Annual Report • Apr 28, 2023
Annual Report
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Icelandic Salmon AS Industriveien 51 7266 Kverva - Norway
| Summary highlights in 2022 10 | |
|---|---|
| The ABC of salmon farming 11 | |
| Arnarlax's visions, ambition and values12 |
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| The leader in icelandic aquaculture 14 | |
|---|---|
| Secret of salmon farming 17 | |
| Icelandic Salmon main events 202218 | |
| Importance of regulatory bodies20 | |
| Benthic monitoring and site certificates21 | |
| Sustainability – It´s in our nature22 | |
| People and society 32 | |
| The UN Goals for sustainability 36 |
| Corporate governance at Icelandic Salmon 38 | ||
|---|---|---|
| Group management 42 | ||
| Board of Directors 43 | ||
| Highlights for 202244 | ||
| BOD report for 202246 | ||
| Icelandic Salmon AS Consolidated Financial Statements 54 | |
|---|---|
| Notes to the Consolidated Financial Statements for 202259 | |
| Icelandic Salmon AS Financial Statements103 | |
| Notes to the Annual Financial Statements for 2022106 | |
| Statement by the Board of Directors and CEO113 | |
| Independent auditor's report 114 | |
| GRI index and third-party verification 116 |
Icelandic Salmon AS owns all shares and is the Parent company of Arnarlax ehf., the largest fish farmer and producer of Atlantic salmon in Iceland. The Parent company's shares are listed on Euronext Growth Oslo. In this report, the Parent company and Arnarlax ehf., with subsidiaries are collectively referred to as "the Group" or "Icelandic Salmon". "Arnarlax" also refers to the brand under which the Group's operations and products are marketed.
While the Parent company is registered in Norway, Arnarlax ehf. has its headquarters in the Icelandic village Bíldudalur. It has been engaged in fish farming since 2010. The Group's farming facilities are strategically located in the beautiful West Fjords of Iceland, a region that is well sheltered with stable and moderate sea temperatures and good tidal currents, creating favourable conditions for salmon farming.
The Group is considered a leading salmon farmer in Iceland, controlling the entire value chain from hatchery to sales.
| Key figures for Icelandic Salmon4 | |
|---|---|
| Message from CEO6 | |
| The history of Icelandic Salmon8 | |
| Summary highlights in 2022 10 | |
| The ABC of salmon farming 11 | |
| Arnarlax's visions, ambition and values12 |
| EURmillion | FY 2022 | FY 2021 |
|---|---|---|
| Operating revenue | 157.59 | 90.81 |
| Operational EBIT | 36.15 | 7.31 |
| Production tax | 1.33 | 0.31 |
| Fair value adjustments | -0.21 | -2.94 |
| Profit (loss) before tax | 41.82 | 2.60 |
| Net interest bearing debts | 56.03 | 36.80 |
| Equity ratio | 61% | 64% |
| Harvested volume from own production (tonnes) |
16.138 | 11.537 |
| Operational EBIT EUR/kg. | 2.24 | 0.63 |
Operating revenues
Current operations License application
6 ASC certified sites in 3 fjords
Number of Employees
31/12 2021 31/03 2022 30/06 2022 30/09 2022 31/12 2022
2021 2022 2022 2022 2022
We are proud to be part of the world's global food supply market, and in 2022 we supplied more than 16,000 tonnes of sustainable salmon to consumers worldwide. This was made possible with the dedication of our 177 employees, suppliers and customers.
Looking back at what has been a successful year for the Group, it has also been a year of uncertainty as a consequence of the Russian invasion of Ukraine. We want to express our deepest sympathy for the people of Ukraine and those impacted by the war.
The war has significantly impacted our market, and we have seen the price of raw materials increase. The cost of transportation has also seen a rise, especially airfreight, which has harmed our sales and ability to access specific markets. Nevertheless, the market price of salmon has also increased, which has and will benefit the Group in the short term. In the long term, we believe that the prices will stabilise at a level that makes salmon accessible for the many and encourages market development in new geographies.
In 2022, Icelandic Salmon increased its harvested volume by 40 per cent to 16,138 tonnes from 11,521 tonnes in 2021. This is the result of long-term planning and execution of our growth strategy, which includes access to smolt. As part of the strategy, the Group acquired the remaining shares of the Ísþór smolt plant. This move enabled Icelandic Salmon to access sufficient smolts to fully utilize the existing seawater licenses over the next few years. As of 2023, we will see this effect in smolt outputs, which will impact the harvest volumes in 2024. We also expect to see a significant improvement in MAB utilization by increasing the average weight of the smolt, which in turn will reduce the production time at sea. The 2021 acquisition of the smolt plants, Laxabraut 5 and Fjallalax, will also positively affect the overall smolt output in 2023 by increasing the number and average weight of the smolt.
Additionally, the Group received another site approval as part of its 12,200 tonnes license in Patreksfjörður and Tálknafjörður. The new site, Vatneyri, demonstrates promising environmental conditions for salmon production and will be used for smolt output in 2024. Icelandic salmon also invested in additional sea equipment in 2022, which will support the Group's efforts to increase smolt output in the years to come.
Throughout 2022, the Group has continued to experience a high demand for its products. Our strong sales team has worked and collaborated with markets globally, focusing on the European market, the US and Canada. Europe is our main market and will continue to be our main market in the coming years. However, we expect that the US and Canadian markets will take up a more prominent position over the next few years. This trend is mainly driven by a need for more suppliers that can reach the US and Canada by boat. This form of transportation carries a significant upside when it comes to CO2 emissions, in addition to favourable logistics costs. Our customers also have responded positively to the quality of our product when transported by boat.
Part of what enables us to ship our products by boat is that we superchill the salmon to minus one degree in the harvesting plant before packaging. This method significantly extends the shelf life of the salmon and compensates for the extended transportation time of five to six days when transported by boat.
As mentioned, the past year has seen high market prices for salmon, but it has also seen the Group achieve good market prices. This is due to our excellent sales team and the Group's low share of fixed-price contracts. This has made it possible for the Group to benefit from high spot market prices.
2022 marked the first full year with Icelandic Salmon's pre-rigor fillets on the market, which has been a steadily growing part of our sales. We are confident that the market will continue to enjoy this product. In 2022, 10 per cent of our HOG salmon was used as raw material for our fillet production, representing a strong increase from the year before. This is another trend benefiting the Group's CO2 footprint and improving our logistic costs. The filleting process is done by a contracting partner.
We are also excited about our cooperation with one of our US-based customers. Together, we have created a new brand – Icefjord, Premium Icelandic Salmon. This brand is currently being presented as part of restaurant menus and is available in stores in the US market. We are proud to be now able to reach end consumers through another strong brand.
We are proud of our role in the Icelandic and European markets when it comes to producing sustainable and highquality salmon. Founded on the principles of operating as sustainable as possible, our entire production has been ASC certified. This is a significant milestone for the Group, and we will continue to work under the highest standards with the aim of continuously improving how we operate.
The Group's position as a leading aquaculture business in Iceland has been made possible by the dedication of our people and the close relationship with the communities where we operate. Throughout the year, we have worked with all of our employees to ensure support for internal learning and development takes place. Our main approach to this is through our Arnarlax Academy program, where we involve and encourage all employees to actively develop company culture while working on improving operations. We support all employees who seek further education, both at a vocational and higher level. As a result of this program, five employees received a diploma for having completed a vocational aquaculture training course. Through the acquisitions of smolt facilities, we have also increased the number of employees working with freshwater production, we also see an increase in employees working with seawater and at the harvest plant, as a result of increased production.
We have also strengthened our sales team and finance department and are excited by the developments we saw in 2022.
In 2022, the Group performed well from an operational perspective. We expanded the number of smolt facilities that we operate and succeeded in bringing on board new talents to develop and strengthen the Group. Icelandic Salmon is now entering 2023 in a strong Financial Position and as a proud contributor to the Icelandic economy and society. Moving forward, we will continue to deliver on our growth strategy and deliver sustainable Icelandic salmon across the world.
The management of Icelandic Salmon and our dedicated and talented employees look forward to another exciting year in 2023.
Björn Hembre //CEO Arnarlax
Arnarlax ehf, a subsidiary of Icelandic Salmon AS, was founded in 2009 in Bíldudalur, a small Icelandic village inside a long fjord called Arnarfjörður. Bíldudalur is the hometown of the company's founder, Matthías Garðarsson, who knew that the area had excellent conditions for farming salmon. Today, the company is Iceland's biggest aquaculture company. Modern salmon farming is relatively new in Iceland compared to our neighbours in the Faroe Islands, Scotland and Norway. The company's vision is "Sustainability – it's in our nature", so to be sustainable in every aspect of its operations and lead the way in terms of cost efficiency, biology and the development of the whole value chain for salmon farming in Iceland.
The Group successfully completed a private placement in the autumn of 2020 followed by a listing on Euronext Growth. At the end of 2022, SalMar owned 51 per cent of the shares in the company. The company is fully integrated with its own hatcheries, sea farms, harvesting plant and sales department. The natural conditions, with good quality seawater and temperatures on a pair with northern Norway, provide a sound basis for engaging its sustainable aquaculture in Iceland.
The company has its headquarters and harvesting plant in Bíldudalur in Iceland's West Fjords region, close to the sea farms located in surrounding fjords. In addition, the company has an office facility in Reykjavík and four smolt facilities, whereby one is located in the West Fjords, and three on the south coast of Iceland.
The company strongly believes in sustainable aquaculture production in Iceland.
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The broodstock are the parent fish which provide the eggs and sperm (milt) required to produce new generations. The fertilised eggs take 60 days to hatch when placed in an incubator kept at 8 °C.
After 25–30 days in the incubator, the eggs have developed to the stage where the eyes of the salmon are clearly visible as two black dots inside the egg.
The egg hatches when the eggshell cracks open, liberating the baby fish (fry) inside. When it hatches, the fry is attached to a yolk sac, which provides it with the sustenance it needs during its first few weeks of life. From now on, the fish's growth and development will depend entirely on temperature.
When most of the yolk sac has been absorbed, the fry can be moved from the incubator into a fish tank. They are now ready for initial feeding. The water temperature is kept at 10-14 °C, and the fry are exposed to dim lighting 24 hours a day. The initial feeding period lasts for six weeks. As they grow, the fry is sorted and moved to larger tanks. Well ahead of their 'smoltification', all the fish are vaccinated before being shipped by wellboat to the fish farm's marine net-pens.
The process whereby juvenile fish transition from a life in fresh-water to a sea-going existence is called smoltification. During this process, the fish develop a silver sheen to their bellies, while their backs turn a blue-green colour. The gills of juvenile fish also change when they become a smolt, to be able to control the balance of body salt when it goes from freshwater to seawater.
The farming of fish for human consumption takes place in net-pens – large, enclosed nets suspended in the sea by flotation devices. In addition to a solid anchorage, netpens require regular cleaning and adequate measures to prevent the farmed fish from escaping. Growth in net-pens is affected by feeding, light, temperature, and water quality.
After approximately 12-24 months after transfer to the farm sites, the first fish are ready for harvesting, depending on the size of the smolt at output to sea. The fish are transported live by wellboat to the harbour next to processing plant. They are then carefully transferred to the plant itself. The fish are killed and bled out using high-tech equipment and always in accordance with the applicable public regulations. After harvesting, the final product is head-on-gutted salmon.
The salmon is sold by our strong sales team, as fresh whole-gutted or pre-rigor fillets, and distributed to markets domestically and around the world. The pre-rigor fillets are produced by a third party as a contractor to Arnarlax.
Figure 3. The lifecycle of Atlantic Salmon
EGGS/FRY SMOLT GROWTH HARVESTING & PROCESSING
SALES MARKET
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Be in compliance with Icelandic Salmon standard Keep everything in order Walk the talk – Follow rules and regulations Continue to give of us to society at large and local communities
Lead by example
We strive to have quality in everything we do, our Arnarlax standard guides us to quality
Show respect for colleagues, community, nature and salmon Be ready to encourage and embrace what's being done well Talking and listening to each other
Team Work Makes us stronger
We are driven by working together as a Team Together everyone accomplish more
| The leader in icelandic aquaculture 14 | |
|---|---|
| Secret of salmon farming 17 | |
| Icelandic Salmon main events 202218 | |
| Importance of regulatory bodies20 | |
| Benthic monitoring and site certificates21 | |
| Sustainability – It´s in our nature22 | |
| People and society 32 | |
| The UN Goals for sustainability 36 |
Icelandic Salmon has been at the forefront of the industry for several years. The company is working with neighbouring farmers, local governments, and regulators on improving operations and reducing environmental footprint.
Icelandic Salmon was the first farming company in Iceland to use lumpfish to reduce lice levels. It was also the first farming company to use 200m cages in Iceland in year 2022. Along with these innovations the company started early to use Aqualine Midgard system in cages on farm sites. The feeding station (OPC), located in the main office building in Bildudalur, has a modern set-up for good control of feeding the fish and cooperate with a company named Spill-free which has a system which helps to optimize the feeding process.
In early year 2022 the Group signed up for 2 hybrid feedbarges that will arrive into operations in year 2023. This technology will decrease oil consumption up to 80.000- 100.000 litres a year. In the year 2022 the Group also received a grant from the Energy Fund of Iceland on electricity supply from land and hybrid technology for the feed barges, which will be paid out when the project is completed.
Another project is hybrid technology of the work boats, a project has started with Blámi which is a collaborative project between Landsvirkjun, Orkubúið and Vestfjarðarstofa. The main objective of Blámi is to support and promote innovation and development of energy exchange projects by increasing the share of environmentally friendly fuels, hydrogen and electric fuels in transport and industry.
Innovative part within education is our educational arena, Arnarlax Academy, which is for all employees, held once a year. The company was also the first salmon farming company to offer vocational training for its employees.
Departments of Freshwater, Seawater, Harvest plant and Sales have dedicated teams which monitors daily quality registrations. As follow-up to these daily registrations, the company conducts an internal audit plan throughout the year for these departments. In addition to all daily checks and internal audits, external authorities inspect the operations by scheduled audit plan throughout the year. In addition, risk assessments towards environment, health and safety, and fish welfare are carried out in departments of Freshwater, Seawater and Harvest plant to ensure that the company takes a precautionary approach.
The total harvested volume in 2022 was ASC (Aquaculture Stewardship Council) certified. By choosing ASC-certified salmon, consumers can be assured that they are buying salmon from a responsible farmer.
ASC is one of the best-known environmental and social responsible certifications in the world of aquaculture and certified producers must satisfy comprehensive environmental and social standards, involving over 400 auditing criteria within eight categories. The ASC Standard is difficult to achieve and to retain. It demands substantial resources in respect of documentation and reporting, before, during and after certification. Furthermore, the company is certified in accordance with the ASC's Chain of Custody scheme.
In the year 2021 the company's harvest plant got BRCGS certified. BRCGS certification is approved by the Global Food Safety Initiative (GFSI), which means that processes in the harvest plant meet quality and food safety requirements internationally. Customers can rest assured that here the salmon is processed in the best way possible with quality and food safety at the forefront from the time salmon enters processing until it arrives to the customer. The certification enhances image and confidence in us as a manufacturer. In December 2022 the company was reaudited and went up from grade B to grade A.
The Group recognizes the importance and value of education and has been among pioneers in educational programmes related to fish farming in Iceland. Together with several educational institutions, the company has participated in developing education program in co-operation with Icelandic College of Fisheries (Fisktækniskólinn) and is also one of the members of University Centre of the Westfjords (Háskólasetur Vestfjarða). The company runs a trainee programme to recruit young, well-educated people to the company and the industry. In addition, employees who wish to undertake further education, are supported economically by the company .
The Group is the biggest contributor to a State-controlled Environmental Fund, through a fee paid for each kg harvested. The fund aims to reduce the potential impact of salmon farming on nature. The fund has contributed to various projects in recent years.
The company is in active discussions with government agencies and authorities on how to lessen the environmental impact of its farming operations, improve fish health, and improve other aspects of the industry. Latest project is working with authorities and aquaculture companies on how the industry in Iceland can achieve 55 per cent reduction in GHG emissions by year 2030 where the goal will be to set phased emission targets.
Transparency is a key element to build trust and inspire an honest dialog between all stakeholders. Lice count numbers are publicly available on the Group's website within a week from lice counting. Monthly production reports are submitted for all active farm sites to the Icelandic Food and Veterinary Authority (MAST) with information regarding harvesting, culling, feeding, biomass, mortality, lice numbers and treatments among other. The company has meetings with local officials to strengthen the relationship and understanding. By being transparent, open about the challenges and respectful towards critics, the company can come across solutions that might be beneficial for all stakeholders.
Open and transparent reporting of our performance increases our stakeholders' trust in us. In 2022, the Group continued its efforts to report through a greater variety of channels. In furtherance of this, The Group has also chosen to commission third-party verification of its sustainability KPIs. The table below shows the many ways the company reports on sustainability-related matters.
| Internal influence | Business associates | Customer groups | External influence |
|---|---|---|---|
| Employees | Partners | External customers | Government / regulatory authorities |
| Shareholders/investors | Suppliers | New customers | Industry associations |
| Board and Group Management |
Service providers | International customers | Discussion partners |
| National customers | NGOs | ||
| Research establishments | |||
| Local communities | |||
| Media |
Table 2. Reporting within the Group
| Reporting method | Comment |
|---|---|
| Annual report | Integrated report, combining sustainability and financial reporting. |
| Quarterly reports | Quarterly update of financial and operational results. |
| Half year reporting | Half year financial operational results |
| Emission accounting | A separate annual information of emissions from the operations submitted to the Environmental Agency of Iceland (UST) |
| Green accounting | A separate annual report submitted to the Environmental Agency of Iceland (UST). |
| ASC reports | Audit reports from our ASC-certified sites are available at www.asc-aqua.org |
| MAST & UST reports | Audit reports from the Food and Veterinary Authority (MAST) www.mast.is and the Environment Agency of Iceland www.ust.is |
| www.arnarlax.is | The website is updated regularly. Here you will find relevant information. |
Iceland offers some key factors when it comes to salmon farming. The temperature is in the lower end of optimal conditions for the salmon, long fjords create shelter, while the wind, waves and tidal current ensure that movement of water is sufficient to give the salmon access to oxygenrich seawater. Icelandic waters are free of several harmful viruses affecting other farming nations. Iceland´s access to clean geothermal water additionally provides very favourable conditions to raising smolt.
It all starts with a premium egg that comes from Iceland. All fry's are grown into smolts, nurtured, and vaccinated in the Group's hatcheries. The time in the hatcheries is usually around 12 months. When the smolts reach 50-100g, they go through smoltification, which is a physiological process that prepares them for leaving the freshwater of the tanks and entering seawater, the same natural process undergone by wild salmon.
Since the sea temperature in Iceland falls below 2°C during the coldest winter months, smolts are put out in sea cages in the summer/autumn months when the temperature is optimal. The low winter temperatures result in slower growth, and low levels of lice.
The Group has a comprehensive quality system, monitoring every aspect of operations. Meaning that improvements and adjustments to improve safety and quality are regularly implemented. Harvesting is one of the most important factors when it comes to product quality of the salmon. Super-chill cooling technique is used after harvest to optimise freshness and the quality of the salmon. This allows the Group to deliver fresh salmon to customers in Europe, North America or Asia without compromising quality.
» MAST surveillance audit in Fjallalax smoltstation.
» Approved 900 tons license for maximum allowed biomass of salmon in smolt facility at Laxabraut 5
» Laugardalur MOM-B post fallow benthic monitoring.
The authority audits each issued license at least once a year for freshwater stations, seawater farm sites and harvest plant. Farming equipment, fish welfare, biomass in cages and food safety is audited. All audit reports and licenses can be seen on the website of MAST www.mast.is
At least once a year the authority takes samples from salmon and feed to analyse following:
Monthly production reports are submitted to MAST where production info from all sites and all cages is reported. This info is used for aquaculture dashboard presented on MAST website.
MAST oversees approving applications for delousing treatments. In fall 2021 the authorities set limits for mature female lice.
In case of an escape or a suspicion of an escape a contingency plan is activated within the Group and MAST is informed immediately along with the Directorate of Fisheries (Fiskistofa). Inspectors from the authorities arrive to the farm soon after being informed.
On 29th August 2021 a hole on cage 11 at farm site Haganes was discovered. Contingency plan of the Group was activated. Fiskistofa and MAST were informed the same day. Inspectors arrived the day after. At this moment it was not known how many fishes had escaped. After harvest from the cage in October 2022 it was discovered that 81,564 fishes were missing. After this event the Group took a decision to withdraw the site from ASC certification. It will then be an evaluation of the CAB (e. certification body) when Haganes site can undergo ASC re-certification again.
The authority audit each license at least once a year for freshwater stations and seawater farm sites. All audit reports and licenses can be found on the website www.ust. is. The authority have surveillance with all wildlife near and around farm sites, go through benthic monitoring reports for sites, waste handling, chemical usage and allowed biomass at each site. The authority also handle external complaints of our operations. Green books and emission accounting are submitted to UST before May 1st each year.
After a site has been fallowed and then at max biomass a benthic monitoring is conducted by a third-party. The monitoring is done according to guidelines of the Norwegian standard NS9410:2016 which includes evaluation of sediment, faunal investigation, and bottom topography. Two types of surveys are conducted MOM-B and MOM-C. The primary objective of a B-survey is to fulfil the requirements regarding bottom survey in the local impact zone at fallow period as they are defined in NS9410:2016. The primary objective of a C-survey carried out at max biomass is to fulfil requirements by ASC standard and in accordance with chapter 5.0 in the Norwegian standard NS9410:2016 which outlines the methodology for a C-study. The survey includes pH/redox measurements, hydrography, and geochemical and bottom fauna analyses adjacent to the fish farming site.
In year 2022 both sites, Laugardalur and Hringsdalur, that had a new output of fish generations were restored to best conditions for both MOM-B and MOM-C after fallowing, with score of 1 = Very good.
A site certificate is issued for each farm site where inspection of farm equipment installation has been inspected according to requirements of Norwegian standard 9415:2019 – Marine fish farms – Requirements for site survey, risk analyses, design, dimensioning, production, installation and operation. On the issued site certificate, the installation configuration can be seen for the site. Each certificate is valid for 5 years if no changes are made on the equipment
MOM-B and MOM-C with score of 1 = Very good
'Sustainability - it´s in our nature' is our vision and the foundation of all the Group's operations. It is the way it operates as a company and how it behave in the areas surrounding its operations. This includes taking care of its customers, employees, the salmon, and the environment, while developing the industry and moving society in a more sustainable direction.
In year 2013 Bíldudalur started in the project Fragile communities in 2013 under the name Bíldudalur - a conversation about the future with the Icelandic Regional Development Institute (Byggðastofnun).
The project was formally completed at the end of 2016, and it was a joint decision by residents, municipalities and the Regional Development Institute that it was no longer needed due to positive developments in the area, not least because of the boom in the economy.1
This year, the Group presents its sustainability section for the third time. The numbers stated in this section have undergone third-party verification.
The bulk of this section is divided into the three central pillars on which the Group rests its thinking about sustainability throughout the value chain.
Table 3. Icelandic Salmon sustainability focus summarized.
Fish
Good fish welfare is the foundation of the Group's business.
We work systematically to create an environment in which the salmon thrives and remains healthy.
The Group believes in preserving the seas for future generations.
We minimize our footprint with measures and routines throughout the entire value chain.
People and society
The Group acts as a responsible corporate citizen.
We believe in creating local value and safe workplaces and support the local communities where we operate.
1https://www.byggdastofnun.is/is/verkefni/brothaettar-byggdir/bildudalur
The Group's goal is to produce sustainable and healthy protein for a growing global population. Sustainable salmon farming therefore takes place on the fish's terms where its tried to not exceed 13kg/m3 during winter and 19kg/m3 during summer to make sure that the fish has enough space. This means that the salmon must come first in all aspects of the Group's work.
The Group is working systematically on initiatives and procedures relating to fish welfare. At the same time, its known that every single decision made relating to fish health also has a financial, social- and environmental impact throughout the value chain.
Table 4. Biological KPI´s
| The Group's KPIs | Target | 2022 | 2021 | 2020 | |
|---|---|---|---|---|---|
| Survival | 12-month rolling survival rate2 | >95% | 89.7% | 93,3% | 90.5% |
| Antibiotics | Grams of active pharmaceutical ingredients (API) per tonne produced |
0 | 0 | 0 | 0 |
| Lice treatments | Total number of treatments. In 2022, 4 sites were treated, 1x treatment |
# of treatments in year: |
4 | 3 | 2 |
| on each site | <3 per cycle3 | Compliant | Compliant | Compliant | |
| Birds – Accidental mortality | 0 | 0.43 | 0.17 | 0.71 | |
| Interaction | Birds – Euthanised | 0 | 0 | 0 | 0.29 |
| with wildlife4 | Marine mammals – Accidental mortality | 0 | 0 | 0 | 0 |
| Marine mammals – Euthanised | 0 | 0 | 0 | 0 | |
| No of incidents Fish escapes No of escaped fish |
0 | 0 | 1 | 0 | |
| 0 | 0 | 81,5645 | 0 | ||
| Certification of marine ingredients in fish feed6 | 100% | 100% | 98.2% | 99% | |
| Certification of soya ingredients in fish feed7 | 100% | 100% | 100% | 100% | |
| Feed | FFDR (fishmeal) | <1.28 | 0.56 | 0.32 | 0.63 |
| FFDR (fish oil) | <2.529 | 1.29 | 1.56 | 1.98 | |
| Economic feed conversion ratio | <1.19 | 1.34 | 1.30 | 1.43 | |
| Certification | Share of active certified sites10 | 100% | 100% | 83% | 86% |
2 12-month rolling mortality measured in accordance with the Global Salmon Initiative methodology.
3 Target in accordance with ASC certification requirements.
4 Number of wildlife incidents distributed over number of active sites.
5 Confirmed in October 2022.
6 Fish meal, certified in accordance with Marintrust, MSC or equivalent.
7 Certified in accordance with ProTerra RS or equivalent.
8 Target in accordance with ASC certification requirements.
9 Target in accordance with ASC certification requirements.
10 Active sites in 2022 certified in accordance with ASC.
Good fish welfare requires systematic efforts to ensure that fish welfare is safeguarded by providing the fish with optimal conditions throughout their lifecycle.
Salmon lice are a natural seawater parasite. As fish farmers, the task is to make sure that the salmon can coexist with the lice. Salmon lice can impair the quality of the salmon's flesh and can, in the worst cases, lead to disease and death. The Group therefore works preventively to keep lice numbers down.
Lice numbers increased between years 2021 and 2022 in all categories but were on average within the national limit set at 0.5. (Table 5).
The Group received an approval from ASC after applying for Variance Request from clause 3.1.7 within the ASC standard v1.3 as a national limit at 0.5 has been set by the Icelandic Food and Veterinary Authorities (MAST) during the sensitive period when wild smolts migrate to sea (April to June). All lice numbers are reported to the Food and Veterinary Authorities in Iceland (MAST) and published on the Group's website within a week from lice counting.
As regards delousing treatments, the Group follows the Global Level set in the ASC standard, which allows three lice treatments per each production cycle on a site (Table 6). This has never been fully utilized. In 2022, 4 sites in operation were deliced one time each. The main strategy for reducing the number of chemical treatments is to take preventive measures, such as lice skirts, fallowing and use of lumpfish.
| Year | Juveniles | Movables Adult females |
Caligus | |
|---|---|---|---|---|
| 2022 | 0.33 | 0.33 | 0.41 | 2.17 |
| 2021 | 0.19 | 0.19 | 0.19 | 1.61 |
| 2020 | 0.35 | 0.39 | 0.19 | 3.09 |
Table 6. Number of treatments allowed per cycle in different countries according to the ASC standard.
| Region | Entry Level (WNMT) | Global Level (WNMT) |
|---|---|---|
| Canada (BC) | 1 | |
| Chile | 9 | |
| Faeroes | 6 | |
| Ireland | 3 | 3* |
| Norway | 5 | |
| Scotland | 9 |
The Group was the first farming company in Iceland to begin the use of lumpfish to reduce lice levels on sea farms. The lumpfish is born at supplying company in Iceland where it lives before arrival to the farms. Each fish is manually inspected and vaccinated before arrival to ensure their quality and welfare in the sea cages.
Good care is taken of the lumpfish when they are out in sea; they are fed special feed and they have artificial kelp out on the cages where they can go for a rest.
In year 2022 total of 425,000 lumpfish were put out in our cages on 4 sites.
As a measure of feed sustainability, we use the Fish Forage Dependency Ratio (FFDR). This quantifies our dependence on wild fish stocks as raw materials in our feed. This is done by assessing the volume of live fish from small pelagic fisheries that is required to make the amount of fish meal or fish oil needed to produce one unit of farmed salmon.
The lower the FFDR we can achieve, the more salmon we can produce on the basis of a globally limited supply of marine raw materials.
According to the ASC standard, feed is deemed to be sustainable if its FFDR (fish meal) is <1.2 and its FFDR (fish oil) is <2.52. In 2022, the company achieved values well below this level.
The company uses an all-round feed that optimises production and promotes good fish health – in other words, a high-value salmon feed that ensures good growth and meets the fishes' nutritional needs. In 2022, approx. 26,200 tonnes of feed were used in the operations.
It is the Group's responsibility to ensure its customers safety when they eat its salmon and know that it has a healthy nutritional content and has been processed after good food safety measures. For this reason, the Group is certified in accordance with the strictest requirements and guidelines for sustainable aquaculture, including the Aquaculture Stewardship Council (ASC) and BRCGS which emphasizes on food safety.
11 Fish harvested from our farm sites Steinanes, Haganes, Foss and Eyri analysed in accredited laboratory.
Growing salmon is one of the most sustainable ways of producing protein, in terms of carbon emissions, water, land use, etc. However, production comes with several challenges, as for all commercial food production. Icelandic Salmon is aware of those challenges and is constantly working on minimising the impacts, using innovative solutions, environmental certifications, and strategic monitoring.
The Group has an active environmental policy. There is good cooperation between companies within the same industry and farm sites in joint fjords. This cooperation is known as ABM (Area Based Management) and aims to share information regarding: 1) diseases and handling of fish, 2) output plans, 3) fallowing periods, 4) monitoring in relation to diseases, and 5) lice monitoring.
The main objectives of the environmental policy are:
Iceland has taken a somewhat unique approach to genetic mixing between farmed and wild salmon. Iceland has legally enacted the use of a unique genetic risk assessment that estimates the potential risk of genetic mixing between farmed and wild salmon and limited the permitted production of farmed salmon based on the outcome of that model.
A large portion of the coastline is also closed off for fish farming. The result is that all of Iceland's major salmon rivers are far away from fish-farming activities.
It is safe to say that the Icelandic authorities are taking a conservative approach when it comes to fish farming and the possible effect on the wild salmon stock. The risk assessment is up for evaluation every third year. Next evaluation is in 2023.
Before fish farming is allowed in Iceland, the Icelandic Marine and Freshwater Research Institute conducts a carrying-capacity assessment estimating how much biomass there may be in each farming fjord. This is done to minimize the risk of organic waste accumulating at the bottom of the fjords to affect the total situation in each fjord. The Institute is monitoring the fjords to ensure that production does not excess the carrying capacity.
All of the company's farming activity has been through an environmental assessment process. That process includes stakeholder participation and involvement of the Environment Agency of Iceland (UST), the Food and Veterinary Authority (MAST), the Planning Agency and the Marine and Freshwater Research Institute, among other agencies. The outcome is an extensive environment report describing the impact of the farming activity, mitigating measurements, and how the environment should be monitored.
As mentioned above, the Group's production of salmon was 100 per cent ASC (Aquaculture Stewardship Council) certified in year 2022. The Group also holds BRC food safety certification and went through re-auditing in December 2022 where the grade went up from B to A.
Each year, the company submits a green accounting report and emission report to the Environment Agency of Iceland (UST), including information on power usage and usage of oil, water and seawater. The report also covers all chemicals, recycling of waste categories, medicine usage and emissions involved in the company's operations.
After the farming has started, all sites are monitored from the bottom and up. Oxygen levels are monitored daily, and a third-party monitors oxygen in the threshold fjord Arnarfjordur up to three times a year. Benthic samples are conducted by a third-party from the seabed under the cages twice for each generation to see if organic materials are accumulating under the cages. The Food and Veterinary Authority (MAST) also takes fish and feed samples twice a year from the farm sites to sample for heavy metals and dioxins, pesticide residues, antibiotics, etc. MAST also conducts audits once a year for each farming license and so does Environment Agency of Iceland (UST).
Below is an overview of the Group's greenhouse gas (GHG) emissions. Carbon accounting is a fundamental tool in identifying tangible measures to reduce GHG emissions. The annual carbon accounting report enables the organisation to benchmark performance indicators and evaluate progress over time.
The input data is based on consumption data from internal and external sources, which are converted into tonnes CO2 equivalents (tCO2e). The carbon footprint analysis is based on the international standard; A Corporate Accounting and Reporting Standard, developed by the Greenhouse Gas Protocol Initiative (GHG Protocol). The GHG Protocol is the most widely used and recognized international standard for measuring greenhouse gas emissions and is the basis for the ISO standard 14064-I.
The carbon inventory is divided into three main scopes of direct and indirect emissions:
Scope 1 includes all direct emission sources. This includes all use of fossil fuels for stationary combustion or transportation, in owned and, depending on the consolidation approach selected, leased, or rented assets. It also includes any process emissions, from e.g. chemical processes, industrial gases, direct methane emissions etc.
Scope 2 includes indirect emissions related to purchased energy; electricity and heating/cooling where the organisation has operational control.
Scope 3 includes indirect emissions resulting from value chain activities. The scope 3 emissions are a result of the company's upstream and downstream activities, which are not controlled by the company, i.e. they are indirect. Examples are business travel, goods transportation, waste handling, consumption of products like feed etc.
| Target | Status vs. target | 2022 | 2021 | 2020 | |
|---|---|---|---|---|---|
| Energy consumption (TJ) | |||||
| Scope 1 - Fossil fuels | 30 | 32 | 15 | ||
| Scope 2 - Electricity | 42 | 22 | 18 | ||
| Scope 1+2 (GHG tCO2e) | 72 | 55 | 33 |
| Greenhouse gas emissions (GHG tCO2e) | |||||
|---|---|---|---|---|---|
| Scope 1 - Fossil fuels | 42% reduction from 2020-2030 |
+99 % | 2,054 | 2,185 | 1,033 |
| Scope 2 - Electricity | 0 | 0 | 0 | ||
| Scope 3 | +6 % | 68,729 | 66,824 | 64,637 | |
| Total (Scope 1+2+3) | +8% | 70,783 | 69,010 | 65,670 |
| Intensity12 | |||||
|---|---|---|---|---|---|
| Energy intensity (GJ/tons produced) | 42% | 3.5 | 3.2 | 2.4 | |
| Intensity of GHG emissions (kgCO2e/tons produced) - Scopes 1+2 |
+30% | 99 | 128 | 76 | |
| Intensity of GHG emissions (kgCO2e/tons produced) – Scope 3 |
reduction from 2020-2030 |
-31% | 3,297 | 3,923 | 4,757 |
| Intensity of GHG emissions (kgCO2e/tons produced) - Scopes 1+2+3 |
-30% | 3,396 | 4,052 | 4,833 |
The operations consumed 800,037 liters of fossil fuel (30 TJ) and 11,551 MWh of electricity (42 TJ) in 2022. All electricity used by our operations is from renewable sources.
12 All intensities are calculated with tons produced biomass, gross growth in sea.
Aquaculture generally has a low freshwater requirement compared with other types of food production. The fish live a large part of their lives in the sea and do not depend on supplies of freshwater. Freshwater consumption of the company derives largely from its onshore hatcheries and its harvesting plant.
Freshwater consumption for hatcheries is based on calculations from each site manager. Other freshwater usage is community water used in processing plant for cleaning and for consumption on feed barges. No community freshwater is used in hatcheries.
In large parts of the world, access to fresh water is a challenge. Icelandic Salmon uses fresh water only from areas where the risk of water shortages, or the risk of poor water quality, is low. The water risk map produced by the World Resource Institute13 provides a good overview of the water risk in various areas. All the areas in which the company operates are defined as low risk.
Waste is a resource which we must take care of, and which can be reused to make new products. We help to reduce marine pollution
By-products are exploited to the full. All by-products from the harvest plant are sent for further processing, resulting in 100 per cent of the raw materials being utilized. All material is sent to third party production site through closed pipeline from our harvesting plant.
All mortality from seawater production and smolt plants is processed on site by the Group and delivered to a company that use them as ingredients for the biogas-, compost and soil industry.
Project for the sludge from hatcheries is in process where open discussion with the farmers union in the areas of hatcheries is ongoing for how to utilize the sludge as a fertilizer on fields. The overall, long term goal, for the project is to exchange all import of artificial fertilizer to Iceland with reuse of by-products from several industries, including aquaculture.
All water from the harvest plant is rinsed and disinfected in the water treatment system before being released into the ocean to ensure biosecurity.
Consumption of freshwater 2022 2021 2020 Consumption (megalitres) 16.214 5.5 5.5 Intensity (litres per kg gross growth in sea) 779 325 405
13 https://www.wri.org/aqueduct
14 With one new hatchery in year 2022 the water consumption increased.
One of the company values is "We Care". We who work at the company care about our colleagues, our partners, and the local communities in which we operate. For us, it is important to behave as a responsible corporate citizen because we believe that this has a positive impact on our own operations and society at large.
With total of 177 employees, in 2022, in five communities the Group is a major employer and an important member of society. This position gives rise to multiple responsibilities to people, society, and industry. Ethical business practice is a key value for the Group. We aim to operate in an honest, proper, and trustworthy manner, and take pride in showing off what we do.
| Target | 2022 | 2021 | 2020 | ||
|---|---|---|---|---|---|
| Employees | No. of full-time equivalents (FTE) |
154.4 | 132.6 | 110 | |
| Ratio of women | 26% | 23% | 24% | ||
| No. of fatalities | 0 | 0 | 0 | 0 | |
| Safety & sickness absence |
LTI's15 | 0 | 9 | 7 | 9 |
| H-factor16 | <6 | 5.8 | 5.5 | 7.8 | |
| Sickness absence | <4.5% | 4.1% | 4.1% | 4.3% | |
| Regulatory | No. of violations | 0 | 117 | 0 | 0 |
| compliance | Fines in ISK | 0 | 0 | 0 | 0 |
The Group recognizes the importance of a good and meaningful relationship with the local community and understands its role and responsibility as one of the biggest companies in the region. The company participates in various community projects and is for example a proud sponsor of public transport, culture events, volunteering activities, schools, local sports teams, and clubs.
When buying items, it is looked at whether items can be bought that are being contributed to good causes along the way. In this case we can for example mention items bought where the proceeds went to a good cause. The company is always seeking ways to give something back with its purchases.
The company has been blessed with skilled and capable people from all over the world working on the common goal of delivering world-class salmon in harmony with nature. Employees' ideas and innovative thinking are a crucial driver of the company's performance, and the company welcomes forward-thinking and honest dialogue. The safety of our people is a top priority and active measures are taken to reduce accidents by using a dynamic quality system and functioning Health & Safety committee.
All employees of the company are free and can bargain collectively for their rights. The workers have access to trade unions and choose a union representative by themselves without managerial interference.
Child labour is not accepted, forced, bonded or compulsory labour and the company does not hire any persons under the age of 16. Persons between the age of 16 and 18 years of age will not be exposed to hazardous health and safety conditions and are under strict supervision during their work.
The company has an anti-discrimination policy, ethical guidelines, and ethics gateway.
The policy of the company and its subsidiaries is that bullying, sexual harassment, gender-based harassment, violence and any form of inappropriate conduct is not tolerated. Every measure should be taken to prevent this from occurring and to resolve any case as successfully as possible.
15 LTI: Lost time injury. If a worker does not show up at work the day after an incident, it is counted as an LTI.
16 H-factor: Total LTI's over the year * 200,000 work hours / accumulated work hrs over the year.
17 This case has been appealed and final decision is not made.
A workplace should emphasise boosting employees' awareness of the importance of positive communications and make them a highlight of the workplace, such as with education on equal rights.
Ethical Guidelines were first issued in year 2020 within the company. The purpose of the guidelines is to ensure a healthy corporate culture and safeguard the Company's integrity by helping employees to comply with standards for good business practice. Furthermore, the guidelines are intended to act as a tool for self-assessment and for the further development of the Company's corporate identity.
A professional and safe venue, implemented in 2021, for employees to whistle blow or report undesirable conduct in the workplace or emotional distress at work. The Ethics Gateway team has specialists in human resources and accredited service providers in health and safety in workplaces. The consultancy company Hagvangur ehf. operates Ethics Gateway.
In December 2021 the company completed its Equal Pay certification process in accordance with standard ÍST85 equal pay standard. The equal wage policy is an inseparable part of the wage policy and is valid for all the organizations employees. The policy is that all employees shall be receiving equal pay and enjoy equal terms of employment and rights for the same jobs or jobs of equal value, so that there is no gender-based pay gap within the company. The Group was re-certified for the equal pay certification at end of year 2022.
All employees of the company receive payment above basic needs wage.
The company has an education policy where the company emphasize on education for its work force. The education is in all forms, university studies, courses, diploma, and smaller courses etc.
An ongoing agreement is in place with the Iceland College of Fisheries with educational program in Aquaculture. In May 2022 total of 5 employees graduated from the college. Furthermore, more employees are studying alongside work withing the company in different educational institutions in Iceland where the company supports their study.
Within the company an health and safety committee is present. On board the committee there are two members from the management group and 4 general employees from different departments. The committee meets at least 4 times a year according to Icelandic law. The committee oversees the health and safety matters within the company along with work environment conditions of the employees. On board the committee there are highly trained employees with various skills and education.
Employees can report issues regarding health and safety in general, food safety or other matters anonymously to the committee. Monitoring is also done via the EQS18 system where incidents are registered. If the incident is an LTI (e. lost time injury) it is reported to appropriate authority. All documents are kept on file for each case.
Quality monitoring is present within the harvest plant where samples are taken and sent regularly to accredited laboratory for analysing bacteria dangerous for the consumer health. An HACCP plan is also followed parallel to the process flow chart where critical points are monitored.
As stated under the chapter of Importance of regulatory bodies the Icelandic Food and Veterinary authority conducts sample taking at least once a year from raw material and feed for various analysis.
Any deviation regarding food safety impacts of the product itself within the hatcheries, seawater farm sites and harvest plant is registered into EQS and acted on.
An emergency recall team is present in the company consisting of 5 members from management, In emergency cases the team meets up where case is evaluated, and actions taken. The company has never recalled a product batch.
The United Nation Sustainable Development Goals are a collection of 17 global goals designed to serve as guidance towards a more sustainable future for all. Farming salmon in a sustainable way contributes to many of these goals and eight of them are closely linked to the company's operations.
3. Good health and wellbeing Salmon is a nutritious food, packed with quality protein and essential fatty acids such as Omega 3.
The company is one of the major sponsor of public transport within the area and sponsors various community projects. Bildudalur was once categorized as a fragile community. With good economic growth Bildudalur was out of the project in 2016.
The company has an education policy and encourages its staff to seek education.
Farming salmon in sea cages is one of the most sustainable ways of producing animal protein for human consumption, in terms of feed and water usage. ASC and BRCGS certified.
The company has a gender equality policy and is Equal Pay certified.
A large part of the world's greenhouse gas emissions is caused by food production. Farming salmon stands out from other animal protein production for its low level of carbon emissions and usage of water.
The company aims to utilize the sea areas in which it operates in a sustainable manner and to contribute to reducing marine debris and discharges, by reducing and handling its waste properly and by engaging in all the local coastal communities of which it is a part of.
| Corporate governance at Icelandic Salmon 38 | |
|---|---|
| Group management 42 | |
| Board of Directors 43 | |
| Highlights for 202244 | |
| BOD report for 202246 |
37
Icelandic Salmon aims to uphold and maintain the highest standards of corporate governance and operates according to law and legislation.
The Board of Directors recognizes that good corporate governance contributes to ensuring the protection of all shareholders' interests and ensuring that the Group complies with high ethical and social standards.
Icelandic Salmon has a sustainable approach to salmon farming. As part of the Atlantic Ocean surrounding Iceland, the Group adheres to strict quality standards whilst also aiming to be a low-cost producer. The Group can achieve this goal only through sustainable biological production and commits to farming fish conducive to their wellbeing. Combining the best biological results with cost focus and optimal processes, the Group believes this enables Icelandic Salmon to be a cost-effective producer of farmed salmon in Iceland.
The Group recognizes the diversity and importance of its corporate social responsibility as an employer, producer, supplier of healthy food, a user of the natural environment and administrator of financial and intellectual capital. Social responsibility is essential to the Group and incorporated in daily tasks. At the same time, the Group aims to minimize it operations' impact on the natural environment.
Icelandic Salmon AS is listed on the EURONEX Growth stock exchange in Oslo. The Group is required to report on its corporate responsibility and selected related issues under §3-3a and §3-3c of the Norwegian Accounting Act. Some key priorities are described below. A detailed report on all relevant topics can be found in sustainability part of this report in section 2.
Arnarlax ehf., subsidiary of Icelandic Salmon, is the Iceland's largest producer of farmed salmon. At end of year 2022, the Group's licenses totalled up to 23,700 tonnes MAB in sea in Iceland and in addition hold licenses of 3,000 tonnes in land-based facilities used for smolt production.
In 2022 Arnarlax acquired remaining share of Eldisstöðin Ísþór smolt facility and with that secured further production on smolt as part of the valuation chain. The acquisition came as a following process of the Groups long term growth strategy, but the Group had acquired two smolt facilities in 2021.
The Groups growth strategy is to maximize utilization of MAB within its licenses and increase license volume in order to obtain critical mass to secure competitiveness in the global market.
Icelandic Salmon AS objectives have been defined as following:
"The objective of the company is production, processing and sale of seafood and seafood-based products, as well as conducting other business in connection with these purposes, including through investments and ownership in other companies with same purpose".
Board of Icelandic Salmon AS approved ethical guidelines in August 2020 that applies for all Icelandic Salmon Group, its employees, Board of Directors and any other who act on behalf of the Group. The purpose of the ethical guidelines are to ensure healthy corporate culture and safeguard the Groups integrity by helping employees to comply with standards for good business practice. Furthermore, the guidelines are intended to act as a tool for self-assessment and for further development on the Group's corporate identity.
It is the Group's ambition to be Iceland's leading salmon farmer. The Group focuses on farming salmon on the salmon's terms and work tirelessly to be outstanding at all levels and in all aspects of production. The operative business has two clear strategic goals, which form the core of the Groups strategic foundation.
"Sales shall secure the best possible price and fish farming shall be unbeatable on cost – best for operational efficiency."
Overarching all business operations and actions is the Group's vision, "Sustainability – it's in our nature", meaning all decision relating to production will be made based on the Group's vision. The fish will be farmed in conditions most conductive to their wellbeing. The Group believe that the best biological results will pave the way for the best financial results, and thus safeguard the Groups position as a sustainable salmon producer.
The Group has a set of tenets that describe desired behaviours and a shared understanding of how employees should behave. Through Arnarlax Academy, all employees are given encouragement and opportunities for development as well as introduction and guidelines on the Groups tenets and ethical guidelines.
The Group has a presence in five local communities and its employees are multicultural from all over the world. The Group is therefore aware of the diverse nature of its social responsibilities as an employer, producer and a user of the natural environment. Further description of the social responsibility can be found in sustainability part of the report.
As of 31st December 2022, the company's equity totalled EUR 144.2 million which corresponds to an equity ratio of 61 per cent. The Board considers Icelandic Salmon AS capital structure to be adequate in relation to the Groups objectives, strategy and risk profile.
Icelandic Salmon intends to provide shareholders with a competitive return on invested capital by creating value for the shareholders in the form of share price appreciation over time. The Group has not paid out any dividends to its shareholder and no decisions nor dividend policy have been made on dividend payments while the Group is following its growth strategy.
The Group follows three main long term financial targets linked to its Net Interest Bearing Debts (NIBD), EBITDA and equity.
The Group has not issued any increased share capital and no approval of from the AGM has been issued for any share issues.
The Group has an active Board of Directors with a prescheduled meeting agenda throughout the year. At an annual general meeting that took place on 21 May 2021, all members of the current Board of Directors were re-elected for a period of two years.
Board of Directors are comprised of five members elected by the AGM, one female and four males. The board Chairman is elected by AGM. All members of the Board of Directors are representatives of the Groups shareholders and all of them have minority stake in the Group ownership, directly or indirectly through a minority stake in other entities.
10th October 2022, one of the board members, Olav Andreas Eirvik, notified the stock exchange and the Board of Directors that he resigns his seat on Icelandic Salmon AS Board of Directors. A new board member will be elected at the latest at the Groups next AGM in 2023. In his absence until new board member will be elected, Ulrik Steinvik, CFO of SalMar ASA, will take his seat as an observer.
One of the board members is deemed to be independent.
The Board is responsible for ensuring that the Group's risk management and internal control system are adequate in relation to the regulations governing the business. The Group's systems and procedures for risk management and internal control are intended to ensure efficient operations, timely and correct financial reporting, as well as compliance with the legislation and regulations to which the Group is subject. The Board performs an annual review of the Group's risk management/corporate governance.
Internal control of financial reporting is achieved through day-to-day follow-up by management and process owners and supervision by the Audit committee. Nonconformances and improved opportunities are followed up and corrective measures implemented. Financial risk is managed by a central unit at the head office, and, where appropriate, considerations is given to the use of financial hedging instruments.
Follow-up and control of compliance with the Group's values and code of conduct take place in the line as part of day-to-day operations.
The company has purchased and maintains a Directors and Officers Liability insurance on behalf of the members of the Board of Directors and the CEO. The insurance also covers any employee acting in a managerial capacity. The insurance policy is issued by a reputable insurer with an appropriate rating and has a limit of liability of NOK 100 million.
Arnarlax ehf, the Icelandic Salmon AS subsidiary, is recognized as a public interest company in Iceland. Therefor the Company had to establish an audit committee for Arnarlax ehf. operations. Committee's responsibilities are in relation to Arnarlax ehf. both publicly and according to the committee's mandates. However, as in the nature of the Group's structure, the committee also take upon assignments set to the committee in relations to Icelandic Salmon AS.
The committee main tasks are to prepare the Board's follow-up of the financial reporting process, monitor the Groups internal controls and routines, as well as to maintain an ongoing dialogue with the Group's auditors.
According to the committee mandate, the committee is required to be comprised of a minimum of three persons elected by the Board of Directors annually. All members of the committee shall be independent from the Groups auditors and majority of the committee shall be independent from the Company or the Group.
As of 31st December 2022, the Audit Committee (AC) comprise the following members:
The Audit committee is required to hold five meetings each year and in 2022 the committee held nine meetings. Majority of the audit committee members are considered to be independent from the Group.
Communication with shareholders, investors and nearby community is a priority for the Group. The objective is to ensure that the financial markets and shareholders receive correct and timely information. All shareholders have access to the same financial information of the Groups operations and all public information are published on the Group's webpage. All notices sent to the EURONEXT stock exchange are also made available on the Groups website www.arnarlax.is.
The Group holds an open investor presentation in association with the publications issued of the year-end and interim results. The presentations are open to all and provide an overview of the Group's operational and financial performance as well as an overview of the Groups operations. These presentations are also made available on the Groups website. The Group publish a financial calendar that indicates the dates of publication of the Groups interim reporting and presentations both on EURONEXT stock exchange news web as on the Groups homepage.
The Group keep good communications to the nearby community with regular information and updates as requested by the municipality in the area where the Group operates. The group has active dialog as well with the authorities as a part of day-to-day activities.
The Groups auditor is appointed by the AGM. The auditor shall draw up a plan for the execution of their auditing activities and the plan shall be discussed by the Audit Committee. Auditors shall hold at least one meeting each year with the Board of Directors at which no representatives of the company's management are present. The auditor attends the board meeting at which the year-end Financial Statements are considered. Auditors are also invited to Audit Committee meetings and shall there inform the committee of remuneration payable to auditor, divided between auditing and other services component.
The Group benefits from a highly competent senior management team, comprising six individuals with extensive first-hand experience in fish farming in Iceland. Working closely with SalMar, one of the world's top producers of farmed salmon, the management team leverages its industry knowledge to drive the Group's success. In addition to their core operations, the Group also plays an active role in developing local educational programs within the aquaculture industry and runs its own Arnarlax Academy to foster the growth of leadership skills and positive company culture.
The Group's management team consist of the following members:
Bjørn Hembre CEO
Jónas Heiðar Birgisson CFO
Rolf Ørjan Nordli COO of Biology
Hannibal Hafberg COO of Harvest Plant
Kjersti Haugen CSO of Sales
Silja Baldvinsdóttir Quality Manager
Current position: Managing Director of Markó Partners
Mr. Ólafsson has served as the chairman of the board of directors since 2013. He has a MSc in Fishery Science from the University of Tromsø with emphasis on economy and finance. Further, he is founder and managing director of Markó Parnters, an Icelandic Seafood advisory boutique.
Current position: CEO of Pactum AS.
Mr. Marcussen has been the CEO of Pactum AS since 2017. Prior to this, he served as the deputy CEO of the shipping company Bergshav. He has also long experience from investment banking with combined 17 years at Handelsbanken and Nordea. Marcussen holds a siviløkonom degree from the Norwegian school of economics (NHH)
Current position: CFO of SalMar AkerOcean
Ms. Romuld has extensive experience from a broad range of management positions within seafood, consulting, and auditing, from both Norwegian and international companies. Romuld has more than 10 years' experience as a board member and head of / member of audit committees for listed companies, including Bakkafrost, DNB and Kærner. Romuld is currently a board member and member of the audit committee in Sparebank 1 SR-Bank ASA. Romuld is state authorized public accountant form the Norwegian school of economics (NHH).
Current position: Works in his investment company LIN AS.
Mr. Nordhammer was the CEO in SalMar from 1996 to 2016, with a hiatus from 2011 to 2014. He is a board member of Kverva AS and SalMar ASA as well as chairman of Scottish Sea Farms L.td. He has extensive experience from leadership positions from several companies within aquaculture and has been a part of the industry since 1985. Former companies include Sparebank 1 Midt-Norge, E Boneng & Sønn, Frøya Holding AS and Hydro Seafood AS. Nordhammer has educational background for the Norwegian Armed Forces, Trondheim Business School and University in Trondheim. Nordhammer also seved on the board of directors of Icelandic Salmon from 2016-2019.
Current position: CFO of SalMar ASA
Steinvik started in the position as Director Business Improvement in August 2017 with SalMar ASA. Mr. Steinsvik holds the title as Norwegian state authorized public accountant. Ulrik Steinvik graduated from the Norwegian School of Economics and Business Administration in 2002.
Icelandic Salmon has experienced strong organic growth of 40 per cent in harvest volumes from 11,521 tonnes in 2021 to 16,138 tonnes in 2022.
Icelandic Salmon has seen a stable development of its biological performance, but also an Increase in cost levels due to general price increase and inflation. Feed prices in 2022 have increased significantly and represent a high proportion of the Group's cost.
The Group also see a strong improvement in EBIT from EUR 0.63 per kg in 2021 to EUR 2.24 per kg in 2022. This is explained by high market prices, but also strong price achievement compared to market price. The reception of the Group's brand, which was launched in 2021, has been positive. In 2022, the Group achieved a milestone by reaching the end consumer with the brand IceFjord, -premium Icelandic Salmon. In 2022, the Group had a low share of sold volume on contracts at 19 per cent. This was beneficial in periods during 2022 with high spot prices on salmon and is reflected in the financial results.
In 2022, Icelandic Salmon has invested significantly in smolt production by purchasing the remaining 50 per cent of the shares in Eldisstöðin Ísþór. Further investments were made to improve the Group's additional three smolt production facilities; Gileyri, Fjallalax and Laxabraut 5.
The Group now has a smolt capacity of up to eight million smolts, depending on the size of the smolts. This smolt strategy will give the Group larger smolts, which are expected to increase from 154 grams to 250 grams in 2023. This will reduce production time at sea, which again reduce risk and improve biological performance. The smolt strategy is expected to improve the Group's Maximum allowed biomass (MAB) utilization in the upcoming years.
The Group received approval for one new site within the 12,200 tonnes license in Patreksfjörður and Tálknafjörður. This will make it possible to increase the output of smolts on that license, supporting improved MAB utilization on this license. The first output from the new site, Vatneyri, is expected to take place in 2024. Additional applications for two new sites within the 10,000 tonnes Arnarfjörður License are expected to be approved in 2023. These new sites will improve the MAB utilization on the Arnarfjörður license.
Enabling further growth, another two applications are being processed by the authorities. The first application of 10,000 tonnes in Ísafjarðardjúp, is expected to be approved in the third quarter 2023. The second application concerns 4,500 tonnes in Arnarfjörður, and there is no expected timing for approval on that one.
All production within the Group was ASC certified in 2022. This is important documentation for the Group, and the sustainability profile. With the ASC certification, it is documented that the environmental and social responsibility impact of the Group is acceptable and under good governance. This also states that the Group complies with laws and regulations and that employees are treated in a fair way.
Supporting the Group's focus on Food Safety, the Group's harvest plant is BRC certified. This certification assures customers that they can eat the Group's excellent salmon, without concerns related to food safety. The Group received the BRC certificate in 2021 and the overall score was upgraded from B to A during the audit in November 2022.
The Group's sales team has worked diligently to utilize the Group's well-established shipping route to the US and Canada to deliver fresh salmon. This transportation method represents a 95 per cent reduction in the Group's CO2 footprint when compared to airfreight. It also significantly reduces logistic cost. The utilizing of this transportation method will also be prioritised moving forward. The Group's super chill technology in the Harvest Plant makes this transport route possible, due to the increased shelf-life provided by super chill.
In 2022, the Group continued to develop its pre-rigor filet production, together with a third-party fileting contractor. The volumes of filet increased from 123 tonnes in 2021 to 1,100 tonnes in 2022. The strong market interest for the product remains, and volumes are expected to increase in the upcoming years.
The Group has continued to focus on developing its organization and education. The Arnarlax Academy took place in 2022, and all employees were involved in the process of fostering company culture, and coordinate work streams to reach the Group's operational goals. Efforts to encourage employees to gain a formal education continued in 2022 and 5 employees received their diploma for vocational aquaculture school. In addition, the Group has supported several of its employees to complete higher education.
The annual Financial Statements for 2022 have been prepared on the assumption that Icelandic Salmon is a going concern under §3-3a of the Norwegian Accounting Act. Regarding the Group's results, Financial Position, backlog and forecasts for the years ahead, the conditions required for continuation as a going concern are hereby acknowledged. In the Board's opinion, the Group's Financial Position is satisfactory.
Icelandic Salmon AS (the "Company") is the sole owner and parent company of Arnarlax ehf., a company incorporated in Iceland. The Company and its subsidiaries are referred to as the "Group" or "Icelandic Salmon". All operational activities in the Group are performed through Arnarlax ehf., and its subsidiaries. The Company acquired remaining shares of one of the smolt facilities previously owned 50/50 with another Icelandic fish farmer. It is now a subsidiary of Arnarlax and consolidated as from that time. The Group is considered a leading salmon farmer in Iceland, controlling the entire value chain from smolt facilities to sales. This organisational structure enables the Group to operate a well-developed and fully integrated value chain, controlling all steps. The Group purchases eggs for its hatcheries, produces its own smolt, has seawater net pen production, operates a harvesting plant and sells sustainable salmon in Europe, North America and the far East.
Global sales of salmon produce are steadily increasing, and the Group is well placed to capitalise on this demand through its pioneering and sustainable approach to salmon production. The Group continues to invest in its future and has done so through biological development, diversifying its range of products and expanding its delivery routes.
The Company's shares are listed on Euronext Growth under the ticker ISLAX. The Group has licenses covering 23.7 thousand tonnes of maximum allowed biomass (MAB). They are all located in the southern part of the Icelandic West fjord region.
The Group currently operates the only salmon harvesting facility in the West fjord region, a key operational asset in the Group's value chain with a total harvesting capacity of 30.0 thousand tonnes per year. The Group also sells harvesting services to third parties to fill up the harvesting capacity. In addition, the Group operates four smolt facilities and sales department.
The Group generated consolidated operating revenues of EUR 158.6 million in 2022 compared with EUR 90.8 million in 2021, representing a 78 per cent increase. Harvesting increased with 40 per cent from 11.5 thousand tonnes in 2021 to 16.1 thousand tonnes in 2022. Icelandic Salmon harvested an addition 8.6 thousand tonnes for third parties compared to 10.9 thousand tonnes year before.
The operational EBIT as defined in the Consolidated Financial Statements was EUR 36.2 million compared with EUR 7.3 million the year before. For 2022 this corresponds to an Operational EBIT 2.24 per kg harvested fish. Improved market conditions have been the main driver for profit increase along with strong price achievements compared to the market from the Groups sales team.
The price of salmon (NASDAQ Salmon Index) has developed positively when compared with previous years. The price of salmon remained unusually high throughout the first half of the year and the Group benefitted from this and its strategic sales and marketing efforts along with the new brand which lunched in 2021, and relatively low contract shares.
In 2022, the production tax paid to the state was EUR 1.3 million, up from EUR 0.3 million the year before. Fair value adjustments of the biomass were negative EUR 0.2 million, reflecting changes in the biological stock value, as further described in note 3.6 in section 4.
Net financial items amounted EUR 7.2 million in 2022 but was negative by EUR 1,5 million in 2021. Which is mainly explained by the effect of fair value gain of previously owned equity interest in Eldisstöðin Ísþór that amounted EUR 9.0 million for the year 2022. Financial expenses amounted EUR 1.9 million in 2022 compared to EUR 2.0 million in 2021, During the year 2022 there was a currency loss amounting EUR 0.2 million compared to currency gain amounting EUR 0.4 million 2021.
The Group's net profit for the year 2022 increased sharply and amounted to EUR 34.9 million compared to a net profit of EUR 2.4 million for the year 2021.
In 2022, net cash flow from operational activities was positive by EUR 11.6 million compared with negative cash flow of EUR 0.24 million in 2021. Strong operational results is the main reason for the shift between years but at the same time the Group built up its' biological assets at cost by EUR 20.0 million.
Net cash flow from investing activities was EUR 27.2 million in 2022, compared with EUR 14.8 million in the year before. The main investment activities for the year were mainly in acquisition of remaining shares of smolt facility Eldisstöðin Ísþór, which now is within the Group as consolidated entity. In addition, the Group followed its expansion projects with continuing investments in the Groups smolt facilities along with investments in cages, mooring and other farm site related equipment. For next year, the Group foresees continuing investments in farm site related equipment among with purchase of new barges and service boats.
Net cash flow from financing activities amounted EUR 13.7 million in 2022 compared to EUR 15.7 million the year before. The Group has a loan agreement with DNB and Arion Bank which was signed in June 2021 and is valid until June 2024. New interest-bearing debt amounted to EUR 22.6 million.
Cash and cash equivalents at 31st December 2022 was EUR 1.9 million, compared to EUR 3.7 million at end of year 2021.
The Group's balance sheet on 31st December 2022 was at EUR 235.3 million, up with an increase of EUR 64.3 million from the end of the year 2021. Total equity was EUR 144.2 million with equity ratio of 61 per cent at end of year compared to total equity at EUR 109.3 million and with equity ratio at 64 per cent at the end of prior year.
Non-current assets increased from EUR 88.4 million to EUR 124.5 million in the year and current assets increased from EUR 82.6 million to EUR 110.8 million. The main reasons for increased assets in the year are due to increase in the value of biological assets of EUR 17.2 million as described in note 3.6 in section 4 and an increase of fixed assets due to investment activities.
Non-current liabilities increased from EUR 43.3 million from the end of the year 2021 to EUR 61.0 million as of the end of year 2022. Current liabilities increased from EUR 18.4 million from end of 2021 to EUR 30.1 million at end of year 2022.
As of end of 2022, the Group's trade receivables total EUR 15.0 million and its cash and cash equivalents amount to EUR 1.9 million. This indicates that the Group's liquidity position is robust for the upcoming months.
The Group has incorporated rigorous risk management systems and routines as part of its daily operations. These systems and practices monitor important risk factors across the Group's entire operation. They are also regularly assessed to ensure the Group operates in accordance with the highest quality and certification standards.
The Group's Chief Executive Officer is responsible for ensuring that the Group operates in compliance with all relevant legislation and that it operates within the guidelines of each entity. In addition, each line organisation is responsible for the follow-up and control of risk factors and compliance with the Group's values and code of conduct.
The most significant risk to the Group is the development of its fish stock, both in smolt production and at sea farms. The Group is constantly developing and implementing risk-reduction measures to protect its fish stock, but there remains a biological risk that could compromise the Group's overall output.
Part of the biological risks is mortality, sea lice and winter wounds. As part of the Group's risk assessment, it has identified mortality due to winter wounds as one of the main risk factors. This risk was mitigated by decreasing the density of enclosed fish, and larger sea pens for exposed areas.
The Group has identified hatchery mortality as a risk factor and is continuously optimising hatchery production to reduce mortality.
Several salmon diseases remain foreign to the Icelandic waters. To protect the wellbeing of its salmon, the Group has implemented additional procedures to minimize the risk and spread of disease. For Icelandic Salmon, this is important because it keeps costs down and improves financials.
As part of the Group's Icelandic heritage, ensuring that the region remains low on disease and supporting its overall health is considered a priority. Therefore, the Group promotes fish welfare through several initiatives such as having dedicated fish health personnel, vaccination of smolt before being transferred to seawater farms, which has led to zero use of antibiotics.
Icelandic Salmon's unique position in the Westfjords allows the Group to operate in close to disease free waters, supporting low medical treatment cost. As such, the Group refrains from antibiotics throughout the entire production cycle. This is an important part of the Group's daily operations. Icelandic Salmon has also implemented standards to minimize the risk of unknown diseases entering the Icelandic environment to preserve the region's status.
Additional operational risks and measures, including the Groups commitments to fish welfare are laid out in the sustainability part of this report in section 2.
The Group's internal control process ensures that it achieves its strategic objectives and provides reliable and transparent financial reporting. It also ensures that the Group operates efficiently whilst complying with laws and regulations. Monitoring financial risk is part of the Board's ongoing risk management, the effectiveness of which is reviewed annually.
The Group finalised its internal protocol in 2020 and has developed additional policies designed to minimise the risk of incorrect financial reporting. The Group's agreed policies and monitored by its management, ensuring that the procedures are carried out as intended by all employees.
The Group has implemented several procedures and controls to prevent and detect any fraud risk which extends to financial misreporting or risk of any other financial fraud. The primary responsibility for prevention and detection of fraud rest with the Senior management and Audit Committee.
A further overview of financial risks, interest rate risk, foreign exchange risk, credit risk and liquidity risk is included in note 4.1 in section 4.
The salmon market price is a risk to the Group as its operations are based on the production and sale of salmon. The Group's profitability and cash flow are strongly correlated with fluctuating movements in the price of salmon.
To mitigate its potential impact, the Group constantly considers with cost reductions. The Group also regularly considers ways in which to sell a proportion of its stock at a fixed price. This would minimise the risk of fluctuating prices but also poses the risk of the Group not benefitting from high spot market prices.
Volatility in exchange rate can affect the profitability for sales of salmon. Strong local currency can make exports more expensive, while a weaker currency can increase the cost of imported goods, such as feed. To reduce risk of currency fluctuations the Group has implemented process of hedging all fixed price contracts in other currencies than the operational currency. The group has also emphasized on having as much as possible of purchasing contracts in EUR, the Groups operational currency.
Governments can impose regulations and tariffs that affect the price of salmon. Trade disputes and tariffs can disrupt the supply chain and lead to higher prices for customers. This is not considered a major threat when selling to a customer but may have an effect on supply chain.
The climate risks associated with extreme weather, such as high winds, heavy rainfall, and prolonged dry spells, as well as the possibility of rising sea temperatures, have been assessed by the group. To address the risk of extreme winds and waves, all sea installations have been certified to withstand the most severe conditions. The risk of increased rainfall is not deemed to be exceptional as all freshwater activities are supplied by groundwater from wells. Regarding the risk of high temperatures, the group operates in fjords with a temperature range that can tolerate a temperature increase of up to 7 degrees Celsius before reaching critical levels, making the risk negligible.
Liquidity risk can be a concern for Icelandic salmon farmers, particularly because they are heavily dependent on the export market. The salmon farming industry is capital-intensive, with significant investments required to establish and maintain hatcheries, sea farms, and processing facilities. The revenues generated by salmon sales can be affected by market fluctuations, which can have a significant impact on cash flow and liquidity.
Additionally, the industry's dependence on international markets for the sale of its products makes it vulnerable to factors such as changes in foreign exchange rates, geopolitical tensions, and global economic conditions. These factors can impact the demand and prices of salmon, leading to reduced revenues and increased risk of illiquidity.
To address liquidity risk, the Group has implemented various mitigating measures. One such measure involves optimizing the cash conversion cycle, while another involves purchasing credit insurance for all customers. The Group regularly updates its liquidity forecasts, which are shared with both management and the Board of Icelandic Salmon. By closely monitoring these forecasts, the Group is better equipped to identify and address any potential threats to its liquidity position in a timely manner.
Icelandic Salmon has a sustainable approach to salmon farming. As part of the Atlantic Ocean surrounding Iceland, the Group adheres to strict quality standards whilst also aiming to be a low-cost producer. The Group can achieve this goal only through sustainable biological production and commits to farming fish conducive to their wellbeing. Combining the best biological results with cost focus and optimal processes, the Group believes this enables Icelandic Salmon to be a cost-effective producer of farmed salmon in Iceland.
The Group recognizes the diversity and importance of its corporate social responsibility as an employer, producer, supplier of healthy food, a user of the natural environment and administrator of financial and intellectual capital. Social responsibility is essential to the Group and incorporated in daily tasks. At the same time, the Group aims to minimise it operations' impact on the natural environment.
The Group is required to report on its corporate responsibility and selected related issues under §3-3a and §3-3c of the Norwegian Accounting Act. Some key priorities are described below. A detailed chapter on all relevant sustainability topics can be found in this report under section 2.
Salmon farming is considered one of the most environmentfriendly ways of producing food and benefits from natural space, freshwater consumption and low greenhouse gas emissions.
Seeking to work in harmony with nature, Icelandic Salmon has a strict environmental policy aiming to make the Group sustainable across its entire operation. The policy includes but is not limited to complying with laws local to Iceland and internationally, adherence to ASC regulation and standards, preventing escapes, optimal feed ratio of the fish, reduction of organic load, using environmentally friendly products and recycling of business materials and waste.
In addition, all farming activity has been through an environmental assessment process. That process includes stakeholder participation and involvement of the Environmental Agency of Iceland, the Food and Veterinary Authority (MAST), the Planning Agency and the Marine
and Freshwater Research Institute, among other agencies. The outcome is an extensive environmental report describing the impact of the farming activity, mitigating measurements, and how the environment should be monitored.
Further details of the Groups environmental policy, including its commitment to sustainable fish farming, can be found in Sustainability part of this report under Section 2.
The Group is committed to providing a safe and healthy work environment for all its employees and has an active health and safety committee. All work-related incidents and sickness are monitored and reported by the quality department to the Directors of the Group and reported as such in the Sustainability part of this report under Section 2.
The Group supports and encourages employees to participate in education and courses provided by the Group or external education that will benefit both employee and the Group. The Group strongly believes in building up a Fish Farm educational program to build a stronger foundation for the industry in Iceland.
Ensuring that the Group operates in line with this value, it actively works to implement a collaborative culture. It does so by offering employees to join the Arnarlax Academy, an educational program introducing employees to the Group's operating structure, governance, and roles of each operating segment. As a result, the Arnarlax Academy supports increased workforce competency.
The program also encourages moral and awareness of
the Group's position in the environment, staying true to our values, "We care" and "Teamwork makes us stronger". In addition to this program, the Group provides vocational aquaculture training, which saw 5 employees receive diplomas in 2022 and ten employees in 2021.
As a strong supporter of cultural happenings in local communities, the Group actively supports local initiatives focusing on youth, cultural and sport activities.
The Group is committed to build an inclusive business where all forms of diversity are encouraged. The Group also ensures that the necessary internal processes and culture are in place to promote equal opportunity for all. In 2021, the Group obtained equal pay certification and continues to maintain it in 2022.
The Board and senior management are fully committed to providing equal opportunities for all employees, irrespective of race, gender, religion, national origin, disability, or other personal characteristics.
The Group is subject to report annually about its efforts to secure equal opportunities under the "Equality and Antidiscrimination Act of Norway".
The Group has a gender ratio of 26 per cent female and 74 per cent male and actively encourages more female employees to join the business. The Group has as well a multinational workforce whereas in the year 2022 more than 15 nationalities worked for the Group, emphasises the diversity of the Group's workforce.
The Board of Directors of Icelandic Salmon has five members, of which one is female. At year end 2022, the Executive Management team comprised seven people, of which two are female.
The Group fully respects the human rights of all individuals and groups that might be affected by its operations. The Group has a zero-tolerance policy toward human rights violations and illegal conditions and is guided by internationally recognized human rights and labour standards. This is clearly communicated to the Group's suppliers, and Icelandic Salmon will act on any known violation of human rights.
The Group acknowledge the implementation of the Norwegian Transparency Act in July 2022, which is one of the initial measures in the development of guidelines for human rights due diligence. It is anticipated that the EU will also introduce similar regulations soon. The Group is committed to uphold responsible and sustainable practices not only within its own operations but also across our supply chain, prioritizing human rights. The Groups parent company, SalMar, has conducted evaluations to meet the requirements of the Norwegian Transparency Act, evaluating various suppliers that pose a higher risk of violating human rights. Icelandic Salmon AS support these evaluations and stand by them.
The Group is committed to conducting its business ethically and with integrity. Icelandic Salmon will not allow corruption or bribery to occur across any part of its operations. Accordingly, the Group has issued a statement concerning the acceptance of improper or excessive gifts, which can be a form of bribery or corruption, as it is prohibited under the Group's policies and by law. All employees are obligated to report all gifts and offers made to them and reject improper or excessive gifts and offers.
The Group is dedicated to creating a safe work environment where employees can safely report wrongdoings in the workplace. All employees are provided whistleblowing training and are protected from reprisal should they file a report.
The effects of the pandemic on the salmon market gradually declined in 2021 and from the second quarter 2022 the Group has achieved good market prices. The effect of the pandemic is at a minimum and is expected to remain low throughout 2023. Effects from the pandemic are no longer considered a main risk factor in the Group's operations.
The Group's effort to differentiate and expand its offering have further contributed to improved prices. Important steps to this effect were taken in 2021 with the launch of a new brand "Arnarlax – Sustainable Icelandic Salmon", and with the opening of a climate friendly seaway transportation route for salmon to North America. This has contributed an increased sales to North America and contributed larger market scale into the new year.
The Russian invasion of Ukraine and imposed sanctions have disrupted many supply chains and impacted the price of raw materials such as fish feed, operations, and logistics. At the same time the market has shown a positive price development and increased demand for Atlantic Salmon, balancing the effect of higher cost. The current geopolitical situation has so far had no significant negative impact on the Icelandic Salmon markets. Management will continue to monitor the situation closely.
Acquisition of the remaining shares in smolt facility Eldisstöðin Ísþór, in addition to further investments in the Groups smolt facilities, has secured the Groups smolt need along with better utilization of the MAB license (Maximum allowed biomass). First effect of the Group's investments will be shown in the smolt output in 2023 and further in 2024, and in the Group's operational results in 2024 and 2025.
The Group's harvesting totalled up to 16.1 thousand tonnes in 2022, an increase from 11.5 thousand tonnes in 2021. Continuing investments in the Group's growth projects, including investments in smolt facilities, are expected to bring the Group higher harvesting and revenues in nearby future. The Group expects to harvest 16.0 thousand tonnes in 2023.
The legal framework for Iceland as a new farming region has been developing for the last few years, but still has a considerable potential for improvement and increased predictability. Strategic planning for the future structure of Iceland as a new farming region is an ongoing process. It is of great importance for all our communities and all stakeholders, both from economic and environmental point of view, that the companies will have the opportunity to focus on being internationally competitive. A key success factor will be to further develop all parts of the value chain and utilize economies of scale when competing in the global markets, serving a demanding buyer's universe and fast-growing retailers with fresh Icelandic salmon every week, within the framework of environmentally sustainable production.
The Group's responsibility is to ensure that it conducts itself in the best possible way to provide value to all of the Group's stakeholders, including shareholders, employees, customers, and the local community and waters in which it operates. With a strong balance sheet, the Group has the needed building blocks to further develop and grow without compromising its core mission: to produce sustainable and good quality Icelandic salmon.
The employees continue to be the Group's most essential key to success. Therefore, continuous development of the organisation through learning and development activities remains a strategic focus area for the Group.
The Board would like to take this opportunity to thank all employees for their hard work and dedication throughout 2022 and the shareholders for their continued investment in the Group's vision.
In the first quarter of 2023, the smolt facility Ísþór, owned by the Group, experienced a high mortality rate due to POX disease. This event was considered extraordinary and was expensed as operational cost in January 2023. The cost incurred amounted to EUR 81 thousand, which was deemed immaterial.
| Icelandic Salmon AS Consolidated Financial Statements 54 | |
|---|---|
| Notes to the Consolidated Financial Statements for 202259 | |
| Icelandic Salmon AS Financial Statements103 | |
| Notes to the Annual Financial Statements for 2022106 | |
| Statement by the Board of Directors and CEO113 | |
| Independent auditor's report 114 | |
| GRI index and third-party verification 116 |
| In EUR 1000 | Note | 2022 | 2021 |
|---|---|---|---|
| Revenue from contracts with customers | 2.2, 4.6 | 157,593 | 90,806 |
| Total operating revenue | 157,593 | 90,806 | |
| Cost of goods sold | 4.6 | 78,406 | 52,753 |
| Salaries and personnel expenses | 2.3, 2.4 | 17,349 | 12,180 |
| Other operating expenses | 2.5 | 18,230 | 12,644 |
| Depreciation | 3.4, 3.5 | 7,456 | 5,915 |
| Total operating expenses | 121,440 | 83,492 | |
| Operational EBIT | 4.6 | 36,153 | 7,314 |
| Production tax | (1,329) | (307) | |
| Onerous Contracts | (122) | 0 | |
| Fair value adjustments of biomass | 3.6 | (215) | (2,937) |
| Operating profit | 34,487 | 4,070 | |
| Income from investment in joint venture | 180 | 3 | |
| Financial items | |||
| Financial income | 2.6, 4.5 | 9,256 | 144 |
| Financial expense | 2.6 | (1,915) | (1,969) |
| Net currency gain | (189) | 351 | |
| Net financial items | 7,151 | (1,474) | |
| Profit before tax | 41,817 | 2,600 | |
| Income tax | 2.7 | 6,901 | 232 |
| Net profit for the year | 34,917 | 2,367 | |
| Net profit (loss) attributable to: | |||
| Equity holders of the parent company | 34,917 | 2,367 | |
| Other comprehensive income | |||
| Items which may subsequently be reclassified to profit or loss | |||
| Translation differences related to joint venture | 96 | 88 | |
| Translation differences related to subsidiaries | (314) | (1) | |
| Other comprehensive income (loss) for the year | (217) | 87 | |
| Total comprehensive income for the year | 34,699 | 2,454 | |
| Total comprehensive income attributable to: | |||
| Equity holders of the parent company | 34,699 | 2,454 | |
| Earnings per share ("EPS"): | |||
| Basic and diluted (EUR per share) | 4.3 | 1.13 | 0.08 |
| In EUR 1000 | Note | 31/12/2022 | 31/12/2021 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Goodwill | 3.1, 3.2 | 34,740 | 19,332 |
| Licenses | 3.2, 3.3, 4.5 | 1,626 | 431 |
| Other intangible assets | 3.2, 3.3, 4.5 | 0 | 547 |
| Property, plant & equipment | 3.4 | 81,149 | 52,225 |
| Lease assets | 3.5 | 6,975 | 5,827 |
| Investment in joint venture | 4.4 | 0 | 1647 |
| Other long-term receivables | 4.5 | 0 | 4,964 |
| Deferred tax assets | 2.7 | 0 | 3,407 |
| Total non-current assets | 124,490 | 88,380 | |
| Current assets | |||
| Biological assets | 3.6 | 84,146 | 66,899 |
| Inventories | 3.6 | 5,043 | 2,538 |
| Trade receivables | 3.7 | 15,026 | 7,323 |
| Other receivables | 3.7, 4.1, 4.5 | 4,748 | 2,126 |
| Cash and cash equivalents | 3.8, 3.9 | 1,854 | 3,744 |
| Total current assets | 110,816 | 82,630 | |
| Total assets | 235,306 | 171,010 |
| In EUR 1000 | Note | 31/12/2022 | 31/12/2021 |
|---|---|---|---|
| Equity and liabilities | |||
| Equity | |||
| Share capital | 4.2 | 29,571 | 29,571 |
| Share premium | 88,600 | 90,622 | |
| Other paid-in equity | 2.4 | (930) | (1,089) |
| Other equity | 2.4 | 26,976 | (9,795) |
| Total equity | 144,216 | 109,309 | |
| Liabilities | |||
| Non-current liabilities | |||
| Interest-bearing borrowings | 3.8, 3.10 | 51,649 | 38.465 |
| Lease liabilities | 3.5 | 5,756 | 4,803 |
| Deferred tax liabilities | 2.7 | 3,576 | 0 |
| Total non-current liabilities | 60,981 | 43,268 | |
| Current liabilities | |||
| Interest-bearing borrowings | 3.8, 3.10 | 6,230 | 2,084 |
| Lease liabilities | 3.5, 3.10 | 1,186 | 1,086 |
| Trade payables | 11,702 | 9,699 | |
| Tax payables | 2.7 | 1,341 | 0 |
| Provision for onerous contracts | 3.11 | 122 | 0 |
| Other payables | 3.8, 3.11, 4.5 | 9,528 | 5,564 |
| Total current liabilities | 30,109 | 18,433 | |
| Total liabilities | 91,090 | 61,701 | |
| Total equity and liabilities | 235,306 | 171,010 |
Bíldudalur, 21 April 2023
Kjartan Olafsson, Chairman of the Board
Leif-Inge Nordhammer, Member of the Board
Trine Sæther Romuld Member of the Board
Bjørn Hembre, CEO
Espen Weyergang Marcussen, Member of the Board
| In EUR 1000 | Note | 2022 | 2021 |
|---|---|---|---|
| Cash flow from operating activities: | |||
| Profit before tax | 41,817 | 2,600 | |
| Adjustments to reconsile profit for tax to net cash flows: | |||
| Deprecation | 3.4, 3.5 | 7,456 | 5,915 |
| Share based payment expense | 2.4 | 158 | 209 |
| Net foreign exchange diffrences and other items | (1,054) | 136 | |
| Financial expenses (debt/borrowings and leases) | 2.6 | 1,915 | 1,969 |
| Financial revenue (interest income) | 2.6 | (288) | (144) |
| Share of (loss) profit from joint ventures | (180) | (3) | |
| Fair value gain related to remeasured shares in joint venture | 4.5 | (8,968) | 0 |
| Change in fair value of biomass | 3.6 | 215 | 2,937 |
| Working Capital changes: | |||
| Change in inventories and biomass recognized at cost | 3.6 | (19,967) | (13,470) |
| Change in payables and receivables | 3.6, 3.7 | (9,486) | (392) |
| Net cash flow to from operating activities | 11,619 | (244) | |
| Cash flow from investing activities: Proceeds from from sale of property, plant & equipment Purchase of property, plant & equipment |
3.4 | 178 (16,617) |
12 (12,886) |
| Acquisition of a subsidiary, net of cash received | 4.5 | (10,537) | 0 |
| Other investments | (267) | (1,905) | |
| Proceeds of interest income | 2.6 | 68 | 8 |
| Net cash flow to investing activities | (27,176) | (14,771) | |
| Cash flow from financing activities: | |||
| Proceeds from new interest-bearing debt | 3.10 | 22,630 | 25,171 |
| Repayment of interest-bearing debt | 3.10 | (5,828) | (4,826) |
| Payment of principal portion of lease liabilities | 3.5 | (1,192) | (785) |
| Paid interest (debt/borrowings and leases) | 2.6 | (1,943) | (2,233) |
| Share based payments | 0 | (1,618) | |
| Net cash flow from financing activities | 13,667 | 15,709 | |
| Net change in cash and cash equivalents | (1.890) | 694 | |
| Cash and cash equivalents as at 1 Jan | 3,744 | 3,050 | |
| Cash and cash equivalents as at 31 Dec | 1,854 | 3,744 |
| Other equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | Note | Share capital |
Share premi um |
Other paid-in equity |
Restriced reserve |
Statutory reserve |
Translation differences |
Retained earnings |
Total equity |
| Equity as at 1 Jan 2021 | 29,571 | 90,622 | 288 | (1,219) | (11,084) | 108,178 | |||
| Net profit for the year | 0 | 0 | 0 | 0 | 0 | 0 | 2,367 | 2,367 | |
| Other comprehensive income | |||||||||
| Translation difference of foreign interest | 0 | 0 | 0 | 0 | 0 | 87 | 0 | 87 | |
| Total comprehensive income for the year |
0 | 0 | 0 | 0 | 0 | 87 | 2,367 | 2,454 | |
| Share-based payment, expensed | 2.4 | 0 | 0 | 209 | 0 | 0 | 0 | 0 | 209 |
| Share-based payment, settlement | 2.4 | 0 | 0 | (1,585) | 0 | 0 | 0 | (33) | (1,618) |
| Other changes | 0 | 0 | 0 | 0 | 0 | (178) | 265 | 87 | |
| Other transactions | 0 | 0 | (1,376) | 0 | 0 | (178) | 232 | (1,322) | |
| Equity as at 31 Dec 2021 | 29,571 | 90,622 | (1,089) | 0 | 0 | (1,310) | 8,485 | 109,309 |
| Other equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2022 | Note | Share capital |
Share premi um |
Other paid-in equity |
Restriced reserve |
Statutory reserve |
Translation differences |
Retained earnings |
Total equity |
| Equity as at 1 Jan 2022 | 29,571 | 90,622 | (1,089) | 0 | 0 | (1,310) | (8,485) | 109,309 | |
| Net profit for the year | 0 | 0 | 0 | 0 | 34,917 | 34,917 | |||
| Uncovered loss moved against Share premium |
0 | (2,023) | 0 | 0 | 0 | 0 | 2,023 | 0 | |
| Share in subsidiaries- restrictive reserve |
0 | 0 | 0 | 8,971 | 0 | 0 | (8,971) | 0 | |
| Statutory reserve | 0 | 0 | 0 | 0 | 3,527 | 0 | (3,527) | 0 | |
| Other comprehensive income | |||||||||
| Translation difference of foreign interest | 0 | 0 | 0 | 0 | 0 | (217) | 49 | (168) | |
| Total comprehensive income for the year |
0 | (2,023) | 0 | 8,971 | 3,527 | (218) | 24,491 | 34,749 | |
| Share-based payment, expensed | 2.4 | 0 | 0 | 158 | 0 | 0 | 0 | 0 | 158 |
| Other transactions | 0 | 0 | 158 | 0 | 0 | 0 | 0 | 158 | |
| Equity as at 31 Dec 2022 | 29,571 | 88,600 | (930) | 8,971 | 3,527 | (1,528) | 16,006 | 144,216 |
Restricted reserves refers to restricted equity in Arnarlax (subsidiary of Icelandic Salmon). The equity is restricted until the subsidiaries of Arnarlax distribute dividend in excess of accumulated profits, which is the restricted amount, to Arnarlax.
According to the Icelandic private limited companies law nr. 138/1994 at least 10 per cent of the profit of the Group which is not devoted against losses from previous years and is not contributed to other legal reserves must be contributed to the statutory reserve until it amounts to 10 per cent of the share capital. When that limit has been reached the contribution must be at least 5 per cent of the profit until the statutory reserve amounts to 25 per cent of the share capital of relevant Company of the Group.
Icelandic Salmon AS (the "Company" or "Icelandic Salmon" is a limited liability company, incorporated in Norway and headquartered in Kverva. The address of its registered office is Industriveien 51, 7266 Kverva, NORWAY. The Ultimate Parent Company is Kvarv AS.
Icelandic Salmon is the leading salmon farmer in Iceland and the main operation of the Group is production, processing and sale of seafood and seafood-based products.
The Consolidated Financial Statements of the Group for the year ended December 2022 were approved by the Board of Directors on 21 April 2023.
The Consolidated Financial Statements of the Company for the year ended on 31 December 2022 incorporates the Financial Statements of the Company and its subsidiaries which are collectly referred to as "the Group". The Consolidated Financial Statements of the Group comprise the Consolidated Statements of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of cash flow and Consolidated Statement of changes in equity and related notes. The Consolidated Financial Statements of the Group for the year ended 31 December 2022 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by The European Union ("EU"), as well as additional disclosure requirements pursuant to the Norwegian Accounting Act.
The Consolidated Financial Statements have been prepared on a historical cost basis, except for biological assets that have been measured at fair value. Further, the Consolidated Financial Statements are prepared based on the going concern assumption. All figures are presented in EUR thousands (000), except when otherwise noted.
The Consolidated Financial Statements of the Group are prepared in accordance with the same accounting principles as the Consolidated Financial Statements for 2021.
The Company has selected a presentation in which the description of accounting policies as well as estimates, assumptions and judgmental considerations are disclosed in the notes to which the they relate. A summary of significant and other accounting policies not disclosed in the notes, are summarized below:
The Consolidated Financial Statements are presented in EUR, which is also the functional currency of the Company and Arnarlax ehf. (subsidiary) where the Groups main operation is.
The functional currency is determined in each company within the Group based on the currency within the primary economic environment of that company. Transactions in foreign currency are translated to functional currency using the exchange rate at the date of the transaction. Monetary items in foreign currency are at the end of the reporting period translated to functional currency using the closing rate. Differences arising on settlement or translation of monetary items are recognized in the Statement of Comprehensive Income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
For presentation purposes, items in the Statement of Financial Position are translated from functional currency to presentation currency by using exchange rates at the reporting date. Items within the Statement of Comprehensive Income are translated from functional currency to presentation currency by applying monthly average exchange rates. If currency rates are fluctuating significantly, transaction date exchange rates are applied for significant transactions. Translation differences are recognized in other comprehensive income.
The Group's Consolidated Financial Statements comprise the Parent Company and its subsidiaries as of 31 December 2022. Consolidated companies have been assessed as being controlled by the Group during the reporting period.
Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if, and only if, the Company has:
The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary.
Intercompany transactions, balances and unrealized gains or losses on transactions between Group companies are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Business combinations are accounted for by using the acquisition method. The consideration transferred is measured as the fair value of the assets transferred, equity instruments issued, and liabilities incurred or assumed at the date of exchange. All acquisition-related costs are recognized in Statement of Comprehensive Income except for costs to issue debt or equity, which are recognized in accordance with IFRS 9 and IAS 32. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the Group's share of the net assets of the subsidiary acquired, the difference is recognized directly in the Statement of Comprehensive Income.
| Subsidiary | Registered office | 2022 | 2021 | Parent Company | Country |
|---|---|---|---|---|---|
| Arnarlax ehf. | Strandgata 1, 465 Bíldudalur | 100% | 100% | Icelandic Salmon AS | Iceland |
| Fjallalax ehf. | Strandgata 1, 465 Bíldudalur | 100% | 100% | Arnarlax ehf. | Iceland |
| Eldisstöðin Ísþór ehf. | Nesbraut 25, 815 Þorlákshöfn | 100% | 50% | Arnarlax ehf. | Iceland |
An asset is current when it is:
All other assets are classified as non-current.
A liability is current when:
The Group classifies all other liabilities as non-current.
Cash and cash equivalents in the Statement of Financial Position and the Statement of Cash Flows includes cash and restricted cash with a restriction less then three months from end of the reporting period.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown as a deduction from the proceeds received.
Equity is defined as any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
The Consolidated Statement of cash flows is prepared using the indirect method.
New standards and interpretations adopted and effective during the periods The following new IFRS standards have been adopted by the Group effective 1 January 2022:
| IAS 16 (Amendments) – Property, Plant and Equipment – Proceeds before Intended Use |
The IASB issued amendments to IAS 16, which prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced before that asset is available for use; that is, proceeds while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Consequently, an entity recognizes such sales proceeds and related costs in profit or loss. The adoption of the amendments did not have a material impact on the Consolidated Financial Statements of the Group. |
|---|---|
| IAS 37 (Amendment) – Onerous Contracts – Cost of Fulfilling a Contract |
The IASB issued amendments to IAS 37 to specify that the 'cost of fulfilling' a contract comprises the 'costs that relate directly to the contract'. Costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract (examples would be direct labor or materials) and an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The amendments apply to contracts for which the entity has not yet fulfilled all its obligations at the beginning of the annual reporting period in which the entity first applies the amendments. The adoption of the amendments did not have a material impact on the Consolidated Financial Statements of the Group. |
| Annual Improvements to IFRS Standards 2018-2020 Cycle IFRS 9 Financial Instruments |
The IASB issues amendments on IFRS 9, which clarifies that in applying the '10 percent' test to assess whether to derecognize a financial liability, an entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other's behalf. The amendment is applied prospectively to modifications and exchanges that occur on or after the date the entity first applies the amendment. The adoption of the amendments did not have a material impact on the Consolidated Financial Statements of the Group. |
The Group has not early adopted new standards or amendments to IFRSs that have been issued and are permitted for early adoption. The following amendments are effective from 1 January 2023:
– Sale or Contribution of Assets between Investor and its Associate or Joint Venture
The IASB issues amendments to IFRS 10 and IAS 28, which relate to situations where there is a sale or contribution of assets between an investor and its associate or joint venture. The amendments state that gains or losses resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method, are recognized in the parent's profit or loss only to the extent of the unrelated investors' interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement of investments retained in any former subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to fair value are recognized in the former parent's profit or loss only to the extent of the unrelated investors' interests in the new associate or joint venture. The effective date of the amendments has yet to be set by the Board; however, earlier application of the amendments is permitted. The Group anticipates that the application of these amendments may have an impact on the Consolidated Financial Statements in future periods should such transactions arise.
The Annual Improvements include amendments to the following Standards that are relevant to the Company:
| IFRS 16 Leases | The IASB issues amendments on IFRS 16, which removes the illustration of the reimbursement of leasehold improvements. As the amendment to IFRS 16 only regards an illustrative example, no effective date is stated. |
|---|---|
| AS 1 Presentation of Financial Statements, Practice statement 2 and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors |
The IASB issues amendments to IAS 1, which affect the presentation of liabilities as current or noncurrent in the statement of Financial Position. The amendment does not impact the amount or timing of recognition of any asset, liability, income or expenses, or the information disclosed about those items. The amendments clarify that the classification of liabilities as current or noncurrent is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of 'settlement' to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments are applied retrospectively for annual periods beginning on or after 1 January 2023, with early application permitted. The Group anticipates that the application of these amendments may have an impact on the Consolidated Financial Statements in future periods. |
| IAS 12 Income Taxes | The aim to improve accounting policy disclosures and to help users of the inancial Statements to distinguish between changes in accounting estimates and changes in accounting policies. The amendment is effective for annual periods beginning on or after 1 January 2023. |
The Management of the Company do not expect that the adoption of the amended standards listed above or other issued new standards and amendments scheduled that become effective in subsequent periods will have a material impact on the Consolidated Financial Statements of the Group in future periods.
The preparation of the Consolidated Financial Statements in accordance with IFRS and applying accounting policies requires management to make judgments, estimates and assumptions about the reported amounts of assets, liabilities, revenues and expenses that are not readily apparent from other sources. The estimates and associated assumptions are based on information available when the Consolidated Financial Statements are prepared, historical experience and other factors that are considered to be relevant. Existing circumstances and assumptions may change due to events arising that are beyond the Group's control. Therefore, actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The Group has conducted an analysis of the impact of climate risk on its operations, as detailed in Section three of the Board's report on risk assessment. As of the reporting date, the Group has deemed the risk to be negligible.
An operating segment is a component of an entity:
The operating segments represents the business units for which the chief operating decision maker monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
The Group owns and operates fish farming in the Icelandic fjords and the main purpose of the Group is production, processing and sale of seafood and seafood-based products, as well as conducting other business in connection with the purposes, including through investments and ownership in other companies with same purpose. The Group operates and manages its business as one operating segment based on the manner in which the Chief Executive Officer, the Group's chief operating decision maker, assesses performance and allocates resources across the Group. The segment reporting is therefore identical to the Group Consolidated Financial Statements presented in this report.
The Group recognizes revenue from the sale of salmon at the point in time when control of the goods is transferred to the customer. The transfer of control to the customer depends on shipping terms, but will normally occur when the goods are delivered to the customer. Other revenues from the sale of services relate primarily to the sale of harvesting services. Revenue from contracts with customers is recognized when control of the goods and the service has been transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods and/or service.
Revenues from contracts with customers are recognized in the Statement of Comprehensive Income or loss net of discounts. Transaction prices are fixed upfront without any variable consideration. There is no right of return and refunds are only given if delivered goods are damaged or if there is a discrepancy in delivered goods compared to agreements. The normal credit term is 21 days upon delivery to the customers. Refunded amounts have historically been immaterial.
Revenue recognized at point in time (sale of goods) and revenue recognized over time (other revenue) is as follows:
| Specifications of revenue | 2022 | 2021 |
|---|---|---|
| Sales of goods | 148,657 | 81,628 |
| Other revenue | 8,936 | 9,177 |
| Revenue from contracts with customers | 157,593 | 90,806 |
The Group's revenue based on geographical markets from contracts with customers in which the revenue is earned are presented below:
| Group revenues by geographical market: | 2022 | % | 2021 | % |
|---|---|---|---|---|
| Europe, excl. Norway | 88,710 | 56.3% | 57,597 | 63.4% |
| USA | 34,335 | 21.8% | 12,464 | 13.7% |
| Norway | 26,255 | 16.7% | 16,110 | 17.7% |
| Other | 8,293 | 5.3% | 4,635 | 5.1% |
| Revenue from contracts with customers | 157,593 | 100.0% | 90,806 | 100.0% |
The primary operational income for the Group is denominated in EUR. In 2022, 61 per cent of the Group's operational income was generated in EUR, while other operational income was mostly in USD. Since exchange rate volatility can impact the profitability of salmon sales, the Group has taken steps to mitigate currency risk by hedging all fixed price contracts denominated in currencies other than the operational currency.
| Salaries and personnel expenses | 2022 | 2021 |
|---|---|---|
| Salaries, incl. holiday allowance and bonuses | 12,998 | 8,843 |
| Social security and employers national insurance expenses | 1,049 | 697 |
| Pension expenses | 1,504 | 1,101 |
| Other benefits | 1,798 | 1,539 |
| Total salaries and personnel expenses | 17,349 | 12,180 |
| Number of full-time equivalents employed during the financial year: | 177 | 135 |
Pension expenses related to defined contribution which consists of expense incurred by the Group for employees that are required by local laws to participate in pension schemes. These pension schemes are not sponsored or administered by the Group. Pursuant to the requirements of the schemes, the Group is required to contribute a certain percentage of its payroll costs to the pension schemes. Such contributions are charged to the consolidated statements of comprehensive income in the period they incurred in accordance with the rules of the pension schemes. The Group has no further payment obligations once these contributions have been paid.
| Remuneration to Group management: | 2022 | 2021 |
|---|---|---|
| Bjørn Hembre, CEO | 428 | 342 |
| Management group Arnarlax, consist of three COO's, QM, CBDO and CFO | 902 | 798 |
| Total remuneration to Group's management | 1,330 | 1,140 |
| 21 21 |
|---|
| 103 103 |
All fixed salary employees, including the management of the Group, have performance-related bonus scheme. Performancerelated bonus is based on shared goals and individual valuation. The amount of the bonus is set by the Board of Directors at the beginning of each bonus period as fixed percentage of the EBIT for the Group and is decided on by the valuation of the management and the CEO. The total bonus amount for the year 2021 was set by the Board of Directors as two per cent of the operational EBIT for the Group and was paid out to all employees under the scheme in January 2022. The CEO and part of the senior executive team were granted performance-related bonuses in addition to the fixed salary bonus scheme. BOD approved similar bonus scheme for the year 2022 that was expensed during the operational year but paid out in January 2023.
In the reporting period the Group's management consisted of seven personells from which six of them living in the local community near the company's headquarters. The management, as well as other personells, that live near the company headquarters all pay taxes and obligations to the local municipalicy as laws and regulations apply. Further breakdown and information on taxes and obligations to the authorities can be found in the community footprint issued on the Group's website.
The Company operates an equity-settled, share-based compensation scheme, under which the Company receives services from Arnarlax's employees as consideration for equity instruments (stock options) of the Company. Equity-settled share based options are measured at the fair value of the equity instruments at the grant date using Black-Scholes valuation model, excluding the effect of non-market-based vesting conditions. The fair value determined at the grant date is expensed and recognized in employee benefits on a straight-line basis over the vesting period of the options with a corresponding increase in equity. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-marketbased vesting conditions and recognizes any impact in the Statement of Comprehensive Income such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity.
On 19 February 2021, the Company granted 205,850 share options with an exercise price of NOK 115.00, respectively, to the CEO and certain key employees. The Company's intention is that the options will be equity-settled. The option holders must stay in the employment of the Group over a vesting period of three years from the grant date until 19 February 2024. As at 31 December 2022, the fair value of the agreements was determined to be EUR 504 thousand and pro rata accrual in the amount of EUR 158 thousand was expensed as other employee benefits, with a corresponding entry to other paid-in equity.
| 2022 | 2021 | |||
|---|---|---|---|---|
| Number of shares '000 |
Weighted avg exercise price |
Number of shares '000 |
Weighted avg exercise price |
|
| Outstanding at the beginning of period | 194 | 533 | 165 | 212 |
| Granted during the period | 0 | 0 | 206 | 564 |
| Forfeited during the period | (10) | (29) | (12) | (31) |
| Exercised during the period | 0 | 0 | (165) | (212) |
| Outstanding at the end of period | 184 | 504 | 194 | 533 |
Average remaining contractual life at year-end 1.2 2.2
| 2022 | |
|---|---|
| Date of award | 19.2.2021 |
| Plan | 2021 |
| Volatility | 34.88% |
| Risk free rate | 0.54% |
| Share price at date of award | 115 |
| Weighted average fair value on date of award | 28.01 |
| Option's lifespan | 1.2 |
| Model employed | Black-Scholes |
| Number outstanding | |||||
|---|---|---|---|---|---|
| Date of grant | Expiry date | Key employees | Exercise price | 31/12/2022 | 31/12/2021 |
| 2021 | 2024 | CEO Björn Hembre | 115 | 100,000 | 100,000 |
| 2021 | 2024 | Company's Directors | 115 | 51,600 | 51,600 |
| 2021 | 2024 | Other key employees | 115 | 32,305 | 42,800 |
| 183,905 | 194,400 |
During the year 2022 the Group recognized total expenses of EUR 158 thousand (2021: EUR 209 thousand) related to sharebased payment transactions, which are included in Salaries and personnel expenses in the statement of other comprehensive income.
The parent of the Company, SalMar ASA, operates a restricted share scheme in which the companies within its control receive services from employees in return for equity instruments in the Parent. In 2021 EUR 33 thousand was paid to SalMar ASA by Arnarlax ehf with a contra entry against other equity. By the end of year 2021 Arnarlax employees are no longer part of the SalMar ASA RSU program and no payments were made during the year 2022.
| Specification of other operating expenses: | 2022 | 2021 |
|---|---|---|
| Services, marketing and travel expenses | 6,325 | 4,593 |
| Maintenance expenses | 4,125 | 2,544 |
| Operating equipment & consumables expenses | 3,599 | 1,777 |
| Other expenses | 2,923 | 2,833 |
| Freight & delivery expenses | 503 | 310 |
| Fee expenses | 426 | 294 |
| Insurance expenses | 329 | 293 |
| Total | 18,230 | 12,644 |
The Company pays fees based on the Company's licenses and production
During one of the Group's regular safety inspections at the end of August 2021, a hole was discovered in one pen at the Haganes location in Arnarfjörður. Immediately after, employees initiated appropriate measures in accordance with the Group's wellestablished response plan and informed relevant authorities. No employee was harmed. Following the incident, the Group has adapted its routines to prevent future potential incidents of this kind.
In October 2022, following the final harvest from the pens, the Icelandic Food Authority (MAST) initiated its own investigation of the incident. The MAST investigation concluded by administrating the Group with a EUR 819 thousand fine for not having reported the incident at an earlier stage. Arnarlax is confident that the Group reported the incident within an appropriate timeframe after discovery. The Group has appealed the MAST's decision on the grounds of having responded appropriately when the incident was discovered and in line with laws and regulations. The fine is included in other expenses.
The Company pays fees to Icelandic environmental fund. Environmental fund of fish farming operates based on law no. 71/2008, on fish farming, and is an independent fund owned by the state and is administrated by the Ministry of Fisheries and Agriculture and collected by the Icelandic Food and Veterinary Authority. The fund's objective is to limit the environmental effects caused by fish farming. Holders of operational permits of fish farming pay a yearly fee to the fund and as such the Company paid a total of EUR 0.6 million in 2022 compared to EUR 0.5 million in 2021. The fee is based on fixed price of 20 SDR for each tonnes of the Company's production license. Environmental fees are included in the cost of goods sold.
The Company pays fees to aquaculture fund categorized as production tax. Fees to aquaculture is based on law no. 89/2019 on fees for fish farming in the sea. The Directorate of Fisheries shall assess and charge the fee amount in accordance with guidelines laid down in the 2nd article of the same law. According to a temporary provision of the law, the amount of the fee was 3/7th of the calculated fee in 2022 and will be 4/7th in 2023. From 2026 the fee charged will be full fee in accordance with the law. Resource fee imposed on the Company was calculated to EUR 1.3 million for the year 2022 compared to EUR 0.3 million in 2021. The calculation is based on average NASDAQ prices from the period of August to October from the year before. Tax percentage is also based on same price table. For taxation in 2022, the NASDAQ median value price was 5.31 EUR/ kg. in 2021 that set the tax percentage to 3.5 per cent of harvested volume of gutted weight. For taxation in 2021, the median value price was 4.31 EUR/kg. setting the tax percent to 2.0 per cent. This shows that production tax has more than four folded between years. To highlight the performance of underlying operations before deduction of the production tax, the Company has chosen to report it on a separate line in the Statement of Comprehensive Income below Operational EBIT.
The remuneration (excl. VAT) paid to the Group's auditor breaks down as follows:
| 2022 | Others | EY | Total |
|---|---|---|---|
| Statutory auditing services | 31 | 258 | 289 |
| Other services | 0 | 18 | 18 |
| Total | 31 | 275 | 306 |
| 2021 | Others | EY | Total |
| Statutory auditing services | 176 | 111 | 286 |
| Other services | 25 | 0 | 25 |
| Total | 200 | 111 | 311 |
Remuneration paid to the Group's auditors are included in other operating expenses in the Statement of Comprehensive Income.
| Financial income | 2022 | 2021 |
|---|---|---|
| Interest income | 288 | 144 |
| Fair value gain of previously owned equity interest* | 8,968 | 0 |
| Total financial income | 9,256 | 144 |
| *See further note 4.5 | ||
| Financial expenses | 2022 | 2021 |
| Interest expenses on debts and borrowings | 1,643 | 1,827 |
| Interest expenses on lease liabilities | 272 | 142 |
| Total financial expenses | 1,915 | 1,969 |
The tax expense consists of the tax payable and changes to deferred tax. Deferred tax/tax assets are calculated on all differences between the book value and tax value of assets and liabilities.
Deferred tax assets are recognized when it is probable that the relevant tax entities will have a sufficient profit for tax purposes in subsequent periods to utilize the tax asset or when there are taxable temporary differences that will reverse in future periods. The companies recognize previously unrecognized deferred tax assets to the extent it has become probable that the company can utilize the deferred tax asset. Similarly, the Company will reduce a deferred tax asset to the extent that the Group no longer regards it as probable that it can utilize the deferred tax asset.
Deferred tax and deferred tax assets are measured based on the expected future tax rates applicable to the companies in the Group where temporary differences have arisen.
Deferred tax assets and deferred tax are recognized at their nominal value and classified as non-current assets and long-term liabilities in the Statement of Financial Position.
Taxes payable and deferred taxes are recognized directly in equity to the extent that they relate to equity transactions.
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
| Current income tax expense: | 2022 | 2021 |
|---|---|---|
| Change deferred tax/deferred tax assets (ex. OCI effects) | 6,901 | 232 |
| Total income tax expense | 6,901 | 232 |
| Reconciliation deferred tax (liablities)/assets | 2022 | 2021 |
| Deferred tax assets recognized in the Consolidated Statement of Financial Position at 1 January |
3,407 | 3,677 |
| Tax recognized in the Concolidated Statement of Comprehensive Income | (6,901) | (232) |
| Tax recognized trough equity | 0 | (37) |
| Deferred tax associated with acquisitions | (1,216) | 0 |
| Tax payable | 1,341 | 0 |
| Translation differences | (207) | 0 |
| Deferred tax (liabilities)/assets recognized in Consolidated Statement of Financial Position 31.12.2022 |
(3,576) | 3,407 |
| Deferred tax (liabilities)/assets are split as follows: | 2022 | 2021 |
| Property, plant and equipment | (11,172) | 469 |
| Biological assets | (5,832) | (5,795) |
| Other current assets | (152) | (4,724) |
| Liabilities | 60 | 5,200 |
| Losses carried forward (including tax credit) | 4,945 | 25.407 |
| Exchange rate difference | (783) | 296 |
| Basis for deferred tax (liablities)/assets: | (12,935) | 20.854 |
| Calculated deferred tax (liabilities)/assets | (2,587) | 4,171 |
| - Deferred tax assets not recognized | 989 | 763 |
| Net deferred tax (liabiliites)/assets recognized in Consolidated Statement of Financial Position |
(3,576) | 3,407 |
| Reconciliation of income tax expense | 2022 | 2021 |
| Profit before taxes | 41,817 | 2,600 |
| Income tax expense at corporate income tax rate in Norway (22%) | 9,200 | 572 |
| Effect of tax rates outside Norway | (836) | (52) |
| Non-taxable and non-deductible items | (1,463) | (281) |
| Deferred tax assets not recognized current year | (0) | (7) |
| Recognized in Consolidated Statement of Comprehensive Income | 6,901 | 232 |
| Carry forward loss | Fjallalax ehf. | Eldisstöðin Ísþór ehf. |
Icelandic Salmon AS |
|
|---|---|---|---|---|
| Loss for 2020, expires end of 2030 | 313 | 0 | 0 | 313 |
| Loss for 2021, expires end of 2031 | 91 | 392 | 0 | 483 |
| Loss for 2022, expires end of 2032 | 21 | 0 | 0 | 21 |
| No expiry (tax loss Norway) | 0 | 0 | 4,127 | 4,127 |
| Total carry forward loss | 426 | 392 | 4,127 | 4,945 |
For losses carried forward in Norway (Icelandic Salmon AS) and for Fjallalax ehf in Iceland, no deferred tax asset is recorded.
Goodwill represents the excess of the purchase price of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities, contingent liabilities, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held equity interest in the acquiree.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment at least annually, and whenever there is an indication that the asset may be impaired. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. The value in use calculation is performed using discounted expected future cash flows. The discount rate applied to these cash flows is based on the weighted average cost of capital and reflects current market assessments of the time value of money.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the Group's cash-generating unit (CGU) that is expected to benefit from the business combinations, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
| Goodwill | 31/12/2022 | 31/12/2021 |
|---|---|---|
| Carrying amount at beginning of the year | 19,332 | 19,332 |
| Addition business combination* | 15.407 | 0 |
| Carrying amount at year end | 34,740 | 19,332 |
*See further note 4.5.
Impairment is determined by assessing the recoverable amount of the CGU to which the goodwill and indefinite lifetime liceneses relates. If the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.
The Group comprise of one CGU for goodwill being the icelandic fish farming operations of Arnarlax ehf.
The table below outlines the carrying amounts of goodwill at year ended:
| Total Goodwill | 34,740 | 19,332 |
|---|---|---|
| Eldisstöðin Ísþór ehf. | 15,407 | 0 |
| Arnarlax ehf. | 19,332 | 19,332 |
| 2022 | 2021 |
Impairment is tested by calculating the recoverable amount of the CGU. The recoverable amount of the cash-generating unit is determined based on a value in use calculation which uses cash flow projections based on the financial forecast for the period 2023-2026 that has been approved by management and the Board of Directors. Cash flows beyond 2027 have been extrapolated using a 2.5 per cent terminal growth rate. An impairment loss is recorded if the carrying amount of the CGU exceeds the estimated value in use.
The Group has determined that the following assumptions are the key assumptions used in determining the current estimate of value in use:
Forecast of harvested volume are estimated based on current production and future harvesting plans, adjusted for expected increases in future output given current licenses.
EBIT per kg is volitile to fluctuations in the price of salmon. Forecast market prices for the harvested products are based on market data from Fishpool (fishpool.eu). Estimates for production cost are based on historical figures and expectations.
A detailed CAPEX forecast is used which includes CAPEX needed for the forecast increase in production. Investment after 2026 have been estimated with simplified approach to estimate the maintenance investment of assets required to maintain the production volume.
The discount rate used reflects management's estimate of the risk specified for the CGU. The discount rates are based on the Weighted Average Cost of Capital (WACC) methodology. In the model a ten-year risk-free rate has been used. Calculation of the final discount rates also takes into account market risk premium, debt risk premium, gearing and beta value. In the calculations, the Group has applied estimated cash flows after tax. The discount rate for the year 2022 is estimated post - tax 10.2 per cent compared to 7.8 per cent previous year.
In connection with the impairment testing of intangible assets, a sensitivity analysis has been performed. With the assumptions used, the recoverable amount of the cash-generating unit was in reasonable excess of its carrying amount as of 31 December 2022 and 2021. There is sufficient headroom in place and that there are no triggers indicating that impairment is necessary. Management believes that any reasonably possible change in the key assumptions on which the recoverable amount of the cash-generating unit is based would not cause the carrying amount of the cash-generating unit to exceed its recoverable amount.
Based on the above assessments, there were no impairment indicators identified related to the fish farming licenses or goodwill as of 31 December 2022.
Intangible assets that are purchased individually are capitalized at acquisition cost. Intangible assets acquired in connection with the purchase of a business entity are capitalized at acquisition cost when the criteria for separate posting are met.
| Licenses | Other intangibles | Total | |
|---|---|---|---|
| Carrying amount at 1 January 2021 | 0 | 0 | 0 |
| Additions | 431 | 547 | 978 |
| Carrying amount at 31 December 2021 | 431 | 547 | 978 |
| Business combination moved to licenses | 547 | (547) | 0 |
| Additions new licenses | 267 | 0 | 267 |
| Additions business combinations | 381 | 0 | 381 |
| Carrying amount at 31 December 2022 | 1,626 | 0 | 1,626 |
Licenses that the Group owns and has purchased are capitalized at their cost. In Iceland, licenses are granted for a period of 16 years and must then be renewed. Licenses will be renewed if the applicant meets the prevailing statutory and regulatory requirements at the time the license comes up for renewal. A small charge must be paid for the license's renewal. As licenses have a contractual 16 year lifetime, with the possibility of renewal, the Group has elected to presume that these licenses have indefinite useful lifetime. They are therefore not amortized, but tested annually for impairment.
In 2022, the Group invested significantly in smolt production by purchasing the remaining 50 per cent of the shares in Eldisstöðin Ísþór. The Group now has a smolt capacity of up to eight million smolts, depending on the size of the smolts. This smolt strategy will give the Group larger smolts, which are expected to increase from 150 grams to 200 grams in 2023. This will reduce production time at sea, which again reduce risk and improve biological performance. The smolt strategy is expected to improve the Group's Maximum allowed biomass (MAB) utilization in the upcoming years.
The Group currently holds license of 23,700 tonnes maximum allowed biomass in the southern part of the Icelandic Westfjords, Arnarfjörður, Patreksfjörður and Tálknafjörður. In 2022 the company got revisions on two current licenses. In Patreksfjörður a site was moved further out the fjord to a more optimal farming location. The new site will be used for the first time in 2024. In Arnarfjörður, the company got an updated licenses where the size of three of companies' sites was increased. The Group also got a renewal on a license in Fossfjörður for 1,500 tonnes MAB.
Application for 10,000 tonnes MAB in Ísafjarðardjúp is still being processed at the Icelandic Food and Veterinary Authority and the Environmental Agency who give out the licenses. Coastal planning was taken in to affect in 2023 and issues regarding farming sites inside white beams from lighthouses were raised resulting in delays of license process. The timeline is unclear when those issues will be resolved, but the Company expects application in Ísafjarðardjúp to be resolved in the third quarter 2023.
The application for 4,500 tonnes increase in Arnarfjörður has been updated and will now focus on 16,000 tonnes total MAB for the Group in Arnarfjörður, the maximum the carrying capacity allows. The work on environmental impact report for the increase in biomass and change of sites is currently underway and will be submitted to the Planning agency when finalized. As for now, management does not know the exact timeline of the application process.
At year end the Group had recognized licenses amounting EUR 1.6 million ( Compared to 31.12.2021: 1.0 million). For further information see business combination note 4.5.
Property, plant and equipment ("PP&E") is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the PP&E and borrowing costs if the asset qualifies recognition criteria. The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset. When significant parts of PP&E are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in Statement of Comprehenive Income as incurred.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. The residual values, useful lives and methods of depreciation of PP&E are reviewed at each financial year end and adjusted prospectively, if appropriate. Right-of-use assets are recognized separately from property, plant and equipment and presented in note 3.5.
| Plant and equipment |
Land, buildings & other property |
Assets under construction |
Total | |
|---|---|---|---|---|
| Acquisition cost at 1 Jan 2021 | 43,669 | 9,098 | 10,866 | 63,633 |
| Additions | 8,664 | 10,912 | (6,667) | 12,909 |
| Sold and disposed | (65) | 0 | 0 | (65) |
| Acquisition cost at 31 Dec 2021 | 52,268 | 20,010 | 4,199 | 76,477 |
| Additions | 10,984 | 1,828 | 4,205 | 17,018 |
| Addition business combination | 3,847 | 15,450 | 0 | 19,298 |
| Sold and disposed | (200) | 0 | (13) | (213) |
| Foreign exchange effect | (24) | (984) | (13) | (1,021) |
| Acquisition cost at 31 Dec 2022 | 66,875 | 36,305 | 8,378 | 111,559 |
| Acc. dep. & impairment at 1 Jan 2021 | (17,332) | (1,397) | (522) | (19,251) |
| Depreciation | (4,578) | (983) | 522 | (5,039) |
| Sold and disposed | 38 | 0 | 0 | 38 |
| Acc. dep. & impairment at 31 Dec 2021 | (21,873) | (2,380) | 0 | (24,253) |
| Depreciation | (5,069) | (1,112) | 0 | (6,181) |
| Sold and disposed | 22 | 0 | 0 | 22 |
| Foreign exchange effect | (11) | 13 | 0 | 3 |
| Acc. dep. & impairment at 31 Dec 2022 | (26,931) | (3,478) | 0 | (30,409) |
| Carrying amount at 31 Dec 2022 | 39,944 | 32,827 | 8,378 | 81,149 |
| Carrying amount at 31 Dec 2021 | 30,395 | 17,630 | 4,199 | 52,225 |
| Useful lives | 3-30 years | 30-40 years | ||
| Depreciation plan | Straight-line | Straight-line | ||
| Gains/losses on sale of non-current assets | (6) | 0 |
As of 31 December 2022, the Group had PP&E at total of EUR 81.1 million compared to EUR 52.2 million as of 31 December 2021. The PP&E consist of property, plant and equipment, land, buildings and other property, and assets under construction. Plant and equipment mainly consist of operational equipment's, floating pens boats and aquaculture tanks. Land building & other property mainly consist of Real Estate, land and other non-removable assets. The useful life of these PP&E differs from three years, up to forty years. Assets under construction relates to ongoing investment projects later to be moved to the relevant nature of PP&E when taken to usage.
See further note 4.5 regarding addition of the year arising from business combination. No impairments of property, plant and equipment were incurred in 2022 or 2021.
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group as a lessee applies a single recognition and measurement approach for all leases, with exception for leases with a term of less than 12 months and for leases relating to assets with a low underlying value.
Non-lease components in a lease arrangement are not capitalized as a part of the lease. This applies to the Group´s lease arrangements of wellboat, where crew costs and other service elements included in lease amount are excluded from the value of the right-of-use asset and lease liability. If not stated in the contract, non-lease components are estimated based on markets price on the service element.
A lease liability is initially recognized as the present value of lease payments that are not paid on the commencement date of the lease contract. The lease payments are discounted by using the Group's incremental borrowing rate as a discount rate. The Group assesses it's incremental borrowing rate based on it´s current rating, adjusted for nature of the underlying asset and duration of the lease agreement.
A lease liability is subsequentially measured by using effective interest rate. The lease liability is revalued when there is a change in future payments due to a change in index or interest rate. The lease liability is also revalued if there is a change in the Group's estimation on residual payments in relation to the lease contract, if there is a change in estimation on utilization of an option to buy the underlying asset, or if there is a change in the expected lease term.
The right of use asset is depreciated on a straight-line basis from the commencement date until the final date of the contract, except when the Group becomes an owner of the asset at the end of the lease period or has an option to purchase the asset at the end of the lease period, and intends to do so. In those cases the asset is depreciated over the expected useful life of the asset, which is the same method as used for depreciation of other operating assets of the Group. The right of use asset is adjusted for any impairment or revaluation of the lease liability if that occur.
| Lease assets | |
|---|---|
| Balance at 1 January 2021 | 1,995 |
| Additions and changes of leases in the year | 4,708 |
| Depreciation | (876) |
| Balance at 1 January 2022 | 5,827 |
| Additions and changes of leases in the year | 2,292 |
| Addition business combination * | 131 |
| Depreciation | (1,275) |
| Balance at 31 December 2022 | 6,975 |
| Balance at 1 January 2021 | 1,901 | |
|---|---|---|
| Additions and changes of leases in the year | 4,772 | |
| Payments | (927) | |
| Accretion of interest | 142 | |
| Balance at 1 January 2022 | 5,889 | |
| Additions and changes of leases in the year | 2,112 | |
| Addition business combination* | 134 | |
| Payments | (1,465) | |
| Accretion of interest | 272 | |
| Balance at 31 December 2022 | 6,942 | |
| *See note 4.5 | ||
| 2022 | 2021 | |
| Current lease liabilities | 1,186 | 1,086 |
| Total Lease liabilities | 6,942 | 5,889 |
|---|---|---|
| Non-current lease liabilities | 5,756 | 4,803 |
| Summary of amounts recognized in the Consolidated Statments | ||
|---|---|---|
| of Comprehensive Income: | 2022 | 2021 |
| Depreciation expense of leased assets | 1,275 | 876 |
| Interest expense on lease liabilities (included in finance expenses) | 272 | 142 |
| Total amount recognized in profit or loss | 1,547 | 1,018 |
The Group had total cash outflows for leases of EUR 1.5 million in 2022 compared with EUR 0.9 million in 2021.
Live fish are accounted for in accordance with IAS 41 Agriculture. The main principle is that such assets are measured at fair value less cost of sale. Fair value is measured in accordance with IFRS 13 within level 3 which is based on factors that are not drawn from observable markets assumptions. Changes in value are recognized and classified under fair value adjustments in the Consolidated Statement of Comprehensive Income.
Roe, fry, smolt and artic char are valued at historic cost. Historic cost is deemed to be the best estimate of fair value for these assets, due to little biological conversion.
The fair value of biological assets held at the Group's sea farms is calculated using a model based on future cash flow. The present value is calculated based on estimated revenues, less estimated remaining production costs until the fish is harvestable at the individual site. A fish is harvestable when it has reached the estimated weight required for harvesting specified in the Company's budgets and plans. The estimated value is discounted to present value in the Consolidated Statement of Financial Position. Present value is estimated for the biomass at each site.
Incoming cash flows are calculated as the estimated biomass at harvest multiplied by the price expected to be achieved at the same time. The estimated biomass (volume) at harvest is calculated based on the number of individual fish held in sea farms on the balance sheet date, adjusted for expected mortality until harvest and multiplied by the estimated weight of the fish at harvest.
The price is calculated using the Fish Pool forward price for the estimated harvesting date that was in effect at the end of the reporting period. Forward prices are adjusted for an exporter supplement, as well as harvesting, sales and carriage costs. In addition, an adjustment is made to take account of expected differences in fish quality. Price adjustments are made at the site level.
Management estimates the remaining production costs based on experience and current market conditions for the farming of fish up until they reach a harvestable weight. In the model, instead of being a separate cost element in the calculation, compensation for license fees and site leasing costs is included in the discount factor, and thereby reduces the fair value of the biomass.
The fair value of the biomass is calculated using a monthly discounting of the cash flow based on the second last harvesting month in the harvesting plan. The discount factor is intended to reflect three main components:
The discount factor is set based on an average for all the Group's sites and which, in the Group's assessment, provides a sensible growth curve for the fish – from smolt to harvestable fish.
The risk adjustment must take account of the risk involved in investing in live fish. A fish spends from 16 up to 24 months at a sea farm, and the risk will be higher the longer the time until harvest. Biological risk, the risk of increased costs and price risk will be the most important elements to be recognized. The present value model includes a theoretical compensation for license fees and site leasing costs as a surplus to the discount factor in the model, instead of being a cost-reducing factor in the calculation.
Inventories is comprised of feed, packaging materials and finished goods. Inventories are stated at the lower of cost or net realizable value. Net realizable value is the expected sales price less completion costs and costs to be incurred in marketing, selling, and distributing the inventory. Cost is determined using the first-in, first-out method.
Finished products includes direct material cost, direct personnel expenses, and indirect processing cost (full production cost). Interest costs are not included in the inventory value. If cost value of finished product is estimated higher than realised sales value, based on judgement of the management, the finished products is revaluated based on best estimate on product valuation. Finished product is never valued over cost value. Value is based on the principle of first-in-first-out.
| Book value of biological assets and inventories | 31/12/2022 | 31/12/2021 |
|---|---|---|
| Raw materials | 4,112 | 2,470 |
| Boxes | 67 | 67 |
| Finished Products | 864 | 0 |
| Inventories | 5,043 | 2,538 |
| Biological assets | 84,146 | 66,899 |
| Total biological assets and inventories | 89,189 | 69,437 |
Cost of finished products recognized as an expense in respect of write-downs of inventory to net realizable value.
| 2022 | 2021 | |
|---|---|---|
| Write downs within period | 2,101 | 95 |
Fair value adjustments are part of the Group's operating profit/loss, but changes in fair value are presented on a separate line to provide a greater understanding of the Group's profit/loss on sold goods. The item comprises:
| 2022 | 2021 | |
|---|---|---|
| Change in fair value of the biomass | (215) | (2,937) |
| Recognized fair value adjustments | (215) | (2,937) |
| Book value of biological assets recognized at fair value | 31/12/2022 | 31/12/2021 |
| Biological assets held at sea farms at cost | 68,094 | 57,127 |
| Fair value adjustment of biological assets | 5,580 | 5,795 |
| Total biological assets held at sea by fair value | 73,674 | 62,922 |
| Roe, fry, smolt and arctic char fish at cost | 10,473 | 3,977 |
| Total biological assets | 84,146 | 66,899 |
Raw materials comprise mainly feed for smolt and marine-phase fish production. It also includes raw materials for use in processing, as well as packaging. Stocks of biological assets are associated with farming activities on land and at sea, and comprise roe, fry, smolt, arctic char and fish held at sea farm. Finished goods comprises whole salmon, fresh and frozen, as well as processed salmon products.
| Biological assets held at sea farm 31 Dec | 73,674 | 62,922 |
|---|---|---|
| Translation differences | (0) | (0) |
| Net fair value adjustment | (215) | (2,937) |
| Reduction resulting from incident-based mortality | (1,552) | (42) |
| Reduction resulting from sale/harvesting | (68,155) | (44,959) |
| Increase resulting from production/purchase | 80,674 | 61,648 |
| Biological assets held at sea farm 1 Jan | 62,922 | 49,211 |
| held at sea farm carried at fair value | 31/12/2022 | 31/12/2021 |
In the event of incidents exceeding three per cent mortality in a period based on a single incident, or if the mortality exceeds five per cent over several periods based on one and the same incident, an assessment is made as to whether there is a basis for write-down. The assessment relates to the number of fish and is carried out at site level. Incident-based mortality is recognized under cost of goods sold in the Consolidated Statement of Comprehensive Income.
The easement relates to the number of fish and is carried out at site level. The Group had one incident in it's sea farm in the year 2022 that resulted in incident-based mortality as defined above. The total effect on the Group's operational profit at cost was EUR 1.3 million but the Group has in place insurance of it's biological assets that covered part of the mortality. The corresponding numbers for 2021 was one incident and effect on Group operating profit at cost of EUR 42 thousand where the mortality was unclaimable to the insurance. The Group also had one incident in it's land based smolt facilities with total effect on the Groups operating profit at cost EUR 0.5 million but no incident affected the Groups operating profit in year 2021 on land based facilities.
| Biological assets held at sea farms 31 Dec 2022: | Cost | Fair value adjustment | Carrying amount |
|---|---|---|---|
| < 1 kg (LW) | 7,455 | 623 | 8,077 |
| 1-4 kg | 39,835 | 3,268 | 43,103 |
| > 4 kg (GW) | 20,804 | 1,689 | 22,494 |
| Biological assets held at sea farms | 68,094 | 5,580 | 73,674 |
| Roe, fry, smolt and arctic char fish at cost | 10,473 | 0 | 10,473 |
| Biological assets total: | 78,566 | 5,580 | 84,146 |
| Biological assets held at sea farms 31 Dec 2021: | Cost | Fair value adjustment | Carrying amount |
|---|---|---|---|
| < 1 kg (LW) | 7,254 | 722 | 7,975 |
| 1-4 kg | 29,563 | 2,941 | 32,503 |
| > 4 kg (GW) | 20,310 | 2,133 | 22,443 |
| Biological assets held at sea farms | 57,127 | 5,795 | 62,922 |
| Roe, fry, smolt and arctic char fish at cost | 3,977 | 0 | 3,977 |
| Biological assets total: | 61,104 | 5,795 | 66,899 |
The discount rate at end of year 2022 was 5.0 per cent per month, which reflects the biomass capital cost, risk and synthetic license fees and site rental charges. The discount rate was changed from end of year 2021 from 4,0 per cent and is based on increased margin that should give a higher contribution to the owner of the licenses and higher expectations of profitability in the industry.
| Expected harvesting period: |
Forward price 31/12/2022 |
Expected harvesting period: |
Forward price 31/12/2021 |
|---|---|---|---|
| Q1-2023 | 8.60 | Q1-2022 | 6.80 |
| Q2-2023 | 8.94 | Q2-2022 | 6.73 |
| Q3-2023 | 7.12 | Q3-2022 | 5.53 |
| Q4-2023 | 7.28 | Q4-2022 | 6.08 |
| Q1-2024 | 7.84 | Q1-2023 | 6.32 |
| Q2-2024 | 8.12 | Q2-2023 | 6.34 |
| Q3-2024 | 6.81 | Q3-2023 | 5.29 |
| Q4-2024 | 7.07 | Q4-2023 | 5.41 |
The estimated fair value of biological assets has been calculated using different parameters. The effect on the estimated fair value of biological assets is summarised below:
| 2022 | Increase | Effect on estimated fair value 31/12/2022 |
Decrease | Effect on estimated fair value 31/12/2022 |
|---|---|---|---|---|
| Change in forward price | 0.5 EUR per kg. | 2,486 | 0.5 EUR per kg. | (2,486) |
| Change in discount factor | 1% | (733) | 1% | 762 |
| Change in harvesting time | 1 month earlier | (1,318) | 1 month later | 1,388 |
| Change in biomass | 1% | 293 | 1% | (293) |
| 2021 | Increase | Effect on estimated fair value 31/12/2021 |
Decrease | Effect on estimated fair value 31/12/2021 |
|---|---|---|---|---|
| Change in forward price | 0.5 EUR per kg. | 5,526 | 0.5 EUR per kg. | (5,526) |
| Change in discount factor | 1% | (1,436) | 1% | 3,394 |
| Change in harvesting time | 1 month earlier | (1,396) | 1 month later | 1,809 |
| Change in biomass | 1% | 555 | 1% | (555) |
The Group's trade receivables consist solely of amounts receivable from revenue from contracts with customers. Trade receivables are generally on payment terms of 21 days.
Trade and other receivables are financial assets which are initially recognized at transaction price determined under IFRS 15. The Group always recognizes an allowance for trade receivables and other receivables that are in scope of the expected credit loss model. The expected credit losses are estimated using a provision matrix based on the Group's historical credit loss experience and based on individual estimate of each trade receivable.
The Group recognizes an allowance for expected credit losses (ECLs) for its financial assets. ECLs are based on the cash flows that the Group expects to receive. For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date.
The Group bases the allowance of its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
| 31/12/2021 | 31/12/2022 | |
|---|---|---|
| 7,723 | 15,502 | Trade receivables |
| (400) | (476) | Allowance for expected credit losses |
| 7,323 | 15,026 | Total trade receivables |
| 2,002 | 4,624 | Other receivables |
| 309 | 309 | Bonds |
| (185) | (185) | Allowance for expected credit losses (Bonds) |
| 2,126 | 4,748 | Total other receivables |
| 9,449 | 19,774 | Total receivables |
Allowance for expected credit losses are classified as other operating expenses in the Statement of Comprehensive Income. Changes in allowance for expected credit losses are charged to expenses during the period are presented below:
| Allowance for expected credit losses | 2022 | 2021 |
|---|---|---|
| Total allowance for expected credit losses 1 Jan. | 585 | 673 |
| Total allowance for expected credit losses 31 Dec | 661 | 585 |
| Change in allowance for expected credit losses during the year | 76 | (87) |
| 2022 | 2021 | |
| Actual loss incurred | (199) | (101) |
| Change in allowance for expected credit losses | 284 | (1) |
| Exchange rate difference | (9) | 15 |
| Allowance recognized in Statments of Comprehensive Income | 76 | (87) |
See Note 4.1 for further details of the credit risk and foreign exchange risk associated with trade receivables and other receivables.
As at 31 December, the Group's outstanding net trade and other receivables had the following payment profile:
| EUR 1000 | Total | Not due | <30 d | 31-60d | 60-90d | >90d |
|---|---|---|---|---|---|---|
| 31/12/2022 | 15,026 | 12,925 | 2,082 | 0 | 9 | 10 |
| 31/12/2021 | 7,323 | 4,685 | 1,970 | 90 | 13 | 565 |
The Groups' financial instruments are grouped in the following categories:
Trade, other receivables and other long-term receivables are part of the Group's business model with the sole objective to collect contractual cash flows. Additionally, if the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, thereby passing the "SPPI test", constituting debt instruments measured at amortized cost.
Financial liabilities at amortized cost includes the Group's interest bearing and non-interest bearing debts.
The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities under the Group's recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognized in the consolidated statements of comprehensive income.
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralised borrowing for the proceeds received.
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument in IAS 32.
All assets and liabilities for which fair value is measured or disclosed in the Consolidated Financial Statements, the Group has used the following assumption to measure fair value:
Management assessed that the carrying amount of cash and cash equivalents, trade receivables, other receivables and other long-term receivables is a reasonable approximate of their fair value.
Management assessed that the carrying amounts of trade and other payables is a reasonable approximate of their fair value. The fair values of the Group's interest-bearing debts are similar to the carrying amount, as the interest rates are floating.
| Assets | 31/12/2022 | 31/12/2021 |
|---|---|---|
| Other long-term receivables | 0 | 4,964 |
| Trade receivables | 15,026 | 7,323 |
| Other receivables | 4,748 | 2,126 |
| Cash and cash equivalents | 1,854 | 3,744 |
| Total financial assets | 21,627 | 18,157 |
| Liabilities | 31/12/2022 | 31/12/2021 |
|---|---|---|
| Non-current interest-bearing liabilities | 51,649 | 38,465 |
| Current interest-bearing liabilities* | 6,230 | 2,084 |
| Trade payables | 11,702 | 9,699 |
| Tax payables | 1,341 | 0 |
| Provision for onerous contracts | 122 | 0 |
| Other current payables | 9,528 | 5,564 |
| Total financial liabilities | 80,572 | 55,811 |
Non-current and current interest-bearing liabilities are recognized at amortized cost.
| Cash and cash equivalents | 31/12/2022 | 31/12/2021 |
|---|---|---|
| Bank deposits, unrestricted | 1,854 | 3,744 |
| Cash and cash equivalents in the statement of Financial Position | 1,854 | 3,744 |
At 31 December 2022, the Group has used a overdraft facility of EUR 4.1 million (see note 3.10).
| Non-current interest-bearing borrowings | 2022 | 2021 |
|---|---|---|
| Interest-bearing borrowing to credit institutions (in EUR) | 53,749 | 40,549 |
| Next year's installment on non-current interest-bearing borrowings (in EUR) | (2,099) | (2,084) |
| Total non-current interest-bearing borrowings to credit institutions | 51,649 | 38,465 |
| Current interest-bearing borrowings | 2022 | 2021 |
| Bank overdraft (in EUR) | 4,130 | 0 |
| Next year's installment on non-current interest-bearing borrowings (in EUR) | 2,099 | 2,084 |
| Total current interest-bearing borrowings to credit institutions | 6,230 | 2,084 |
Debt facilities are entered into by Arnarlax ehf. Interest-bearing borrowings to credit institutions consist of a combined EUR 56.0 million facilities entered in to 30 June 2021, and amendment to that facility in addition of EUR 5.0 million facility entered in October 2022. Debt facilities are split into revolving facility, term facility and overdraft facility. The current loan agreement is valid until June 2024 and there for presented as a long-term interest-bearing borrowings in the Group's Consolidated Statements of Financial Position. The interest rate is the aggregate of a margin of two to four per cent in addition to EURIBOR rate.
For maturity structure of interest-bearing borrowings, references are made to note 4.1. Lease liabilities are presented separately from interest-bearing borrowings to credit institutions and disclosed in note 3.5.
The Company has a solvency requirement which means that the book equity ratio must be above 35 per cent and profit requirement that requires that the Company's 12-month rolling interest coverage ratio must not be lower than 4.0:1. In addition, the Company's NIBD / 12-month rolling EBITDA should not exceed 5.0:1. The Company was in compliance with these covenants as at 31 December 2022.
| 2022 | 1 January 2022 |
New interestbearing borrowings |
Repayment of interestbearing borrowings |
Refinancing of borrowings |
Current portion of longterm borrowings |
Other changes |
31 December 2022 |
|---|---|---|---|---|---|---|---|
| Non-current interest-bearing borrowings to credit institutions |
38,465 | 18,875* | (3,578) | 0 | (2,313) | 201 | 51,649 |
| Current interest-bearing borrowings to credit institutions |
2,084 | 4,130 | (2,250) | 0 | 2,313 | (48) | 6,230 |
| Total liabilities from financing |
40,549 | 23,005 | (5,828) | 0 | 0 | 153 | 57,879 |
*Included in new borrowings of the year are loans arising from business combination see further note 4.5
| 2021 | 1 January 2021 |
New interestbearing borrowings |
Repayment of interestbearing borrowings |
Refinancing of borrowings |
Current portion of longterm borrowings |
Other changes |
31 December 2021 |
|---|---|---|---|---|---|---|---|
| Non-current interest-bearing borrowings to credit institutions |
0 | 18,171 | (1,000) | 23.875 | (2.250) | (331) | 38,465 |
| Current interest-bearing borrowings to credit institutions |
20,462 | 7,000 | (3,826) | (23.875) | 2.250 | 73 | 2,084 |
| Total liabilities from financing |
20,462 | 25,171 | (4,826) | 0 | 0 | (258) | 40,549 |
| 2022 | 1 January 2022 | New leases recognized |
Cash flows | Current portion of long-term leases |
31 December 2022 |
|---|---|---|---|---|---|
| Non-current lease liabilities (Note 3.5) |
4,803 | 2,184* | (148) | (1,083) | 5,756 |
| Current lease liabilities (Note 3.5) |
1,086 | 0 | (1,044) | 1,145 | 1,186 |
| Total liabilities from financing |
5,889 | 2,184 | (1,192) | 62 | 6,942 |
*Included in new lease recognized are lease arising from business combination see further note 4.5
| 2021 | 1 January 2021 | New leases recognized |
Cash flows | Current portion of long-term leases |
31 December 2021 |
|---|---|---|---|---|---|
| Non-current lease liabilities (Note 3.5) |
1.442 | 4.772* | (325) | (1.086) | 4.803 |
| Current lease liabilities (Note 3.5) |
460 | 0 | (460) | 1.086 | 1.086 |
| Total liabilities from financing |
1.901 | 4.772 | (785) | 0 | 5.889 |
*Included in new leases recognized are lease arising from business combination see further note 4.5
A provision is recognized when, and only when, the Group has a constructive obligation (legal or self-imposed) deriving from an event which has occurred, and it is probable (more likely than not) that a financial settlement will take place as a result of that liability, and the amount in question may be reliably quantified Provisions are reviewed on each reporting date, and the level reflects a best estimate of the liability concerned.
IAS 37 defines an onerous contract as a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under the contract. Unavoidable costs are the lower of the costs of fulfilling the contract and any compensation or penalties from the failure to fulfill it. If a contract can be terminated without incurring a penalty, then it is not onerous.
The definition of onerous contract focuses on the costs of fulfilling the obligations compared to the expected benefits. Similarly, a contract not performing as well as anticipated, or as well as possible, is not onerous unless the costs of meeting the obligations under the contract exceed the expected benefits.
The recognition and measurement of onerous contract provisions are (as discussed in IFRS 15:BC296) subject to the general requirements of IAS 37 and, as such, are based on the entity's 'best estimate' of the (net) expenditure required to settle an obligation (IAS 37:36).
Physical fixed-price sales contracts whose price is less than the price used as the basis for adjusting the fair value of the biomass are recognized as liabilities in the Consolidated Statement of Financial Position. The amount recognized as a liability is the difference between the market price at the end of the reporting period plus costs to sell and the contract price. Changes in provisions are recognized in a separate line in the Consolidated Statement of Comprehensive Income and are included in the operational profit.
Provision related to onerous contracts was EUR 0.1 million for the year 2022. The effect is recognized as separte line in the Consolidated Statement of Comprehensive Income with with contra entry to current liabilities. No provision of onerous contracts was recognized in the year 2021.
| Other current payables comprise: | 31/12/2022 | 31/12/2021 |
|---|---|---|
| Withheld taxes | 6 | 2 |
| Unpaid payroll expenses | 1,404 | 1,085 |
| Accured interest expense | 356 | 170 |
| Other accrued expenses * | 7,761 | 4,307 |
| Total other current payables | 9,528 | 5,564 |
* Other accrued expenses consist of accruals for operational expense and accrued accumulated clean up expenses for sites.
Through its activities, the Group is exposed to various kinds of financial risk: market risk, credit risk and liquidity risk. The Company's management assesses these risks on an ongoing basis and draws up guidelines for dealing with them. The Group has bank loans raised for the purpose of providing capital for investment in the Company's business. In addition, the Company has financial instruments such as trade receivables, trade payables, etc, which are ascribable directly to day-to-day business operations.
The Groups operating results and cash flow from operations are largely independent of changes in market interest rates. The Group has an insignificant part of its assets which are interest-bearing. The Groups long-term loans have variable interest rates based on EURIBOR. The Group has not entered into any swaps or other derivatives in relation to interest rate risk.
The Group operates in a global environment which exposes it to foreign currency fluctuations mainly related to any trade receivables or trade payables denominated in foreign currency. Interest bearing debt is denominated in EUR which is the functional currency of the borrowing entity Arnarlax ehf. The Directors of the Group monitor the risk related to currency fluctuation in relation to day to day operations. The Group has not entered into any forward contracts or other derivatives in relation to currency risk.
The risk that counterparties do not have the financial strength to meet their obligations is considered low, since, historically, losses due to bad debts have been small. The Group has no material credit risk relating to individual counterparties or counterparties which may be considered a group due to similarities in the credit risk. The Group has guidelines to ensure that sales are made only to customers that have not previously had material payment problems, and that outstanding balances do not exceed fixed credit limits. Part of the total trade receivable is insured. The gross credit risk on the balance sheet date corresponds to the Group's trade receivables portfolio on the balance sheet date. See note 3.8.
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Cash flow forecasts are drawn up on a regular basis and the Accounting department monitors rolling forecasts of the Group's liquidity requirements to ensure that the Group has sufficient cash equivalents to meet operational liabilities, as well as at all times having adequate flexibility in the form of unused credit facilities (see consolidated statement of cash flows), such that the Group does not infringe borrowing limits or specific borrowing conditions. The Group's objective is to have sufficient cash, cash equivalents or medium-term credit facilities to meet its payment obligations in the short term.
The table below details the Group's non-derivative financial liabilities classified by maturity structure. The figures presented in the table are undiscounted contractual cash flows.
| Maturity structure for financial liabilities as at 31 Dec 2022 |
Less than 1 year |
1-2 years |
2-3 years |
3-4 years |
5 years and more |
Total |
|---|---|---|---|---|---|---|
| Non-current interest-bearing bank loans | 2,099 | 51,649 | 0 | 0 | 0 | 53,749 |
| Current interest-bearing bank loans | 4,130 | 0 | 0 | 0 | 0 | 4,130 |
| Trade payables and other short-term payables | 11,702 | 0 | 0 | 0 | 0 | 11,702 |
| Lease liabilities | 1,180 | 1,068 | 762 | 620 | 3,312 | 6,942 |
| Tax payable | 1,341 | 0 | 0 | 0 | 0 | 1,341 |
| Other current liabilities | 9,650 | 0 | 0 | 0 | 0 | 9,650 |
| Total liabilities | 30,101 | 52,718 | 762 | 620 | 3,312 | 87,514 |
| Maturity structure for financial liabilities as at 31 Dec 2021 |
Less than 1 year |
1-2 years |
2-3 years |
3-4 years |
5 years and more |
Total |
|---|---|---|---|---|---|---|
| Non-current interest-bearing bank loans | 2,084 | 2,084 | 36,380 | 0 | 0 | 40,549 |
| Trade payables and other short-term payables | 9,699 | 0 | 0 | 0 | 0 | 9,699 |
| Lease liabilities | 1,098 | 1,088 | 1,011 | 753 | 1,939 | 5,889 |
| Other current liabilities | 5,564 | 0 | 0 | 0 | 0 | 5,564 |
| Total liabilities | 18,444 | 3,172 | 37,391 | 753 | 1,939 | 61,701 |
The sensitivity to a possible change in interest rates, with all other variables held constant, on the Group's profit before tax, is illustrated below.
| Interest rate sensitivity* | Increase / decrease in basis points | Effect on profit before tax | Effect on equity |
|---|---|---|---|
| 31/12/2022 | +/- 100 | 579 | 463 |
| 31/12/2021 | +/- 100 | 405 | 324 |
*The figures given above are absolute figures
The primary operational income for the Group is denominated in EUR. In 2022, 61 per cent of the Group's operational income was generated in EUR, while other operational income was mostly in USD. Since exchange rate volatility can impact the profitability of salmon sales, the Group has taken steps to mitigate currency risk by hedging all fixed price contracts denominated in currencies other than the operational currency.
The Group's operational costs are primarily denominated in EUR and significant purchases are also contracted in EUR. However, around 40 per cent of the operational costs are in Icelandic Krona (ISK), which is a currency that is highly vulnerable to fluctuations in the global market. While the group acknowledges the impact of currency fluctuations on its operational cost, there has been no hedging against ISK to EUR. The main components of the operational costs in ISK are salaries, domestic contractor and supplier purchases, and taxes.
The objective of the Group's capital management is to safeguard the Group's continued operations in order to secure a return on investment for shareholders and other stakeholders, and maintain an optimal capital structure for reducing capital costs. By ensuring a good debt-to-equity ratio the Group will support its business operations, and thereby maximise the value of the Group's shares.
The Group manages and makes changes to its capital structure in response to an ongoing assessment of the financial conditions under which the business operates, and its short and medium-term outlook. No changes were made in the guidelines covering this area in 2022.
As of 31 December 2022, the Group had an equity ratio of 61.3 per cent (64 per cent as at 31 December 2021). See Note 3.11 for further details of the Group's net interest-bearing debt.
| As at 31 December 2022, the parent company's share capital comprised: | ||||
|---|---|---|---|---|
| No. | Face value | Share capital in EUR | ||
| Ordinary shares | 30,961.868 | 0.96 | 29,571.137 |
The Company's 20 largest shareholders as at 31 December 2022 were:
| No. | Shareholding | |
|---|---|---|
| SalMar ASA | 15,798,152 | 51.02% |
| J.P. Morgan bank luxembourg S.A. | 2,882,986 | 9.31% |
| Íslandsbanki hf. | 2,444,463 | 7.90% |
| Gyda ehf. | 1,000,000 | 3.23% |
| Holta Invest AS | 938,314 | 3.03% |
| Pactum Vekst AS | 825,862 | 2.67% |
| MP Pensjon PK | 619,706 | 2.00% |
| Roth | 599,661 | 1.94% |
| Clearstream Banking S.A. | 569,526 | 1.84% |
| Nima Invest AS | 563,088 | 1.82% |
| State Street Bank and Trust comp | 515,000 | |
| Kristians and AS | 470,000 | 1.52% |
| Haganes AS | 270,705 | 0.87% |
| VPF DNB Norge Selektiv | 257,374 | 0.83% |
| Verdipapirfondet DNB SMB | 231,249 | 0.75% |
| Alden AS | 217,776 | 0.70% |
| Lithinon AS | 186,881 | 0.60% |
| Verdipapirfondet Eika Spar | 185,492 | 0.60% |
| Verdipapirfondet Pareto Investment | 185,000 | 0.60% |
| DNB Bank ASA | 170,537 | 0.55% |
| Total 20 largest shareholders | 28,931,772 | 93.44% |
| Total other shareholders | 2,030,096 | 6.56% |
| Total no. of shares | 30,961,868 | 100.00% |
Shares owned by members of the board and directors.
| Name | Title | shares | Shareholding |
|---|---|---|---|
| Kjartan Olafsson * | Chairman of the board | 1,000,000 | 3.23% |
| Trine Sæther Romuld *** | Boardmember | *** | |
| Olav Andreas Ervik *** | Boardmember | *** | |
| Leif Inge Nordhammer *** | Boardmember | *** | |
| Espen Marcussen **** | Boardmember | **** | |
| Bjørn Hembre ** | CEO | 32,900 | 0.11% |
| Rolf Ørjan Nordli *** | COO SeaWater | *** | *** |
* Kjartan Ólafsson owns indirectly through Gyda ehf. Kjartan Olafsson owns 100 per cent of the shares in Berg Fjárfesting ehf, which own 100 per cent of the shares in Gyda ehf.
** Björn Hembre owns indirectly through IVMA AS which is one of minority stakeholders in Icelandic Salmon AS. Björn owns 100 per cent of the shares in IVMA AS.
*** Trine Sæther Romuld, Olav Andreas Ervik, Leif Inge Nordhammer and Rolf Ørjan Nordli: all indirectly owns share through minority stakes in SalMar ASA.
**** Espen Marcussen indirectly owns shares through a minority stake in Pactum AS
See further information regarding share options in note 2.4
| Earnings per share | 2022 | 2021 |
|---|---|---|
| Net profit for the year | 34,917 | 2,367 |
| No. of shares outstanding as at 1 Jan | 30,962 | 30,962 |
| Share issue during the year | 0 | 0 |
| No. of shares outstanding as at 31 Dec | 30,962 | 30,962 |
| Average no. of shares outstanding through the year (basic and diluted) |
30,962 | 30,962 |
| Earnings per share (EUR) | ||
| Basic and diluted | 1.13 | 0.08 |
| Subsidiary | 31/12/2022 | 31/12/2021 | Company | Registered office | Principal activity |
|---|---|---|---|---|---|
| Arnarlax ehf. | 100% | 100% | Icelandic Salmon AS |
Strandgata 1, 465 Bíldudalur, Iceland |
Fish farming |
| Fjallalax ehf. | 100% | 100% | Arnarlax ehf. | Strandgata 1, 465 Bíldudalur, Iceland |
Fish farming |
| Eldisstöðin Ísþór ehf. | 100% | 50% | Arnarlax ehf. | Þorlákshöfn, Iceland | Fish farming |
| Icelandic Salmon ehf. | 100% | 100% | Arnarlax ehf. | Tálknafjörður, Iceland |
Dormant* |
* Share capital of Icelandic Salmon ehf. consists solely of ordinary shares, which are held directly by the Group. The company is dormant and not consolidated in these cConsolidated Financial Statements as its effects would be immaterial in the opinion of management.
**See not 4.5 business combination
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss as incurred.
The Company's fully owned subsidiary, Arnarlax ehf., signed a Share Purchase Agreement (SPA) on 25th of May for the remaining 50 per cent of shares in its joint venture, Eldisstöðin Ísþór ehf. ("Ísþór"). The transaction was subject to approval from the Icelandic Competition Authorities (ICA) and certain other closing conditions. The ICA approved the acquistion on 2nd of August and all other closing condision was closed on 17 of August, which is the acquisition date.
With this acquisition the Group has gained full control over its joint venture and therefore in accordance with IFRS the Group has remeasured its 50 per cent equity interest held before the acquistion to fair value. The remeasurement resulted in a fair value gain of EUR 9.0 million recognized as other financial items in the Consolidated Statement of Comprehensive Income.
After the transaction the Group owns 100 per cent of the shares in Ísþór. The purpose of the transaction is to increase the flexibility in size of smolt and increased number of smolt supporting the company's growth plans. For accounting purposes, the transaction will be treated as a business combination with effect from the acquisition date. With this acquisition the Group takes another important step in its strategy of increasing smolt weight, allowing increased MAB license utilization while reducing production time in sea and thereby biological risk. No material external transaction costs were incurred in the connection with the acquisition.
As part of the acquistion, Ísþór repaid to the former owners a liability amounting to EUR 4.3 million founded by a loan from Arnarlax.
| Eldisstöðin Ísþór ehf's assets acquired and liabilities recognized at the date of acquisition: |
Carrying amount |
Adjustment to fair value |
Fair value |
|---|---|---|---|
| Property, plant and equipments | 12,970 | 6,328 | 19,298 |
| Investment in associates | 1 | 0 | 1 |
| Lease assets | 131 | 0 | 131 |
| Cash | 51 | 0 | 51 |
| Long term debt | (375) | 0 | (375) |
| Deferred tax liability | 50 | (1,266) | (1,216) |
| Trade payables | (1,304) | 0 | (1,304) |
| Lease liability | (134) | 0 | (134) |
| Liabilities - former owners | (4,290) | 0 | (4,290) |
| Other current liabilities | (89) | 0 | (89) |
| Net identifiable assets and liabilities | 7,010 | 5,062 | 12,073 |
| Cash consideration | 10,588 | ||
| Total consideration and recognized goodwill | |||
| Cash consideration | 10,588 | ||
| Fair value of previously held equity interest* | 16,892 | ||
| Minus net idendifiable assets and liabilities | (12,073) | ||
| Goodwill | 15,407 | ||
| Net cash outflow arising on acquisition | |||
| Cash consideration | 10,588 | ||
| Less cash and cash equivalent balances acquired | (51) | ||
| Net cash outflow arising on acquisition | 10,537 |
*Fair value of previously held equity interest include intercompany long-term liability of EUR 6.3 million and Equity of EUR 10.6 million have been consolidated as of 31 December 2022.
Arnarlax signed a contract on 11 May 2021 for the acquisition of all shares in Fjallalax ehf, for a cash consideration of EUR 0.67 million. Of that amount, EUR 0.47 million was paid on 11 June 2021 which is defined as the acquisition date and EUR 0.2 million in end of January 2022. Below is the fair value of assets and liabilities acquired based on final purchase price allocation according to IFRS 3.
After the transaction the Group owns 100 per cent of the shares in Fjallalax ehf. The purpose of the transaction is to increase the flexibility in size of smolt and increased number of smolt supporting the company's growth plans. For accounting purposes, the transaction will be treated as a business combination with effect from the acquisition date.
With this acquisition the Group takes important step in its strategy of increasing smolt weight, allowing increased MAB license utilization while reducing production time in sea and thereby biological risk. No material external transaction costs were incurred in the connection with the acquisition.
| Book value | to fair value | Fair value |
|---|---|---|
| 41 | 0 | 41 |
| 365 | 0 | 365 |
| 26 | 0 | 26 |
| 0 | 928 | 928 |
| 18 | 0 | 18 |
| 0 | (186) | (186) |
| (338) | 0 | (338) |
| (159) | 0 | (159) |
| (27) | 0 | (28) |
| (75) | 743 | 667 |
| 667 | ||
| Adjustment |
Assets and liabilities of Fjallalax ehf. have been consolidated as of 31 December 2021.
Balances and transactions between Icelandic Salmon AS and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its joint ventures are disclosed below.
| Transactions with related parties in 2022: | Sales | Purchases | Receivables | Liabilities |
|---|---|---|---|---|
| Eldisstöðin Ísþór ehf., subsidiary | 252 | 2,861 | 0 | 0 |
| Entities related to Salmar ASA, parent company | 731 | 53 | 0 | 0 |
| Entities related to Kvarv AS, ultimate parent | 189 | 9,119 | 27 | 1,354 |
| Entities related to chairman of Icelandic Salmon AS | 49 | 448 | 4 | 37 |
| Transactions with related parties in 2021: | Sales | Purchases | Receivables | Liabilities |
|---|---|---|---|---|
| Eldisstöðin Ísþór ehf., joint venture | 0 | 3,719 | 4,964 | 0 |
| Salmar ASA, shareholder in Icelandic Salmon AS | 0 | 34 | 0 | 34 |
| Entities related to SalMar ASA parent company | 3,426 | 0 | 166 | 0 |
| Entities related to Kvarv AS, ultimate parent | 0 | 6,482 | 0 | 532 |
| Entities related to shareholder of Icelandic Salmon AS | 0 | 492 | 11 | 41 |
Transactions between the Group and related parties are undertaken at market terms and conditions. See note 2.3 for remuneration to group management and board of directors.
Icelandic Salmon AS is part of the SalMar Group. The Group's Parent Company is Salmar ASA. SalMar's Parent Company is Kverva Industrier AS, which owns 41.27 per cent of the shares in SalMar ASA. The Ultimate Parent Company is Kvarv AS, which prepares its own consolidated accounts in accordance with NGAAP.
The Group has evaluated subsequent events. The Group has determined that there were no significant events or transactions that occurred subsequent to year-end that would require adjustment to or disclosure in the financial statements. Therefore, the financial statements present farily, in all material respects, the financial position of the Group as date of the issue and the results of its operations and its cash flows for the year then ended.
On 24 February 2022 the Russian army invaded Ukrain. The market effect for the Company is minimal as sales to Russia and Ukraine has been very low prior to the invasion. The Russian invasion and imposed sanctions have disrupted many supply chains and impacted the price of raw materials such as fish feed, operations, and logistics. At the same time the market has shown a positive price development and increased demand for Atlantic Salmon, balancing the effect of higher cost. The current geopolitical situation has so far had no significant negative impact on the Icelandic Salmon markets. Management will continue to monitor the situation closely.
The Group prepares its Financial Statements in accordance with International Financial Reporting Standards (IFRS). In addition, management has established alternative performance parameters (APMs) to provide useful and relevant information to users of its Financial Statements. Alternative performance parameters have been established to provide greater understanding of the Company's underlying performance, and do not replace the Consolidated Financial Statements prepared in accordance with international accounting standards (IFRS): The performance parameters have been reviewed and approved by the Group's management and Board of Directors. Alternative performance parameters may be defined and used in other ways by other companies.
Operational EBIT is an APM used by the Group and the most important measure of its performance under IFRS, since it shows the results of underlying operations during the period. The difference between Operational EBIT and operating profit/loss relates to items which are classified in the Financial Statements on the line for fair value adjustments. These items are market value and fair value assessments linked to assumptions about the future. Operational EBIT shows the underlying operation and the results of transactions undertaken in the period.
Operational EBIT is the Groups's most important measure of its performance under IFRS, since it shows the results of underlying operations during the period. Specific items not associated with underlying operations are presented on separate lines in the Consolidated Financial Statements.
| 2022 | 2021 | |
|---|---|---|
| Operating profit | 34,487 | 4,070 |
| Production tax | 1,329 | 307 |
| Onerous contracts | 122 | 0 |
| Fair value adjustments of biomass | 215 | 2,937 |
| Operational EBIT | 36,153 | 7,314 |
The production tax represents resource tax as described in note 2.5. Production tax reduces profit by EUR 1.3 million in 2022 compared to EUR 0.3 million in 2021.
Operational EBIT per kg gutted weight (GW) is defined as a key APMs for the Group. The performance parameter is used to assess the profitability of the goods sold and the Group's operations. The performance parameter is expressed per kg of harvested volume.
| 2022 | 2021 | |
|---|---|---|
| Operational EBIT | 36,153 | 7,314 |
| Harvested volume (tonnes) | 16,138 | 11,537 |
| Operational EBIT per kg gutted weight | 2.24 | 0.63 |
Net interest bearing debt is an alternative performance measure used by the Group. The performance measure is used to express the Groups's working capital, and is an important performance measure for investors and other users, because it shows net borrowed capital used to finance the Group. Net interest-bearing debt is defined as long-term and short-term debt to credit institutions, less cash and cash equivalents. Lease liabilities under IFRS 16 are not included in the calculation of Net interest-bearing debt.
| 2022 | 2021 | |
|---|---|---|
| Non-current interest-bearing borrowings | 51,649 | 38,465 |
| Current interest bearing borrowings | 6,230 | 2,084 |
| Cash and cash equivalents | (1,854) | (3,744) |
| Net interest bearing debt (NIBD) | 56,025 | 36,805 |
| In EUR 1000 | Note | 2022 | 2021 |
|---|---|---|---|
| Operating revenues and expenses | |||
| Payroll expenes | 2 | 103 | 21 |
| Other operating expenses | 2 | 176 | 146 |
| Total operating expenses | 280 | 167 | |
| Operating loss | (280) | (167) | |
| Financial items | |||
| Other interest income | 15 | 0 | |
| Other interest expenses | (1) | 0 | |
| Foreign currency (loss) gain | 3 | (90) | 90 |
| Net financial items | (76 | 89 | |
| Loss for the year | (355) | (78) |
| In EUR 1000 | Note | 2022 | 2021 |
|---|---|---|---|
| Assets | |||
| Non-Current assets | |||
| Investments in subsidiaries | 4, 10 | 115,729 | 115,571 |
| Total non-current assets | 115,729 | 115,571 | |
| Current assets | |||
| Other current receivables | 10 | 0 | |
| Bank deposits, cash & cash equivalents | 5 | 1,527 | 1,891 |
| Total current assets | 1,537 | 1,891 | |
| TOTAL ASSETS | 117,266 | 117,462 | |
| Equity and liabilities | |||
| Equity | |||
| Share capital | 6,7 | 29,571 | 29,571 |
| Share premium | 6 | 88,600 | 90,622 |
| Other paid-in equity | 6 | (930) | (1,089) |
| Other equity | 6 | 0 | (1,667) |
| Total equity | 117,241 | 117,438 | |
| Liabilities | |||
| Current liabilities | |||
| Trade payables | 26 | 1 | |
| Current payables to group companies | 8 | 0 | 1 |
| Other current liabilities | 0 | 23 | |
| Total liabilities | 26 | 24 | |
| TOTAL EQUITY AND LIABILITIES | 117,266 | 117,462 |
Kverva, 21 April 2023
Kjartan Olafsson, Chairman of the Board
Leif-Inge Nordhammer, Member of the Board
Trine Sæther Romuld Member of the Board
Bjørn Hembre, CEO
Espen Weyergang Marcussen, Member of the Board
| In EUR 1000 | Note | 2022 | 2021 |
|---|---|---|---|
| Cash flow from Operating Activities | |||
| Loss before tax | (355) | (78) | |
| Change in trade payables and other current liabilities | (8) | (200) | |
| Net cash flow from Operating Activities | (363) | (278) | |
| Cash flow from Financing Activities | |||
| Net change in debt to group companies | 8 | (1) | (1) |
| Net cash flow from financing activities | (1) | (1) | |
| Net change in bank deposits, cash & cash equivalents | (364) | (279) | |
| Bank deposits, cash & cash equivalents 1 Jan | 1,891 | 2,170 | |
| Cash & cash equivalents as at 31 Dec | 1,527 | 1,891 |
The Annual Financial Statements have been prepared pursuant to the Norwegian Accounting Act of 1998 and generally accepted accounting principles in Norway (NGAAP). The Financial Statements are denominated in EUR, which is the company's functional currency.
Preparation of Annual Financial Statements in accordance with generally accepted accounting principles requires management to make assessments, estimates and assumptions that affect the application of the accounting principles and the recognized value of assets and liabilities in the Statement of Financial Position, revenues and expenses for the financial year, as well as disclosures about uncertain assets and liabilities on the reporting date. Estimates and their underlying assumptions are based on historic experience and other factors considered to be relevant and obable at the time the assessment is made. These estimates affect the book value of assets and liabilities when their value is not based on other sources. Estimates are assessed continuously and final values and results may deviate therefrom. Changes in accounting estimates are recognized in the period in which the change takes place.
Subsidiaries classified as non-current assets are recognized in accordance with the cost method. Subsidiaries are companies in which Icelandic Salmon AS has a controlling influence as a result of legal or de facto control. A controlling interest is, in principle, deemed to exist when more than 50 per cent of the voting capital is owned either directly or indirectly.
Dividend and other distributions are recognized as other financial income. If dividends exceed the share of profit and loss withheld after acquisition, the surplus amount represents a repayment of invested capital, and the distributions are deducted from the value of the investment in the Statment of Financial Position.
Means of payment comprise cash, bank deposits and other short-term investments that can be converted into cash in no more than three months.
Assets intended for permanent ownership or use are classified as non-current assets. Other assets are classified as current assets and normally include items due for payment in less than a year, as well as items relating to the production cycle. For the classification of current and non-current liabilities, similar criteria applies.
Non-current assets are recognized at acquisition cost. If the recoverable value of a non-current asset is lower than its book value, and the impairment is not expected to be temporary, the carrying amount of the asset is reduced to its recoverable amount. Non-current assets with a limited economic lifespan are depreciated systematically.
Current assets are recognized at the lower of acquisition cost and fair value. Other non-current liabilities and current liabilities are recognized at their nominal value.
Trade receivables and other receivables are recognized at their nominal value, less a provision for bad debts. Provisions for bad debts are made on the basis of an individual assessment of the receivable concerned.
Cash and cash equivalents in the Statement of Financial Position and the Statement of Cash Flows includes cash and restricted cash with a restriction less then three months from end of the reporting period.
As of January 1st 2021 the functional currency of Icelandic Salmon was changed to EUR and the Financial Statements are presented in EUR, which is also the functional currency of Arnarlax ehf (subsidiary) where the Groups main operation is.
Transactions in foreign currencies are recognized in the Statement of Financial Position at the exchange rate in effect when the transaction took place. Monetary items denominated in foreign currencies are translated into EUR at the exchange rate in effect on the reporting date. Non-monetary items valued at historic cost expressed in foreign currencies are translated into EUR using the exchange rate in effect when the transaction took place. Changes in exchange rates are recognized in the Income Statement under other financial items in the accounting period in which they occur.
The tax expense is matched against the profit/loss before tax. The tax expense comprises tax payable (tax on the year's direct taxable income) and change in net deferred tax. To the extent it is probable that they may come to be used, deferred tax assets and liabilities are presented net in the Statment of Financial Position.
The Company's Statement of Cash Flow shows a breakdown of total cash flow generated by operating, investing and financing activities. The statement shows the individual activity's effect on cash and cash equivalents. The Statement of Cash Flow has been prepared in accordance with the indirect method.
The figures for the previous year's annual Financial Statements are comparable.
Included in payroll expenses are benefits paid to Directors of the company as follows:
| Payroll expenses | 2022 | 2021 |
|---|---|---|
| Directors' fees | 103 | 21 |
| Total payroll expenses | 103 | 21 |
Remuneration of Board of directors for the year 2022 comprise of EUR 103 thousand compared to EUR 21 thousand in 2021.
The company's CEO is employed by and receives a salary from the subsidiary Arnarlax ehf. For further information see note 2.3 of Consolidated Financial Statements of Icelandic Salmon AS. As Icelandic Salmon AS has no employees of its own and is therefor not obliged to provide an occupational pension scheme pursuant to the Norwegain Mandatory Occupational Pensions Act.
On 19 February 2021, the Company granted 205,850 share options with an exercise price of NOK 115.00, respectively, to the CEO and certain key employees. The Company's intention is that the options will be equity-settled. The option holders must stay in the employment of the Group over a vesting period of three years from the grant date until 19 February 2024. As at 31 December 2022, the fair value of the agreements was determined to be EUR 504 thousand (2021: EUR 533 thousand) and pro rata accrual in the amount of EUR 158 thousand (2021: EUR 155 thousand) was recognized as an investment in subsidiaries, with a corresponding entry to other paid in equity.
Corresponding amounts have been recognized as salary by Arnarlax ehf. For further details, see note 2.4 the Consolidated Financial Statements of Icelandic Salmon AS.
| Others | EY | Total | |
|---|---|---|---|
| Statutory auditing services | 0 | 53 | 53 |
| Total remuneration to auditors in 2022: | 0 | 53 | 53 |
| Statutory auditing services | 19 | 19 | 38 |
| Total remuneration to auditors in 2021: | 19 | 19 | 38 |
Fees are presented inclusive of VAT.
The effect of currency gains or losses are recognized under other financial expenses in the Income Statement. The currency gain/(loss) are related to bank balances in NOK.
| Company | Shareholding | Registered office | Book value | Net profit/ (loss ) 2022 |
Book value of equity at 31 Dec 2022 |
|---|---|---|---|---|---|
| Arnarlax ehf | 100% | Bildudal - Iceland | 115,729 | 35,272 | 142,684 |
The Company´s cash and cash equivalent consist of bank balances and withholding tax.
| 31.12.2022 | 31.12.2021 | |
|---|---|---|
| Bank balances | 1,527 | 1,883 |
| Bank balances, withholding tax | 0 | 8 |
| Total cash and cash equivalent | 1,527 | 1,891 |
Share capital as at 31 December 2022 comprised:
| No. | Face value | Share capital in EUR | |
|---|---|---|---|
| Ordinary shares | 30,961,868 | 0.96 | 29,571,137 |
The company has only one class of shares.
The company's 20 largest shareholders as at 31 December 2022 were:
| No. of shares | Shareholding | |
|---|---|---|
| SalMar ASA | 15,798,152 | 51.02% |
| J.P. Morgan bank luxembourg S.A. | 2,882,986 | 9.31% |
| Íslandsbanki hf. | 2,444,463 | 7.90% |
| Gyda ehf. | 1,000,000 | 3.23% |
| Holta Invest AS | 938,314 | 3.03% |
| Pactum Vekst AS | 825,862 | 2.67% |
| MP Pensjon PK | 619,706 | 2.00% |
| Roth | 599,661 | 1.94% |
| Clearstream Banking S.A. | 569,526 | 1.84% |
| Nima Invest AS | 563,088 | 1.82% |
| State Street Bank and Trust comp | 515,000 | 1.66% |
| Kristians and AS | 470,000 | 1.52% |
| Haganes AS | 270,705 | 0.87% |
| VPF DNB Norge Selektiv | 257,374 | 0.83% |
| Verdipapirfondet DNB SMB | 231,249 | 0.75% |
| Alden AS | 217,776 | 0.70% |
| Lithinon AS | 186,881 | 0.60% |
| Verdipapirfondet Eika Spar | 185,492 | 0.60% |
| Verdipapirfondet Pareto Investment | 185,000 | 0.60% |
| DNB Bank ASA | 170,537 | 0.55% |
| Total 20 largest shareholders | 28,931,772 | 93.44% |
| Total other shareholders | 2,030,096 | 6.56% |
| Total no. of shares | 30,961,868 | 100.00% |
| Name | No. of shares | Share-holding | |
|---|---|---|---|
| Kjartan Olafsson * | Chairman of the board | 1,000,000 | 3.23% |
| Trine Sæther Romuld *** | Boardmember | *** | |
| Olav Andreas Ervik *** | Boardmember | *** | |
| Leif Inge Nordhammer *** | Boardmember | *** | |
| Espen Marcussen **** | Boardmember | **** | |
| Bjørn Hembre ** | CEO | 32,900 | 0.11% |
| Rolf Ørjan Nordli *** | COO SeaWater | *** |
Shares owned by members of the board and senior executives:
* Kjartan Ólafsson owns indirectly through Gyda ehf. Kjartan Olafsson owns 100 per cent of the shares in Berg Fjárfesting ehf, which own 100 per cent of the shares in Gyda ehf.
** Björn Hembre owns indirectly through IVMA AS which is one of minority stakeholders in Icelandic Salmon AS. Björn owns 100 per cent of the shares in IVMA AS.
*** Trine Sæther Romuld, Olav Andreas Ervik, Leif Inge Nordhammer and Rolf Ørjan Nordli: all indirectly owns share through minority stakes in SalMar ASA.
**** Espen Marcussen indirectly owns shares through a minority stake in Pactum AS
| Share capital |
Share premium |
Other paid-in equity |
Uncovered loss |
Total equity |
|
|---|---|---|---|---|---|
| Equity 1 Jan 2021 | 29,571 | 90,622 | 288 | (1,590) | 118,891 |
| Year's change in equity: | |||||
| Net loss for the year | 0 | 0 | 0 | (78) | (78) |
| Share-based payment, expensed | 0 | 0 | 209 | 0 | 209 |
| Share-based payment, settlement | 0 | 0 | (1,585) | 0 | (1,585) |
| Equity 31 Dec 2021 | 29,571 | 90,622 | (1,089) | (1,667) | 117,438 |
| Equity 1 Jan 2022 | 29,571 | 90,622 | (1,089) | (1,667) | 117,438 |
| Year's change in equity: | |||||
| Net profit loss for the year | 0 | 0 | 0 | (355) | (355) |
| Uncovered loss moved against Share Premium | 0 | (2,023) | 0 | 2,023 | 0 |
| Share-based payment, expensed | 0 | 0 | 158 | 0 | 158 |
| Equity 31 Dec 2022 | 29,571 | 88,600 | (930) | 0 | 117,241 |
For further information on share-based payments see note 2.4 in Consolidated Financial Statements of Icelandic Salmon AS.
| Other short-term payables | 2022 | 2021 | |
|---|---|---|---|
| Group Companies | 0 | 1 | |
| Total | 0 | 1 |
Related parties transactions in the years 2022 and 2021 were insignificant.
| 2022 | 2021 |
|---|---|
| (355) | (78) |
| (355) | (78) |
| 2022 | 2021 |
| (4,172) | (3,816) |
| (355) | (78) |
| 229 | (184) |
| (4,127) | (4,001) |
| 4,127 | 4,001 |
| 0 | 0 |
| 22% | 22% |
Deferred tax assets are calculated at 22 per cent on all temporary differences between the book value and tax value of assets and liabilities, and loss carried forward at the end of the reporting period. Taxable and deductible temporary differences that reverse or may reverse in the same period are offset. Deferred tax assets are recognized when it is probable that the Company will have adequate profit for tax purposes in subsequent periods to utilize the tax asset.
| Reconciliation of nominal to actual tax rate | 2022 | 2021 |
|---|---|---|
| Profit/loss before tax | (355) | (78) |
| Expected tax on income at nominal tax rate | (78) | (17) |
| Carry forward loss not recognized in Income Statement as tax asset* | 78 | 17 |
| Estimated tax expense | 0 | 0 |
| Effective tax rate | 0.0% | 0.0% |
*The Company's Carry forward loss of EUR 4.2 million does not expire according to Norwegian laws. The Company will recognize and record tax asset when there is an dequate profit for tax purposes to utilize the existing carry forward loss.
Icelandic Salmon AS has pledged shares it holds in Arnarlax Ehf. as security for its subsidiary's liabilities. Icelandic Salmon AS owns 100 per cent of the shares in Arnarlax ehf, the book value of which was EUR 115,7 million as at 31 December 2022.
According to the best knowledge of the Board of Directors and the CEO, the Consolidated Financial Statements are in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional requirements in the Norwegian Financial Statement Act. It is the opinion of the Board of Directors and the CEO that the Consolidated Financial Statments give a fair view of the Group's assets, liabilities and Financial Position as at 31 December 2022 and the Group's results and changes in cash in the year 2022.
Furthermore, it is the opinion of the Board of Directors and the CEO that the Financial Statements and the Endorsement by the Board of Directors for the year 2022 give a fair view of the Group's results, Financial Position and development and describe the main risk factors faced by the Group.
The Board of Directors and the Chief Executive Officer hereby confirm these Consolidated Financial Statements with their signature.
Bíldudalur 21 April 2023
Kjartan Olafsson, Chairman of the Board
Leif-Inge Nordhammer, Member of the Board
Trine Sæther Romuld Member of the Board
Bjørn Hembre,
CEO
Espen Weyergang Marcussen, Member of the Board
To the board of directors in Icelandic Salmon AS
We have been engaged by Icelandic Salmon AS to perform a limited assurance engagement, as defined by International Standards on Assurance Engagements, here after referred to as the engagement, to report on Icelandic Salmon AS's sustainability reporting as defined in the Icelandic Salmon AS's GRI Index (see the document GRI content index 2022 on p. xx) (the "Subject Matter") as of 31 December 2022 and for the period from 1 January to 31 December 2022.
Other than as described in the preceding paragraph, which sets out the scope of our engagement, we did not perform assurance procedures on the remaining information included in the Annual report, and accordingly, we do not express a conclusion on this information.
In preparing the Subject Matter, Icelandic Salmon AS applied the relevant criteria from the Global Reporting Initiative (GRI) sustainability reporting standards as well as own defined criteria (the "Criteria"). The Criteria can be accessed at globalreporting.org and are available to the public. Icelandic Salmon AS has also applied relevant criteria from the reporting standards of the Global Salmon Initiative (GSI). Such Criteria were specifically designed for companies and other organizations that want to report their sustainability impacts in a consistent and credible way. As a result, the Subject Matter information may not be suitable for another purpose.
The Board of Directors and Group Chief Executive Officer (management) are responsible for selecting the Criteria, and for presenting the Subject Matter in accordance with that Criteria, in all material respects. This responsibility includes establishing and maintaining internal controls, maintaining adequate records, and making estimates that are relevant to the preparation of the Subject Matter, such that it is free from material misstatement, whether due to fraud or error.
Our responsibility is to express a conclusion on the presentation of the Subject Matter based on the evidence we have obtained.
We conducted our engagement in accordance with the International Standard for Assurance Engagements Other Than Audits or Reviews of Historical Financial Information ('ISAE 3000'). This standard requires that we plan and perform our engagement to obtain limited assurance about whether, in all material respects, the Subject Matter is presented in accordance with the Criteria, and to issue a report. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risk of material misstatement, whether due to fraud or error.
We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusions.
We are independent of the company in accordance with the requirements of the relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. Our firm applies International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained if a reasonable assurance engagement had been performed. Our procedures were designed to obtain a limited level of assurance on which to base our conclusion and do not provide all the evidence that would be required to provide a reasonable level of assurance.
Although we considered the effectiveness of management's internal controls when determining the nature and extent of our procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT systems.
A limited assurance engagement consists of making enquiries, primarily of persons responsible for preparing the Subject Matter and related information and applying analytical and other appropriate procedures.
We believe that our procedures provide us with an adequate basis for our conclusion. We also performed such other procedures as we considered necessary in the circumstances.
Based on our procedures and the evidence obtained, we are not aware of any material modifications that should be made to the Subject Matter as of 31 December 2022 and for the period from 1 January 2022 to 31 December 2022 in order for it to be in accordance with the Criteria.
Trondheim, 21 April 2022 ERNST & YOUNG AS
The assurance report is signed electronically
State Authorised Public Accountant
Built on the basis of the guidelines issued by the Global Reporting Initiative (GRI), Icelandic Salmon AS reports on its activities in the field of corporate social responsibility and sustainability within Annual report, sustainability report and other information published on the Groups website.
| Statement of use | Icelandic Salmon AS has reported in accordance with the GRI Standards for the preiod 1 January 2022 - 31 December 2022 |
||||
|---|---|---|---|---|---|
| GRI 1 used | GRI 1 used | ||||
| Applicable GRI Sector Standard(s) |
N/A | ||||
| GRI STANDARD/ OTHER SOURCE |
DISCLOSURE | LOCATION | |||
| General disclosures | |||||
| 2-1 Organizational details | Icelandic Salmon AS | ||||
| 2-2 Entities included in the organization's sustainability reporting | Arnarlax ehf. | ||||
| 2-3 Reporting period, frequency and contact point | 1st January 2022 - 31 st December 2022. | ||||
| 2-4 Restatements of information | N/A First reporting | ||||
| 2-5 External assurance | This report - Page 116-117 | ||||
| 2-6 Activities, value chain and other business relationships | This report ABC of salmong farming | ||||
| 2-7 Employees | This report - People and society | ||||
| 2-8 Workers who are not employees | This report - People and society | ||||
| 2-9 Governance structure and composition | This report - Corporate governance at Icelandic Salmon | ||||
| 2-10 Nomination and selection of the highest governance body | This report - Corporate governance at Icelandic Salmon | ||||
| 2-11 Chair of the highest governance body | This report - Corporate governance at Icelandic Salmon | ||||
| 2-12 Role of the highest governance body in overseeing the management of impacts |
This report - Corporate governance at Icelandic Salmon | ||||
| 2-13 Delegation of responsibility for managing impacts | This report - Corporate governance at Icelandic Salmon and Group management |
||||
| 2-14 Role of the highest governance body in sustainability reporting |
This report - Corporate governance at Icelandic Salmon and Group management |
||||
| GRI 2: General Disclosures 2021 |
2-15 Conflicts of interest | This report - Corporate governance at Icelandic Salmon and Group management |
|||
| 2-16 Communication of critical concerns | This report - BOD Report for 2022 | ||||
| 2-17 Collective knowledge of the highest governance body | This report - Corporate governance at Icelandic Salmon and Group management |
||||
| 2-18 Evaluation of the performance of the highest governance body |
This report - Corporate governance at Icelandic Salmon and Group management |
||||
| 2-19 Remuneration policies | This report - Corporate governance at Icelandic Salmon | ||||
| 2-20 Process to determine remuneration | This report - Equity and Dividend | ||||
| 2-21 Annual total compensation ratio | Page 68 | ||||
| 2-22 Statement on sustainable development strategy | This report - Message from CEO | ||||
| 2-23 Policy commitments | Ethical-Guidelines-Arnarlax-2020_EN.pdf | ||||
| 2-24 Embedding policy commitments | Ethical-Guidelines-Arnarlax-2020_EN.pdf | ||||
| 2-25 Processes to remediate negative impacts | This report - Corporate governance at Icelandic Salmon | ||||
| 2-26 Mechanisms for seeking advice and raising concerns | Page 33-35 | ||||
| 2-27 Compliance with laws and regulations | This report - Corporate governance at Icelandic Salmon | ||||
| 2-28 Membership associations | SFS, SA, University center in Isafjordur | ||||
| 2-29 Approach to stakeholder engagement | Page 15 | ||||
| 2-30 Collective bargaining agreements | This report - People and society |
| OMISSION | GRI SECTOR STANDARD | |||
|---|---|---|---|---|
| REQUIREMENT(S) OMITTED | REASON | EXPLANATION | REF. NO. | |
A gray cell indicates that reasons for omission are not permitted for the disclosure or that a GRI Sector Standard reference number is not available.
| GRI STANDARD/ OTHER SOURCE |
DISCLOSURE | LOCATION |
|---|---|---|
| Material topics | ||
| GRI 3: Material Topics | 3-1 Process to determine material topics | Page 22 |
| 2021 | 3-2 List of material topics | Page 22 |
| Economic performance | ||
| 201-1 Direct economic value generated and distributed | Section 4 | |
| 201-2 Financial implications and other risks and opportunities | This report, Section 3, Climate risk, page 50 | |
| GRI 201: Economic Performance 2016 |
due to climate change 201-3 Defined benefit plan obligations and other retirement |
This report, Note 2.3 Salary and personnel expenses, page |
| plans | 67, and Note 2.4 Share-based incentive schemes, page 68 | |
| 201-4 Financial assistance received from government | ||
| Market presence | ||
| GRI 202: Market | 202-1 Ratios of standard entry level wage by gender compared to local minimum wage |
|
| Presence 2016 | 202-2 Proportion of senior management hired from the local community |
This report, Note 2.3 Salary and personnel expenses, page 67 |
| Indirect economic impacts | ||
| GRI 203: Indirect | 203-1 Infrastructure investments and services supported | |
| Economic Impacts | 203-2 Significant indirect economic impacts | Disclosed in annual social footprint report |
| 2016 | on www.arnarlax.is | |
| Procurement practices | ||
| GRI 204: Procure ment Practices 2016 |
204-1 Proportion of spending on local suppliers | Disclosed in annual social footprint report on www.arnarlax.is |
| Anti-corruption | ||
| 205-1 Operations assessed for risks related to corruption | This report, Section 3, Anti-corruption and bribery, page 51 | |
| GRI 205: Anti-corrup tion 2016 |
205-2 Communication and training about anti-corruption poli cies and procedures |
This report, Section 3, Anti-corruption and bribery, page 51 |
| 205-3 Confirmed incidents of corruption and actions taken | No such incidents, not disclosed in report | |
| Anti-competitive behavior | ||
| GRI 206: Anti-com | 206-1 Legal actions for anti-competitive behavior, anti-trust, and | |
| petitive Behavior 2016 |
monopoly practices | |
| Tax | ||
| 207-1 Approach to tax | This report, Note 2.5 Other operating expenses page 70 and Note 2.7 Tax expense page 72. |
|
| 207-2 Tax governance, control, and risk management | This report, Note 2.7 Tax expense page 72. | |
| GRI 207: Tax 2019 | 207-3 Stakeholder engagement and management of concerns | |
| related to tax 207-4 Country-by-country reporting |
||
| Materials GRI 3: Material Topics |
||
| 2021 | 3-3 Management of material topics | Environment |
| GRI 301: Materials | 301-1 Materials used by weight or volume | Page 26 |
| 2016 | 301-2 Recycled input materials used | Page 31 |
| 301-3 Reclaimed products and their packaging materials | ||
| Energy | ||
| GRI 3: Material Topics 2021 |
3-3 Management of material topics | Environment |
| 302-1 Energy consumption within the organization | Page 30 | |
| GRI 302: Energy 2016 | 302-2 Energy consumption outside of the organization | Page 30 |
| 302-3 Energy intensity | Page 30 | |
| 302-4 Reduction of energy consumption | Page 30 | |
| 302-5 Reductions in energy requirements of products and | Page 30 | |
| services |
| OMISSION | ||||
|---|---|---|---|---|
| REQUIREMENT(S) OMITTED | REASON | EXPLANATION | GRI SECTOR STANDARD REF. NO. |
|
| A gray cell indicates that reasons for omission are not permitted for the disclosure or that a GRI Sector Standard reference number is not available. | ||||
| Information unavailable/incomplete | Goal to report on this for year 2023 | |||
| Information unavailable/incomplete | Goal to report on this for year 2023 | |||
| Information unavailable/incomplete | ||||
| Not applicable | Goal to report on this for year 2023 | |||
| Information unavailable/incomplete | Goal to report on this for year 2023 | |||
| This report, Note 2.5 Other operating expenses page 70 and | ||||
| Information unavailable/incomplete | Goal to report on this for year 2023 | |||
| Not applicable | ||||
| Not applicable | ||||
| GRI STANDARD/ OTHER SOURCE |
DISCLOSURE | LOCATION |
|---|---|---|
| Water and effluents | ||
| GRI 3: Material Topics 2021 |
3-3 Management of material topics | Environment |
| 303-1 Interactions with water as a shared resource | Page 31 | |
| 303-2 Management of water discharge-related impacts | Page 31 | |
| GRI 303: Water and Effluents 2018 |
303-3 Water withdrawal | Page 31 |
| 303-4 Water discharge | Page 31 | |
| 303-5 Water consumption | Page 31 | |
| Biodiversity | ||
| GRI 3: Material Topics | 3-3 Management of material topics | Environment |
| 2021 | 304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas |
|
| GRI 304: Biodiversity 2016 |
304-2 Significant impacts of activities, products and services on biodiversity |
Page 21 |
| 304-3 Habitats protected or restored | Page 21 | |
| 304-4 IUCN Red List species and national conservation list species with habitats in areas affected by operations |
Válisti fugla Icelandic Institute of Natural History (ni.is) | |
| Emissions | ||
| GRI 3: Material Topics 2021 |
3-3 Management of material topics | Environment |
| 305-1 Direct (Scope 1) GHG emissions | Page 30 | |
| 305-2 Energy indirect (Scope 2) GHG emissions | Page 30 | |
| 305-3 Other indirect (Scope 3) GHG emissions | Page 30 | |
| GRI 305: Emissions | 305-4 GHG emissions intensity | Page 30 |
| 2016 | 305-5 Reduction of GHG emissions | Page 30 |
| 305-6 Emissions of ozone-depleting substances (ODS) | ||
| 305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions |
||
| Waste | ||
| GRI 3: Material Topics 2021 |
3-3 Management of material topics | Environment |
| 306-1 Waste generation and significant waste-related impacts | Page 31 | |
| 306-2 Management of significant waste-related impacts | Page 31 / Green books 2022 | |
| 306-3 Waste generated | Page 31 / Green books 2022 | |
| GRI 306: Waste 2020 | 306-4 Waste diverted from disposal | Page 31 / Green books 2022 |
| 306-5 Waste directed to disposal | Page 31 / Green books 2022 | |
| 307-1 Non-compliance with environmental laws and regulations | ||
| Supplier environmental assessment | ||
| GRI 308: Supplier | 308-1 New suppliers that were screened using environmental | |
| Environmental As sessment 2016 |
criteria 308-2 Negative environmental impacts in the supply chain and actions taken |
|
| Employment | ||
| 401-1 New employee hires and employee turnover | ||
| GRI 401: Employment 2016 |
401-2 Benefits provided to full-time employees that are not | |
| provided to temporary or part-time employees | ||
| 401-3 Parental leave |
| OMISSION | GRI SECTOR STANDARD | |||
|---|---|---|---|---|
| REQUIREMENT(S) OMITTED | REASON | EXPLANATION | REF. NO. | |
| 303-1 Interactions with water as a shared resource Page 31 |
||||
| 303-2 Management of water discharge-related impacts Page 31 |
||||
| 303-3 Water withdrawal Page 31 |
||||
| 303-4 Water discharge Page 31 |
||||
| 303-5 Water consumption Page 31 |
||||
| 304-1 Operational sites owned, leased, managed in, or adjacent | ||||
| to, protected areas and areas of high biodiversity value outside | 304-1 | Not applicable | Arnarlax does not operate in any protected areas. |
|
| protected areas 304-2 Significant impacts of activities, products and services on Page 21 |
||||
| biodiversity | ||||
| 304-3 Habitats protected or restored Page 21 304-4 IUCN Red List species and national conservation list |
||||
| Válisti fugla Icelandic Institute of Natural History (ni.is) species with habitats in areas affected by operations |
||||
| 305-1 Direct (Scope 1) GHG emissions Page 30 |
||||
| 305-2 Energy indirect (Scope 2) GHG emissions Page 30 |
||||
| 305-3 Other indirect (Scope 3) GHG emissions Page 30 |
||||
| 305-4 GHG emissions intensity Page 30 |
||||
| 305-5 Reduction of GHG emissions Page 30 |
||||
| 305-6 Emissions of ozone-depleting substances (ODS) | 305-6 | Not applicable | No emissions of ozone-depleting substances within the operations. |
|
| 305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other | No nitrogen oxides, sulfur oxides and | |||
| significant air emissions | 305-7 | Not applicable | other significant emissions within the operations. |
|
| 306-1 Waste generation and significant waste-related impacts Page 31 |
||||
| 306-2 Management of significant waste-related impacts Page 31 / Green books 2022 |
||||
| 306-3 Waste generated Page 31 / Green books 2022 |
||||
| 306-4 Waste diverted from disposal Page 31 / Green books 2022 |
||||
| 306-5 Waste directed to disposal Page 31 / Green books 2022 |
||||
| 307-1 Non-compliance with environmental laws and regulations | Not applicable | We are in compliance. | ||
| 308-1 New suppliers that were screened using environmental | 308-1 | Information unavailable/incomplete | The aim is to report on this for year | |
| criteria 308-2 Negative environmental impacts in the supply chain and |
2023. The aim is to report on this for year |
|||
| actions taken | 308-2 | Information unavailable/incomplete | 2023. | |
| First report. The aim is to report on this | ||||
| 401-1 New employee hires and employee turnover | 401-1 | Information unavailable/incomplete | for year 2023. | |
| 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees |
401-2 | Information unavailable/incomplete | First report. The aim is to report on this for year 2023. |
|
| 401-3 Parental leave | 401-3 | Information unavailable/incomplete | First report. The aim is to report on this for year 2023. |
| GRI STANDARD/ | DISCLOSURE | LOCATION |
|---|---|---|
| OTHER SOURCE | ||
| Labor/management relations | ||
| GRI 402: Labor/Man agement Relations 2016 |
402-1 Minimum notice periods regarding operational changes | |
| Occupational health and safety | ||
| GRI 3: Material Topics 2021 |
3-3 Management of material topics | People and society |
| 403-1 Occupational health and safety management system | This report - People and society | |
| 403-2 Hazard identification, risk assessment, and incident investigation |
This report - People and society | |
| 403-3 Occupational health services | This report - People and society | |
| 403-4 Worker participation, consultation, and communication on occupational health and safety |
This report - People and society | |
| GRI 403: Occupation | 403-5 Worker training on occupational health and safety | This report - People and society |
| al Health and Safety 2018 |
403-6 Promotion of worker health | This report - People and society |
| 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships |
||
| 403-8 Workers covered by an occupational health and safety management system |
This report - People and society | |
| 403-9 Work-related injuries | This report - People and society | |
| 403-10 Work-related ill health | This report - People and society | |
| Training and education | ||
| GRI 3: Material Topics 2021 |
3-3 Management of material topics | People and society |
| 404-1 Average hours of training per year per employee | ||
| GRI 404: Training and Education 2016 |
404-2 Programs for upgrading employee skills and transition assistance programs 404-3 Percentage of employees receiving regular performance and career development reviews |
This report - Education programmes on p9 and Ecuation and training on p41. |
| Diversity and equal opportunity | ||
| GRI 405: Diversity | 405-1 Diversity of governance bodies and employees | This report - Corporate governance at Icelandic Salmon and Group management |
| and Equal Opportuni ty 2016 |
405-2 Ratio of basic salary and remuneration of women to men | This report – Pages 35 and 51 |
| Non-discrimination | ||
| GRI 3: Material Topics | 3-3 Management of material topics | People and society |
| 2021 | ||
| GRI 406: Non-dis crimination 2016 |
406-1 Incidents of discrimination and corrective actions taken | |
| Freedom of association and collective bargaining | ||
| GRI 3: Material Topics 2021 |
3-3 Management of material topics | People and society |
| 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 |
|
| Child labor | ||
| GRI 408: Child Labor 2016 |
408-1 Operations and suppliers at significant risk for incidents of child labor |
|
| Forced or compulsory labor | ||
| GRI 409: Forced or Compulsory Labor |
409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor |
|
| 2016 Security practices |
||
| GRI 410: Security | 410-1 Security personnel trained in human rights policies or | |
| Practices 2016 | procedures |
| OMISSION | GRI SECTOR STANDARD | |||
|---|---|---|---|---|
| REQUIREMENT(S) OMITTED | REASON | EXPLANATION | REF. NO. | |
| 402-1 | Information unavailable/incomplete | First report. The aim is to report on this for year 2023. |
||
| This report - People and society | ||||
| 403-7 | Not applicable | |||
| Data gathering around all training is | ||||
| 404-1 | Information unavailable/incomplete | incomplete. | ||
| Information unavailable/incomplete | First report. The aim is to report on this for year 2023. |
|||
| This report - Corporate governance at Icelandic Salmon and | ||||
| 406-1 | Confidentiality constraints | All incidents received through Ethical portal are taken care of. High confiden tiality is regarding these incidents within the company. |
||
| 407-1 | Not applicable | Collective bargaining and the right to choose or form a union is bonded in Icelandic laws no. 80/1938. |
||
| 408-1 | Not applicable | No child labor or incidents regarding the | ||
| topic are present within the operations. | ||||
| No forced or compulsory labor or | ||||
| 409-1 | Not applicable | incidents regarding the topic are present within the operations. |
||
| 410-1 | Not applicable | No force, inhuman or degrading treat ment of employees. |
| GRI STANDARD/ OTHER SOURCE |
DISCLOSURE | LOCATION |
|---|---|---|
| Rights of indigenous peoples | ||
| GRI 411: Rights of Indigenous Peoples 2016 |
411-1 Incidents of violations involving rights of indigenous peo ples |
|
| Local communities | ||
| GRI 413: Local Com | 413-1 Operations with local community engagement, impact assessments, and development programs |
|
| munities 2016 | 413-2 Operations with significant actual and potential negative impacts on local communities |
|
| Supplier social assessment | ||
| GRI 414: Supplier | 414-1 New suppliers that were screened using social criteria | |
| Social Assessment 2016 |
414-2 Negative social impacts in the supply chain and actions taken |
|
| Public policy | ||
| GRI 415: Public Policy 2016 |
415-1 Political contributions | |
| Customer health and safety | ||
| GRI 3: Material Topics 2021 |
3-3 Management of material topics | People and society |
| GRI 416: Customer | 416-1 Assessment of the health and safety impacts of product and service categories |
Page 35 |
| Health and Safety 2016 |
416-2 Incidents of non-compliance concerning the health and safety impacts of products and services |
|
| Marketing and labeling | ||
| 417-1 Requirements for product and service information and labeling |
||
| GRI 417: Marketing and Labeling 2016 |
417-2 Incidents of non-compliance concerning product and service information and labeling |
|
| 417-3 Incidents of non-compliance concerning marketing communications |
||
| 417- | ||
| GRI 418: Customer Privacy 2016 |
418-1 Substantiated complaints concerning breaches of custom er privacy and losses of customer data |
| OMISSION | GRI SECTOR STANDARD | ||
|---|---|---|---|
| REQUIREMENT(S) OMITTED | REASON | EXPLANATION | REF. NO. |
| 411-1 | Not applicable | No indigenous people are in Iceland. | |
| 413-1 | Not applicable | No vulnerable groups. | |
| 413-2 | Not applicable | No actual or significant negative im pacts on local communties. |
|
| 414-1 | Information unavailable/incomplete | We aim to report on this indicator for our 2023 report. |
|
| 414-2 | Information unavailable/incomplete | We aim to report on this indicator for our 2023 report. |
|
| 415-1 | Not applicable | ||
| 416-1 | |||
| 416-2 | Not applicable | No incidents of non-compliance con cerning the health and safety impact of products. |
|
| 417-1 | Not applicable | We are a manufacturer and distributor of our products to primary producers. |
|
| 417-2 | Not applicable | No incidents | |
| 417-3 | Not applicable | No incidents | |
| 418-1 | Not applicable | No substantiated complaints concern ing breaches of customer privacy and losses of customer data. |
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