| Interest payments for right to use liabilities | $-50$ | $\Omega$ | $-100$ | 0 | $-153$ |
| Current debt change | 2.715 | $-182.546$ | 4.566 | $-216.624$ | $-247.450$ |
| Issued new share capital | $\mathbf{0}$ | $\bf{0}$ | $\bf{0}$ | 344.141 | 344.140 |
| Net interest payments | $-4.630$ | $-5.670$ | $-9.819$ | $-11.003$ | $-22.311$ |
| Net cash flow from financing activities | 29.251 | $-207.795$ | 29.745 | 66.598 | 154.070 |
| Net increase in bank deposits | $-70.557$ | $-264.990$ | 25.243 | 3.530 | $-41.046$ |
| Bank deposits as of start of period | 133.926 | 347.691 | 38.126 | 79.171 | 79.171 |
| Bank deposits at the end of the period | 63.369 | 82.701 | 63.369 | 82.700 | 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 on 26th of August 2022.
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).
| Farming | Eliminations / other | TOTAL | ||||
|---|---|---|---|---|---|---|
| (NOK '000) | Q 2 2022 | Q 2 2021 | Q 2 2022 | Q 2 2021 | Q 2 2022 | Q 2 2021 |
| Total sales revenues | 87.001 | 99.798 | 87.001 | 99.798 | ||
| Operating costs | 49.112 | 82.178 | 2.058 | 2.910 | 51.170 | 85.088 |
| Operational EBIT | 37.890 | 17.620 | $-2.058$ | $-2.910$ | 35.832 | 14.710 |
| Fair value adjustments Production tax |
36.913 $-897$ |
42.748 $-602$ |
36.913 $-897$ |
42.748 $-602$ |
||
| EBIT | 73.906 | 59.766 | $-2.058$ | $-2.910$ | 71.848 | 56.856 |
| Volume harvested (HOG) | 1.029 | 1.824 | 1.029 | 1.824 | ||
| Operational EBIT per kg Farming | 36,84 | 9,66 | 36,84 | 9,66 |
| Farming | Eliminations / other | TOTAL | ||||
|---|---|---|---|---|---|---|
| (NOK '000) | YTD 2022 | YTD 2021 | YTD 2022 | YTD 2021 | YTD 2022 | YTD 2021 |
| Total sales revenues | 369.526 | 268.641 | 369.526 | 268.641 | ||
| Operating costs | 245.393 | 229.500 | 133.289 | 6.632 | 378.681 | 236.132 |
| Operational EBIT | 124.133 | 39.142 | $-133.289$ | $-6.632$ | $-9.155$ | 32.510 |
| Fair value adjustments | 61.163 | 83.021 | 61.163 | 83.021 | ||
| Production tax | $-4.432$ | $-2.236$ | $-4.432$ | $-2.236$ | ||
| EBIT | 180.864 | 119.927 | $-133.289$ | $-6.632$ | 47.576 | 113.295 |
| Volume harvested (HOG) | 5.250 | 5.617 | 5.250 | 5.617 | ||
| Operational EBIT per kg Farming | 23.64 | 6.97 | 23.64 | 6,97 |
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: |
|---|
| -------------------------- |
| 30.6.2022 | 31.3.2022 | 30.6.2021 | 31.12.2021 |
|---|---|---|---|
| 23.881 | 28.725 | 30.900 | 33.785 |
| 48.088 | 47.496 | 27.349 | 29.575 |
| 391.496 | 288,408 | 442.497 | 482.435 |
| 463.465 | 364.629 | 500.746 | 545.795 |
| specification of the biological assets: | |
|---|---|
| (NOK '000) | 30.6.2022 | 31.3.2022 | 30.6.2021 | 31.12.2021 |
|---|---|---|---|---|
| Biological assets at cost | 318408 | 255 717 | 379490 | 459 778 |
| Fair value adjustments of the biomass | 121 176 | 80.187 | 90.356 | 52.232 |
| Book value biological assets | 439.584 | 335.904 | 469.846 | 512.010 |
| (NOK '000) | Q2 2022 | Q1 2022 | Q 2 2021 | FY 2021 |
|---|---|---|---|---|
| Opening balance biological assets | 5.315 | 11.477 | 8.585 | 10.513 |
| Increase due to fish put in the sea | 103 | 240 | 436 | |
| Increase due to production in the period | 1.696 | 1.324 | 2.686 | 14.541 |
| Reduction due to mortality in the period | -64 | $-54$ | $-182$ | $-631$ |
| Reduction due to harvesting in the period | $-1.199$ | $-4.920$ | $-2.125$ | $-13.382$ |
| Non-recurring events and other | 0 | $-2.512$ | $\mathbf{0}$ | |
| Closing balance biological assets | 5.851 | 5.315 | 9.203 | 11.477 |
| (NOK '000) | Q 2 2022 | Q1 2022 | Q 2 2021 | FY 2021 |
|---|---|---|---|---|
| Opening balance biological assets | 335.904 | 512.010 | 401.730 | 402.191 |
| Increase due to production in the period | 98.869 | 85.246 | 91 441 | 447.558 |
| Non-recurring events and other at cost | 0 | $-120.801$ | 0 | $\Omega$ |
| Reduction due to harvesting in the period | $-36.177$ | $-168.507$ | $-66.072$ | $-382.636$ |
| Fair value adjustments of the biological assets | 40.988 | 27.955 | 42.748 | 44.897 |
| Closing balance biological assets | 439.584 | 335.904 | 469.847 | 512.010 |
| Groups of biological assets in | Number of fish | Biomass | Fair value | ||
|---|---|---|---|---|---|
| sea, status as of 30.6.2022 | (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 |
|---|---|---|---|---|---|
| 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 | Number of fish | Biomass | Fair value | ||
|---|---|---|---|---|---|
| sea. status as of 30.6.2021 | (1000) | (tonnes) | Costs | adjustments | Book value |
| Smaller than 1 kg | 1.233 | 368 | 14.071 | 3.611 | 7.682 |
| $1-4$ kg | 2.417 | 4.636 | 177,377 | 45.513 | 222.890 |
| Larger than 4 kg | 792 | 4.200 | 160.693 | 41.232 | 201.925 |
| Biological assets | 4.442 | 9.204 | 352.141 | 90.356 | 432.497 |
| Groups of biological assets in | Number of fish | Biomass | Fair value | ||
| sea, status as of 31,12,2021 | (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 |
| 30.6.2022 | NOK/kg | 31.3.2022 | NOK/kg | 30.6.2021 | NOK/kg | 31.12.2021 | NOK/kg |
|---|---|---|---|---|---|---|---|
| Q3 22 | 81.83 | Q 2 2 2 | 78.95 | Q221 | 55.77 | Q1 22 | 68.67 |
| Q4 22 | 78.58 | Q3 22 | 61.97 | Q3 21 | 60,97 | Q 2 2 2 | 68,23 |
| Q1 23 | 85.70 | Q4 22 | 66.23 | Q4 21 | 64.40 | Q3 22 | 56.43 |
| Q 2 23 | 86.10 | $Q1 + Q223$ | 68.50 | $Q1 + Q221$ | 56.60 | Q4 22 | 62,27 |
| $Q3 + Q423$ | 80,21 | $Q3 + Q423$ | 59,50 | $Q3 + Q421$ | 56.60 | $Q1 + Q223$ | 65,25 |
| Q2 2022 | Q1 2021 | |||||
|---|---|---|---|---|---|---|
| Non-recurring event 1) | Cost | Fair value adjustments |
Fair value | Cost | Fair value adjustments |
Fair value |
| 0 | 0 | 0 | 0 | 0 | 0 | |
| Biological assets | 0 | 0 | 0 | 0 | 0 | 0 |
| 1) Non-recurring events are not allocated to the segments. | ||||||
| YTD 2022 | YTD 2021 | |||||
| Non-recurring event 1) | Cost | Fair value adjustments |
Fair value | Cost | Fair value adjustments |
Fair value |
| Fish mortality in Dyrafjordur | 129.072 | 0 | 129.072 | 0 | 0 | 0 |
| Biological assets | 129.072 | 0 | 129.072 | 0 | 0 | 0 |
1) Non-recurring events are not allocated to the segments.
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) | Q2 2022 | Q 2 2021 | YTD 2022 | YTD 2021 | FY 2021 |
|---|---|---|---|---|---|
| Change in fair value adjustments of the biomass | 40.988 | 42.748 | 68.405 | 83.021 | 45.435 |
| Change in provision for onerous sales contracts | $-4.075$ | 0 | $-7.242$ | -538 | |
| Total fair value adjustments | 36.913 | 42.748 | 61.163 | 83.021 | 44.897 |
| The fair value adjustments has the following effect in the balance sheet: | 30.6.2022 | 31.3.2022 | 30.6.2021 | 31.12.2021 | |
| (NOK '000) | |||||
| Fair value adjustments biomass (biological assets) | 121.176 | 80 187 | 90.356 | 52.770 | |
| Provision for onerous sales contracts (other current liabilities) | $-7.781$ | $-3.705$ | $-538$ | ||
| Net fair value adjustments in the balance sheet | 113.395 | 76.482 | 90.356 | 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 Q2'2022 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) | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | FY 2021 |
| Companies controlled by large shareholder - products purchased | - | 12.761 | 2.115 | 14.166 | 14.301 |
| Companies controlled by large shareholder - services purchased | 1.458 | 921 | 2.187 | 1.672 | 4.121 |
| Total goods and services purchased from related parties | 1.458 | 13.682 | 4.302 | 15.838 | 18.422 |
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) | 30.06.2022 | 31.3.2022 | 30.6.2021 | 31.12.2021 |
|---|---|---|---|---|
| Reported long-term interest-bearing debt | 359,477 | 308.021 | 221,242 | 318.152 |
| Reported short-term interest-bearing debt | 40.406 | 37.914 | 40.125 | 36.063 |
| Reported bank deposits | $-63.369$ | $-133.926$ | $-82.701$ | $-38.126$ |
| Total net interest bearing debt | 336.514 | 212.008 | 178.666 | 316.090 |
| (NOK '000) | 30.06.2022 | 31.03.2022 | 30.06.2021 | 31.12.2021 |
|---|---|---|---|---|
| Reported equity | 1.000.742 | 963.223 | 943.668 | 975.508 |
| Reported total assets | 1.539.719 | 1449293 | 1 311 356 | 1.433.695 |
| Equity ratio | 65,0% | 66.5% | 72.0% | 68.0% |
At the end of the second 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. | 12.200.833 | 38,28% |
| 3 | Landsbankinn hf. | 479.651 | 1,50% |
| 4 | KVERVA FINANS AS | 258.000 | 0,81% |
| 5 | VERDIPAPIRFONDET NORDEA AVKASTNING | 237.107 | 0,74% |
| 6 | CLEARSTREAM BANKING S.A. | 203.751 | 0,64% |
| 7 | VERDIPAPIRFONDET PARETO INVESTMENT | 190.000 | 0,60% |
| 8 | VERDIPAPIRFONDET EIKA SPAR | 172.312 | 0,54% |
| 9 | GÅSØ NÆRINGSUTVIKLING AS | 166.700 | 0,52% |
| 10 | MP PENSJON PK | 165.000 | 0,52% |
| 11 | PACTUM AS | 152.751 | 0,48% |
| 12 | VERDIPAPIRFONDET EIKA NORGE | 125.225 | 0,39% |
| 13 | VERDIPAPIRFONDET NORDEA KAPITAL | 113.504 | 0,36% |
| 14 | Íslandsbanki hf. | 111.513 | 0,35% |
| 15 | State Street Bank and Trust Comp | 98.616 | 0,31% |
| 16 | J.P. Morgan Bank Luxembourg S.A. | 83.849 | 0,26% |
| 17 | VERDIPAPIRFONDET NORDEA NORGE PLUS | 82.702 | 0,26% |
| 18 | ROTH | 80.000 | 0,25% |
| 19 | Euroclear Bank S.A./N.V. | 46.989 | 0,15% |
| 20 | SKEIE ALPHA INVEST AS | 46.000 | 0,14% |
| Ownership of 20 largest shareholders | 31.361.327 | 98,38% | |
| Total number of shares | 31.876.653 | 100,00% |
Arctic Fish Holding AS does not own any of its own shares.
| (NOK '000) | Q 2 2022 | Q 2 2021 | YTD 2022 | YTD 2021 | FY 2021 |
|---|---|---|---|---|---|
| Operational EBIT continuing operations | 35.832 | 14.710 | $-9.155$ | 32.510 | 86.944 |
| Non-recurring events (note 4) | |||||
| Operational EBIT | 35.832 | 14.710 | $-9.155$ | 32.510 | 86.944 |
| Harvested volume (tonnes) | 1.029 | 1.824 | 5.250 | 5.617 | 11.479 |
| Operation EBIT pr. kg | 34,84 | 8,07 | (1, 74) | 5,79 | 7,57 |
| Operational EBIT per kg FARMING | |||||
|---|---|---|---|---|---|
| (NOK '000) | Q2 2022 | Q 2 2021 | YTD 2022 | YTD 2021 | FY 2021 |
| Operational EBIT (segment, note 2) | 37,890 | 17.620 | 124.133 | 39.142 | 99.527 |
| Operational EBIT | 37.890 | 17.620 | 124.133 | 39.142 | 99.527 |
| Harvested volume (tonnes) | 1.029 | 1.824 | 5.250 | 5.617 | 11.479 |
| Operational EBIT per kg | 36,84 | 9.66 | 23,64 | 6,97 | 8,67 |
| Production cost per kg FARMING | |||||
|---|---|---|---|---|---|
| (NOK '000) | Q 2 2022 | Q 2 2021 | YTD 2022 | YTD 2021 | FY 2021 |
| Production cost (segment, note 2) | 49.112 | 82.178 | 245.393 | 229,500 | 496.368 |
| Harvested volume (tonnes) | 1.029 | 824 | 5.250 | 5.617 | 11.479 |
| Production cost pr. kg | 47,75 | 45.06 | 46,74 | 40.86 | 43,24 |
| (NOK '000) | Q 2 2022 | Q 2 2021 | YTD 2022 | YTD 2021 | FY 2021 |
|---|---|---|---|---|---|
| Majority share of net result for the period | 37.518 | 47.001 | 25.234 | 120.722 | 152.563 |
| Majority share of fair value adjustments of biomass | $-40.988$ | $-42.748$ | $-68.405$ | $-83.021$ | $-45.435$ |
| Fair value of sales contracts and Fish Pool contracts | 4.075 | 7.242 | 538 | ||
| Majority share of fair value-adjusted result for the period | 605 | 4.253 | $-35.929$ | 37.701 | 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 | 0.02 | 0.13 | (1, 13) | $1.18$ 7 | 3.38 |
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