Annual Report • Apr 29, 2016
Annual Report
Open in ViewerOpens in native device viewer
ONE OF THE LARGEST AND MOST COST EFFICIENT SALMON PRODUCERS IN THE WORLD
3Passion for Salmon
| This is SalMar | 4 |
|---|---|
| Key Figures | 7 |
| CEO's report | 8 |
| Historical development of the SalMar Group | 10 |
| Offshore fish farming | 12 |
| The ABC of Salmon farming | 14 |
| SalMar's operative segments | 16 |
| SalMar's tenets | 18 |
| Passion for Salmon | 19 |
| HSE, sustainability and social responsibility | 21 |
| Corporate Governance | 25 |
| The management | 33 |
| Shareholder information | 34 |
| Board of directors' statement | 37 |
| Statement remuneration and other benefits payable to senior executives |
50 |
| Consolidated financial accounts | 53 |
| SalMar ASA financial account | 91 |
| Auditors report | 107 |
| Statement of responsibility | 111 |
1SalMar's 50 % share
SalMar holds quarterly presentations open to the public. The presentations will take place at 08.00 CET at Hotel Continental in Stortingsgaten 24/26 in Oslo, Norway.
The annual general meeting will be held at Frøya. Please note that the dates are subject to change. Changes will be communicated.
GEOGRAPHICAL DISTRIBUTION of SalMar's 100 wholly owned licenses in Norway pr. 31.12.2015:
SalMar Northern Norway
SalMar South-Korea SalMar Japan
SalMar is one of the world's leading producers of Atlantic salmon and is integrated from broodstock, roe and smolt to value added products and sales. SalMar have significant farming operations in both Central and Northern Norway, as well as in Scotland through 50 % ownership in Scottish Sea Farms. SalMar also operate a comprehensive harvesting and VAP facility in Central Norway at the company's headquarter at InnovaMar on Frøya and on Vikenco at Aukra. Learn more about SalMar at www.salmar.no
| OPERATING REVENUES AND OPERATING PROFIT NOK mill . |
2015 | 2014 | 2013 | |
|---|---|---|---|---|
| Operating revenues | 7 326 | 7 186 | 6 246 | |
| Operational EBIT | 1 404 | 1 879 | 1 259 | |
| Operating margin | 19 % | 26 % | 20 % | |
| Operating profit | 1 444 | 1 647 | 1 949 | |
| Profit before tax | 1 384 | 1 629 | 2 322 | |
| Profit margin | 19 % | 23 % | 37 % | |
| Net profit for the year | 1 129 | 1 215 | 1 903 | |
| Earnings per share after fair value adjustment of biomass | 9,8 | 10,6 | 15,8 | |
BALANCE SHEET NOK mill . 2015 2014 2013 Non-current assets 5 962 5 455 4 732 Current assets 4 982 4 669 5 199 Total assets 10 943 10 124 9 932 Equity 5 227 5 137 5 061 Debt 5 716 4 987 4 871 Total equity and debt 10 943 10 124 9 932 Net interest bearing debt 2 628,1 2 301,3 1 772,4 Equity share 48 % 51 % 51 %
SalMar Northern Norway
Segment Rauma
Segment Villa
Scottish Sea Farms Ltd (50 % share)
HARVEST VOLUME 1 000 tons – gutted weight
1000 tons – product weight
1000 tons – product weight VALUE ADDED PRODUCTS 2015 Fillets Portions Other 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 3,8 6,0 22,1
| 2015 | 2014 | 2013 | |
|---|---|---|---|
| 5962 | 5455 | 4732 | |
| 4 9 8 2 | 4669 | 5199 | |
| 10 943 | 10124 | 9932 | |
| 5227 | 5137 | 5061 | |
| 5716 | 4987 | 4871 | |
| 10 943 | 10 124 | 9932 | |
| 2628,1 | 2 301,3 | 1772,4 | |
| 48% | 51 % | 51 % |
SalMar posted very strong results in 2015. Gross operating revenues of NOK 7.3 billion and an operating profit of NOK 1.4 billion plainly show that SalMar is continuing to develop and create extremely good financial results. The volume harvested decreased slightly to 136.400 tonnes, but good salmon prices led to higher sales revenues. The organisation expanded through the year, and the Group now numbers some 1,200 employees, in 27 municipalities and five counties.
definitive answer to all the questions that arise in the wake of the massive campaign being waged against the lice. New experiences and new problems are constantly emerging.
We believe it is expedient to challenge existing measures, preparedness, management and knowledge concerning lice, in order to use our resources in the best possible way and to ensure that the problem is resolved as quickly as possible. As a contribution to this, we have become engaged in the establishment of a wide-ranging lice research programme spearheaded by the Norwegian University of Science and Technology (NTNU), which will start up in 2016. The aim is for colleagues within the industry and scientists to ask "outof-the-box" questions. Many people may find that a provocation in itself – it is perceived as a denial of the importance of wild salmon – but we consider such reactions to be a clear sign that the lice issue has become far too politicised. Knowledge is always the most important path to development.
Since 2012 SalMar has invested some NOK 100 million to develop and test its offshore fish farming concept. And on 28 February 2016 we finally received notification that Sal-Mar had been awarded eight development licences for its sea-going installation. That our subsidiary, Ocean Farming, was the first company to be awarded development licences under the new scheme that the government introduced last autumn was a source of pleasure and pride for SalMar. The eight licences will allow the company to realise its much talked of offshore fish farm, which has been designed with the assistance of Norwegian and international centres of excellence in the fields of maritime design, testing and quality assurance.
We are pleased that Norwegian centres of expertise have also proved fully competitive with regard to supplying advanced equipment for the offshore installation. Although the unit will be built at a shipyard in China, major equipment contracts have been entered into with Norwegian suppliers. The offshore installation is scheduled to be on site and ready to receive the first transfer of fish in the summer of 2017. The offshore fish farm underlines SalMar's ambition and determination to be a technology leader in the field of sustainable seafood production. The installation is groundbreaking in that respect.
Many people deserve applause for their formidable efforts, but the offshore fish farm would almost certainly never have been realised had it not been for the vision, unswerving faith and willingness never to give up on the project of our founder Gustav Witzøe.
management and a host of other areas which are crucial to our business.
For our operative units, we have two simple but clear objectives:
Maximum operational efficiency for biological production at the minimum cost
The best possible sales price for our salmon, and optimal resource utilisation
These goals encapsulate the very core of SalMar's philosophy. Our farming units produce high quality salmon on the fish's terms, while our sales and processing operations maximise its value once it is brought ashore. This is a winning formula, which we have used for many years, and which will continue to be our foundation in the years to come.
The six tenets of our corporate culture remain in force. Although we are constantly changing and improving, our
CEO
SalMar has initiated major investments to increase smolt capacity, so that we can achieve self-sufficiency in smolt. By the end of 2016 we will have come close to completing an entirely new hatchery in Senja, with the capacity to produce up to 20 million smolt. And a new building phase at Follafoss will bring capacity at that facility up towards 20 million smolt. Altogether we are investing around NOK 800 million in these two plants.
Our production costs for whole, gutted salmon rose in 2015. This is primarily attributable to higher feed costs and extremely high direct and indirect costs associated with the management of salmon lice. SalMar has always been recognised as the most cost-effective publicly listed aquaculture company, because we have always been able to manage our production costs and operate effectively. Doing so now requires even greater efforts than before, largely because external factors have such a great impact on our operational efficiency. However, there are still cost elements that we can do something about, and paying even stronger attention to costs is vital if we are to maintain our position as a cost leader.
"Passion for Salmon" is our vision. It is our shared commitment to farming salmon on the fish's terms and our focus on creating a unified SalMar that will help to further develop the company and draw us ever onward. We must dare to proclaim that our ambition is to be "the world's best fish farming company". It is an ambition we are not far from realising, though getting there will demand a lot of us. There are many different ways to measure success: we must be the best for sustainability, animal welfare, technology, leadership, lice Considerable uncertainty continues to attach to the followup of the government's aquaculture white paper, that was debated by the Norwegian parliament in June 2015. The new model divides the Norwegian coast into a series of production zones, with the licensed production volume within each zone being regulated up or down depending on the extent of salmon lice infestation and its anticipated effect on wild salmon populations. Within the industry there is considerable concern that this new "traffic model" will result in greater
We see ever more clearly the challenges facing the organisation in dealing with what we feel are partly conflicting regulations and expectations from the regulatory authorities, society at large and our own workforce. This is particularly evident in the effort to combat salmon lice. Here, there are obvious paradoxes, including the regulations governing the use of and emissions from wellboats that participate in delousing treatments, as well as less apparent challenges, such as prioritising between the lice regulations and animal welfare considerations, eg in connection with mandatory treatment at low temperatures.
For a production manager it can be difficult to balance the different considerations, and it can be difficult to avoid criticism no matter what one prioritises. We believe the authorities need to issue overarching clarifications regarding some of these issues, and we aim to help bring this about. We have seen the need to highlight our prioritisation of animal welfare in this past year, out of consideration for both the fish and our employees.
tenets constitute the immutable bedrock on which we are built – it is they we follow and are guided by day to day. other centres of expertise must participate in the evaluation before any new regulatory model is introduced. There are still many loose ends and misgivings relating to the new model. SalMar and an almost unanimous aquaculture industry maintain their view that the first step must be to carry out an impact assessment of the new model, with the assistance of various centres of expertise and in conjunction with the industry itself.
Handling the challenges posed by the lice situation remains the biggest task for us as an aquaculture company. The Norwegian salmon industry's battle to eradicate salmon lice is so extensive and demanding of resources that it deserves all the assistance and input that can be found. No one has the
bureaucracy, inferior framework conditions and greater unpredictability. It is also extremely doubtful whether the new model will actually result in the environmentally sustainable growth that is intended.
The Norwegian parliament issued some important and, for the industry, positive directives for the further follow-up of the aquaculture white paper. For example, the Industry Committee's recommendations underline that the flexibility which the industry has today through the so-called "inter-regional biomass ceiling", and which provides a high degree of processing, must be maintained. This is important for both jobs and value creation along the Norwegian coast. Another important directive from the Norwegian parliament is that the Institute of Marine Research should not be a dominant premise-giver for the new model, but that
SalMar was founded in February 1991 following the acquisition of a licence for the production of farmed salmon and a white fish harvesting/processing plant from a company that had gone into liquidation. These events took place during one of the most turbulent periods in the history of the Norwegian aquaculture industry, which subsequently also led to the collapse of the fish farmers' own sales organisation (Fiskeoppdretternes Salgslag AL) in November that same year. It was precisely this company's failure, and the so-called salmon mountain, that helped lay the foundations for the secondary processing operations which are a cornerstone of the SalMar story. Up until then the vast majority of Norwegian salmon had been exported as fresh or frozen round gutted fish. This was the start of a major restructuring of the Norwegian aquaculture sector, which gradually led to a substantial increase in its level of industrialisation.
Total volume harvested: 65,000 tonnes gutted weight. Acquisition of one licence in Central Norway (Møre & Romsdal) and one in Northern Norway (Troms). Senja Sjøfarm AS is renamed SalMar Nord AS. The Company now includes all SalMar's operations in Troms. Acquisition of 34 % of the shares in Volstad Seafood AS.
Total volume harvested: 77,000 tonnes gutted weight. Acquisition of the remaining 66 % of the shares in Volstad Seafood AS, making SalMar sole owner of the company.
Total volume harvested: 79,000 tonnes gutted weight. Acquisition of 75.54 % of Rauma Gruppen AS. Broodfish, two hatcheries and eight fish farming licenses in Central Norway (Møre & Romsdal). Acquisition of 23.29 % of the shares in the listed Faeroe Islands company Bakkafrost P/f. Acquisition of Stettefisk AS.
Total volume harvested: 116,100 tonnes gutted weight. Acquisition of 10 licenses in Northern Norway (Finnmark) from Villa Artic AS. Acquisition of additional shares in P/F Bakkafrost, bringing SalMar's total shareholding to 25.21 %.
Total volume harvested: 104,000 tonnes gutted weight. Completion of the world's most innovative and efficient salmon harvesting and processing plant – InnovaMar. Acquisition of Bringsvor Laks AS with two licences in Central Norway (Møre & Romsdal). Acquisition of Krifo Havbruk AS with one licence in Central Norway (Trøndelag). Leif Inge Nordhammer steps down as CEO and is replaced by Yngve Myhre on 6 June. Acquisition of Villa Miljølaks AS with four licenses in Central Norway (Møre og Romsdal). Acquisition of a further 1.5 % of the shares in P/F Bakkafrost, bringing SalMar's total shareholding to 24.8 %. 2015 Total volume harvested: 150,000 tonnes gutted weight. Principle approval of the ocean farming pilot. Completion of acquisition that ensures an indirect stake of 22.91 % of the shares in the Icelandic farming company Arnarlax Hf. *Total harvest volume SalMar group, incl. 50 % of SSF harvest volumes.
Total volume harvested: 128,000 tonnes gutted weight. Acquisition of minority shares in SalMar Rauma AS. Acquisition of 50.4 % of the shares in Villa Organic AS. Divestment in P/F Bakkakfrost. New share holding approximately 14.9 %. Divestment of remaining 14.9 % of shares in P/F Bakkafrost. Following the transaction SalMar has no shares in P/F Bakkafrost.
Yngve Myhre steps down as CEO and is replaced by Leif Inge Nordhammer on 20 January. Nordhammer previously served as SalMar's CEO for a period of 15 years until he stepped down in 2011. Acquisition of 8 green licenses.
SalMar is founded in Frøya in Sør-Trøndelag following the acquisition of one licence for the production of farmed salmon and a harvesting/processing plant from a company that had gone into liquidation. The company's primary business was the processing of frozen salmon. This was the start of a major restructuring of the Norwegian aquaculture sector, which gradually led to a substantial increase in its level of industrialisation.
Acquisition of two licences for the production of farmed salmon in Central Norway.
Acquisition of Follasmolt AS in Verran, Nord-Trøndelag. Start of smolt production. Lease of Kjørsvik Settefisk's hatchery in Aure, Møre & Romsdal.
Extension of the plant at Nordskaget in Frøya to increase processing capacity. Kverva Holding AS becomes sole owner of SalMar.
Total volume harvested: 11,000 tonnes gutted weight. Establishment of operations outside of Central Norway through the acquisition of 49 % of the shares in Senja Sjøfarm AS in Troms. At that time Senja Sjøfarm had nine production licences and its own hatchery.
Total volume harvested: 15,000 tonnes gutted weight. Establishment of operations outside Norway through Norskott Havbruk AS, a 50/50 joint venture with Lerøy Seafood Group. Norskott Havbruk AS is sole owner of Scottish Sea Farms Ltd, the UK's second largest salmon producer.
Total volume harvested: 35,000 tonnes gutted weight. Divestment of operations SalMar does not consider to be core businesses, including the production of herring, herring oil and fish meal. Greater focus on core business activities, farming, harvesting and processing of salmon.
Total volume harvested: 44,000 tonnes gutted weight. Kverva Holding AS sells 42.5 % of the company's shares to a limited number of Norwegian and international investors. Acquisition of three new licenses in Nordmøre. Acquisition of the remaining 51 % of the shares in Senja Sjøfarm AS, making SalMar sole owner of the company.
Total volume harvested: 64,000 tonnes gutted weight. SalMar shares floated on the Oslo Stock Exchange on 8 May 2007. Acquisition of Halsa Fiskeoppdrett AS (two licences) and Henden Fiskeoppdrett AS (two licences) in Møre & Romsdal. Acquisition of Arctic Salmon AS (four licences) in Nordreisa, Troms.
On 28 February 2016 the Norwegian Directorate of Fisheries awarded the first eight development licences to Ocean Farming AS, and thereby the SalMar Group, for the development and realisation of a fish farming concept based on offshore technology. The award recognises the substantial efforts which both our own employees and external centres of competence have made over the past four years to develop an entirely new equipment concept, which aims to introduce a new industrial standard to the aquaculture industry.
new development licence scheme has the qualities necessary to stimulate the Norwegian aquaculture industry to engage in costly innovation and technological development for increased sustainability to a far greater degree than before. Through this scheme, both the Norwegian government and parliament (Storting) have created an effective tool with which to strengthen an important growth sector for Norway – and the world. of seven years, but may be converted into ordinary pro-A sufficient number of development licences have now been granted to enable the construction of a full-scale pilot installation, and the advanced equipment associated with it, to commence within a short space of time. Our objective is to be in a position to transfer the first fish to the offshore installation in the summer of 2017. This will be no "walk in the park", but if successful, the project has a huge potential for the entire industry. In its notification letter, the directorate gives clear instructions about how the knowledge generated by the project shall, from the very outset, be shared, such that it benefits the entire
The development licences have been granted for a period duction licences before that time if their objectives and the criteria on which they were granted have been met. At the suggestion of Ocean Farming, and through dialogue with the directorate, final performance criteria and a milestone reporting framework have been drawn up. industry, as stipulated in the regulations. There has been an open, positive and constructive dialogue with the directorate in connection with their consideration of our application. The award confirms that the
This is a technical solution based on the best that the Norwegian aquaculture and offshore oil industries have to offer – a slack-anchored submersible facility, with a rigid structure capable of maintaining flotational stability in areas close to the open ocean with sea depths of 100-300 metres, where biological conditions are perfect for "fish-friendly" farming. The project is built up around tried and tested technologies, which are combined for optimal fish production.
All fish handling can be carried out on site, without the need for external boats or equipment. In other words, from the moment the smolt is transferred to the sea until it is ready for harvesting, the fish will remain at the farm. In addition, the facility is equipped with one sliding bulkhead and two fixed bulkheads, which allow it to be divided into three separate zones in which different fish-related operations can be carried out. Nozzles will also be installed on the sliding bulkhead, which will make it possible to clean the netting daily if desired. The facility is automated, thus avoiding many heavy, manual operations. On a day-to-day basis the facility will have an on-site crew of 2-4 people for operational monitoring/control. However, remote operation of the farm will also be possible. Analysis reinforces the view that the facility will be highly escape proof.
Global Maritime AS has carried out the facility's technical design/project specification (FEED). A model test performed by MARINTEK confirms its favourable behaviour under various challenging weather conditions. In addition, the design will be verified and quality assured by means of independent third-party audits, in accordance with standard oil industry practice.
This pilot facility will also be equipped specifically to carry out various R&D activities, relating to biological conditions and fish welfare. This will help to advance the development of the aquaculture industry as a whole, as well as provide opportunities for applied research and development in this field.
The ABC of
s
MARKET
HARVESTING
GROWTH
EGGS/FRY
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 incu bator kept at eight degrees Celsius.
After 25-30 days in the incubator the eggs have developed to the stage where the eyes of the salmon are clearly visible as two black dots inside the egg.
The egg hatches when the eggshell cracks open, liberating the baby fish (fry) inside. When it hatches the fry is attached to a yolk sac, which provides it with the sustenance it needs during its first few weeks of life. From now on the fish's growth and development will all depend on temperature.
When most of the yolk sac has been absorbed, the fry can be moved from the incubator into a fish tank. They are now ready for initial feeding. The water temperature is kept at 10-14 degrees Celsius, and the fry are exposed to dim lighting 24 hours a day. The initial feeding period lasts for six weeks. As they grow the fry are sorted and moved to larger tanks. Well ahead of their "smoltification" all the fish are vaccinated before being shipped by wellboat to the fish farm's marine net-pense.
The process whereby the juvenile fish transition from a life in freshwater to a sea-going existence is called smoltification. During this process the fish develop a silver sheen to their bellies, while their backs turn a blue-green colour. Their gills also change when the juvenile fish turns into a smolt.
The farming of fish for human consumption takes place in net-pens, large enclosed nets suspended in the sea by flo tation devices. In addition to a solid anchorage, net-pens require regular cleaning and adequate measures to prevent the farmed fish from escaping. Growth in the net-pens is affected by feeding, light and water quality. Here too the fish are sorted as they develop and grow.
A year after transfer to the marine net-pens, the first fish are ready for harvesting. The fish are transported live by well boat to the processing plant. There the fish are kept in hold ing pens, before being carefully transferred to the plant itself. The fish are killed and bled out using high tech equipment, and always in accordance with applicable public regulations. After harvesting the salmon is subject to various degrees of processing.
The fish is sold either as whole gutted salmon (fresh or fro zen), fillets, in individual portions or a wide range of other products, which are distributed to markets around the world.
No. of production facilities:
• 1 onshore facility for the production of roe
25.6 million smolt, 29 million roe and 2.8 million lumpfish in 2015.
The facilities are distributed from Senja in the north to Sunnmøre in the south. Two of the facilities, Straumsnes Settefisk and Rauma Sætre AS, produce organic smolt, while the other facilities produce conventional smolt. Smolt vary in weight from 60-250 g.
The segment employs 75 people, many of whom are extremely experienced. A large proportion of the workforce are college-educated or have certificates of completed apprenticeship. The segment's staff are highly competent with regard to both day-to-day operations and development work/projects. The production of smolt is currently switching to the use of recirculated water. SalMar currently has this in place at its Follafoss facilities. The new capacity being built will employ recirculated water technology.
The segment has started work to expand two of its facilities:
The success of SalMar's efforts to enhance the quality of the smolt it delivers is reflected in the steadily rising survival rate for smolt transferred to the sea.
SalMar's lumpfish production unit is located in Langstein. The facility currently has the capacity to produce 1.4 million vaccinated lumpfish. This capacity will gradually be increased through 2016 to reach around 3 million vaccinated lumpfish in 2017.
Located at Vågstranda in Romsdal, SalMar's onshore salmon roe production facility has the capacity to produce 60 million roe each year. However, current output stands at around 25 million roe. SalMar has its own breeding material: the Rauma stock.
SalMar Northern Norway currently holds 32 licences for the production of farmed salmon, as well as four jointly operated licences, and is the largest aquaculture enterprise in Troms and Finnmark. SalMar's Fish Farming Northern Norway segment has operations in ten districts, stretching from Harstad in southern Troms to Sør-Varanger in Finnmark. Around 75 per cent of the segment's fish farms are located in Troms, while Finnmark will account for an increasing percentage as time goes on. In Northern Norway, SalMar harvests most of its output locally, and purchases harvesting services for a substantial portion of its volume in Skjervøy, Troms. The segment's administration is located at Finnsnes in Lenvik.
The segment currently has around 133 permanent employees, and plans to further expand its workforce in 2016 due to increased activity and output in the region. Fish Farming Northern Norway has many qualified and highly experienced employees. Moving forward, the segment will continue to concentrate on R&D and increasing its fish farming expertise through a demonstration aquaculture facility, for which a licence has been granted.
The company's hatchery, which is located in Gjørvika, in Senja, has halted production while a new facility with the capacity to produce 15 million smolt is under construction. The new smolt facility will adds a further 12,000 m2 to the facility, bringing its total area to 14,500 m2, and will base its production on the use of recirculated water. When the facility is completed at the close of 2016, it will have the equivalent of 14 full-time employees.
In Northern Norway, SalMar has established a 'feed centre' at Lysnes in Lenvik. This provides joint surveillance and control of all the segment's sites from South Troms to Finnmark.
It is possible to produce more salmon in Norway, and Northern Norway has a strong potential for further growth. This region faces fewer challenges with respect to disease and salmon lice, and has excellent environmental conditions for sustainable production. The expansion of our smolt production in Senja is an important element in the segment's future growth.
(Trøndelag and Nordmøre) No. of production licences: 52 Harvested volume in 2015: 80,500 tonnes gutted weight
Central Norway is the region in which the SalMar Group first established its business. Initially this was based on assets acquired from a company that had gone into liquidation, and which had one licence for the production of farmed salmon and a harvesting and processing plant in Frøya that was designed to handle white fish. Since then both the Group as a whole and the segment have gone from strength to strength. Today SalMar's Fish Farming Central Norway segment controls 52 production licences: 34 in Trøndelag and 18 in Nordmøre. In addition, the segment operates several R&D licences, three of which in association with the research firm ACE (Sintef). The purpose of these licences is to develop more sustainable technologies. The segment also cooperates with VESO on the operation of two licences associated with improved fish health. SalMar Farming acquired seven licences in the Green B round of licence awards in 2014. These went into operation in July of that year. With effect from 1 January 2016, SalMar Organic was merged into SalMar Farming AS.
The bulk of SalMar's marine-phase fish farming operations are organised in SalMar Farming AS, and are located in Central Norway, stretching from Nordmøre to the Namdal coast. Fish Farming Central Norway is divided into three regions, south (Nordmøre), central (Frøya – Hitra) and north (Fosen – Nord-Trøndelag). At the close of 2015 the segment employed some 250 people. The environmental conditions for salmon farming in this region are extremely good, with favourable sea temperatures all year round thanks to the Gulf Stream, a high water replacement rate and plenty of suitable locations.
SalMar's fish farms focus on cost-effective operation and maintain a high ethical standard with respect to animal husbandry. In order to contribute to SalMar reaching its goal of being the most cost-effective producer of farmed salmon, there is a continuous focus on sub-goals, such as achieving the fastest possible growth, with the lowest feed factor. The company was quick to introduce its own standards and 'best practices' in order to secure increased efficiency. This involves, among other things, concentrating marine-phase production at large, sustainable facilities with the correct capacity.
(Møre & Romsdal) No. of licences: 16
Harvested volume in 2014: 16,400 tonnes gutted weight The Rauma segment operates 16 marine-phase production licences. These include conventional, organic and broodfish licences. The Rauma segment has operations in eight districts. Although the bulk of its fish farms are located in the Romsdal region, it also has sites in several districts in Sunnmøre. The segment is administered from offices located in Sjøholt, and employs a total of 75 people on land and at sea.
SalMar is currently the world's largest producer of organic farmed salmon. Organic farmed salmon used to be produced in both Trøndelag and Romsdal, but with effect from 2013 all production activities were brought together in Fish Farming Rauma. In 2015 the segment harvested 16,400 tonnes (gutted weight) of salmon at Vikenco AS in Aukra. Organic salmon accounted for just over 55 per cent of the segment's harvested volume in 2015. The proportion of organic salmon is expected to rise in the time ahead.
Fish Farming Rauma operates two R&D licences. One of the projects is being undertaken in close cooperation with the research institution Møreforskning, Ålesund University College and the Institute of Marine Research. The objective is to improve the welfare of the cleaner fish used to rid salmon of lice. The segment is also working closely with Ålesund University College to resolve challenges associated with organic fish farming, and the college's R&D licence is operated alongside the segment's own licences. An R&D collaboration with Akvaforsk Genetic Centre got underway in 2015. Including the R&D licences, Fish Farming Rauma operates a total of 18 licences.
The Sales and Processing segment administers the Group's sales activities and onshore processing facilities. The Sales department handles the sale of approx. 150,000 tonnes of salmon and other fish-based products. Sales are focused in the markets of Europe, Asia and the USA. The segment distributes salmon to more than 40 different countries.
The segment also administers the Group's industrial production capacity. InnovaMar is the SalMar Group's main salmon harvesting and processing facility, and is located in Frøya. Construction of InnovaMar was completed in 2010. It is an ultra-modern building covering some 17,500 m2, with an advanced equipment park for harvesting and filleting. InnovaMar has the capacity to harvest 70,000 tonnes of salmon a year in one shift, of which a significant portion goes on to further processing before being shipped to customers and consumers worldwide. Through innovative use of production technology, the quality of the final product is enhanced, costs are reduced and the working environment for staff is improved. Around 128,000 tonnes of salmon was harvested at InnovaMar in 2015. Through our part-ownership of Vikenco AS, we facilitate the harvesting of fish from the southern part of Central Norway. In 2015 Vikenco and InnovaMar together produced around 32,000 tonnes of processed products, measured by product weight. Fish produced by SalMar's Fish Farming Northern Norway segment is harvested largely by Lerøy Aurora AS under an industrial cooperation agreement.
Today, SalMar is one of the world's foremost producers of farmed salmon. Throughout its history company growth has gone hand in hand with outstanding financial performance. The aquaculture industry is developing rapidly, and the potential for further growth is enormous. However, at SalMar we are in no doubt that any growth must be sustainable: environmentally, socially and financially.
In 2014, to reinforce our focus on the elements that have made SalMar the company it is today, we adopted a new vision that will henceforth guide our steps;
«Passion for Salmon» Although SalMar continues to pursue its stated aim of cost leadership, it is moving from a focus on outcomes to a focus on performance. We aim for excellence at all levels and in all aspects of our operation.
The new vision will underpin all activities and all actions within SalMar. All decisions relating to production will be made on the basis of our passion for salmon. The fish will be farmed in conditions most conducive to their wellbeing. We believe that the best biological results will pave the way for the best financial results, and thus safeguard our position as the most cost-effective producer of farmed salmon in the world.
This new vision and ambition depend on the existence of a winning culture throughout the organisation. The source of SalMar's corporate culture and the company's cultural tenets is our shared passion for salmon. These tenets underpin our vision and describe the attitudes and conduct expected of all employees.
SalMar's corporate culture is constantly evolving, and builds on the success factors that have been cultivated within the company since its inception in 1991. Although the company's culture is affected by both external and internal framework conditions, it remains firmly anchored in a few overarching principles, in particular a strong focus on good husbandry, operational efficiency and safe food production.
To be the most cost-effective salmon producer demands continuous improvement at all stages of the production process. This tenet is about daring to step into the unknown and develop a culture of winning, where performance is both measured and celebrated.
This means that we will meet the expectations of others and demand high standards of each other, in accordance with our own SalMar standards. There are many 'suppliers' and 'customers' in the production chain, and it is only by treating each other with mutual respect that we will succeed.
Everyone who works for SalMar, regardless of position or place, has a duty to help come up with solutions and contribute to improvement processes. We will challenge existing practices and systems, we will jointly implement solutions, and we will talk to, not about, each other.
Although SalMar as a whole numbers more than 1000 people, it is vital to develop personal attitudes and an understanding that what happens is up to me and my function. It is therefore vital that everyone is familiar with our vision, objectives and values, and that we support each other for our common passion for salmon, and on our way to being at all times the lowest-cost supplier of farmed salmon.
To succeed as a team we must also develop the right attitudes towards, as well as respect and care for salmon, co-workers, customers, business associates and the environment. We must think for ourselves but act with loyalty, and always bear in mind that we are engaged in food production.
High ethical and moral standards form the basis for developing an even stronger focus on safeguarding the environment that we work in day to day, and that we are the temporary custodians of. We shall not deplete the environment, but ensure that we pass it on unimpaired to the next generation. This is our shared social responsibility, and everything we do must stand up to public scrutiny both today and in the future.
SalMar intends to secure long-term profitability and growth by operating all aspects of its fish farming and processing activities in a sustainable manner, and by acting as a responsible corporate citizen. For SalMar, sustainability means maintaining high ethical standards and helping to further raise awareness of the environment in which we work every day. We shall protect the environment and ensure it is managed in a way that will benefit future generations.
SalMar has a presence in local communities up and down the Norwegian coast, and therefore has an interest in the continuing welfare of many small towns and rural districts. For our employees, it is important that the local communities to which they belong have the necessary infrastructure and opportunities for an active social life outside of work. For SalMar, it is crucial that the Group is able to operate at sites affording good growing conditions for its fish stocks. SalMar is actively engaged in several local projects. It is also important for SalMar to have a presence in local arenas for the exchange of views and information, as well as participate in planning processes.
Salmon farming must still be considered a young industry, and it is important to ensure that local decision-makers and the general public are well informed about its operations and development plans. By actively engaging in industry organisations and the public debate, SalMar contributes to important processes for sustainable development in Norway.
The Group is extremely aware of the diverse nature of its social responsibilities: as an employer, an industrial processor, a producer of healthy food, a user of the natural environment, and as a custodian of financial and intellectual capital. We strive to fulfil our corporate social responsibilities, ensure that everything we do bears public scrutiny, and minimise the impact of our operations on the environment.
In 2015 SalMar continued to publish a separate sustainability report according to the principles of the Global Reporting Initiative. For a more complete account of HSE, sustainability and social responsibility at SalMar, please see this report. The following text must therefore be seen as an overarching summary of selected issues discussed in that report, which is available in its entirety from SalMar's website www.salmar.no.
SalMar's code of conduct and social responsibility has been made known to all employees. The code of conduct, which covers, among other things, SalMar's policies on business ethics and corruption, the working environment and community relations, is intended to contribute towards the development of a healthy corporate culture and uphold the company's integrity. Internal training programmes also highlight how employees can report wrongdoing or other causes for concern. A high ethical standard in all aspects of our business is an absolute requirement, and constitutes the very foundation of SalMar's HSE strategy.
A set of corporate tenets has been drawn up. These tenets describe desired behaviours and provide a shared platform for the actions of all employees. It is the workforce that embodies and develops SalMar's corporate culture. The employees' commitment and positive attitudes have always played a key role in SalMar's success. These issues are discussed at the SalMar School's annual seminars. For further details, please see page 5 of SalMar's sustainability report for 2015.
The code of conduct and corporate tenets may be obtained from SalMar's website www.salmar.no.
All new employees receive HSE training through induction courses, operational seminars and the SalMar School.
In 2015 we worked to further develop our corporate governance platform (called EQS). The system is specially adapted to SalMar's needs, and we have focused on creating an effective and user-friendly reporting solution. The system has now become an important tool in the day-to-day management of the company, and is a useful aid in the monitoring and management of risk. We will continue to develop this platform in 2016 to include additional opportunities for performance management and learning across the different units. For further details, please see page 21 of SalMar's sustainability report for 2015.
SalMar's new employees receive HSE training though initiatives such as induction courses, operational seminars and the SalMar School. All employees have received training in how to report potential wrongdoing or other causes for concern, and know that internal whistleblowers are protected from any reprisals. The procedure for such notification is described in the corporate governance system, which is available to all employees.
The SalMar School comprises a series of workshops for all employees, which focus on relevant work-related topics as well as business ethics and attitudes. The SalMar School encourages and develops the entire workforce. By revitalising the SalMar School, the Group wishes to ensure the exchange of experience and knowledge between the various divisions.
The risks associated with the various day-to-day operational activities at SalMar mean that training and the correct competences are vital. Training is given both on the job and in the form of external courses. Day-to-day follow-up and professional development within the individual's team of co-workers are nevertheless the most important sources of personal growth. For further details, please see page 21 of SalMar's sustainability report for 2015.
SalMar intends to be a safe place to work. The company works systematically with risk assessment and training to safeguard its employees. For further details, please see page 21 of SalMar's sustainability report for 2015.
In addition to being measured and audited in accordance with statutory regulations and the sustainability requirements of third parties and customers, SalMar has developed its own 'SalMar Standard' performance criteria for the various parts of its operation. The 'SalMar Standard' designation is awarded to those departments which score highly in internal audits. For further details, please see page 19 of SalMar's sustainability report for 2015 .
SalMar fully supports and respects internationally recognised human rights by acting responsibly in all areas of its business. This means that the company respects labour rights, opposes any form of child labour, forced labour or discrimination, avoids corruption and is considerate of the environment.
SalMar's HSE activities are based on our values and strategic priorities. SalMar has drawn up a set of overarching objectives, with associated activities and action plans. On the basis of these overarching objectives, each individual division and department has drawn up its own local sub-goals. Management is committed to realising the goals that have been set.
In 2015 we continued to work on the development of an overarching platform for corporate governance. The system is specially adapted to SalMar's needs, and we have focused on creating a user-friendly solution with a clear reporting function that is used for evaluation in the appropriate arenas. Emphasis is placed on competence enhancement, surveillance and control of key figures and the evaluation of non-conformances. The system is an important tool in the day-to-day management of the company, and is a useful aid in the monitoring and management of risk.
Risk assessments are carried out in accordance with the Norwegian standard NS 5814, and result in the drawing up of contingency and action plans that are regularly reviewed. Senior personnel have environmental responsibility as part of their job descriptions, and HSE rules and regulations have been drawn up for all employees. All non-conformances are reported, dealt with and evaluated on an ongoing basis. Activities relating to the environment are followed up through systematic weekly and monthly reviews by SalMar's management teams. The issue of sustainability, with particular emphasis on the working environment and human safety, is tabled for discussion annually by SalMar ASA's board of directors.
Sickness absence Sickness absence has remained relatively stable in recent years. The sickness absence rate in 2015 came to 7.47 per cent, compared with 5.79 per cent in 2014 and 5.00 per cent in 2013. The processing sector drives up the average, but here too the sickness absence rate is on a par with the industry as a whole. Short-term sickness absence in 2015 totalled 2.33 per cent, compared with 2.19 per cent in 2014 and 2.12 per cent in 2013. Long-term sickness absence totalled 5.14 per cent, compared with 3.60 per cent in 2014 and 2.88 per cent in 2013. The ASC standard is extremely demanding with regard to environmental burden, working environment, communication with stakeholders and transparency. In some cases the requirements are stricter than those laid down in Norwegian law. The ASC standard is difficult to achieve, since it requires substantial resources to be devoted to preparation and a considerable focus on the details. Openness with regard to performance is an important part of the standard, and information is presented on an ongoing basis on our website www.salmar.no. This standard is helping SalMar to take a fresh look at how we do things and stretch ourselves still further to live up to one of our basic tenets: Sustainability in everything we do. For further details, see pages 29 in Sal-
In addition to risk assessments, evaluations and the thorough analysis of incidents and non-conformances, employee training, internal auditors, safety inspections and seminars for safety representatives are important measures to increase safety in the workplace. Internal consultants are used actively to further raise the quality of the company's improvement efforts.
Systematic efforts are being made to implement preventive Mar's sustainability report for 2015.
measures and, where necessary, adapt workplaces and workloads to the needs of individual employees.
The Group has published clear policies with respect to diversity and equality in its code of conduct. SalMar accepts no discrimination of employees, shareholders, board members, customers or suppliers on the grounds of ethnicity, nationality, age, gender or religion. Respect for the individual is the cornerstone of the company's policies. For further details, please see page 21 of SalMar's sustainability report for 2015.
SalMar accepts no forms of corruption. No SalMar employee shall, directly or indirectly, offer, promise, give or receive any bribe, unlawful or inappropriate benefit or remuneration in order to achieve advantage for themselves or the company. As part of its anti-corruption measures, SalMar has adopted guidelines with respect to gifts. To date, SalMar has not been accused of or involved in any cases relating to any form of corruption or bribery. The board and management are not aware of any violations of the company's code of conduct in this respect.
SalMar works systematically to avoid having an undesirable impact on its surroundings. This includes the day-today actions of its employees, involvement in research and development, as well as collaboration with government and regulatory authorities, interest groups, other aquaculture companies and suppliers of goods and services. For further details, please see pages 18-27 in SalMar's sustainability report for 2015.
SalMar is currently working to certify its sites in accordance with the ASC standard, which is considered the most stringent sustainability standard in the world. The main objective of the ASC standard is to ensure transparency, a reduced carbon footprint and compliance with corporate social responsibilities, as well as provide added value to the companies certified. So far, SalMar has achieved certification of eight sights, while four new sites are working towards certification in the winter/spring of 2016.
SalMar's board of directors has overall responsibility for ensuring that the company has adequate corporate gov ernance. The company's board and management perform a thorough annual assessment of its principles for corporate governance.
SalMar is a Norwegian public limited company listed on the Oslo Stock Exchange. The company is subject to Section 3-3b of the Norwegian Accounting Act as well as the Oslo Stock Exchange's requirements for an annual statement of its principles and practices with respect to corporate govern ance. The Norwegian Corporate Governance Board (NUES) has drawn up a Norwegian Code of Practice for Corporate Governance (the "code of practice"). SalMar complies with the current code of practice, published 30 October 2014. The code of practice may be found at www.nues.no.
Application of the code of practice is based on the 'comply or explain' principle. In other words, companies must comply with the individual provisions of the code or explain why they have not done so.
The company issues a comprehensive annual statement of its principles for corporate governance in its annual report, and this information is available from www.salmar.no. The statement describes how SalMar has conducted itself with respect to the code of practice in 2015.
SalMar deviated from the code of practice with respect to
one chapter in 2015: • Senior executives on the board (Chapter 8).
SalMar's core values are based on such principles as equality, quality, care for the environment, focus on work tasks and continuous improvement. The core values are well embed ded in the day-to-day operation of the business. Through the SalMar School and day-to-day exposure to SalMar's corporate and performance culture, all employees are given encourage ment and opportunities for development. The SalMar School was set up in 2002 and has been further developed each year since then. The SalMar School has been important for the Group's strong corporate culture. For more information on the SalMar culture, please see the annual report and the company's website www.salmar.no.
As at 31 December 2015, the company's equity totalled NOK 5,227 million, which corresponds to an equity ratio of 47.8 per cent. The board considers SalMar's equity to be adequate in relation to the company's objectives, strategy and risk profile.
Based on the year-end financial results for 2015, the board has proposed payment of a dividend amounting to NOK 10 per share. In terms of its financial performance, 2015 was a satisfactory year for SalMar. The board considers SalMar's financial position to be extremely sound, and the company's financial capacity for further growth is deemed to be strong.
Authorisations granted to the board are normally time lim ited, and are valid only up until the next AGM.
The AGM of 2 June 2015 granted the board two authorisa tions, one to increase the company's share capital and one to buy back its own (treasury) shares. Both authorisations were extensions of authorisations granted by the AGM in 2014, and, in line with the Norwegian code of practice, they were considered separately.
The first authorisation allowed the board to increase the company's share capital by up to NOK 2,829,667.5 through the issue of up to 11,318,670 shares to finance investments and the acquisition of businesses through cash issues and contributions in kind.
The second authorisation allowed the board acquire treasury shares up to a maximum of 10 per cent of applicable share capital: in other words, up to 10,029,999 treasury shares, with a total face value of NOK 2,507,499.75. The authorisation could be used to purchase company shares in connection with the share-based incentive scheme for senior management and as a means of returning value to existing shareholders.
It follows from the purpose of both authorisations that the board may need to waive existing shareholders' preference rights, which is permitted under the terms of the authorisa tions concerned.
Both board authorisations are valid up until the next AGM, which will be held on 7 June 2016.
SalMar has drawn up a code of conduct and social responsibil ity, whose purpose is to safeguard and develop the compa ny's values, create a healthy corporate culture and uphold the company's integrity. The code of conduct is also meant to be a tool for self-assessment and for the further development of the company's identity. All employees of the company are bound to comply with the ethical guidelines laid down in the code of conduct. The reporting of any wrongdoing or other causes for concern is covered by specific procedures, which also allow employees to report anonymously through an external channel. The code of conduct is available from the company's website www.salmar.no.
SalMar intends to provide shareholders with a competitive return on invested capital, taking into consideration the com pany's risk profile. Returns will be achieved through a combi nation of positive share price development and the payment of a dividend. The company plans to pay out surplus liquidity (funds not necessary for the company's day-to-day opera tions) in the form of a dividend or by means of a capital reduc tion with distribution to the shareholders. The company will at all times consider whether the available liquidity should be used for new investments or the repayment of debt instead of being paid out as dividend. Provided the Annual General Meeting (AGM) approves, the aim is to make annual payments of dividend. The company will also consider the buyback of treasury shares within the authorisation limits granted to the board by the AGM. As at 31 December 2015 SalMar ASA owned 1.18 million treasury shares, which accounts for 1.04 per cent of the company's registered share capital. Transactions involving treasury shares are undertaken on the stock exchange or otherwise at the listed price. In the event of not immaterial transactions with related par ties, the company shall make use of valuations provided by an independent third party. In the event of capital increases based on an authorisation issued by a general meeting of shareholders, where the ex isting shareholders' rights will be waived, the reason for this will be provided in a public announcement in connection with the capital increase.
SalMar has a presence in many local communities. The Group is therefore extremely aware of the diverse nature of its so cial responsibilities: as an employer, an industrial processor, a producer of healthy food, as a custodian of financial and intellectual capital, and – not least- as a user of the natural environment. Increased biological control is one of the com pany's most important focus areas, and is a material prereq uisite for long-term success. The company is, among other things, working actively to safeguard fish welfare and pre vent salmon from escaping.
One of the company's most important tenets is 'We care'. This permeates the SalMar culture, and ensures a high degree of awareness among employees, both internally and externally, in the areas in which the company operates.
Deviations from the code of practice: None
SalMar is one of the world's largest producers of farmed salmon, and owns 100 licences for marine production of At lantic salmon in Norway. In addition, SalMar owns 50 per cent of Norskott Havbruk AS, which in turn owns 100 per cent of Scottish Sea Farms Ltd, the UK's second largest producer of salmon, with a capacity of 30,000 tonnes of harvested fish. The company has a substantial secondary processing busi ness, which is co-located with its headquarters in Frøya.
SalMar ASA's objectives are defined in Article 2 of its articles of association:
"The objective of the company is fish farming, the processing and trading of all types of fish and shellfish, and other finan cial activities related thereto. The company may, in accord ance with directives from the relevant authorities, undertake general investment activities, including participation in other companies with similar or related objectives."
SalMar's board of directors has drawn up clear objectives and strategies for the Group. Each business area has developed its own goals in line with these, and strategic priorities have been defined. Within the framework of the above article, Sal - Mar is currently engaged in broodfish and smolt production, marine-phase farming, harvesting, processing and sale of farmed salmon and white fish.
The company's objectives and main strategies are further discussed in the annual report and can be found on the com pany's website www.salmar.no.
Deviations from the code of practice: None
SalMar has only one class of shares and all shares have equal rights. Each share has a face value of NOK 0.25 and carries one vote.
SalMar's code of conduct sets out what is required of employees with respect to loyalty, conflicts of interest, confi dentiality and guidelines for trading in the company's shares. The code of conduct states that all employees must notify the board if they, directly or indirectly, have a material inter est in any agreement entered into by the company. Board members also have a duty to comply with the company's code of conduct.
The regulations governing the board's working practices provide guidelines for how individual directors and the CEO should conduct themselves with respect to matters in which they may have a personal interest. Among them is the stipu lation that each director must make a conscious assessment of his/her own impartiality, and inform the board of any pos sible conflict of interest.
Any transactions with related parties are discussed in Note 29 to the 2015 financial statements.
Deviations from the code of practice: None
The company's shares are freely transferable on the Oslo Stock Exchange, and its articles of association do not contain any restrictions on the shares' transferability. Nor are there any restrictions on the buying and selling of shares by board members and members of company management, as long as the regulations governing insider trading are complied with.
Deviations from the code of practice: None
The company's highest decision-making body is the General Meeting of Shareholders.
General meetings of shareholders are open for participation by all shareholders. Pursuant to Article 7 of the company's articles of association, the Annual General Meeting must
Corporate governance at SalMar shall be based on the following main principles:
be held by the end of June each year in Oslo, Trondheim or Kverva in the municipality of Frøya.
The 2016 AGM will be held on 7 June at the company's head office in Frøya.
An invitation to attend the AGM or an EGM will be issued no later than 21 days prior to the date of the meeting.
In accordance with the company's articles of association, documents relating to matters to be addressed at a general meeting of shareholders may be made available on SalMar ASA's website. The same applies to documents which by law must be included in or attached to the invitation to attend the general meeting. If the documents are made available in this way, the statutory requirement with respect to distribution to shareholders is not applicable. A shareholder may nevertheless ask to be sent documents relating to matters to be discussed at a general meeting by post. Case documents must contain all the documentation necessary to enable shareholders to take a standpoint on all matters to be addressed.
The deadline for notification of shareholders' intention to attend a general meeting is stipulated by the board of directors in the invitation thereto, no less than five days prior to the date of the meeting. Shareholders may send notification of their attendance, using the form provided, by post or email to the company's account manager Nordea Bank Norge AS, or via the company's website www.salmar.no.
Shareholders are entitled to make proposals and cast their votes either in person or through a proxy, including a proxy appointed by the company. The proxy form also enables shareholders to grant a proxy vote for each individual agenda item.
The Board of Directors determines the agenda for the general meeting, and the main issues to be dealt with by the AGM are regulated by Article 9 of the company's articles of association.
The Board of Directors, Nomination Committee and the company's auditor will be represented at the AGM, which will normally be chaired by the Board Chair. In the event of any disagreement on individual agenda items where the Board Chair belongs to one of the factions, or for some other reason is not deemed to be impartial, a different person will be selected to chair the meeting in order to ensure independence with respect to the matters concerned.
The company will publish the minutes of general meetings of shareholders in accordance with stock exchange regulations.
Deviations from the code of practice: None
Article 8 of the company's articles of association stipulates that the Nomination Committee shall comprise a total of three people, who shall be shareholders or shareholders' representatives. The Nomination Committee's composition shall
All shareholders are entitled to propose candidates for the board or other elected offices to the Nomination Committee. Such proposals must be submitted to the Nomination Committee no less than six weeks prior to the company's AGM. All proposals shall be sent by email to the Nomination Committee's chair. Contact details are available from the company's website www.salmar.no.
Deviations from the code of practice: None
The company does not have a Corporate Assembly.
Pursuant to Article 5 of SalMar's articles of association, the board of directors shall comprise five to nine members, to be elected by the AGM. The Board Chair is elected by the AGM, while the Vice-Chair is elected by the board itself. The company's current board is made up of seven members, including two employee representative. Three of the company's directors are women, including one female employee representative. Women therefore comprise 43 per cent of the board, which is in line with the provisions of the Public Limited Companies Act.
The regulations governing the work of the Nomination Committee state that emphasis shall be placed on ensuring that members of the board have the necessary competence to carry out an independent assessment of the matters presented to it by management and of the company's business activities. Emphasis shall also be placed on ensuring that there is a reasonable gender balance and that directors are independent with respect to the company. The Nomination Committee's recommendation shall meet the requirements relating to board composition stipulated by applicable legislation and the regulations of the Oslo Stock Exchange. Board members are elected for a term of two years and may be re-elected. An overview of the individual directors' competence and background is available from the company's website www.salmar.no. An overview of the individual directors' shareholdings in SalMar can be found in the 2015 annual report.
be such that the interests of shareholders as a community shall be upheld, and the majority of committee members shall be independent of management and the board. The members of the Nomination Committee, including its chair, are elected by the AGM for a term of two years. Members may be re-elected. To ensure continuity, members' terms of office shall not coincide. The remuneration payable to members of the Nomination Committee is determined by the AGM. A set of regulations governing the work of the Nomination Committee was adopted at the board meeting of 21 March 2007 and updated at the AGM in 2014.
As at 31 December 2015, the Nomination Committee comprises the following:
The Nomination Committee shall make a recommendation to the AGM with respect to candidates for election to the board of directors and Nomination Committee, as well as propose the remuneration payable to the members of the board and the Nomination Committee. In its work, the Nomination Committee shall take into consideration relevant statutory requirements with respect to the composition of the company's governing bodies, as well as principles for corporate governance laid down in the Norwegian Code of Practice for Corporate Governance drawn up by NUES. Proposals for members of the board and Nomination Committee should safeguard the shareholder community's interests and the company's need for competence, capacity and diversity. To achieve this the Nomination Committee may contact shareholders and company directors.
The Nomination Committee draws up criteria for the selection of candidates for the board and Nomination Committee, in which both sexes should be represented. The Nomination Committee should, over time, balance the requirements for continuity and renewal in the individual governing body. Relevant candidates must be asked whether they are willing to undertake the office of director or deputy director.
The committee should base its recommendations with respect to the remuneration payable on (a) information about the size of the remuneration paid to elected officers in other comparable companies, and (b) on the scope of work and the amount of effort the elected officers are expected to devote to the task on behalf of the company.
SalMar's board of directors is composed such that it is able to act independently of any special interests. Board Chair Bjørn Flatgård also chairs the board of Kverva AS, and is therefore not deemed to be independent. The remaining directors, with the exception of Gustav Witzøe, who founded SalMar, are deemed to be independent of senior executives, material business associates and the company's largest shareholders. In matters of material importance in which the Board Chair is, or has been, actively engaged, another director is appointed to chair the board's deliberations. There have been two such matters during 2015. The board shall approve the Group's plans and budgets. Proposals relating to targets, strategies and budgets are drawn up and presented by management. Strategy is normally discussed during the autumn, ahead of the Group's budget process. Within the area of strategy, the board shall play an active role in setting management's course, particularly with regard to organisational restructuring and/or operational changes. The board meets as often as necessary to perform its duties.
The Nomination Committee's recommendation to the AGM must be published in good time, so that it can be communicated to the shareholders before the meeting takes place. The recommendation shall accompany the invitation to attend the AGM, no later than 21 days before the meeting takes place. The committee's recommendation shall contain information about the candidates' independence and competence, including age, education and work experience. If relevant, notice shall also be given about how long the candidate has been an elected officer of the company, any assignments for the company, as well as material assignments for other group companies that may be of significance.
| No. of board | ||||
|---|---|---|---|---|
| Year | Current meetings | |||
| first | term | attended | ||
| Board members Pos. | elected ends | in 2015 | ||
| Bjørn Flatgård | BC | 2002 | 2017 | 9 of 10 |
| Gustav Witzøe | Director 1991 | 2017 | 7 of 10 | |
| Kjell A. Storeide | Director 2008 | 2016 | 10 of 10 | |
| Tove Nedreberg | Director 2012 | 2016 | 9 of 10 | |
| Bente Rathe* | Director 2015 | 2017 | 6 of 10 | |
| Geir Berg* | ER | 2015 | 2017 | 5 of 10 |
| M. G. Sandberg* | ER | 2015 | 2017 | 6 of 10 |
| Merethe H. Holte** Director 2013 | 2015 | 4 of 10 | ||
| Pål Georg Storø** ER | 2013 | 2015 | 4 of 10 | |
| Hanne Tobiassen** ER | 2013 | 2015 | 4 of 10 | |
* Entered June 2015 ** Left June 2015
Deviations from the code of practice: Pursuant to the Norwegian Code of Practice for Corporate Governance, senior executives should not be members of the board of directors. Board member Gustav Witzøe is the founder of SalMar and a member of group management. However, the board considers that it is in the company's interests to avail itself of Gustav Witzøe's extensive experience and considerable expertise, both as a senior executive and as a director. Deviation from the code of practice on this point has therefore been deemed acceptable. Gustav Witzøe is also the company's largest shareholder through his company Kverva AS, which owns 53.4 per cent of SalMar's shares.
The board has overall responsibility for the management of the Group and the supervision of its day-to-day management and business activities. The work of the board is governed by a set of regulations which describe the board's responsibilities, tasks and administrative procedures. Furthermore, the board determines the Group's overall objectives and strategy, including the overall composition of the Group's portfolio and the business strategies of the individual business unit. The board has also prepared a set of instructions for the executive management team that clarifies its duties, lines of authority and responsibilities.
In 2015 the board held ten meetings, of which two were by telephone. The overall attendance rate at board meetings was 91 per cent. See also the table above for further details.
The board makes an annual assessment of its own work and competence. An evaluation of this kind was last conducted in February 2016.
Passion for Salmon
Pursuant to the Public Limited Companies Act, SalMar has a board-appointed Audit Committee. The committee's main tasks are to monitor the Group's internal control systems, ensure that the auditor is independent and that the financial statements reflect the Group's performance and position in accordance with generally accepted accounting practice. The Audit Committee held four meetings in 2015, with an overall attendance rate of 100 per cent.
As at 31 December 2015, the Audit Committee comprises the following:
Deviations from the code of practice: None
The board is responsible for ensuring that the company's risk management and internal control systems are adequate in relation to the regulations governing the business. The company's systems and procedures for risk management and internal control are intended to ensure efficient operations, timely and correct financial reporting, as well as compliance with the legislation and regulations to which the company is subject. Specific targets for the internal control effort within the company are drawn up, and are revised annually by Sal - Mar's group management.
The most important risk factor for SalMar is the biological performance of its hatchery and fish farming facilities. The company has an internal control scheme that involves sys tematic planning, organisation, performance and evaluation of the Group's activities in accordance with both the regula tory framework and internal ambitions with respect to con tinuous improvement. The company has, among other things, drawn up shared goals for its internal control activities with respect to the working environment and personal safety, the prevention of fish escapes, fish welfare, pollution, food safety and water resources. It is the CEO's responsibility to ensure that the company operates in accordance with all rel evant statutes and guidelines associated with operation of the Group's divisions. This also includes acquisition, operation and maintenance of fish farming equipment, as well as the handling of the company's biomass.
Internal control of financial reporting is achieved through day-to-day follow-up by management and process owners, and supervision by the Audit Committee. Non-conformances and improvement opportunities are followed up and correc tive measures implemented. Financial risk is managed by a central unit at head office, and, where appropriate, consid eration is given to the use of financial hedging instruments.
Follow-up and control of compliance with the company's val ues, code of conduct and guidelines for social responsibility is carried out by the line organisation and is part of day-today operations. Material risks and any changes in them are discussed at fortnightly management meetings.
The board will, through the Audit Committee, conduct a comprehensive annual review of the Group's financial and risk management systems. Key risk factors for the company
Communication with shareholders, investors and analysts is a high priority for SalMar. The objective is to ensure that the financial markets and shareholders receive correct and timely information, thus providing the soundest possible founda tion for a valuation of the company. All market players shall have access to the same information, and all information is published in both Norwegian and English. All notices sent to the stock exchange are made available on the company's website and at www.newsweb.no.
SalMar seeks to comply with the Oslo Stock Exchange's rec ommendations on the reporting of information to investors on companies' websites, last updated on 10 June 2014. The company has, in line with the Norwegian Code of Practice for Corporate Governance, also adopted an 'IR Policy', which is available from the company's website. The CEO, CFO and IRcontact are responsible for communications with shareholders in the period between general meetings.
The company holds open investor presentations in associa tion with the publication of its year-end and interim results. These presentations are open to all, and provide an overview of the Group's operational and financial performance in the previ ous quarter, as well as an overview of the general market out look and company's own future prospects. These presentations are also made available on the company's website.
The company publishes its provisional year-end accounts by the end of February each year, and a complete set of financial statements, including an annual report, is made available at the latest three weeks before the date of the AGM, and no later than the end of April each year. The company's interim results are published no more than 60 days after the close of the quar ter, in line with the Oslo Stock Exchange's regulations.
SalMar will minimise its contacts with analysts, investors and journalists in the final three weeks before publication of its results. During this period, the company will hold no meet ings with investors or analysts, and will give no comments to the media or other parties about the Group's results and future outlook. This is to ensure that all interested parties in the market are treated equally.
Each year SalMar publishes a financial calendar indicating the dates of publication of the Group's interim reports, as well as the date of its AGM. The calendar is available from the Group's website www. salmar.no. It is also distributed as a stock mar ket notice and updated on the Oslo Stock Exchange's website www.newsweb.no. The calendar is published before 31 De cember each year.
Deviations from the code of practice: None
The board of directors has drawn up guidelines with respect to takeover bids, in line with the Norwegian Code of Practice for Corporate Governance. The guidelines were adopted by the board at a meeting on 29 March 2011, and the board un -
are biological risk associated with the state of health at the company's hatchery and fish farming facilities, as well as the risk of salmon escaping from the company's fish farms, and financial risk (foreign exchange, credit and interest rates). These risk factors are monitored and addressed by manag ers at all levels in the organisation. For further information on this matter, please see the 2015 annual report and Note 2 to the financial statements included therein.
Deviations from the code of practice: None
The Nomination Committee's proposal for the remuneration payable to the board of directors is approved or rejected by the company's AGM. Directors' fees shall reflect the board's responsibilities, competence, time spent and the complexity of the business.
Directors' fees are not performance-related and contain no share option element. Additional information relating to directors' fees can be found in Note 24 to the financial state ments included in the 2015 annual report.
Director Gustav Wizøe is also a member of SalMar's group management, and is remunerated as an employee represent ative to the board.
Deviations from the code of practice: None
Pursuant to Section 6-16a of the Public Limited Companies Act, the board of directors has prepared a statement relating to the determination of salaries and other benefits payable to senior executives. This statement will, in line with the said statutory provision, be laid before the company's AGM each year.
The company's senior executive remuneration policy is based primarily on the principle that executive pay should be com petitive and motivating, in order to attract and retain key per sonnel with the necessary competence.
The statement refers to the fact that the board of directors shall determine the salary and other benefits payable to the CEO. The salary and benefits payable to other senior execu tives are deter-mined by the CEO in accordance with the guidelines laid down in the statement. Today's compensation scheme is divided into three and comprises a fixed salary, a performance-related bonus, and a share-based incentive scheme in line with the board's authorisation.
At the 2015 AGM the statement on executive remuneration was set forth as a separate case document. The AGM voted individually on the item relating to share-based remuneration and the item relating to the guidelines for the determina tion of salary and other benefits to senior executives for the 2015 financial year.
The board's statement, as well as further details relating to the salary and benefits payable to the CEO and other senior executives can be found in Note 24 to the financial state ments included in the 2015 annual report.
Deviations from the code of practice: None
dertakes to act in a professional manner and in accordance with applicable legislation and regulations.
The guidelines shall ensure that the interests of sharehold ers are safeguarded, and that all shareholders are treated equally. Furthermore, the guidelines shall help ensure that company operations are not unnecessarily disturbed. The board will strive to provide shareholders with sufficient infor mation to enable them to make up their minds with respect to the specific bid.
If a takeover bid has been made, the board will make a state ment and at the same time assess whether to obtain a valu ation from an independent expert. The board will obtain an independent valuation if a major shareholder, board member, member of the management team, related party or any col laborator of such a related party, or anyone who has recently held one or more of the above-mentioned positions, is either the bidder or has a particular interest in the takeover bid.
The board will not seek to prevent any takeover bid, unless the board is of the opinion that such action is justified out of con sideration for the company and the company's shareholders. The board will not exercise any authorisations or adopt other measures for the purpose of preventing the takeover bid. This stipulation may be waived with the approval of a gen eral meeting of shareholders after a bid has been announced.
Transactions which, in reality, involve the sale of the compa ny's business shall be laid before a general meeting of share holders for approval.
Deviations from the code of practice: None
The company's auditor is appointed by the AGM and is in dependent of SalMar ASA. Each year the board of directors shall receive written confirmation from the auditor that the requirements with respect to independence and objectivity have been met.
Each year the auditor shall draw up the main elements of a plan to carry out auditing activities, and the plan shall be made known to the board of directors and the Audit Commit tee. Furthermore, the auditor shall hold at least one meet ing each year without any representatives of the company's management being present.
The board shall inform the AGM of the remuneration payable to the auditor, broken down into an auditing and other ser vices component. The AGM shall approve the auditor's fees.
The company has drawn up guidelines for any work other than auditing to be carried out by the auditor or persons as sociated with the auditor. The auditor participates in board meetings in connection with consideration of the year-end accounts, and, at the same time as the board of directors, reviews the company's internal control systems. This includes the identification of weaknesses and proposals for improve ment. The auditor will also attend the company's AGM.
Deviations from the code of practice: None
Leif Inge Nordhammer President and CEO
Mr Nordhammer was the CEO of SalMar ASA from October 1996 to June 2011. Mr Nordhammer retook the position of CEO in January 2014. He has extensive experience from leadership positions in a variety of fish farming companies, and has worked in the industry since 1985. Previous employers include Sparebank 1 Midt-Norge and Frøya Holding AS/ Hydro Seafood AS. Mr Nordhammer holds an education from the army along with a business degree from Trondheim Business School and the University of Trondheim.
Holding as at 31.12.2015
Shares: Mr Nordhammer directly and indirectly owns 2.34 % of the shares in SalMar. RSU-Rights: 18,795
Olav-Andreas Ervik Director farming
Mr Ervik started in the position as head of SalMar ASA´s Farming division August 2014. Before this Mr Ervik held the position as General Manager in SalMar Farming AS. Mr Ervik has held various positions in companies within the salmon farming industry, including Lerøy Midnor, Scottish SeaFarms and Lerøy Hydrotech.
Holding as at 31.12.2015 Shares: 2,446 RSU-Rights: 10,813
Trond Tuvstein Chief Financial Officer
Trond Tuvstein was appointed as new CFO October 2013. Tuvstein served as Head of Investor Relations in SalMar ASA from January 2012 until October 2013. Tuvstein therefore knows both SalMar and the aquaculture industry well. Mr Tuvstein is certified public accountant, having completed a Master's degree in Accounting and Auditing
Shares: 13,788 RSU-Rights: 11,245
Holding as at 31.12.2015 Shares: 1,695 RSU-Rights: 7,383
Gustav Witzøe Director Processing and Sales
Mr Witzøe is the co-founder of SalMar ASA. He holds a degree in engineering. After several years as an engineer he co-founded BEWI AS, a company producing styrofoam boxes for the fish farming industry. Mr Witzøe held the position as managing director of BEWI AS until 1990. Since Mr Witzøe founded SalMar ASA in 1991 he has gained extensive experience in fish farming and processing. In addition to being a director of SalMar ASA, Mr Witzøe is chairman of Egersund Fisk AS and is a director of Norskott Havbruk AS and Scottish Sea Farms Ltd.
Eva Haugen Director Quality Management/HSE Eva Haugen has held the position as Director Quality Management/HSE since 2H 2013. Prior to this position Haugen has been the Head of Quality Management in the SalMar Group since 2005. Haugen has also worked as a quality manager at the factory in Nordskaget in the periods 2001 and 2004. She has several years of experience as a teacher in secondary school subjects such as aquaculture, science and biology. Haugen is a graduate from NTNU in the fields of chemistry, biology and education studies, and holds a degree in ecotoxicology and physiology in salmonids. Chief Strategy Officer (CSO) Tom Aleksandersen was appointed as Chief Strategy Officer 1 March 2015. Aleksandersen holds an MBA with specialization in Innovation and Implementation (1995). His main areas of expertise is: strategy, business development, cultural development and leadership training. Aleksandersen has extensive experience from working with strategic processes and organizational development from businesses in Central Norway, including several years of experience as a partner and head of BDO's consultancy department in Central Norway.
Shares: Mr Witzøe owns 90.85 % of Kverva AS, which in turn owns 53.4 % of the shares in SalMar ASA. Mr Witzøe is also a director of Kverva AS.
Tom Aleksandersen
Holding as at 31.12.2015 Shares: 0 RSU-Rights: 7,386
2015 2014
SHAREPRICEDEVELOPMENT
Share price per 01.01.2015 was NOK 127,50 thus valuing SalMar at NOK 14 446 million. At year-end the share price was NOK 155,00 valuing SalMar at NOK 17 561 million.
As at 31 December 2015 SalMar ASA had 113.299.999 shares outstanding, with each share having a face value of NOK 0,25.
As at 31 December 2015 the company had approx. 4 900 shareholders.
The company's VPS number is ISIN NO 001-0310956. Account operator is Nordea Bank.
The company's ticker on the Oslo Stock Exchange is SALM.
Trond Tuvstein Telephone: +47 918 53 139 [email protected]
Runar Sivertsen Head of Investor Relations Telephone: +47 960 97 000 [email protected]
Communication with shareholders, investors and analysts is a high priority for SalMar. The objective is company. All notices sent to the stock exchange are Stock Exchange's www.newsweb.no site and though news agencies.
If you would like to subscribe to news from SalMar, please send an e-mail to [email protected] so that we can
Results 4th quarter 2015: 19. February 2016 Results 1st quarter 2016: 11. May 2016 Ordinary General Meeting: 7. June 2016 Results 2nd quarter and 1st half year 2016: 25. August 2016
Results 3rd quarter 2016: 16. November 2016
SalMar holds quarterly presentations open to the public. The presentations will take place at 08.00 CET at Hotel Continental in Stortingsgaten 24/26 in Oslo, Norway. The annual general meeting will be held at Frøya. Please note that the dates are subject to change. Changes will be communicated.
| NAME |
|---|
| Kverva as |
| Folketrygdfondet |
| State Street Bank and Trust co. |
| J.P. Morgan Chase Bank N.A. London |
| IIN as |
| The Bank of New York Mellon |
| SalMar ASA |
| Clearstream Banking S.A. |
| Pareto Aksje Norge |
| JP Morgan Bank Luxembourg S.A |
| State Street Bank and Trust CO. |
| Morgan Stanley & CO. International |
| Storebrand Norge |
| State Street Bank & Trust CO. |
| JP Morgan Chase Bank, N.A. |
| J.P. Morgan Chase Bank N.A. London |
| Verdipapirfondet Alfred Berg Norge |
| RBC Investor Services Bank S.A. |
| KLP Aksjenorge Indeks |
| State Street Bank and Trust co. |
| Total 20 largest shareholders |
| Other shareholders |
| Total |
| NAME | Shareholding 31.12.15 | Shareholding (%) |
|---|---|---|
| Kverva as | 60 500 000 | 53,40 % |
| Folketrygdfondet | 8 324 725 | 7,35 % |
| State Street Bank and Trust co. | 3 335 179 | 2,94 % |
| J.P. Morgan Chase Bank N.A. London | 2 758 075 | 2,43 % |
| LIN as | 2 005 200 | 1,77 % |
| The Bank of New York Mellon | 1 199 063 | 1,06 % |
| SalMar ASA | 1 180 081 | 1,04 % |
| Clearstream Banking S.A. | 1 074 336 | 0,95 % |
| Pareto Aksje Norge | 1 047 794 | 0,92 % |
| JP Morgan Bank Luxembourg S.A | 976 509 | 0,86 % |
| State Street Bank and Trust CO. | 721 107 | 0,64 % |
| Morgan Stanley & CO. International | 676 528 | 0,60 % |
| Storebrand Norge | 613 924 | 0,54 % |
| State Street Bank & Trust CO. | 595 375 | 0,53 % |
| JP Morgan Chase Bank, N.A | 524 786 | 0,46 % |
| J.P. Morgan Chase Bank N.A. London | 491 221 | 0,43 % |
| Verdipapirfondet Alfred Berg Norge | 490 464 | 0,43 % |
| RBC Investor Services Bank S.A | 443 677 | 0,39 % |
| KLP Aksjenorge Indeks | 439 584 | 0,39 % |
| State Street Bank and Trust co. | 425 326 | 0,38 % |
| Total 20 largest shareholders | 87 822 954 | 77,51 % |
| Other shareholders | 25 477 045 | 22,49 % |
| Total | 113 299 999 | 100,00 % |
Total no. of shares 113 299 999
Passion for Salmon
Passion for Salmon
36
SALMAR
ANNUAL REPORT
The SalMar Group generated gross operating revenues of NOK 7,326 million in 2015, up 2 per cent from the year before. Operational EBIT fell by 25 per cent to NOK 1,404 million, compared with NOK 1,879 million in 2014. Net profit for the year totalled NOK 1,129 million.
The board of directors is satisfied with the 2015 result. The market developed very well, and customers continued to demand salmon even at high prices. Overall, the operational challenges were dealt with satisfactorily.
Fish Farming Central Norway, the Group's largest fish farming segment, posted a satisfactory result, despite operational challenges. The cost of keeping salmon lice levels within the authorities' designated limits has been high. The volume har vested rose by around 7 per cent, which can be attributed to a larger proportion of the biomass being harvested earlier than planned to reduce overall lice numbers in the region.
Fish Farming Northern Norway increased its harvested vol ume by 5 per cent in 2015. This is slightly lower than planned, since we experienced difficulties in obtaining access to suf ficient production space. In light of the prevailing framework conditions, the segment achieved satisfactory results, with developments in Finnmark being particularly good.
In the same way as the Central Norway segment, Fish Farm ing Rauma experienced a challenging year as a result of biological issues. The Group's production of organic salmon takes place in this segment. The level of prices achieved was good, and made a positive contribution to the profit posted.
The Sales and Processing segment performed less well in 2015 than in 2014. Volatility in foreign exchange rates caused salmon price developments to be unpredictable. Fixed-price contracts have therefore had a negative impact on profit and loss. The biological challenges experienced caused difficulties for InnovaMar's operations difficult. On the harvesting side, activity levels were high, with stable developments since 2014 and good results achieved. High and volatile salmon prices, combined with poorer quality raw materials, negatively affected the results achieved on the processing side.
2015 was a fairly average year for Norskott Havbruk. Biolog ical challenges and stronger price competition in the domes tic market caused a decrease in profits compared with 2014.
The company's net profit for the year totalled NOK 90 million. The subsidiary Scottish Sea Farms Ltd gained access to addi tional sites, which has increased its production capacity. The volume harvested in Scotland will therefore rise in the time ahead.
The Group expects to harvest a total of 133,000 tonnes of salmon in 2016, some 3,000 tonnes less than 2015.
Based on the year-end financial statements for 2015, the board is proposing a dividend payout of NOK 10.00 per share .
SalMar ASA is a Norwegian public limited company, whose shares are quoted on the Oslo Stock Exchange under the ticker SALM.
The Group is one of the world's largest and most efficient producers of Atlantic salmon, and is vertically integrated through the entire value chain from broodfish, roe and smolt to harvesting, processing and sales. At the close of 2015 SalMar had a total of 100 wholly owned licences for the pro duction of Atlantic salmon in Norway: 68 in central Norway (Møre & Romsdal, Sør-Trøndelag and Nord-Trøndelag), and 32 in northern Norway (Troms and Finnmark). The Group also have joint operational agreements/time-limited R&D licences linked to 13 licences. In addition, the Group has a substantial harvesting and processing capacity at InnovaMar in Frøya and Vikenco in Aukra.
SalMar owns 50.0 per cent of Scottish Sea Farms Ltd (through Norskott Havbruk AS), the UK's second largest pro ducer of farmed salmon.
SalMar is headquartered in Frøya, Sør-Trøndelag, and the Group's registered address is 7266 Kverva.
It is SalMar's expressed ambition to be the world's best aqua culture company. To achieve this we have established the vi sion "Passion for Salmon", which puts the emphasis squarely on the welfare of the salmon. SalMar shall be outstanding in all aspects and areas of production. In this way, our vi sion puts human performance at the centre of our efforts to achieve operational efficiency.
Underpinning our efforts to reach our goal, we have estab lished a strong strategic foundation that focuses on the con ditions required to perform well. These strategies are based on the company having a strong performance culture that will be further developed. The main focus is on optimising our core businesses. SalMar is firmly convinced that growth must be sustainable: environmentally, socially and financially.
Clear operative goals must be shared with all employees, and good feedback along the way will ensure that our perfor mance culture receives the nourishment it needs. SalMar's strategic direction for growth is to farm our fish "on the salmon's terms". Our ground breaking concept for offshore fish farming will be a key aspect of this policy in the years to come. We strive continuously to improve, and our business tenets are cultivated through active leadership.
-
Historically high salmon prices, driven by low growth in supply, strong demand and favourable developments in foreign exchange rates, resulted in record revenues for SalMar in 2015. Operationally, 2015 was a chal lenging year. The biological situation experienced by the Group's Fish Farming Central Norway segment had a significant impact on both output and costs. Diffi culties in obtaining access to sufficient production space had negative consequences for output and the volume harvested by Fish Farming Northern Norway. SalMar harvested a total of 136,400 tonnes in 2015, 3 per cent less than in 2014.
-
Mr Flatgård is currently working as a professional director of several leading Norwegian companies and as an investor. From 1996 to 2007 he was President & CEO of Elopak ASA. Prior to that he was CEO of Nycomed Phar ma and a member of the executive management of Hafslund Nycomed. Mr Flatgård gained an MSc in Chemical Engineering from the Norwegian University of Science and Technology in 1973 and a degree in Economics and Business Administration from the Norwegian School of Management BI in 1981. Mr Flatgård joined SalMar's board of directors in August 2002, be coming chairman in 2006. Through his family company GloMar AS, Mr Flatgård owns 2.38 % of the shares in Kverva AS, which in turn owns 53,4 % of the shares in SalMar ASA. Mr Flatgård is also Chairman of Kverva AS.
AS, which in turn owns 53.4 % of the shares in SalMar ASA. Mr Witzøe is also
a director of Kverva AS.
KJELL A. STOREIDE, Director Mr Storeide is a graduate of the Norwegian School of Economics and Business Administration (NHH) in Ber
-
gen. From1990 to 2004 he was the CEO and co-owner of Stokke Gruppen AS. Mr Storeide is chairman of several industrial companies in Norway. Mr Storeide joined SalMar's board of directors in February 2008.
Director/Employee representative Sandberg has worked for SalMar since 2014. She is currently head of Sus tainability and Nutrition in the Biology Section at group level. She has experi ence from research and development assignments at Nutreco ARC, KPMG and SINTEF Fisheries and Aquaculture. She has a degree in agricultural sci ence, majoring in aquaculture, from the Norwegian University of Life Sciences (UMB), and is currently a member of the board of the Fisheries and Aqua culture Industry's Research Fund.
Geir Berg has been employed at SalMar since March 2013. He has been Pro duction Manager Fish Farming since May of that year. Mr Berg has 20 years experience of working in the public sector and around 10 years from the private sector. Before joining SalMar he was an airport manager with Avinor. Mr Berg has previously held both operational and administrative posi tions in a variety of business sectors.
BENTE RATHE, Director Ms Rathe has an extensive experience from both operational management and leading positions on the boards of many major Nordic companies. Ms Rathe has served on the board of SalMar since 03.06.2015.
TOVE ELIN NEDREBERG,
Director
Ms Nedreberg holds the position as CEO of Adresseavisen Gruppen AS and Adresseavisen AS. She has extensive experience at executive level from positions in large corporations, includ
-
ing board positions. Nedreberg has served on the board of SalMar since
31.05.2012.
New smolt facility in Troms. Construction of a new smolt facility in Senja got underway in the spring of 2015. The facility is expected to be completed in the late autumn 2016, and the first smolt should be ready for transfer to sea farms in the late summer 2017. The new facility is dimensioned to produce around 15 million smolt each year, of which some 4 million will be over 200 g. The investment, which is estimated to cost around NOK 550 million, is an important part of Sal-Mar's strategy of becoming self-sufficient in smolt, since it will enable us to capitalise on recent investments in production licences.
First step into Iceland. On 11 December 2015 SalMar agreed to acquire indirect ownership of 22.9 per cent of the Icelandic aquaculture company Arnarlax hf. Over time Sal-Mar has gained solid experience in farming fish in northern areas for several years. In this respect, Iceland is an exciting region, with temperature profiles not unlike Finnmark. The potential is there, but much work remains to further develop the aquaculture industry in Iceland.
Offshore fish farm. On 23 December 2015 SalMar received notice from the Norwegian Directorate of Fisheries that it agreed in principle that the Group's offshore fish farm project met the criteria for the new development licences scheme. On 28 February 2016 the first eight aquaculture development licences were granted to SalMar. The award was recognition for the substantial efforts that both our own staff and external competence centres have made over the past four years to develop an entirely new equipment concept with the aim of introducing a new industrial standard in the fish farming sector. The production of a full-scale pilot installation, along with the advanced equipment this entails, will get underway during the spring of 2016. The objective is to transfer the first fish to this offshore installation in the summer of 2017. This will be no walk in the park, but offers a huge potential for the entire industry if the development project is a success. SalMar estimates the investment requirement will total NOK 690 million. The project could make an important contribution to resolving the shortage of production space that the aquaculture industry is currently facing.
No material events have occurred after the close of the year.
The Group generated gross operating revenues of NOK 7,326.2 million in 2015, up 2 per cent from the NOK 7,185.9 million generated in 2014.
Excluding Norskott Havbruk, the Group harvested a total of 136,400 tonnes, a decrease of 3 per cent from the 141,000 tonnes harvested in 2014. Excluding the 11,800 tonnes accounted for by Villa Organic in 2014, SalMar achieved an underlying growth in its harvested volume. Fish Farming Central Norway increased its output by 5,300 tonnes from 75,200 tonnes in 2014 to 80,500 tonnes in 2015. Fish Farming Northern Norway increased its output by 2,000 tonnes, from 37,500 tonnes in 2014 to 39,500 tonnes in contract deliveries and Fish Pool contracts, as well as provisions for loss-making contracts. Changes in the fair value of the biomass and in unrealised Fish Pool positions contributed NOK 203.4 million. Changes in provisions for loss-making contracts and forward currency contracts had the opposite effect in the amount of NOK 163.4 million. Changes in the level of prices towards the end of 2015 are the main reason for the upward adjustment in the fair value of the biomass, along with profit positions on Fish Pool. The weakening of the NOK and an increase in the forward price of salmon has resulted in provisions to cover losses in currency positions and fixed-price contracts.
SalMar made a consolidated operating profit of NOK 1,443.8 million in 2015, down from NOK 1,646.7 million the year before.
Operations at SalMar's associates, ie. companies in which – through its shareholdings – it has a significant influence, produced satisfactory results in 2015. SalMar's share of the profit/loss deriving from these investments totalled NOK 40.2 million. This came almost entirely from Norskott Havbruk. The corresponding figure for 2014 was NOK 96.1 million.
Total interest and financial income for 2015 came to NOK 4.2 million, compared with NOK 11.1 million in 2014. The change is primarily attributable to a decrease in money market interest rates.
SalMar's total financing cost for 2015 came to NOK 104.5 million, a decrease of NOK 20.6 million from the year before. In 2015 SalMar had a higher average interest-bearing debt than in 2014, but lower money market interest rates resulted in lower financing costs.
Net financial items for 2015 therefore totalled NOK -100.4 million, such that profit before tax came to NOK 1,383.7 million, down from NOK 1,628.8 million in 2014. The tax expense for 2015 totalled NOK 254.9 million, NOK 158.5 million lower than in 2014. The reduction is attributable to lower taxable earnings and a reduction in the future tax rate from 27 per cent to 25 per cent.
SalMar's net profit for 2015 as a whole totalled NOK 1,128.8 million, compared with NOK 1,215.5 million in 2014.
Net disbursements from investing activities totalled NOK 724.7 million in the period, compared with NOK 1,031.9 mil-
The average price of salmon (NASDAQ) in 2015 came to NOK 41.45 per kg, compared with NOK 40.56 per kg in 2014. This represents an increase of 2 per cent. The price fell steadily through the first half-year (from NOK 45 to NOK 35 per kg), but rose again through the third quarter (to around NOK 45 per kg). In the fourth quarter the price fell to around NOK 37, before rising sharply towards the end of the year. The price peaked at NOK 56.49 per kg in week 53. Around 52 per cent of SalMar's total volume harvested in 2015 was sold under fixed-price contracts. The terms of these contracts vary in length, but do not normally exceed 12 months. In total, fixedprice contracts secured lower sales prices than the spot price, thereby contributing negatively to the results achieved in 2015.
Around 45 per cent of SalMar's total output volume was harvested in the first half-year, while 55 per cent was harvested in the second half. The volume harvested in the first quarter was lower than in the second quarter, which meant that SalMar did not benefit fully from the high average price in the first six months of the year. The volume harvested in the second half of 2015 had a favourable distribution, with more being harvested in the fourth quarter than in the third. The price rise experienced towards the end of the year therefore had a positive impact on the Group's overall revenue stream.
From a biological point of view, 2015 was a challenging year. Substantial resources were devoted to keeping the level of salmon lice within regulatory limits. The situation for Fish Farming Central Norway was particularly challenging, because the lice there have developed an immunity to the majority of medication-based treatment methods. This resulted in a larger proportion of the biomass being harvested earlier than planned, in other words, before optimal harvesting weight had been reached. Intensive delousing treatments made the salmon less robust, and SalMar experienced episodes of increased mortality. In addition to the costs directly relating to the treatments themselves, fish growth is also affected as a result of fewer feeding days and a poorer appetite on the part of the fish. As a result, the cost of the harvested biomass was higher in 2015 than in 2014.
SalMar generated a positive cash flow from operating activities in the amount of NOK 1,622.3 million in 2015, compared with NOK 1,647.0 million in 2014. The largest positive items of profit and loss without any cash flow effect are the Group's share of profit/loss from associates, amounting to NOK 40.2 million, and the change in fair value adjustments of NOK 39.9 million. The largest negative item without cash flow effect is depreciation, amounting to NOK 321.4 million. Furthermore, the item "interest expenses" has been reclassified to financing activities. During the period, SalMar reduced its working capital (change in trade receivables, inventory, trade payables, etc.) by NOK 189.8 million. In 2015 SalMar paid NOK 315.1 million in corporation tax. At the close of 2015 the Group had non-current financial assets worth NOK 636.2 million. The bulk of this amount relates to the investment in Norskott Havbruk. The Group's biological assets were valued at NOK 3,306.1 million at the close of the year, NOK 191.4 million more than at the close of 2014. Measured in tonnes, the volume of biomass as at 31 December was 8 per cent less than at the start of the year. The cost of producing the biomass rose by NOK 44.1 million to NOK 2,329.9 million. Adjustment in the fair value of the biomass at the close of the year came to NOK 976.1 million, which is NOK 147.3 million more than in the year before.
The SalMar Group posted an Operational EBIT of NOK 1,403.9 million in 2015, compared with NOK 1,879.0 million in 2014. In brief, this can be attributed primarily to a lower harvested volume and increased production costs. Operational EBIT is SalMar's most important measure of its performance under IFRS, since it shows the results of underlying operations during the period. Specific items not associated with underlying operations are presented on separate lines in the consolidated financial statements.
Fair value adjustments boosted profit by NOK 39.9 million in 2015. The corresponding adjustments in 2014 reduced profit by NOK 232.3 million. Fair value adjustments comprise fair value adjustment of the biomass, including unrealised effects of forward currency contracts associated with future lion in 2014. During the year a total of NOK 726.7 million was invested in intangible assets and property, plant and equipment. Investments in facilities for biological production both onshore and at sea totalled NOK 702.1 million. This has been necessary to enable the company to exploit its biological growth potential, as well as meet increasingly stringent requirements with respect to equipment and technology. SalMar received a total of NOK 46 million in dividends from associates, while payments relating to investments in associates came to NOK 43.4 million.
Net disbursements from financing activities in 2015 totalled NOK 795.5 million, compared with NOK 1,522.5 million in 2014. In 2015 SalMar paid a dividend totalling NOK 1,124.9 million to its shareholders. An increase in interest-bearing debt contributed NOK 424.8 million, while NOK 98.8 million was paid out in net interest expenses and refinancing costs.
Overall, this gave SalMar a positive cash flow for 2015 of 102.0 million, which increased the Group's holdings of cash and cash equivalents to NOK 273.7 million at the close of the year. The Group had unused drawing rights totalling NOK 2,535.0 million at the close of the year.
As at 31 December 2015, SalMar's balance sheet totalled NOK 10,943.5 million, an increase of NOK 819.1 million since the close of 2014.
The Group's intangible assets rose by NOK 14.9 million during 2015. Work on the development of the Group's offshore fish farming concept was capitalised in the amount of NOK 29.8 million. Furthermore, intangible assets were written down and depreciated in the amount of NOK 14.9 million. A total of NOK 2,913.5 million in intangible assets was recognised in the balance sheet at the close of 2015. The book value of 100 fish farming licences accounted for NOK 2,363,6 million of this amount.
The total book value of property, plant and equipment came to NOK 2,412.0 million at the close of the year, NOK 394.4 million more than at the close of 2014. The Group's investments are still higher than overall depreciation. A total of NOK 702.1 million was invested in 2015. The largest single investment related to the ongoing project to build a new smolt facility in Senja, Troms.
The amount of capital tied up in trade receivables has
remained relatively stable, decreasing from NOK 888.2 million at the start of the year to NOK 815.5 million at the close. The bulk of the trade receivables are insured. At the close of the year provisions totalling NOK 11.2 million had been made to cover potential bad debts, including the Group's own risk on its credit insurance.
At the close of 2015 the Group's equity totalled NOK 5,227.0 million, up from NOK 5,137.3 million at the close of 2014. As a result of increased total capital, the equity ratio decreased from 50.7 per cent at the close of 2014 to 47.8 per cent at the close of 2015.
Net interest-bearing debt (interest-bearing debt less cash & cash equivalents) totalled NOK 2,628.1 million at the close of the year, up from NOK 2,301.3 million at the close of 2014. In July 2014 the Group entered into a new 5-year borrowing agreement with a consortium of Nordic banks. The financing agreement covers both operating credit facilities and acquisition funding, and provides the Group with drawing rights of NOK 5,000 million. In addition to this main financing package, some of the Group's subsidiaries have their own financing agreements, the interest-bearing debt associated with which totalled NOK 80.4 million at the close of the year. The Group has, moreover, leasing liabilities amounting to NOK 93.9 million. Because of its nature, the leasing agreement with respect to InnovaMar is classified as a financing agreement, the liability for which stood at NOK 318.9 million at the close of the year. Next year's instalments on interest-bearing debt total NOK 140.4 million.
The Group expects to pay NOK 292.3 million in corporation tax, based on its taxable income for 2015.
The increase in the Group's assets during 2015 is attributable to a NOK 89.8 million increase in equity, a NOK 433.6 million increase in interest-bearing debt, and an increase in interest-free liabilities of NOK 295.8 million.
Fish Farming Central Norway, the Group's largest fish-farming segment, had a good year despite operational challenges. The segment generated NOK 3,156.6 million in operating revenues in 2015, compared with NOK 2,863.5 million in 2014. Operational EBIT came to NOK 815.5 million in 2015, compared with NOK 946.2 million the year before.
For the year as a whole, Operational EBIT per kg gutted weight came to NOK 10.1, down from NOK 12.6 in 2014. The downturn is attributable to higher production costs for the harvested biomass than in 2014. This applies in particular to biomass harvested in the second half of 2015. The increase in costs is largely attributable to direct and indirect expenses incurred to maintain compliance with regulatory limits on salmon lice levels. The lice situation in Central Norway was particularly challenging in the second half of the year. The segment experienced major problems with resistance to medical delousing treatments, while the deployment of cleaner fish did not give optimal results. This development came faster and earlier than expected, and substantially
The Rauma segment generated gross operating revenues of NOK 785.2 million in 2015, compared with NOK 782.0 million in 2014. Operational EBIT came to NOK 132.2 million in 2015, compared with NOK 214.7 million the year before.
Operational EBIT per kg gutted weight came to NOK 8.1 in 2015, down from NOK 13.0 in 2014.
The level of lice infestation and the costs associated with managing this problem were highest in this segment. The organic form of farming which this segment utilises makes it additionally difficult to handle the salmon lice situation. The production cycle is slightly longer, with a more even harvesting profile. This has been a significant factor in driving costs, and had a negative impact on profit margins.
This segment is, moreover, responsible for SalMar's breeding and genetics activities. This involves the harvesting of broodfish, which have a significantly higher cost.
The Rauma segment harvested a total of 16,400 tonnes in 2015, compared with 16,500 tonnes in 2014. SalMar expects this segment to harvest around 16,000 tonnes in 2016, in other words no real change.
The Sales and Processing segment posted a reduction in profits from 2014 to 2015. The segment sells the entire Group's harvested volume, with the exception of that deriving from joint operations with Lerøy in Finnmark. The segment generated gross operating revenues of NOK 7,295.0 million in 2015, up from NOK 6,847.8 million in 2014. Operational EBIT came to NOK 72.6 million in 2015, compared with 137.7 million in 2014.
In 2015 around 52 per cent of the harvested volume was sold under loss-making fixed-price contracts. The rise in salmon prices towards the end of the year contributed to substantial losses on fixed-price contracts. Fish sold in the spot market achieved satisfactory margins. Antibiotic-free Norwegian salmon and the weaker NOK has made the business more competitive in the American market. SalMar supplied a historically high volume to this market in 2015. Deliveries to this market are expected to continue in the years ahead.
reduced the effect of the delousing treatments. In addition, feed costs associated with the fish harvested in the period were higher than before. The higher feed cost is attributable to a higher feed factor and increased feed prices. The rise in feed prices is due to increased costs on raw materials, a large proportion of which are exposed to exchange rate fluctuations, and are therefore affected by the weakening of the NOK. The increase in feed factor is attributable largely to intensive delousing treatments, which had a negative impact on fish growth.
Fish Farming Central Norway harvested a total of 80,500 tonnes in 2015, compared with 75,200 tonnes in 2014. A total of 36,500 tonnes was harvested in the first half-year, while 44,000 tonnes was harvested in the second half. Although the prices achieved in the second half were higher than in the first, so were costs. As a result, the profit margin per kg was relatively equal.
As a consequence of the need to reduce lice numbers, a larger number of fish were harvested in the latter part of 2015 than originally planned. The standing biomass was 27.5 per cent lower at the close of 2015 than at the start of the year. As a result, SalMar expects this segment to harvest around 67,000 tonnes in 2016, a decrease of 17 per cent from 2015.
Fish Farming Northern Norway generated gross operating revenues of NOK 1,646.9 million in 2015, compared with NOK 1,443.1 million in 2014. Operational EBIT came to NOK 505.8 million in 2015, compared with NOK 477.2 million the year before.
Operational EBIT per kg gutted weight came to NOK 12.8 in 2015, up from NOK 12.7 in 2014. 2015 was a satisfactory year for the segment. The lice situation was significantly better in this region than in Central Norway. Although profit margins held steady, the cost of the harvested biomass rose in this region as well. This can largely be attributed to increased feed prices and the fact that some of the output was harvested at a lower than optimal average weight, due to restrictions on the maximum allowable biomass (MAB) at individual sites. Access to production space has been and remains a challenge in this region. In the last couple of years a total of 18 licences have been acquired in this region through the takeover of Villa Organic. A restructuring process is underway to optimise production, both through applications to expand the MAB at existing facilities and the acquisition of new sites. This has proved more demanding than initially anticipated.
InnovaMar harvested around 128,000 tonnes of fish in 2015, about the same as in 2014. Operations at InnovaMar's harvesting facilities have been satisfactory. The biological status of the biomass determines activity levels at InnovaMar. Major fluctuations in the harvested volume, and requirements for direct transfer from wellboats have made it difficult to operate as cost-effectively as possible. Despite this, however, the operation has posted consistently good results. The processing business has also experienced difficult framework conditions. Periodically poor raw materials quality has reduced efficiency levels, and volatile salmon prices make it hard to earn a profit from secondary processing. In 2015, therefore, the business made a negative contribution to the segment's overall financial results. Nevertheless, SalMar believes it is strategically important to process a relatively large proportion of its raw materials in Norway. This increases the quality more, the company has recognised a dividend of NOK 46.0 million from its investment in the associate Norskott Havbruk AS. SalMar ASA also administers the Group's main financing activities, and received NOK 71.3 million in interest income on loans to subsidiaries, while interest expenses associated with financing came to NOK 50.6 million. SalMar ASA had capitalised assets of NOK 5,101.5 million at the close of 2015. Non-current assets accounted for NOK 3,513.5 million of this amount, with loans to subsidiaries coming to NOK 2,165.9 million. Current receivables totalled NOK 1,424.4 million, and are largely made up of dividend/ group contributions receivable from subsidiaries. The company had cash and cash equivalents of NOK 147.7 million at the close of the year. Equity as at 31 December 2015 totalled NOK 1,059.7 million, which corresponds to an equity ratio of
Fish Farming Northern Norway has not achieved the growth we expected in 2015. The harvested volume increased by 5 per cent from 2015. The segment harvested 39,500 tonnes in 2015, compared with 37,500 tonnes the year before. 54 per cent of the volume was harvested in the second half of the year.
SalMar expects this segment to harvest around 50,000 tonnes in 2016, an increase of some 27 per cent compared with 2015.
of the product sold to the customer, affords opportunities for efficient handling of by products and saves on transport.
2015 was not as good a year for Norskott Havbruk as 2014. The company increased its gross revenues from NOK 1,384.6 million in 2014 to NOK 1,498.5 million in 2015. However, increased costs and a slightly lower harvested volume reduced Operational EBIT from NOK 232.1 million in 2015 to NOK 121.6 million in 2015.
Norskott Havbruk harvested a total of 27,000 tonnes in 2015, down from 27,500 tonnes the year before. The company expects to harvest some 26,000 tonnes in 2016.
Operational EBIT per kg gutted weight came to NOK 4.5 in 2015, down from NOK 8.4 in 2014. The decrease is largely attributable to higher costs resulting from biological challenges associated with amoebic gill disease (AGD), algae blooms and a difficult lice situation at Shetland. Exchange rates have also contributed to a squeeze on prices in the UK market. The company's board has decided to invest around GBP 35 million in a new smolt facility, capable of producing around 10 million smolt per year.
Norskott Havbruk is recognised as an associate, with SalMar's share of the company's profit/loss after tax and fair value adjustment of the biomass (50.0 per cent) being recognised as financial income. SalMar's share of the company's profit after tax was NOK 41.4 million in 2015, compared with NOK 95.5 million in 2014.
The parent company, SalMar ASA, is a shareholding and administrative entity. Group management and administrative resources are employed by this company. In 2015 it employed a total of 31 full-time equivalents.
The company made a net profit for the year of NOK 942.9 million in 2015, compared with NOK 803.1 million in 2014. The bulk of the company's revenues derive from investments in subsidiaries and associates. 2015 was a good year for the company's subsidiaries and resulted in the recognition of NOK 1,227.7 million in dividends/group contributions. Further-
21 per cent. Non-current liabilities comprise interest-bearing debt totalling NOK 2,400.0 million. Current liabilities total NOK 1,641.7 million, of which NOK 1,121.2 million has been recognised as a dividend provision.
The board is proposing payment of a dividend of NOK 10.00 per share for the 2015 financial year. The board proposes the following allocation of the year's net profit:
At the close of the year the company had distributable reserves of NOK 1,031.4 million.
The financial statements for 2015 have been prepared on the assumption that the company is a going concern, as stipulated in Section 3-3a of the Norwegian Accounting Act. With reference to the Group's financial results, financial position and forecasts for years to come, it is hereby confirmed that grounds for this assumption do exist. In the assessment of the board of directors, the Group's financial position is sound.
Risk management is a key function of the management team. The Group has systems and routines in place to monitor important risk factors in all business areas, and particular emphasis is placed on the control and follow up of production facilities in accordance with the quality handbook and defined operating standards.
It is the CEO's responsibility to ensure that the Group operates in compliance with all relevant legislation and operating guidelines for group entities. Follow-up and control of risk factors, as well as compliance with the Group's values and code of conduct, is carried out in the line organisation as part of day-to-day operations.
The largest operational risk facing SalMar relates to the development of its fish stocks, both at its hatcheries and marine-phase fish farms. Even though SalMar draws up and establishes effective routines for its own operations, the business is such that it will always be important to keep abreast of what competitors and neighbouring facilities are doing.
The aquaculture industry faces challenges with respect to the spread of salmon lice and an increase in the numbers of resistant lice, ie. lice which have a reduced sensitivity to the preparations and medications that have been effective in treating salmon lice over the past decade.
SalMar plays an active role in the effort to combat salmon lice, and works effectively with the authorities, other fish farmers and scientific expertise to reduce biological risk. SalMar has developed its own strategy for dealing with salmon lice, which has been in operation since mid-2009. In addition to its own strategy plan the Group complies with all the counting and treatment strategies implemented by the with the strategic harvesting out of fish stocks in individual net cages will help us to deal with spates of rapidly increasing lice populations. Over time this will permit a reduction in the use of medications, which will in turn diminish the risk of medicine-resistant lice developing.
The follow up of internal controls associated with financial reporting is carried out through management's day-to-day supervision, the process owners' follow up and monitoring by the board's Audit Committee. Non-conformances and improvement areas are followed up and remedial measures implemented. Financial risk is managed by a central unit at head office, and financial hedging instruments are employed where they are considered appropriate.
The borrowing portfolio is currently at floating interest rates, which means that the Group is affected by changes in interest rates.
The global salmon market is largely a fresh-fish market, where most of the fish harvested is sold immediately to processing companies or directly to the consumer. For several years growth in demand has been relatively stable, while growth in supply has varied more substantially from year to year. In addition to planned output volumes defined by the number of smolt released, supply is also affected by a number of external factors. Fluctuations in sea temperatures, the spread of salmon lice and outbreaks of disease are all factors which, directly or indirectly, affect fish growth and thus supply. As a consequence, relatively substantial variations in supply may occur within short periods of time. With relatively stable demand, this can result in considerable price instability.
authorities, including the Norwegian Food Safety Authority's absolute threshold for the initiation of remedial measures.
The salmon lice situation became very challenging in central Norway in the second half of 2015. The entire region faced major challenges when resistance to both hydrogen peroxide and other available medications became widespread, at the same time as the use of cleaner fish was not working optimally. This development came faster and earlier than expected, and significantly reduced the industry's capacity to respond. As the autumn progressed, the company deployed all available measures, including the strategic harvesting out of fish stocks. The company's emergency preparedness with respect to coming periods has been intensified. Wellboat capacity has been strengthened. In addition, mechanical delousing equipment has been ordered, with the aim of collecting up lice to prevent reproduction. When all available countermeasures are in place, SalMar will be able to delouse 80 per cent of its standing biomass in Central Norway in the course of 10-14 days.
The bulk of the Group's output is sold internationally, with accounts settled largely in EUR, USD, GBP and JPY. Changes in exchange rates therefore represent both a direct and indirect financial risk for the Group. Sales in foreign currencies are hedged on the transaction date, while contract sales are hedged when the contract is entered into. The company uses forward contracts as hedging instruments. Foreign exchange exposure linked to the Group's costs is, however, more limited, since input factors and salaries are paid largely in NOK (Norwegian kroner). All interest-bearing debt is, moreover, in NOK. Use of forward currency contracts is described in Note 11 to the financial statements. The Group does not have any significant credit risk associated with an individual counterparty or counterparties which may be considered a group due to similarities in the credit risk they represent. The bulk of the Group's trade receivables is insured against bad debts. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
For the first year of the fish's marine-phase existence, Sal-Mar handles the salmon lice situation with the help of cleaner fish. The intensity of delousing treatments is therefore very low. SalMar has invested in facilities to produce its own cleaner fish.
For SalMar, it is important that production take place in areas which have the capacity and sustainability for the volumes being produced. To ensure the quality of the fish farming facilities, routine measurements and Modelling – On-growing fish farm – Monitoring (MOM) surveys are carried out.
SalMar's entire business is related to salmon, and is therefore directly and indirectly affected by developments in salmon prices. The Group's profitability and cash flows are strongly correlated with movements in the price of salmon. Historically, salmon prices have been highly volatile seen in an annual, quarterly and monthly perspective. In 2015 the spot price of Atlantic salmon fluctuated between NOK 34.86 and NOK 56.49 per kg, measured weekly. The Group's equity ratio, its prospects for future profits and current credit facilities mean that the Group's liquidity risk is considered to be low. Research and development
SalMar also purchased eight "green" licences after the authorities' round of awards in 2013/2014. These green licences set stricter limits for permitted lice and the number of medicinal delousing treatments, and put a stronger focus on escape prevention. At its green licence facilities, SalMar has focused particularly on the use of a more escape-proof cage construction, as well as the use of cleaner fish (in the form of farmed lumpfish) to control lice numbers. A major investment has been made in a dedicated facility for the farming of cleaner fish in Langstein in Trondheimsfjord. Sal-Mar deployed the first lumpfish raised at this facility in the fourth quarter 2014. Experience from the operation of these licences is so far very good. A separate report summing up SalMar's experience and evaluating the operation of its green licences will be published annually. SalMar has also emphasised participation in a project to monitor salmon rivers in Trøndelag county in order to help develop methods and increase expertise in the tracking and mapping of escaped farmed salmon.
SalMar sells a portion of its output through fixed-price contracts. The Group has drawn up guidelines for such contracts to limit exposure to salmon price volatility. It is the Sales and SalMar is Norway's third largest producer of farmed salmon, and the Group is an important contributor to the development of the industry. SalMar gives a high priority to the
SalMar's overarching objective is to reduce the use of chemical delousing treatments, for which good and robust production zones are a prerequisite. Measures to reduce the marinephase production time through, among other things, the use of lager smolt are a strategic area of focus for SalMar. Good preventive efforts involving biological delousing by means of self-produced cleaner fish will avoid an escalation in the growth of lice numbers. An adequate emergency response capability, including mechanical delousing equipment, along Processing segment which sells the entire Group's harvested volume, with the exception of that produced in joint operations with Lerøy in Finnmark. The impact of the Group's fixedprice contracts is therefore recognised in this segment's financial statements. Approximately 52 per cent of the Group's volume was sold under fixed-price contracts in 2015.
The risk of a counterparty not having the financial resources to meet his obligations has, historically, been considered low, and SalMar's losses resulting from bad debts have been small. The Group has guidelines to ensure that sales are made only to customers who have not previously had material payment problems, and that outstanding sums do not exceed defined credit limits. The general rule is that credit insurance must be taken out in connection with all sales.
SalMar's objective is to have sufficient cash, cash equivalents or medium-term credit facilities to meet its short-term funding requirement. The Group prepares rolling cash-flow forecasts to ensure that it has sufficient liquidity at all times. Furthermore, a flexible financing structure is maintained through established credit lines. Unused credit facilities are described in the comments on the Statement of Cash Flow.
The Norwegian aquaculture industry has experienced a period of dramatic growth. Around 100 tonnes of farmed salmon was produced in the early 1970s, while in 2015 output reached approx. 1.3 million tonnes. This growth has been made possible by the industry's unfailing desire to improve and create new, more secure and more efficient ways of producing salmon. Research and development has been an essential part of that effort. The industry has depended on close cooperation with public authorities as well as other commercial, academic and research centres. In a short space of time this collaboration has transformed fish farming from a small niche activity into a modern aquaculture industry that employs thousands of people along the entire Norwegian coast. The aquaculture industry is still young, and a great deal of R&D is required to lift the sector to new heights.
development of specialist knowledge and production skills within its business areas. Knowledge and 'best practices' are developed and disseminated to the entire organisation through the SalMar School. Management in each business area is responsible for identifying and implementing projects and initiatives that can help further develop the Group's competence.
The scale of the company's engagement in R&D has been growing, through both participation in industry organisations and in-house efforts relating to development licences and projects associated therewith. The work has focused primarily on highly topical issues, such as salmon lice control, production optimisation and feeding regimes. Additionally, Sal-Mar has intensified its focus on cleaner fish and fish welfare.
For many years SalMar has engaged in active partnerships with various R&D environments, including partnerships relating to the operation of R&D licences. The scale and professionalism of important development activities has increased and continues to do so. For SalMar it is important to be a professional, but demanding partner, such that the outcomes of ongoing trials are as relevant as possible, while plans and protocols reflect the practicalities of commercial fish farming. SalMar has allocated personnel specifically to organising and assisting R&D environments involved in such collaborative efforts, while production staff are becoming increasingly experienced with regard to the best way to safeguard research results in a busy working day. Proximity to the research, and the opportunity to influence both its planning and its area of focus are important sources of motivation for SalMar. The development of vaccines, optimisation of the use of medication, feeding and nutrition, and technological challenges posed by large-scale operations are examples of important areas for this activity.
SalMar has been particularly keen to raise the quality of the logistics surrounding the fish – both with respect to biosecurity and fish welfare. In 2015 the company has also had its own project team members aboard leased wellboats to gather and systematise data that adequately describes practices and problems. SalMar sees that it is possible to improve logistical quality, and feels that new technology will be a useful tool in the years ahead. SalMar will therefore continue with this effort in 2016.
In recent years, SalMar, through its subsidiary Ocean Farming AS, has been working with leading international maritime environments to develop a new equipment concept that will make it possible to site fish farms further out to sea and in more exposed locations. The design of this installation is based on advanced offshore concepts developed for the petroleum industry. It has been successfully tested at MARINTEK's marine laboratory.
The new offshore farm will be very escape-proof, and the construction – as well as its siting in more exposed areas further out to sea – has the potential to reduce the biological challenges posed by disease and salmon lice.
On 28 February 2016 SalMar was awarded the first eight development licences for Ocean Farming's offshore fish farming concept. SalMar now has a sufficient number of The board was also authorised to introduce a share-based incentive scheme for senior executives. The programme entitles participating employees to receive shares free of charge. Entitlements are accrued over a three-year period. The new share-based incentive scheme is intended to be an annual programme, in which awards and performance criteria are determined each year. It was decided that the maximum number of shares under the 2015 scheme should not exceed 600,000. The board was authorised to draw up more detailed guidelines.
All authorisations granted to the board remain valid until the 2016 AGM, which will be held on 7 June.
On 21 December 2015 the board approved a share-based incentive scheme pursuant to the authorisation granted at the AGM. The final scheme adopted in 2015 encompasses 324,581 shares, and has a duration of three years.
SalMar ASA has one main shareholder, Kverva AS, which owns 53.4 per cent of the company's shares. Kverva AS is controlled by SalMar's founder Gustav Witzøe, who is also a member of the board of directors and of group management in his capacity as director of business development/processing.
The company's 20 largest shareholders own a total of 77.51 per cent of the shares. As at 31 December 2015 SalMar ASA was the seventh largest shareholder with a holding of 1.18 million shares or 1.04 per cent.
SalMar acquired no treasury shares in 2015.
The articles of association contain no stipulations limiting the transferability of the company's shares. Furthermore, the company is not aware of any agreements between shareholders that limit the possibility of trading in or exercising voting rights with respect to shares.
The Group complies with the legislation, regulations and recommendations to which a public limited company is subject, including Section 3-3b of the Norwegian Accounting Act on corporate governance, day-to-day obligations of a company listed on the Oslo Stock exchange and the current version of the Norwegian Code of Practice for Corporate Governance. These principles are discussed in detail in a separate chapter of the annual report.
The Group's board of directors comprises five members elected by the shareholders and two employee representatives. Three of the board members are women, including one employee representative. Female representation among the shareholder-elected directors corresponds to 40 per cent, which is in compliance with Norwegian legislation.
development licences, and construction of the full-scale pilot installation, and the advanced equipment associated with it, can commence within a short space of time. The objective is to be in a position to transfer the first fish to the offshore installation in the summer of 2017. If successful, the project has a huge potential for the entire industry.
tion may be used to purchase company shares in connection with stock option schemes for senior management and as a means of returning value to existing shareholders. Witzøe and Merethe Holte's terms as members of the board came to an end. Bjørn Flatgård and Gustav Witzøe were re-elected for a period of two years, while Merethe Holte left the board and Bente Rathe was elected as a new member.
The development licences have been granted for a period of seven years, but may be converted to ordinary production licences before that time if their objectives and the criteria on which they were granted have been met.
It is SalMar's goal to be a responsible corporate citizen and a sustainable producer of farmed fish and processed products. As an employer, SalMar aims to provide a safe and developing workplace. The Group works continuously to enhance measures and processes associated with health, safety and the environment (HSE), as well as provide professional development opportunities for managers and employees through, among other things, the SalMar School.
Pursuant to section 3-3c of the Norwegian Accounting Act, the board of directors has drawn up guidelines covering business ethics and corporate social responsibility. These are available from the Group's website www.salmar.no. SalMar's activities in the area of social responsibility, including human rights, labour rights, the working environment, equality, discrimination, anti-corruption and the external environment, are described in a separate section of this annual report on pages 25 to 27. In addition, a separate corporate sustainability report for 2015 has been published. This report is also available from the Group's website.
SalMar's shares traded at prices ranging from NOK 108.50 to NOK 155.00 in 2015. The final closing price on 30 December, the last day of trading in 2015, was NOK 155.00.
The Annual General Meeting of 2 June 2015 authorised the board to increase the company's share capital. The authorisation was an extension of one granted at the 2014 AGM.
The authorisation permits the board to increase the company's share capital by up to NOK 2,829,667.50 though the issue of up to 11,318,670 shares in order to finance investments and the acquisition of businesses through cash issues and contributions in kind, as well as reward senior executives participating in ongoing option programmes.
Given the purpose of the authorisation, the board of directors may need to waive the preference rights of existing shareholders. Such a move is allowable under the terms of the authorisation.
The AGM also authorised the board of directors to acquire the company's own (treasury) shares in an amount such that the total holding of treasury shares does not at any time exceed 10 per cent of the outstanding share capital. The authorisa-
At the Group's AGM on 2 June 2015 Bjørn Flatgård, Gustav The NOK weakened against the EUR, USD and GBP through 2015, a trend which may have helped to dampen the effect
Information relating to the competence and background of the various board members is available from SalMar's website www.salmar.no.
At the same AGM Anne Kathrine Slungård was elected as a member of the Nomination Committee for a term of two years. Ms Slungård replaces Bente Rathe.
While the global supply of Atlantic salmon grew by 2 per cent in 2013 and 9 per cent in 2014, it rose by 4 per cent in 2015, bringing the total volume harvested to just over 2.3 million tonnes. Norway increased its combined output by 3 per cent, or around 35,000 tonnes, during the year. Growth in Chile continued, with the region increasing its output of salmon by 1 per cent, corresponding to 8,000 tonnes. Output in North America rose by 28 per cent, or around 33,000 tonnes, during the period. In the Faeroes output fell by 7 per cent, corresponding to just under 6,000 tonnes, while the other markets increased their output by 12 per cent.
Combined Norwegian exports of Atlantic salmon totalled approx. 1,190,000 tonnes round weight in 2015, a rise of 4 per cent compared with 2014. However, the value of Norwegian salmon exports rose by 9 per cent to almost NOK 48 billion in 2015, up NOK 3.9 billion on the year before. Norway exports 76 per cent of its volume to the EU, which all told received a total of 911,000 tonnes of Norwegian salmon. France and Poland increased their imports of Norwegian salmon by 5 per cent and 4 per cent respectively. Exports to key Asian markets (Vietnam, China and Hong Kong) decreased by a combined 14 per cent.
Since August 2014, exports to Russia have been severely affected by that country's ban on imports of Norwegian salmon. Following the introduction of trade restrictions, the volume that was previously destined for the Russian market has been channelled elsewhere. Since August 2014 SalMar has replaced these volumes primarily in existing markets. So far in 2016 (beginning of April), no volumes have been sold to the Russian market.
The price of Atlantic salmon (NASDAQ) fell steadily through the first half of 2015 (from NOK 45 to NOK 35 per kg). It rose again through the third quarter (to around NOK 45 per kg). The price fell to around NOK 37 in the fourth quarter, before increasing sharply towards the end of the year. The year's highest price, NOK 56.49 per kg, was recorded in week 53. Strong prices in the first half of 2015 and a marked rise in the third and fourth quarters contributed to a record average price for the year as a whole. At NOK 41.45 per kg, this was 2 per cent higher than the average for 2014.
for customers who pay in local currencies. During the period the NOK weakened by 6.45 per cent against the EUR, 18.51 per cent against the USD and 12.97 per cent against the GBP.
SalMar sold directly to over 40 different countries in 2015. SalMar's most important market in 2015 was Europe, with Poland, Lithuania and the UK as the largest individual markets. Asia is SalMar's second largest market, with Japan, Korea, Vietnam and Singapore as the largest individual markets. Since SalMar's exports to Russia ceased in August 2014, North America has taken over as the Group's third largest market, with the USA as the largest individual market.
At the close of 2015 Norway's standing biomass stood at 701,400 tonnes round weight, down 3 per cent from the 725,500 tonnes it had at the close of 2014. At the close of 2015 the UK had a biomass of 89,900 tonnes, 3 per cent more than a year before. At 290,200 tonnes, Chile's biomass was down on the figure 12 months previously. The total biomass in the Faeroes was estimated to be 44,300 tonnes at the close of the year, up 13 per cent on a year before.
Preliminary forecasts for 2016 (Kontali) indicate a global decrease in supply of around 7 per cent. The biggest change will come in Chile, which is expected to cut its output by approx. 125,000 tonnes (down 21 per cent) as a result of the loss of biomass due to an algae bloom at the start of the year. In Norway the growth seen in recent years is expected to slacken off. Output in 2016 is expected to decrease by 49,000 tonnes, or 4 per cent. An increase of 7 per cent is expected in the output of Atlantic salmon from producers in the Faeroes. North American producers are expected to have zero growth in output, while those in the UK are expected to increase their output by 2 per cent.
By means of hard work and dedication over many years Sal-Mar has built up a strong position in a growing aquaculture industry. Norway in general, and central Norway in particular, affords excellent natural fish farming conditions, and SalMar will continue to manage these resources in the best possible way for its shareholders, employees, customers and affected local communities.
Based on its strong competitive and financial position, the SalMar Group aims to retain its standing as one of the world's leading aquaculture companies, with further growth and improved profitability in 2016. The board is of the opinion that this is something SalMar is well positioned to achieve.
Although considerable uncertainty attaches to an assessment of future circumstances, both on the market and production sides, the board considers the Group's outlook to be very bright.
The volume harvested in 2016 is expected to be slightly lower than in 2015. This is due primarily to the fact that the lice situation for the Central Norway segment has resulted in SalMar harvesting more individual fish, such that the biomass in this segment is 27 per cent lower at the start of 2016 than it was a year before. In Northern Norway, where lice numbers From a financial performance point of view, 2015 was a good year for SalMar. The board deems SalMar's financial position to be very good and is therefore recommending a dividend of NOK 10.00 per share. In the opinion of the board,
are lower, SalMar expects to increase its harvested volume from 39,500 tonnes to 50,000 tonnes. Overall, SalMar expects to harvest 133,000 tonnes in 2016. This is based on 100 wholly owned licences and joint operation of 13 licences owned by partner entities. In 2016 a larger proportion of the output will be switched to a so-called green operating concept, with associated requirements with respect to equipment and operational standards. During the year a total of 16 licences with be linked to "green" production. This is part of the award criteria for the acquisition of eight green licences.
SalMar's share of the volume harvested by Norskott Havbruk (50.0 per cent) in 2016 is expected to be around 13,000 tonnes.
It is expected that around 40 per cent of the volume will be harvested in the first half of the year, while the remaining 60 per cent will be harvested in the second half. Contract coverage in 2016 is, at the time of writing, just over 30 per cent of the expected harvested volume. The volume is highest in the first half of the year.
SalMar will continue its ongoing maintenance and upgrade investment programme, and expects to invest around NOK 325 million in 2016. The bulk of this will be associated with marine-phase production. The investment in increased smolt capacity in Senja will come to fruition in 2016. SalMar will also begin the expansion of its main smolt production facility at Follafoss in Trøndelag. This will realise our strategy of becoming self-sufficient in smolt, including the need for large smolt. In total, this will cost almost NOK 350 million in 2016. Investment in the offshore farm installation will also get fully underway in 2016, with completion set for the first half of 2017. SalMar's financial capacity for continued growth is strong. The SalMar culture, expressed through our corporate tenets, is fundamental to the entire business, and our vision, a "Passion for Salmon", is the lodestone that guides us on our way towards realising our ambition of being the world's best aquaculture company. SalMar's employees are our most important resource in our quest for further success. Continuous development of the organisation is therefore a key focus area for the Group. The board would like to thank all the company's employees for their dedicated efforts, on which the SalMar Group's long-term success is based.
The lice situation experienced by Fish Farming Central Norway remains challenging. The regulatory regime for the treatment of lice compels the industry to ensure that during the spring of 2016 there shall be no more than 0.1 louse per fish. This is to ensure that wild salmon have a safe journey on their way out to sea. Intensive delousing treatments makes farmed salmon less robust and increases the risk of mortality. The organisation's emergency response capability has therefore been put on high alert. This capability is costly, and SalMar expects it to remain at a high level through 2016. SalMar is working continuously to be in a good position to deal with any biological challenges. This is achieved through investments in important tools, such as the capacity to produce larger smolt and so reduce the time the fish spend at sea, the use of cleaner fish as a delousing method, wellboats and mechanical equipment to provide sufficient delousing capacity, and, if necessary, sanitary harvesting.
SalMar has a high emergency response capacity on the harvesting side, so that extraordinary incidents can be dealt with in the prescribed manner. In addition, efforts are constantly being made to develop the most sustainable operating areas and the best locations. In this context the realisation of the offshore fish farming installation will be a historic milestone. The award of development licences was the trigger for this pilot project, in which SalMar is investing around NOK 690 million. SalMar is convinced that fish farming must be carried out on the fish's terms, and not be constrained by equipment limitations.
Feed is the most important cost component in the farming of salmon, accounting for 55-60 per cent of total production costs. Feed prices rose steadily in 2015, due to higher prices on important input factors, such as fishmeal and fish oil. This price increase has been reinforced by the weakening of the NOK against the USD. So far there are no indications of any material changes in prices in 2016.
In total this means that SalMar expects the cost price of the harvested biomass to be higher in 2016 than in 2015.
Gustav Witzøe
Director
Frøya, 14th of April 2016
Tove Elin Nedreberg Director
Geir Berg Director/Employee representative
Bjørn Flatgård
Chair
Kjell A. Storeide Director
Bente Rathe
Director
Leif Inge Nordhammer President & CEO
Merete Gisvold Sandberg Director/Employee representative
Statement regarding the determination of salary and other benefits payable to senior executives of SalMar ASA for 2016.
Pursuant to section 6-16a of the Public Limited Companies Act, the board of directors of SalMar ASA (the Company) has issued the following statement containing guidelines for the determination of salary and other benefits payable to the Company's CEO and other senior executives (collectively termed "senior executives") in the 2016 financial year. The statement was approved by the board of directors of SalMar ASA on 14 April 2016. In accordance with the provisions of sections 6-16a and 5-6(3), the guidelines will be submitted to SalMar ASA's Annual General Meeting (AGM) on 2 June 2015 for a consultative vote, with the exception of clause 3 "Share-based incentive schemes", which will be submitted to the AGM for approval.
The guidelines in clause 3 "Share-based incentive schemes" are binding on the board. The remaining guidelines are not binding, though any deviations therefrom must be decided by the board. In the event of any such decision, the reason for deviating from the guidelines must be noted in the board meeting's minutes.
The board of directors determines the salary and other benefits payable to the CEO. The CEO determines the salary and other benefits payable to other senior executives. The board shall exercise general oversight of the remuneration paid to other senior executives, and may issue more specific bonus criteria for the coming year. Variable salary increments under the scheme may not exceed 33 % of the individual executive's basic salary. Within this framework, individual bonuses are determined on the basis of an overall assessment of contribution, performance, development and results achieved.
with the establishment of annual programmes. The board will adjust these annual programmes as it deems necessary, and each individual programme will be submitted to the AGM for approval.
guidelines for the remuneration of other senior executives in addition to those presented below. If the CEO wishes to offer remuneration to senior executives that exceeds such more specific guidelines, a proposal therefor shall be submitted to the board of directors for approval.
The Company's senior executive remuneration policy is based on the following main principles:
SalMar has a share-based incentive scheme for senior executives in the Group. The first such programme was approved by the AGM on 4 June 2014. The programme encompasses incumbents of senior positions and key individuals within the Group. The programme entitles the employee to receive shares free of charge. This entitlement accrues over a three-year period. The individual employee may be awarded share entitlements worth the equivalent of 6 months' salary. Accrual of 2/3 of the entitlements depends on the achievement of predefined performance criteria. The value of the shares released under the various programmes in an individual year may not exceed one full year's salary. The intention is that the incentive scheme shall be continued In principle, senior executives must serve a 6-month period of notice. In selected cases, and depending on the position, severance pay of 6 to 12 months may be paid. Benefits-in-kind The Company shall not offer benefits-in-kind over and above these which are normal for senior executives in comparable companies. Other variable elements of remuneration In addition to that stipulated above, the Company may not offer senior executives any variable elements in the remuneration they receive or special benefits that supplement their basic salary.
On the basis of these main principles, the board has drawn up the following remuneration structure for the company's senior executives.
Basic salary is the main element in the executive's compensation package. Basic salary shall correspond to the going rate in the market, and shall reflect the individual position's duties and level of responsibility.
SalMar has a bonus scheme for group management that is determined by the board of directors. The board carries out an annual assessment of the scheme and determines the
Members of group management participate in the Group's general pension scheme. The scheme is a defined contribution plan, in which contributions correspond to 7 % of salary up to 12 G (G being the basic unit of calculation used by the Norwegian National Insurance Scheme).
The Company's senior executive remuneration policy for the 2015 financial year has been carried out in accordance with the statement for 2015 adopted by the AGM on 2 June 2015.
53
Passion for Salmon
| OPERATING REVENUES AND OPERATING EXPENSES | NOTE | 2015 | 2014 |
|---|---|---|---|
| Sales revenues | 11, 23 | 7 303 506 | 7 160 010 |
| Other operating revenues | 27 | 22 696 | 25 877 |
| Total operating revenues | 7 326 202 | 7 185 887 | |
| Change in stocks of goods in progress and finished goods | -246 712 | -162 119 | |
| Cost of goods sold | 3 809 523 | 3 337 411 | |
| Payroll costs | 19, 24, 25 | 765 881 | 710 430 |
| Depreciation of PP&E and intangible assets | 4, 5 | 307 280 | 275 765 |
| Write-downs of PP&E | 4, 5 | 14 169 | 2 399 |
| Other operating expenses | 5, 12, 21, 24, 26 | 1 272 186 | 1 142 953 |
| Total operating expenses | 5 922 328 | 5 306 839 | |
| Operational EBIT | 1 403 873 | 1 879 048 | |
| Fair value adjustments | 14 | 39 932 | -232 349 |
| Operating profit | 1 443 805 | 1 646 699 | |
| Income from investments in associates | 9 | 40 242 | 96 136 |
| FINANCIAL ITEMS | |||
| Interest income | 3 477 | 9 057 | |
| Financial income | 685 | 2 044 | |
| Interest expenses | 17 | 98 780 | 124 193 |
| Financial expenses | 5 744 | 902 | |
| Net financial items | -100 362 | -113 994 | |
| Profit before tax | 1 383 686 | 1 628 841 | |
| Tax | 18 | 254 891 | 413 364 |
| Net profit for the year | 1 128 795 | 1 215 477 | |
| COMPREHENSIVE INCOME | |||
| Items which may subsequently be reclassified to profit & loss | |||
| Translation differences and items of comprehensive income in associates | 58 475 | 58 751 | |
| Translation differences in subsidiaries | 4 705 | 3 312 | |
| Total comprehensive income for the year | 1 191 975 | 1 277 540 | |
| Non-controlling interests' share of net profit for the year | 6 | 25 506 | 22 977 |
| Controlling interest's share of net profit for the year | 1 103 289 | 1 192 500 | |
| Non-controlling interests' share of comprehensive income | 6 | 25 506 | 22 977 |
| Controlling interest's share of comprehensive income | 1 166 469 | 1 254 563 | |
| Earnings per share | 28 | 9,85 | 10,65 |
| Diluted earnings per share | 28 | 9,83 | 10,65 |
NOK 1000
| ASSETS | NOTE | 2015 | 2014 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| INTANGIBLE ASSETS | |||
| Licences, patents, etc | 4, 20 | 2 466 171 | 2 451 271 |
| Goodwill Total intangible assets |
4 | 447 372 2 913 542 |
447 372 2 898 643 |
| PROPERTY, PLANT & EQUIPMENT | |||
| Land, building & other real property | 5, 20 | 617 182 | 489 496 |
| Plant, equipment & operating consumables | 5, 20 | 1 554 914 | 1 336 126 |
| Vessels, vehicles, etc | 5, 20 | 239 863 | 191 953 |
| Total property, plant & equipment | 2 411 959 | 2 017 575 | |
| NON-CURRENT FINANCIAL ASSETS | |||
| Investments in associates | 9 | 627 681 | 523 711 |
| Investments in shares & other securities | 10 | 289 | 519 |
| Pension fund assets | 10, 12, 19 | 1 397 | 1 592 |
| Other receivables | 10, 12, 24 | 6 840 | 13 403 |
| Total non-current financial assets | 636 206 | 539 225 | |
| Total non-current assets | 5 961 707 | 5 455 443 | |
| CURRENT ASSETS | |||
| Biological assets | 13, 20 | 3 306 052 | 3 114 684 |
| Other inventory | 13, 20 | 328 216 | 206 454 |
| Total inventory | 3 634 268 | 3 321 138 | |
| RECEIVABLES | |||
| Trade receivables | 10, 12, 20 | 815 540 | 888 219 |
| Other receivables | 10, 11, 12 | 258 288 | 292 644 |
| Total receivables | 1 073 828 | 1 180 863 | |
| Bank deposits, cash & cash equivalents | 10, 15, 17 | 273 696 | 166 963 |
| Total current assets | 4 981 792 | 4 668 964 | |
| TOTAL ASSETS | 10 943 499 | 10 124 407 | |
As at 31 December NOK 1000
| NOTE | 2015 | 2014 |
|---|---|---|
| 4,20 | 2 4 6 6 1 7 1 | 2451271 |
| 4 | 447 372 | 447 372 |
| 2913542 | 2898643 | |
| 5,20 5, 20 |
617182 1554914 |
489496 1 336 126 |
| 5,20 | 239863 | 191953 |
| 2411959 | 2017575 | |
| 9 | 627 681 | 523711 |
| 10 | 289 | 519 |
| 10, 12, 19 | 1397 | 1592 |
| 10, 12, 24 | 6840 | 13403 |
| 636 206 5961707 |
539 225 | |
| 5 455 443 | ||
| 13,20 | 3 306 052 | 3114684 |
| 13,20 | 328 216 | 206 454 |
| 3634268 | 3 3 2 1 1 3 8 | |
| 10, 12, 20 | 815540 | 888219 |
| 10, 11, 12 | 258 288 | 292 644 |
| 1073828 | 1180863 | |
| 10, 15, 17 | 273696 | 166 963 |
| 4 981 792 | 4668964 | |
| 10 943 499 | 10 124 407 | |
Gustav Witzøe Director
Frøya, 14th of April 2016
Tove Elin Nedreberg Director
Director/Employee representative
Bjørn Flatgård
Geir Berg Bente Rathe
Chair
Kjell A. Storeide
Director
Director
Leif Inge Nordhammer President & CEO
Merete Gisvold Sandberg Director/Employee representative
As at 31 December NOK 1000
| EQUITY AND LIABILITIES | NOTE | 2015 | 2014 |
|---|---|---|---|
| EQUITY | |||
| PAID-IN EQUITY | |||
| Share capital | 16 | 28 325 | 28 325 |
| Treasury shares | -295 | -325 | |
| Share premium fund | 415 286 | 415 286 | |
| Other paid-in equity | 57 768 | 34 834 | |
| Total paid-in equity | 501 084 | 478 120 | |
| RETAINED EARNINGS Distributable reserve |
4 646 272 | 4 598 535 | |
| Total retained earnings | 4 646 272 | 4 598 535 | |
| Non-controlling interests | 6 | 79 684 | 60 622 |
| Total equity | 5 227 039 | 5 137 277 | |
| NON-CURRENT LIABILITIES | |||
| Deferred tax | 18 | 1 230 815 | 1 262 594 |
| Debt to credit institutions | 2, 10, 17, 20 | 2 371 338 | 1 780 174 |
| Leasing liabilities and other non-current liabilities | 2, 5, 10, 17, 20 | 390 035 | 411 388 |
| Total non-current liabilities | 3 992 187 | 3 454 156 | |
| CURRENT LIABILITIES | |||
| Debt to credit institutions | 2, 10, 17, 20 | 140 421 | 276 667 |
| Trade payables | 10, 17 | 649 274 | 409 485 |
| Tax payable | 18 | 292 320 | 321 839 |
| Public charges payable | 153 262 | 143 757 | |
| Other current liabilities | 10, 11, 22 | 488 996 | 381 226 |
| Total current liabilities | 1 724 273 | 1 532 974 | |
| Total liabilities | 5 716 460 | 4 987 130 | |
| TOTAL EQUITY AND LIABILITIES | 10 943 499 | 10 124 407 |
As at 31 December NOK 1000
| NOTE | 2015 | 2014 | |
|---|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES: | |||
| Profit before tax | 1 383 686 | 1 628 841 | |
| Tax paid in the period | 18 | -315 132 | -25 843 |
| Depreciation and write-downs | 4, 5 | 321 449 | 278 164 |
| Options charged to expenses | 24, 25 | 22 933 | 5 459 |
| Share of profit/loss from associates | 9 | -40 242 | -96 136 |
| Gains/losses on sale of non-current assets | 5 | 893 | 628 |
| Gains/losses on sale of non-current financial assets | 117 | 0 | |
| Change in fair value | 14 | -39 932 | 232 349 |
| Change in inventory/biological assets | -165 868 | -198 512 | |
| Change in trade receivables | 72 679 | -219 863 | |
| Change in trade payables | 239 789 | -46 510 | |
| Change in other time-limited items | 141 921 | 88 427 | |
| Net cash flow from operating activities | 1 622 292 | 1 647 004 | |
| CASH FLOW FROM INVESTING ACTIVITIES: | |||
| Receipts from sale of property, plant & equipment | 5 | 0 | 500 |
| Payments for purchase of property, plant & equipment and intangible assets 4, 5 | -726 677 | -1 040 058 | |
| Payments for acquisitions of businesses, net of cash acquired | 7 | 0 | -28 563 |
| Payments for purchase of shares and securities | 9 | -43 394 | 0 |
| Dividend from associates and TRS shares | 9 | 46 000 | 36 250 |
| Net receipts/payments from change in non-current financial assets | -674 | 0 | |
| Net cash flow from investing activities | -724 745 | -1 031 871 | |
| CASH FLOW FROM FINANCING ACTIVITIES: | |||
| New long-term borrowings | 17 | 1 500 000 | 1 804 874 |
| Repayment of long-term borrowings | 17 | -952 062 | -2 143 244 |
| Net change in overdraft | 17 | -123 149 | -18 989 |
| Interest received | 3 477 | 9 057 | |
| Interest paid | 17 | -98 780 | -124 193 |
| Payments for redemption of options | 24, 25 | 0 | -10 219 |
| Cash effect exit of non-controlling interests | 8 | 0 | -133 373 |
| Cash effect exit of subsidiaries | 8 | 0 | -7 538 |
| Payment of dividend | -1 124 900 | -898 208 | |
| Other changes | -107 | -648 | |
| Net cash flow from financing activities | -795 521 | -1 522 481 | |
| Net change in bank deposits, cash & cash equivalents | 102 027 | -907 348 | |
| Foreign exchange effects | 4 705 | 3 312 | |
| Bank deposits, cash & cash equivalents as at 1 Jan | 166 963 | 1 070 998 | |
| Bank deposits, cash & cash equivalents as at 31 Dec | 273 696 | 166 963 | |
| Unused drawing rights | 17 | 2 535 000 | 3 136 193 |
Restricted funds account for NOK 75,591,000 of the company's cash & cash equivalents of NOK 273,696,000. See Note 15 for further details.
Passion for Salmon 57
Notes to the financial statements
NOK 1000
| 2015 | NOTE | capital | Share Treasury premium shares |
Share fund |
Other | paid-in Translation equity differences |
Distri- reserve |
Non butable controlling interests |
Total equity |
|---|---|---|---|---|---|---|---|---|---|
| Equity as at 1 Jan 2015 | 28 325 | -325 415 286 34 834 | 4 458 | 4 594 077 | 60 622 | 5 137 277 | |||
| Net profit for the year COMPREHENSIVE INCOME |
1 103 289 | 25 506 | 1 128 795 | ||||||
| Translation differences in associates | 9 | 58 475 | 58 475 | ||||||
| Translation differences in subsidiaries | 4 705 | 4 705 | |||||||
| Total comphrehensive income | 4 705 | 58 475 | 63 180 | ||||||
| Total comphrehensive income for the year | 0 | 0 | 0 | 0 | 4 705 | 1 161 764 | 25 506 | 1 191 975 | |
| TRANSACTIONS WITH SHAREHOLDERS | |||||||||
| Award of options | 25 | 22 933 | 22 933 | ||||||
| Deferred tax on options | 18 | 1 398 | 1 398 | ||||||
| Options redeemed | 25 | 30 | -30 | ||||||
| Payment of dividend | 16 | -1 120 000 | -6 436 -1 126 436 | ||||||
| Other changes | -100 | -100 | |||||||
| Total transactions with shareholders | 0 | 30 | 0 22 933 | 0 -1 118 732 | -6 444 -1 102 205 | ||||
| Equity as at 31 Dec 2015 | 28 325 | -295 415 286 57 768 | 9 164 | 4 637 108 | 79 684 | 5 227 039 |
| 2014 | NOTE | capital | shares | Share Share Treasury premium fund |
Other | paid-in Translation equity differences |
Distri- reserve |
Non butable controlling interests |
Total equity |
|---|---|---|---|---|---|---|---|---|---|
| Equity as at 1 Jan 2014 | 28 325 | -325 415 286 32 822 | 1 145 | 4 245 724 337 808 | 5 060 784 | ||||
| Net profit for the year | 1 192 500 | 22 977 | 1 215 477 | ||||||
| COMPREHENSIVE INCOME | |||||||||
| Translation differences in ass. | 9 | 58 911 | 58 911 | ||||||
| Items of comprehensive income in ass. | 9 | -160 | -160 | ||||||
| Translation differences in subsidiaries | 3 312 | 3 312 | |||||||
| Total comprehensive income | 3 312 | 58 751 | 62 063 | ||||||
| Total comprehensive income for the year | 0 | 0 | 0 | 0 | 3 312 | 1 251 251 | 22 977 | 1 277 540 | |
| TRANSACTIONS WITH SHAREHOLDERS | |||||||||
| Award of options | 25 | 2 012 | 2 012 | ||||||
| Payment of dividend | 25 | -896 000 | -2 208 | -898 208 | |||||
| Additions non-controlling interests | 7 | 27 656 | 27 656 | ||||||
| Buyout of non-controlling interests | 8 | -6 392 -325 612 | -332 003 | ||||||
| Other changes | -509 | -509 | |||||||
| Total transactions with shareholders | 0 | 0 | 0 | 2 012 | 0 -902 900 -300 164 -1 201 044 | ||||
| Equity as at 31 Dec 2014 | 28 325 | -325 415 286 34 834 | 4 458 | 4 594 077 | 60 622 | 5 137 277 |
Passion for Salmon 59
58
SALMAR ANNUAL REPORT2015
SalMar ASA is registered and domiciled in Norway, and the company's shares are traded on the Oslo Stock Exchange. The company's head office is located in Frøya. The consoli dated financial statements were formally approved by the board of directors on 14 April 2016.
The most important accounting principles used in the prepa ration of the consolidated financial statements are presented below. These principles are applied in the same way in all the periods presented unless otherwise indicated.
The consolidated financial statements have been drawn up in accordance with IFRS and interpretations determined by the International Accounting Standards Board that have been approved by the EU.
The consolidated financial statements are based on the prin ciples of historic cost, with the exception of the following accounting items, which are recognised at fair value:
During the year no new or amended standards were issued which will affect the Group's financial results or position.
Standards and interpretations which have been adopted prior to publication of the consolidated financial statements, but which will come into effect at a future date, are listed below. Only standards that are expected to affect the consolidated financial statements are presented.
IFRS 8 Operating Segments. It is required that an account be given of the assessments made if operating segments are merged. Operating segments that are merged together must be identified, and it must be disclosed which financial indicators have been considered when it has been concluded that they have similar financial characteristics. Amendments come into effect from 1 January 2016.
IFRS 9 Financial Instruments introduces new requirements for the classification and measurement of financial assets. No assessment has been made of the extent to which the standard may affect the Group's accounting for financial assets. The standard continues the classification rules for financial liabilities, but changes the presentation of adjust ments in value associated with own credit risk for liabilities that are voluntarily classified at fair value in profit and loss. The standard is compulsory with effect from 1 January 2018.
IFRS 15 Revenues from Contracts with Customers is a new shared standard for revenue recognition, and replaces all existing standards and interpretations relating thereto. The standard applies to all revenue contracts, and contains a model for recognition and measurement of sales of certain non-financial assets. The standard is not likely to have any 31 December, SalMar ASA had a majority of voting rights in all its subsidiaries.
The consolidated financial statements have been prepared in accordance with uniform accounting principles for similar transactions in all the companies included in the consolidated accounts. All material transactions and balances between group companies have been eliminated.
The acquisition method is used in connection with the rec ognition of business combinations. Subsidiaries are consoli dated from the date on which the Group achieves control, and are excluded from consolidation when control is ceded. This means that the acquired company's assets and liabilities are reported at fair value on the date of acquisition, with any excess value being classified as goodwill. IAS 27 and IFRS 3 build largely on the entity perspective in connection with acquisitions where control is established. The exception is goodwill, where for each acquisition it is optional whether to recognise only the controlling owner's share or 100 per cent. For acquisitions undertaken by the Group up until 31 December 2015, only SalMar's share of goodwill is included in the balance sheet. With respect to future acquisitions, the allocation of goodwill will be assessed on an individual basis. In those cases where the fair value of the acquired assets exceeds the amount paid, the difference is treated as income in profit and loss. Deferred tax is capitalised to the extent to which identifiable excess values ascribed to assets and liabilities lead to an increase or decrease in future tax pay able when these differences are reversed in future periods. Deferred tax is capitalised and calculated using a nominal, undiscounted tax rate.
able to non-controlling interests is presented on a separate line under group equity.
Transactions with minority interests in subsidiaries are recognised as equity transactions. In connection with the purchase of shares from non-controlling interests, the dif ference between the consideration paid and the shares' rela -
material impact on the Group's revenue recognition princi ples. It is expected to be implemented on 1 January 2018 at the earliest.
IFRS 16 Leases replaces the existing IFRS standard for leas ing contracts, IAS 17 Leases. IFRS 16 sets out principles for recognition, measurement, presentation and disclosures for both parties to a leasing agreement, ie the customer (lessee) and the proprietor (lessor). The new standard requires that the lessee recognises assets and liabilities relating to the majority of leasing agreements, which is a material change from today's principles. With respect to the lessor, IFRS 16 is almost entirely a continuation of the existing principles in IAS 17. As such, a lessor shall continue to classify his leasing agreements as operational or financial leasing agreements, and shall account for these two types differently. The standard is not deemed to be of material significance for the Group's financial position. An overview of total future leasing payments is presented in Note 21 to the consolidated finan cial statements. Implementation is expected on 1 January 2019 at the earliest.
IAS 1 Presentation of Financial Statements. Amendments to IAS 1 are intended to promote greater use of professional judgement with respect to the disclosures to be included in the notes, and how the financial statements may be struc tured. The Group considers that the amendments will allow less important information to be toned down, and that other ways of organising the information in the notes may be rel evant. Otherwise, the amendment does not affect the finan cial statements. The amendments come into effect from 1 January 2016.
When shares are acquired in stages, the value of the assets and liabilities on the date the Group was formed is utilised. Later acquisition of assets in existing subsidiaries will not affect the value of assets or liabilities. Should indications of impairment arise, the book value of the investment is written down. Any impairment in value is recognised in the share of profit/loss from associates in the financial statements. When the Group's share of losses exceeds the investment in an associate, the Group's capital ised value is written down to zero, and no further losses are recognised.
Amendments in other standards and interpretations relate to standards and interpretations that are not relevant to the Group.
The consolidated financial statements include SalMar ASA and its subsidiaries as at 31 December 2015. The Group therefore controls an entity in which it has invested when, and only when the Group:
When the Group no longer has control, any remaining share holding is measured at fair value, with changes recognised in profit and loss. Fair value subsequently represents acquisition cost in future accounting periods, either as an investment in an associated company, jointly controlled entity or financial asset. Amounts which were previously recognised in compre hensive income relating to this company are treated as if the Group had divested the underlying assets and liabilities. This may mean that amounts which have previously been recog nised in comprehensive income are reclassified to profit and loss. The SalMar ASA Group See Note 6 for information on the consolidated companies. Non-controlling interests The share of the profit or loss after tax attributable to noncontrolling interests is presented on a separate line after the Group's net profit for the year. The share of equity attribut - If an investment ceases to be an associate, such that the equity method no longer applies, the remaining shareholding is measured at fair value. Important accounting estimates and evaluations Preparation of the financial accounts in accordance with IFRS requires that management make evaluations, estimates and assumptions that affect the application of accounting prin ciples and the book value of assets and liabilities in the bal ance sheet, as well as figures for revenue and expenses for the financial year. Estimates and their underlying assump tions are based on historical experience and other factors deemed relevant and probable at the time the evaluations are made. These evaluations affect the book value of the assets and liabilities where the valuation is not based on other sources. Estimates are reviewed continuously and final values and results may differ from these estimates. Changes in accounting estimates are included in the period in which the changes occur.
If the Group has a majority of the voting rights in an entity, the entity is presumed to be a subsidiary of the Group. To substantiate this presumption, and where the Group does not hold a majority of the voting rights, the Group considers all relevant facts and circumstances to evaluate whether the Group has control over the entity in which it has invested. This includes assessing the size of its shareholding, its vot ing share, the shareholder structure and its relative strength, as well as options controlled by the Group and shareholder agreements or other agreements. The assessment is per formed for each investment. A reassessment is performed when facts and circumstances indicate that changes have taken place in one or more of the controlling elements. As at tive share of the book value of the subsidiary's net assets is recognised in the parent company's equity. Gains and losses deriving from the sale of shares to non-controlling interests is recognised correspondingly in equity.
The Group has investments in associates. Associates are en tities over whose financial or operational management the Group has significant influence, but not control or joint con trol. The factors used to determine whether the Group has a decisive influence over a company correspond to those used to assess control of subsidiaries – see the discussion above.
Associates are recognised in accordance with the equity method from the date on which significant influence is achieved until such influence is ceded. In connection with ini tial recognition, associates are valued at acquisition cost. The Group's share of the profit/loss from associates is recognised in the capitalised value of the entity, while the Group's share of profit/loss is recognised in the Group's profit and loss. Goodwill relating to associates is included in the capitalised value of the investment, and is not tested individually for im pairment. The Group's share of profit/loss from investments in associates is presented on a separate line in the Income Statement. Correspondingly, the Group's share of sums rec ognised directly in equity in underlying investments is pre sented in the Group's statement of equity. Unrealised gains associated with transaction with associates are eliminated against the Group's share of the business.
The evaluations and estimates deemed to be of greatest sig nificance for the Group are as follows:
In accordance with IAS 41, the Group measures live fish at fair value. The difference between the fair value of the biological
assets at the start of the period and at its close is recognised as a positive or negative adjustment. The estimate of fair value is based on market prices of the particular weight class on the balance sheet date. The sales prices used are based on external forward prices, contract prices and/or the most relevant information available for the period in which the fish is due to be harvested. The calculation of fair value is based on estimates for volume, quality and normal production, harvesting and sales costs.
Fair value adjustment of the biomass based on these estimates has no impact on cash flow and does not affect Operational EBIT.
Other biological assets (roe and smolt) are valued at cost price, since little biological transformation has occurred.
See Note 13 'Inventory and biological assets' for further details.
In connection with an acquisition the cost price of the acquired entity must be allocated such that the opening balance in the Group's accounts reflects the estimated fair value of the acquired assets and liabilities. To determine the fair value at acquisition alternative methods are used to determine the fair value of assets for which there is no active market. Value in excess of that which can be attributed to identifiable assets and liabilities is recognised in the balance sheet as goodwill. If the fair value of equity in the acquired entity exceeds the consideration paid, the excess is immediately recognised as income. The allocation of cost price in connection with business combinations changes if new information is obtained with respect to the fair value on the date of takeover and assumption of control, no later than 12 months after the acquisition took place.
See Note 7 'Business combinations' for further details.
The Group classifies leasing agreements in accordance with IAS 17. Operating assets which are leased on terms which transfer the bulk of the financial risk and control to the company (financial leasing) are recognised in the balance sheet as property, plant and equipment, and the corresponding leasing liability is included under non-current liabilities at the present value of the leasing payments. The Group's most important leasing agreement is that with Nordskag Næringspark for the InnovaMar fish landing facility. For accounting purposes, this leasing agreement is treated as a financial leasing item, see Note 5 for further details. Important factors relating to a subjective assessment of those elements in the agreement of significance to its classification for accounting purposes are the present value of the minimum rent payable, including the discount rate applied, as well as various stipulations in the leasing agreement concerning the extent to which the bulk of risk and benefits associated with ownership lie with the lessor or the lessee.
Revenues from the sale of goods are taken to income when both risk and control have been largely transferred to the customer. This will normally occur at the moment of delivery. Revenue is recognised at the value of the consideration when the transaction takes place.
sidiary SalMar Japan KK use NOK as their functional currency. In addition, the company Scottish Seafarm Ltd uses GBP as its function currency. The company is wholly owned by the associate Norskott Havbruk AS. See Note 9 for further details.
All transactions in foreign currencies are translated into NOK at the time the transaction takes place. Realised foreign exchange gains/losses deriving from the settlement and translation of monetary items in foreign currencies at the rate in effect on the balance sheet date are recognised in operational EBIT.
Any foreign exchange differences on monetary items that are part of the net investment in a foreign entity are recognised in comprehensive income.
The fair value of currency hedging instruments is calculated on the balance sheet date at the market price for contracts with a similar maturity profile. Changes in the fair value of such instruments are recognised in the profit and loss account under operational EBIT (sales revenues) when they do not meet the requirements for hedge accounting. The exception is a change in the fair value of forward currency contracts which have been entered into to hedge future deliveries. These are recognised in profit and loss on the line for fair value adjustments. Financial derivatives are classified as current assets or current liabilities in the balance sheet. See Note 11 for further details.
The profit and loss account and balance sheet of group companies (none with hyperinflation) with a functional currency other than the presentation currency are translated thus: a) The balance sheet is translated at the exchange rate in effect on the balance sheet date.
b) The profit and loss account is translated at the average exchange rate (if the average does not give generally reasonable estimate of the transaction rate, the actual transaction rate is used).
c) Translation differences are recognised in comprehensive income and are specified as a separate item under equity.
Translation differences relating to net investments in non-Norwegian businesses and financial instruments designated as hedging instruments are recognised in comprehensive income and as a separate item under equity. In connection with the sale of all or part of a foreign business the associated translation difference is reclassified from comprehensive income to ordinary profit and loss as part of the gain/loss from the sale. Goodwill and excess values deriving from the acquisition of foreign entities are treated as assets and liabilities in the acquired entity and are translated at the exchange rate in effect on the balance sheet date.
Intangible assets that are purchased individually are capitalised at fair value. Intangible assets acquired in connection with the purchase of a business entity are capitalised at acquisition cost when the criteria for separate posting are met.
Intangible assets with a limited economic lifespan are depreciated systematically. Intangible assets are written down to their recoverable value if the expected financial benefits do not cover their book value and any remaining production costs.
Operating revenues are recognised less public charges, discounts, bonuses and other sales costs. The timing of the transfer of risk to the customer depends on the delivery terms stipulated in the sales contract. Delivery terms vary from country to country and from customer to customer.
Dividend is taken to income when the shareholders' right to receive a dividend has been authorised by the Annual General Meeting.
Operating grants are recognised periodically and classified together with the revenue they are intended to augment or the expense they are intended to reduce. Investment grants are recognised as a deferred revenue, and are taken to income in line with depreciation of the investment they are intended to cover.
Operating segments are reported in the same way as they are reported internally to the company's highest decisionmaking bodies. The company's highest decision-making body, which is responsible for the allocation of resources and the evaluation of the operating segments' earnings, is defined as group management. The Group has two business activities: the farming of salmon and trout on the one hand, and its processing and sale on the other. The fish farming segment is divided into three regions: Fish Farming Central Norway, Fish Farming Northern Norway and Fish Farming Rauma. These three are defined as separate segments which are reported and administered as such internally. In addition, a Sales & Processing segment reports separately.
Liquid assets consist of cash and bank deposits.
Assets which form part of the production cycle or fall due for payment within 12 months are classified as current assets. Other assets are classified as non-current assets. Liabilities which form part of the production cycle or fall due for payment within 12 months are classified as current liabilities. Other liabilities are classified as non-current.
Any proposed dividend is not capitalised as a liability until the Group has assumed an irrevocable obligation to pay the dividend, normally after it has been authorised by the Annual General Meeting.
The next year's instalment on long-term debt is classified as a current liability.
Changes in the fair value of biological assets are presented on a separate line under operating profit/loss, along with the unrealised value of Fish Pool contracts and any change in the unrealised value of forward currency contracts that have been entered into to hedge future deliveries. Operating profit/loss is reported before fair value adjustment of the biomass in order to show the Group's underlying sales performance during the period.
The consolidated financial statements are presented in Norwegian kroner (NOK), which is also the parent company's functional currency and the Group's presentation currency. All companies, with the exception of the wholly owned subCosts relating to research and development are charged as expenses as they accrue. R&D costs are capitalised when specific criteria relating to future revenues are met. Capitalised R&D costs are recognised at acquisition cost less accumulated depreciation and write-downs. Capitalised R&D costs are depreciated in a straight line over the asset's estimate period of use.
Breeding nuclei are capitalised at acquisition cost, less accumulated depreciation and write-downs.
Licences are capitalised at cost and are time limited. In connection with normal operations licences are not subject to relinquishment requirements. Licences are not depreciated, since the rights they confer are perpetual, but are tested annually for impairment. Any excess value identified in connection with the acquisition of licence leasing agreements is capitalised as an intangible asset.
Prepaid leasing costs associated with partnership agreements are deemed to confer the right to use of an intangible asset and are classified as an intangible asset. Leasing costs are charged as expenses over the period of the lease.
When another business entity is taken over for a consideration that exceeds the value of the individual assets, the difference is entered as goodwill in the balance sheet. Goodwill deriving from the purchase of subsidiaries is included under intangible assets, while goodwill deriving from the acquisition of associates is included under shares in associates. Goodwill is entered at historic cost less accumulated depreciation up to 2004.
Goodwill is not depreciated (after 1 January 2005), but is tested annually for impairment, or more often if there are indications that its value is lower than book value.
When assessing the need to write down goodwill, it is assigned to relevant cash flow-generating entities or those groups which are expected to benefit from the acquisition. Write-downs are performed in accordance with an assessment of the recoverable value of each of the cash flow-generating entities to which the goodwill is assigned. To identify the Group's cash flow-generating entities the assets are grouped according to the lowest level to which separate and independent cash flows may be ascribed. Recoverable value is calculated on the basis of value in use. This is arrived at by estimating future cash flows for the next three years based on approved budgets and forecasts. Cash flows after three years are assumed to equal the expected rate of inflation. Cash flows are discounted by a rate of interest before tax which takes account of relevant market risk. If the calculated value in use is lower than the book value of the cash flowgenerating entity, goodwill is written down first and then other assets as required.
Property, plant and equipment are capitalised at acquisition cost, less accumulated depreciation and write-downs. Interest on building loans is part of acquisition cost. When assets are sold or divested, the book value is deducted and any loss or gain posted to profit and loss. Ordinary depreciation commences from the date on which the asset goes into normal operation, and is calculated on the basis of its economic lifespan. Depreciation is assigned in a straight line over the
62
expected economic lifespan of the asset, taking into consideration its estimated residual value. If an asset comprises significant components with varying lifespans, these components are depreciated separately. The scrap value of the property, plant and equipment, as well as the depreciation period and depreciation method employed, are reassessed annually.
Facilities under construction are not depreciated. Depreciation is charged to expenses when the facilities are ready for use.
If the situation or circumstances indicate that the book value of an asset cannot be recovered, an assessment is made about whether to write down its value. If the recoverable value of a non-current asset is lower than its book value and the impairment is not expected to be temporary, the asset is written down to recoverable value. The recoverable value is the higher of net sales price and value in use. Value in use is the present value of the future cash flows which the asset will generate.
In accordance with IAS 39, financial instruments falling within its remit are classified in the following categories: fair value with changes in value posted to profit and loss, hold until maturity, loans and receivables, available for sale, and other liabilities.
Financial instruments at fair value in profit and loss Financial instruments at fair value in profit and loss are financial assets held for trading purposes. A financial asset is classified in this category if it has been acquired primarily for the purpose of generating a gain from short-term price fluctuations. Derivatives are classified as being held for sale unless they are part of a hedging scheme. Assets in this category are classified as current assets.
Financial assets at fair value in profit and loss are recognised at fair value upon acquisition and the transaction costs charged as expenses. Following their initial capitalisation financial assets are recognised at fair value in profit and loss.
Loans and receivables are non-derivative financial assets with fixed or determinable payments which are not traded in an active market. They are classified as current assets unless they fall due for payment more than 12 months after the balance sheet date. Loans and receivables are presented in the balance sheet as trade receivables and other receivables, as well as cash and cash equivalents.
Loans and receivables are capitalised initially at fair value plus transaction costs. In subsequent periods loans and receivables are valued at amortised cost using the effective interest method, less any losses deriving from impairment. Due to immaterial transaction costs and short credit times, amortised cost equals nominal value less provisions for bad debts.
Borrowings are recognised at fair value when payment has been received, less transaction costs. In subsequent periods borrowings are recognised at amortised cost calculated using
Biological assets (biomass) comprise salmon roe, smolt and fish in the sea.
The way live fish are accounted for is regulated by IAS 41 Agriculture. IAS 41 contains a hierarchical method for the recognition of biological assets for accounting purposes. The main rule is that such assets are recognised at fair value.
The best estimate of the fair value of fish with a live weight of under 1 kg is accumulated cost, while for harvestable fish with a live weight of more than 4 kg the fair value adjustment of the biomass is set to expected net profit/loss. For fish of between 1 kg and 4 kg live weight the fair value adjustment of the biomass is set to the proportional share of expected net profit/loss at harvest. As a result, this may lead to a downward adjustment in the fair value of biological assets.
The fair value of the biomass is calculated on the basis of market price for the relevant weight class on the balance sheet date, corrected for sales costs, including harvesting costs and wastage. The market price is adjusted for quality variations. The sales prices used are based on external forward prices and/or the most relevant price information available for the period in which the fish will be harvested.
Roe and smolt are valued at cost.
Changes in the fair value of the biomass are recognised in profit and loss on the line for fair value adjustments.
Biomass farmed as part of partnership agreements is treated for accounting purposes as the Group's own fish, since the Group bears the risk associated with farming the fish.
The Group enters into sales contracts for salmon products on an ongoing basis. The contracts involve physical settlement, and deliveries associated with the contracts form part of the Group's normal business activities. The contracts are therefore not financial instruments under IAS 39. The contracts contain no built-in derivative elements.
A provision is made with respect to fixed-price contracts resulting in an obligation on the part of the Group to sell harvestable fish at a lower price than that which forms the basis for an estimation of the fair value of the biomass. The impact on profit and loss for the year is posted to 'Fair value adjustments'.
Ordinary shares are classified as equity. Transaction costs directly related to equity transactions are recognised directly in equity, less tax. If a group company purchases shares in the parent company, the consideration paid for such treasury shares, including any transaction costs – less tax – is recognised as a reduction in equity (allocated to the parent company's shareholders) until the shares are cancelled or resold. If treasury shares are subsequently sold, the consideration received, less direct marginal transaction costs and associated tax effects, is recognised as an increase in equity allo-
Tax
the effective interest method. The difference between the amount of the loan received (less transaction costs) and its redemption value is posted to profit and loss over the term of the loan as part of the effective interest rate. Borrowing expenses are posted as deductions from the loan.
Financial assets available for sale are non-derivative financial assets which have been placed in this category by choice or because they do not belong in any other category. They are classified as non-current assets unless the investment falls due, or management intends to sell the investment, within 12 months of the balance sheet date.
Financial assets available for sale are recognised at fair value, with any changes in fair value, apart from impairment loss, being recognised in comprehensive income. When securities classified as available for sale are sold or written down, the entire change in value that has been recognised in comprehensive income is reclassified as a financial item and posted to ordinary profit and loss.
Financial assets and liabilities are offset and presented net in the balance sheet when an enforceable offsetting entitlement exists and there is an intention to settle net or realise the asset and settle the liability at the same time.
Derivatives are capitalised at fair value on the date the derivative contract was entered into, and thereafter at the fair value in effect in subsequent periods. The way associated gains or losses are accounted for depends on the extent to which the derivative is designated as a hedging instrument, and if so what kind of hedging instrument.
The Group classifies derivatives designated as hedging instruments as hedging of the fair value of an asset, liability or unrecognised binding pledge (fair value hedging). Derivatives not designated as hedging instruments are recognised at fair value in profit and loss. The Group has not employed hedge accounting in 2015.
Realised Fish Pool contracts are classified as operating items and unrealised changes in the value of Fish Pool contracts are classified as part of the fair value adjustment of the biomass.
The fair value of a hedging derivative is classified as a noncurrent asset or non-current liability if the remaining term of the hedged object is longer than 12 months. If the remaining term is less than 12 months it is classified as a current asset or current liability. Derivatives held for trading are classified as current assets or current liabilities.
Inventory consists of feed, packaging materials, roe, fry, live fish in the sea and processed fish. Stocks of feed, packaging materials, smolt and processed fish are valued at the lower of cost and net realisation value. The cost price of goods produced in-house is the full production cost. The FIFO principle is used in connection with the periodic assignment of inventory costs. Net realisation value is estimated sales price less variable finishing and sales costs. Live fish in the sea are recognised at fair value. Stocks of finished goods/frozen fish are valued at the lower of cost (fair value at harvesting less sales costs) and net realisation value.
cated to the parent company's shareholders. The tax expense is matched against the profit/loss before The value thus set is posted to profit and loss periodically over the options' accrual period, with a corresponding increase in paid-in equity. The accrual period is the period from the establishment of the scheme until the options are fully vested. Employer's national insurance contributions are
tax and comprises tax payable (tax on the year's direct taxable income) and changes in net deferred tax. Tax is recognised in profit and loss unless it refers to items which are posted in comprehensive income or are taken directly to equity. In this case tax is included in the net amount posted in comprehensive income or taken directly to equity.
Tax payable for the period is calculated in accordance with the tax legislation and regulations issued, or largely issued, by the tax authorities on the balance sheet date.
Deferred tax in the balance sheet is a nominal amount calculated on the basis of temporary differences between accounting and tax values, as well as any tax loss carried forward at the end of the financial year.
Deferred tax assets are capitalised when the probability that a taxable income will be made, which will allow the asset to be utilised, can be documented.
Deferred tax is calculated on the difference between the accounting and taxable values of licences.
Deferred tax assets and liabilities are presented net in the balance sheet.
The net pension costs for the period are included under salaries and payroll costs. Pensions are recognised on the basis of a linear accrual profile and expected final salary. Estimate deviations are recognised in comprehensive income as they arise.
The Group switched from a defined-benefits to a definedcontribution pension scheme with effect from May 2006. Any effects deriving from the change were posted to profit and loss. Pension premiums payable in connection with the defined-contribution scheme are charged to expenses as they accrue. The Group has no other liability over and above the annual contribution.
The Group operates a share-based incentive scheme in which the companies receive services from the employees in return for equity instruments (RSU entitlements) in the Group. The fair value of the services the entities received from employees in return for the RSU entitlements granted is recognised as a cost in profit and loss.
The fair value of RSU entitlements is set on the date they are awarded. The fair value of the RSU entitlements that are not at market terms is set as the share price on the date the award was made. The probability of the performance criteria being met is taken into account when assessing how many RSU entitlements will be redeemed. The fair value of the RSU entitlements that are at market terms is calculated on the basis of a Monte-Carlo simulation. The most important input data when calculating the value of these RSU entitlements are the share price on the date of the award, volatility, riskfree interest, expected dividend and vesting period.
recognised over the expected accrual period.
See Note 25 for further details of the Group's RSU scheme.
A provision is recognised when, and only when, the company has a valid liability (legal or self-imposed) deriving from an event which has occurred, and it is probable (more likely than not) that a financial settlement will take place as a result of that liability, and that the amount in question can be reliably quantified. Provisions are reviewed on each balance sheet date, and the level reflects the best estimate for the liability.
Operating assets which are leased on terms which transfer the bulk of the financial risk and control to the company (financial leasing) are recognised in the balance sheet as property, plant and equipment, and the corresponding leasing liability is included under non-current liabilities at the present value of the leasing payments. The asset is depreciated systematically and the liability is reduced by the leasing amount paid, less a calculated interest cost. The depreciation period is consistent with similar assets which are owned by the Group. Leasing payments with respect to operational leasing agreements are classified as operating expenses and are posted to profit and loss in a straight line over the term of the contract.
The Group classifies exceptional biological events on a sepa-
rate line in profit and loss. Exceptional biological events means the culling of the entire salmon stock at sites suffering an outbreak of Pancreas Disease (PD), as ordered by the authorities, and individual incidents involving the escape of substantial numbers of salmon. The amount charged to expenses is a provision corresponding to the full production cost of the culled stock, and costs incurred in connection with the clean-up and closure of the site. In the event of escaped fish, the amount charged to expenses corresponds to the full production cost of the escaped fish, and costs incurred in connection with their recapture.
New information regarding the company's financial position on the balance sheet date which is received after the balance sheet date has been recognised in the year-end financial statements. Events after the balance sheet date which do not affect the company's financial position on the balance sheet date, but which will affect the company's future financial position are reported if material.
The Group's statement of cash flow shows a breakdown of the Group's overall cash flow into operating, investing and financing activities. The statement shows the individual activity's impact on liquid assets. Cash flow deriving from the acquisition and sale of businesses is presented under investing activities.
Through its activities, the Group is exposed to various kinds of financial risk: market risk, credit risk and liquidity risk. The company's management assesses these risks on an ongoing basis and draws up guidelines for dealing with them. The Group makes use of financial derivatives to hedge against certain risks.
The Group has bank loans raised for the purpose of providing capital for investment in the company's business. In addition, the company has financial instruments such as trade receivables, trade payables, etc., which are ascribable directly to day-to-day business operations. For hedging purposes the company has certain forward currency contracts. The company does not make use of financial instruments, including financial derivatives, for the purpose of speculation.
Interest rate risk
Since the Group has no material interest-bearing assets, its profit and loss and cash flow from operating activities are largely independent of changes in market rates.
The Group's interest rate risk derives from long-term borrowings. Borrowing at floating interest rates represents an interest rate risk for the Group's cash flow, which is partly reduced by the opposite effect on cash equivalents which earn
floating interest. Fixed-rate loans expose the Group to fair value interest rate risk. The borrowing portfolio is currently at floating interest rates, which means that the Group is affected by changes in interest rates. Loans are capitalised at amortised cost.
Given the financial instruments in effect on 31 December 2015, a 0.5 % rise in the rate of interest would reduce the Group's profit by NOK14,466,000 (2014: NOK 12,315,000), all other variables remaining constant.
The Group operates internationally, and is exposed to foreign exchange risk in several currencies. This risk is particularly relevant with respect to the USD, EUR, GBP and JPY. Foreign exchange risk arises from future trading transactions, capitalised assets and liabilities, and net investments in foreign business operations.
Revenues and assets denominated in foreign currencies are partly hedged through the use of forward contracts and currency accounts. The use of forward currency contracts is described in Note 11.
Given the financial instruments in effect on 31 December 2015, a 10 % fall in the value of the NOK would alter the
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, including any adjustment in dividend payouts, buyback of treasury shares, capital reduction or issue of new shares. No changes were made in the guidelines covering this area in 2015.
The objective of the Group's capital management is to safeguard the Group's continued operations to secure a return on investment for shareholders and other stakeholders, and maintain an optimal structure for reducing capital costs. By ensuring a good debt-to-equity ratio the Group will support its business operations, and thereby maximise the value of the Group's shares. of 2015 the Group had net interest-bearing debt of NOK 2,628,098,000 (2014: NOK 2,301,266,000). Assessment of fair value The table below shows financial instruments and liabilities at fair value in accordance with the valuation method. The various levels are defined as follows:
The company monitors its capital management on the basis of the covenants stipulated. These are based on equity ratio and the ratio of net interest-bearing debt to EBITDA. See Note 17 for further details.
of 47.8 % (50.7 % as at 31 December 2014). At the close
As at 31 December 2015 the Group had an equity ratio The table below presents the Group's assets and liabilities measured at fair value as at 31 December 2015. See Note 11 for details of forward contracts and Fish Pool contracts measured at fair value level 2. See also Note 13 for details of biological assets measured at fair value in level 3.
liability concerned (level 2)
• Valuation based on factors which are not derived from observable markets (non-observable assumptions) (level 3)
| Maturity NOK 1000 | Total | 2016 | 2017 | 2018 | 2019 | 2020 | After 2020 |
|---|---|---|---|---|---|---|---|
| Long-term debt | 2 480 429 | 109 092 109 092 109 092 2 109 092 | 9 092 | 34 971 | |||
| Interest on long-term debt | 147 326 | 44 090 | 42 108 | 40 125 | 19 967 | 718 | 318 |
| Financial leasing agreements | 412 776 | 31 329 | 20 953 | 17 468 | 14 331 | 14 187 | 314 509 |
| Interest on fin. leasing agreem. 527 797 | 43 122 | 42 456 | 41 860 | 41 221 | 40 473 | 318 665 | |
| Short-term credit facilities | - | - | - | - | - | - | - |
| Trade payables | 649 274 | 649 274 | - | - | - | - | - |
| Total liabilities | 4 217 603 876 907 214 608 208 544 2 184 611 | 64 470 | 668 463 | ||||
Group's profit before tax by NOK 169,194,000 (2014: NOK 163,978,000). The Group's most important currencies are the USD, EUR, GBP and JPY. A 10 % reduction in the exchange rate for each of these currencies as at 31 December 2015 would have had the following effect on the Group's profit before tax:
| TNOK 83 886 |
|---|
| TNOK 5 702 |
| TNOK 36 385 |
| TNOK 43 221 |
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 payment problems, and that outstanding balances do not exceed fixed credit limits. The main part of
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Cash flow forecasts are drawn up on a regular basis and the Accounts Debt monitors rolling forecasts of the Group's liquidity requirements to ensure that the Group has sufficient cash equivalents to meet operational liabilities, as well as at all times having adequate flexibility in the form of unused credit facilities (see Statement of Cash Flow), such that the Group does not infringe borrowing limits or specific borrowing conditions (if relevant). The Group's objective is to have sufficient cash, cash equivalents or medium-term credit facilities to meet its borrowing requirements in the short term. See Note 17 for details of the Group's available credit facilities.
The table below details the Group's non-derivative financial liabilities classified by maturity structure. The figures presented in the table are undiscounted contractual cash flows. See Note 17 for details of the maturity structure.
The fair value of trade receivables and trade payables is practically identical to their book value. The fair value of liabilities is practically identical to their book value. The Group has 'current terms', which is is considered to be the same as the market rate on the balance sheet date. Seen Note 17 for further details of interest terms.
The following table presents the changes classified in Level 3 as at 31 December 2015 in instruments.
The following table presents the changes in instruments classified in Level 3 as at 31.12.2014.
| Assets 31.12.2015 NOK 1000 | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial assets at fair value in profit and loss | ||||
| - Derivatives held for trading | - | 32 399 | - | 32 399 |
| Financial assets available for sale | ||||
| - Equity instruments | - | - | 289 | 289 |
| TOTAL assets | - | 32 399 | 289 | 32 687 |
| Liabilities | ||||
| Financial liabilities at fair value in profit and loss | ||||
| - Derivatives held for trading | - | 132 889 | - | 132 889 |
| Long-term debt to credit institutions | 2 371 338 | 2 371 338 | ||
| Leasing liabilities and other non-current liabilities | 390 035 | 390 035 | ||
| Short-term debt to credit institutions | 140 421 | 140 421 | ||
| TOTAL liabilities | - | 132 889 | 2 901 793 | 3 034 682 |
| Assets 31.12.2014 NOK 1000 | Level 1 | Level 2 | Level 3 | Total |
| Financial assets at fair value in profit and loss | ||||
| - Derivatives held for trading | - | 4 419 | - | 4 419 |
| Financial assets available for sale | ||||
| - Equity instruments | - | - | 519 | 519 |
| TOTAL assets | - | 4 419 | 519 | 4 938 |
| Liabilities | ||||
| Financial liabilities at fair value in profit and loss | ||||
| - Derivatives held for trading | - | 175 485 | - | 175 485 |
| Long-term debt to credit institutions | 1 780 174 | 1 780 174 | ||
| Leasing liabilities and other non-current liabilities Short-term debt to credit institutions |
411 388 | 411 388 | ||
| TOTAL liabilities | - | 175 485 | 276 667 2 468 229 |
276 667 2 643 714 |
| Equity instruments available for sale |
Total | ||
|---|---|---|---|
| Opening balance | 519 | 519 | |
| Investments during the period | - | - | |
| Sales during the period | -230 | -230 | |
| Gains/losses recognised in profit and loss | - | - | |
| Closing balance | 289 | 289 | |
| Total gains or losses in the period included in the result for assets held on the balance sheet date - |
| Equity instruments | ||
|---|---|---|
| available for sale | Total | |
| Opening balance | 384 | 384 |
| Investments during the period | 142 | 142 |
| Sales during the period | -7 | -7 |
| Gains/losses recognised in profit and loss | 0 | 0 |
| Closing balance | 519 | 519 |
Operating segments are reported in the same way as they are reported internally to the company's highest decisionmaking bodies. The company's highest decision-making body, which is responsible for the allocation of resources and the evaluation of the operating segments' earnings, is defined as group management.
The Group has two business activities: the faming of salmon and trout on the one hand, and its processing and sale on the other. The fish farming segment is divided into three regions: Fish Central Norway, Fish Farming Northern Norway and Fish Farming Rauma. These three are defined as separate segments which are report and administered as separate internal business areas. In addition, a Sales & Processing segment reports separately.
The Villa segment, in which the SalMar Group has had a controlling interest through its ownership of 51.4 % of the shares in the Villa Group, comprised both fish farming and processing activities. In 2014 the segment was split between the company's two major shareholders, and SalMar's share of the business activities were incorporated into SalMar Nord. Following the demerger SalMar Nord owns eight licences, and with effect from 1 July 2014 its operations have been integrated into the segment Fish Farming Northern Norway. Information needed to restate comparable figures following the restructuring is not available. See Note 8 for further details of the transaction.
Villa Organic, not allocated to the segments. Costs relating to options, non-recurring events and R&D associated with jointly operated licences are also included in the column for eliminations.
Group management evaluates the segments' performance on the basis of Operational EBIT, as well as exceptional biological events. Depreciation and the realisation of excess value from tangible and intangible assets deriving from acquisitions are, with the exception of the acquisition of In the past two years the company has had no individual customers which accounted for more than 10 % of the Group's sales revenues.
Sales between segments are carried out in accordance with the arm's length principle. When revenues from external parties are reported to group management they are measured at the same amount recognised in profit and loss. Assets and liabilities allocated to segments are not reported to group management.
| Fish Farming Fish Farming | Fish | |||||
|---|---|---|---|---|---|---|
| Central | Northern | Farming | Sales & | Other/ | SalMar | |
| 2015 NOK 1000 | Norway | Norway | Rauma | Processing eliminations | Group | |
| External operating revenues | 0 | 153 307 | 4 833 | 7 168 062 | 0 7 326 202 | |
| Internal operating revenues | 3 156 570 | 1 493 593 | 780 327 | 126 951 -5 557 441 | 0 | |
| TOTAL operating revenues | 3 156 570 | 1 646 900 | 785 160 7 295 013 -5 557 441 7 326 202 | |||
| Depreciation | 135 597 | 72 803 | 35 979 | 57 251 | 5 650 | 307 280 |
| Write-downs | 1 942 | 0 | 0 | 1 227 | 11 000 | 14 169 |
| Operating expenses | 2 203 558 | 1 068 326 | 616 978 | 7 163 982 -5 451 965 5 600 879 | ||
| Operational EBIT | 815 472 | 505 771 | 132 203 | 72 553 -122 126 1 403 873 | ||
| Fair value adjustments | -105 312 | 204 053 | 48 522 | -107 331 | 0 | 39 932 |
| Operating profit | 710 160 | 709 824 | 180 725 | -34 778 -122 126 1 443 805 | ||
| Share of profit/loss from associates | 40 242 | |||||
| Net financial items | -100 362 | |||||
| Profit before tax | 1 383 686 | |||||
| Tax | 254 891 | |||||
| Net profit for the year | 1 128 795 | |||||
| Investments in PP&E | 359 867 | 258 708 | 52 906 | 23 049 | 7 603 | 702 132 |
| Investments in business entities | 0 | 0 | 0 | 0 | 0 | 0 |
| Fish Farming |
Fish Farming |
Fish | |||||
|---|---|---|---|---|---|---|---|
| Central | Northern | Farming | Sales & | Other/ | SalMar | ||
| 2014 NOK 1000 | Norway | Norway | Rauma | Processing | Villa eliminations | Group | |
| External operating revenues | 0 | 71 157 | 1 177 | 6 708 122 405 431 | 0 7 185 887 | ||
| Internal operating revenues 2 863 511 1 371 957 780 871 | 139 643 122 097 -5 278 079 | 0 | |||||
| TOTAL operating revenues 2 863 511 1 443 114 782 048 | 6 847 765 527 528 -5 278 079 7 185 887 | ||||||
| Depreciation | 113 589 | 59 605 | 35 075 | 53 345 13 720 | 430 | 275 764 | |
| Write-downs | 0 | 0 | 0 | 2 106 | 0 | 293 | 2 399 |
| Operating expenses | 1 803 675 | 906 297 532 319 | 6 654 614 349 308 -5 217 538 5 028 675 | ||||
| Operational EBIT | 946 247 | 477 212 214 654 | 137 700 164 500 | -61 264 1 879 049 | |||
| Fair value adjustments | 108 941 | -4 537 | -34 033 | -193 385 -109 335 | -232 348 | ||
| Operating profit | 1 055 188 | 472 675 180 621 | -55 685 55 165 | -61 264 1 646 699 | |||
| Share of profit/loss from associates | 96 136 | ||||||
| Net financial items | -113 994 | ||||||
| Profit before tax | 1 628 841 | ||||||
| Tax | 413 364 | ||||||
| Net profit for the year | 1 215 477 | ||||||
| Year's investments in PP&E | 241 522 | 179 678 | 47 058 | 39 793 24 026 | 3 457 | 535 535 | |
| Year's investm. in busin. entities 28 785 | 0 | 0 | 0 | 0 | 0 | 28 785 |
| Other intangible |
||||
|---|---|---|---|---|
| NOK 1000 | Licences | Goodwill | assets | TOTAL |
| Acquisition cost 1 Jan 2014 | 1 982 274 | 451 738 | 67 360 | 2 501 372 |
| Additions | 494 000 | 0 | 22 223 | 516 223 |
| Additions through business takeover | 60 000 | 14 024 | 0 | 74 024 |
| Disposals | 151 676 | 0 | 0 | 151 676 |
| Acquisition cost 31 Dec 2014 | 2 384 597 | 465 762 | 89 583 | 2 939 943 |
| Additions | 0 | 0 | 29 812 | 29 812 |
| Additions through business takeover | 0 | 0 | 0 | 0 |
| Disposals | 0 | 0 | 0 | 0 |
| Acquisition cost 31 Dec 2015 | 2 384 597 | 465 762 | 119 394 | 2 969 754 |
| Acc. dep. and write-downs 1 Jan 2014 Year's depreciation |
10 000 0 |
18 390 0 |
8 925 3 985 |
37 315 3 985 |
| Year's write-downs | 0 | 0 | 0 | 0 |
| Acc. dep. and write-downs 31 Dec 2014 Year's depreciation |
10 000 0 |
18 390 0 |
12 909 3 912 |
41 299 3 912 |
| Year's write-downs | 11 000 | 0 | 0 | 11 000 |
| Acc. dep. and write-downs 31 Dec 2015 | 21 000 | 18 390 | 16 821 | 56 211 |
| Book value as at 31 Dec 2015 | 2 363 597 | 447 372 | 102 573 | 2 913 542 |
| Book value as at 31 Dec 2014 | 2 374 597 | 447 372 | 76 674 | 2 898 643 |
| Book value as at 1 Jan 2014 | 1 972 274 | 433 348 | 58 435 | 2 464 057 |
| Economic life Depreciation plan |
Unlimited | Unlimited | 5-50 years Straight-line |
Under 'Other intangible assets', excess value associated with the purchase of breeding nuclei is depreciated over 50 years. The cost price for this was NOK 30 million, and the residual book value of breeding nuclei is NOK 26.7 million. Remaining items under 'Other intangible assets' are depreciated over 5 years. Of the total NOK 102.6 million recognised, capitalised R&D costs associated with the development of an offshore fish farming installation accounts for NOK 69.8 million. Depreciation of the capitalised costs commences when the project is completed. For further details, see below.
| Specification of fish farming licences 2015 | No. of | Acquisition | Book value |
|---|---|---|---|
| NOK 1000 | licences | cost | 31.12.15 |
| Fish Farming Northern Norway | 32 | 849 193 | 844 193 |
| Fish Farming Central Norway | 52 | 1 047 746 | 1 042 746 |
| Fish Farming Rauma | 16 | 487 658 | 476 658 |
| 100 | 2 384 597 | 2 363 597 | |
| Specification of fish farming licences 2014 | No. of | Acquisition | Book value |
| NOK 1000 | licences | cost | 31.12.14 |
| Fish Farming Northern Norway | 32 | 849 193 | 844 193 |
| Fish Farming Central Norway | 52 | 1 047 746 | 1 042 746 |
| Fish Farming Rauma | 16 | 487 658 | 487 658 |
| 100 | 2 384 597 | 2 374 597 |
The Group has joint operational agreements/time-limited licences linked to 13 licences.
| Specification of goodwill 2015 NOK 1000 |
Acquisition year |
Acquisition cost |
Book value 31.12.15 |
|---|---|---|---|
| Fish Farming Northern Norway | 2006 | 95 114 | 95 114 |
| Fish Farming Central Norway | 1999-2014 | 131 742 | 125 275 |
| Fish Farming Rauma | 2011 | 226 983 | 226 983 |
| 453 839 | 447 372 | ||
| Specification of goodwill 2014 NOK 1000 |
Acquisition year |
Acquisition cost |
Book value 31.12.14 |
| Fish Farming Northern Norway | 2006 | 95 114 | 95 114 |
Fish Farming Central Norway 1999-2014 131 742 125 275 Fish Farming Rauma 2011 226 983 226 983 453 839 447 372 Testing for impairment of other intangible assets The Group is developing new technology for offshore fish farming, and efforts are underway to develop a fish farming installation for offshore use. As at 31 December 2015, a total of NOK 69.8 million in development expenses relating to the project had been capitalised, NOK 28.4 million of which were recognised in 2015. During 2015 it became more likely than not that the project would be realised, and activities were initiated to prepare for the start-up of construction.
Construction costs totalling some NOK 630 million have been budgeted for. SalMar expects to put the installation into production in 2017, and revenues from harvestable fish are budgeted with effect from 2018. In February 2016 the Group was allocated a location in which to operate the offshore installation, as well as eight development licences. When assessing the project for impairment, the Group has assumed a harvested volume per generation of 7,000 tonnes, an average sales price of NOK 36.13 per kg and a discount rate before tax of 8.97 %. Conversion to ordinary production licences, involving an investment cost of NOK 10.0 million per development licence, has also been included in the calculation.
On the basis of the assessment performed, there are no grounds to write down the sums capitalised in connection with development of the offshore fish farming facility.
The book value of the cash-flow generating entities is tested annually for impairment, or more frequently if there are indications that a write-down may be necessary. The book value of licences and goodwill respectively is compared with the recoverable amount. The recoverable amount is the higher of value in use and fair value less sales costs. An estimated sales value in use is employed to calculate the recoverable value. A write-down in performed if the book value is lower than the recoverable value.
Testing for impairment of licences and goodwill SalMar has identified the Group's segments as cash-generating entities. On acquisition, goodwill and intangible assets are assigned to the cash-flow generating entities within the Group to which they are associated. Cash-generating entities are the lowest level at which independent cash flows can be identified, and are not at a higher level than the segments into which the Group divides its operations based on the geographic distribution of its marine-phase fish farms, ie Fish Farming Central Norway, Fish Farming Northern Norway and Fish Farming Rauma, as well as Sales & Processing. For a specification of the book value of licences and goodwill by segment, see over. ment after tax. As with all estimates, cash flow forecasts are sensitive to changes in underlying assumptions. Estimated value in use will be affected most strongly by the following assumptions: • Discount rate • EBIT(DA)/Margins • Salmon price • Production costs • Future output levels Discount rate: the discount rate used reflects management's estimate of the risk specified for each cash-flow generating
The impairment test resulted in no requirement to write down the book value of fish farming licences as at 31 December 2015.
An estimate of value in use is applied when assessing the Group's goodwill for impairment.
Future net cash flows are estimated on the basis of the Group's budget and forecasts for the next three years. No real growth is assumed when calculating the terminal value, ie. growth is stipulated at the expected rate of inflation. Value in use is calculated on the basis of a 6.55 % return on invest-
Fair value is used when assessing the Group's licences for impairment. With respect to the individual segments, the Group has capitalised licences worth on average NOK 20.0 million in the Central Norway segment, NOK 26.4 million in the Northern Norway segment and NOK 29.8 million in the Rauma segment. Impairment is not assessed at the individual licence level, but on a portfolio basis for each segment. An average of observable, historic transactions is used as a best estimate of fair value, with the value as at 31 December 2015 comeing to approx. NOK 60.0 million per licence. The assessment is based on Level 3 in the valuation hierarchy. kg, a normalised long-term EBIT per kg has been used. Future output levels: future output levels are estimated on the basis of current production and harvesting plans, adjusted for expected increases in future output given current licences. The assessment is based on a comparison of estimated future cash flows and the book value of each cash-flow generating entity. Sensitivity analyses are also carried out to assess
entity. The discount rate is set using the 10-year government bond rate in effect at the time of the assessment. The discount rate after tax is calculated at 6.55 %. This corresponds to a pre-tax requirement of 8.97 %.
EBIT(DA)/Margins: EBIT per kg is highly volatile with respect to changes in salmon prices, and has been higher than the historic average in recent years. Salmon price estimates are based on the actual long-term price level in the market in which the fish is sold. Historic figures have been adjusted for known changes. Since the long-term net margin used in the assessment is deemed to be lower than last year's EBIT per
estimated present values by looking at the change in salmon prices, production costs and, thereby, net margins and discount rates. The book value per licence is highest for the Rauma segment, such that the assessment for the Rauma segment is the least robust. The break-even level for EBIT per kg for the Rauma segment is NOK 5.23. The discount rate must increase by 2.9 percentage points before the calculated value would lead to the need for a write-down.
The Group continuously monitors its financial performance with respect to the long-term assumptions used to determine whether the assumptions in the basic model are still valid.
On the basis of these assessments, there are no grounds to write down the book value of goodwill as at 31 December 2015.
| Land, buildings & other |
Plant, operating | Vessels and equipment, other operating |
of which leased oper. |
||
|---|---|---|---|---|---|
| NOK 1000 | real property | fixtures, etc. | assets | TOTAL | assets |
| Acquisition cost 1 Jan 2014 | 579 739 | 2 045 827 | 196 276 | 2 821 842 | 798 212 |
| Additions | 67 449 | 360 949 | 107 137 | 535 535 | 11 700 |
| Additions through business takeovers | 44 447 | 203 561 | 51 555 | 299 564 | 33 159 |
| Disposals | 14 890 | 7 537 | 673 | 23 100 | 1 034 |
| Acquisition cost 31 Dec 2014 | 587 850 | 2 195 676 | 251 185 | 3 034 711 | 775 719 |
| Additions | 155 389 | 435 067 | 111 676 | 702 132 | 5 267 |
| Disposals | 0 | 807 | 447 | 1 254 | 168 |
| Acquisition cost 31 Dec 2015 | 743 239 | 2 629 937 | 362 414 | 3 735 590 | 780 817 |
| Acc. dep. & write-downs 1 Jan 2014 | 106 331 | 797 006 | 59 181 | 962 517 | 179 548 |
| Year's depreciation 2014 | 29 285 | 210 048 | 32 446 | 271 780 | 69 928 |
| Year's write-downs | 25 | 2 081 | 293 | 2 399 | 0 |
| Reversed dep. on exit of subsid. | |||||
| and non-controlling interests | 22 572 | 139 702 | 32 687 | 194 961 | 0 |
| Reversed depreciation | 14 716 | 9 883 | 0 | 24 599 | 0 |
| Acc. dep. & write-downs 31 Dec 2014 | 98 353 | 859 550 | 59 233 | 1 017 136 | 249 477 |
| Year's depreciation 2015 | 26 482 | 213 567 | 63 319 | 303 368 | 60 479 |
| Year's write-downs | 1 222 | 1 948 | 0 | 3 169 | 0 |
| Reversed depreciation | 0 | 41 | 0 | 41 | 0 |
| Acc. dep. & write-downs 31 Dec 2015 | 126 057 | 1 075 023 | 122 553 | 1 323 633 | 309 956 |
| Book value 31 Dec 2015 | 617 182 | 1 554 914 | 239 863 | 2 411 959 | 470 862 |
|---|---|---|---|---|---|
| Book value 31 Dec 2014 | 489 496 | 1 336 126 | 191 953 | 2 017 575 | 526 241 |
| Book value 1 Jan 2014 | 473 408 | 1 248 822 | 137 095 | 1 859 326 | 618 663 |
| Gains/losses on sale of non-current assets Annual lease of off-balance sheet |
0 | 893 | 0 | 893 | |
| operating assets | 21 711 | 15 475 | 6 650 | 43 835 | |
| Capitalised interest | 2 334 | 785 | 0 | 3 119 | |
| Economic life Depreciation plan |
5-20 years straight-line |
3-10 years straight-line |
5-15 years straight-line |
| Subsidiaries | Consolidated (YES/NO) |
Registered office |
Voting share |
|---|---|---|---|
| SalMar Settefisk AS | YES | Kverva | 100,0 % |
| - Langstein Fisk AS | YES | Kverva | 100,0 % |
| - Straumsnes Settefisk AS | YES | Kverva | 100,0 % |
| - Villa Smolt AS | YES | Kverva | 100,0 % |
| Hitramat Farming AS | YES | Kverva | 51,0 % |
| SalMar Farming AS | YES | Kverva | 100,0 % |
| - Salmar Rauma AS | YES | Ørskog | 100,0 % |
| - Rauma Stamfisk AS | YES | Ørskog | 100,0 % |
| - Rauma Sætre AS | YES | Ørskog | 100,0 % |
| - Rauma Eik AS | YES | Ørskog | 100,0 % |
| - Salmar Organic AS | YES | Ørskog | 100,0 % |
| - Vikenco AS | YES | Aukra | 51,0 % |
| Ocean Farming AS | YES | Kverva | 91,0 % |
| SalMar Nord AS | YES | Senja | 100,0 % |
| - Troms Stamfiskstasjon AS | YES | Senja | 100,0 % |
| SalMar AS | YES | Kverva | 100,0 % |
| - SalMar Japan KK | YES | Japan | 100,0 % |
| - Frøyas AS | YES | Kverva | 66,0 % |
| SalMar-Tunet AS | YES | Kverva | 100,0 % |
| Non-controlling interests associated with subsidiaries |
Nor interests' sl |
|---|---|
| Hitramat Farming AS | |
| Vikenco AS | |
| Ocean Farming AS | |
| Fravas AS |
| Non-controlling interests associated with subsidiaries |
interests' shareholding/ voting share |
Share of profit Non-controlling profit/loss allocated to non-controlling interests |
Non-controlling interests' aggregated share of equity |
|---|---|---|---|
| Hitramat Farming AS | 49 % | 5 448 | 33 108 |
| Vikenco AS | 49 % | 18 190 | 39 570 |
| Ocean Farming AS | 9 % | - | - |
| Frøyas AS | 34 % | 1 868 | 7 004 |
| 25 506 | 79 684 |
The consolidated financial statements for 2015 cover the following subsidiaries:
As at 31 December 2015, the company had capitalised NOK 331,032,000 in connection with an investment project that had not been completed and put into operation, and where depreciation had not begun. This breaks down as follows: NOK 129,832,000 in real property, NOK 159,480,000 in plant and equipment, and NOK 41,720,000 in vessels and other operating assets.
As at 31 December 2015, capitalised leasing liabilities totalled NOK 412,776,000. Of the capitalised operating assets, NOK 35,847,000 was accounted for by plant and equipment, NOK 154,041,000 by vessels and other operating assets, and NOK 280,974 ,000 by land and buildings. All leasing agreements have been entered into at standard terms and conditions.
In 2013 the Group renegotiated the InnovaMar leasing agreement in connection with the sale of its shares in the company that owns the factory. The leasing period was extended from 15 to 20 years, with an option to extend after the expiry of the agreement in return for a reduced annual leasing cost. The lessor has, furthermore, the right but not the obligation to demand that SalMar, as tenant, acquires the property after the expiry of the agreement for the sum of NOK 70 million. The change in the terms of the leasing agreement means that the building and the leasing liability have been recognised in the balance sheet with effect from 1 October 2013. In total the property was capitalised to the value of NOK 284.5 million as at 31 December 2015. The leasing liability is correspondingly capitalised. The investment breaks down into a building, technical installation and land component. The portion allocated to buildings is depreciated over 30 years. Correspondingly, the portion allocated to technical installations is depreciated over 13 years. Land is not depreciated.
Analyses of excess value are based to a certain extent on management's experience and good judgement, with the underlying assumptions being verified through operations in the subsequent period.
Hitramat Farming AS boosted Operational EBIT by NOK 4,375,000 in the period after acquisition in 2014. The Group's sales revenues were not affected, because the company's operations comprise joint operation of a licence with SalMar Farming AS. The company's sales revenues are therefore eliminated in their entirety in the consolidated accounts. Hitramat Farming AS made an operating profit of NOK 10,510,000 for 2014 as a whole. Hitramat Farming AS is reported as part of Fish Farming Central Norway, cf. Note 3.
| NOK 1000 | Acquisition date | Acquisition cost |
|---|---|---|
| Hitramat Farming AS | 01.10.2014 | 28 785 |
The total purchase price for the company was NOK 28,785,000. No material transaction costs were incurred in connection with the acquisition.
No business combinations were undertaken in 2015.
On 1 October 2014 the Group agreed to purchase 51 % of the shares in Hitramat Farming AS. The purpose of the acquisition is to secure access to production licences for SalMar. For accounting purposes, the transaction is treated as a business takeover, in which non-controlling interests are assessed at fair value. Measurement of the fair value of licences is based on cash flows after tax. In accordance with IFRS, deferred tax is calculated on the difference between allocated fair value and residual tax base. The opposite item to this deferred tax is goodwill. The allocation of consideration is presented below.
No transactions with non-controlling interests were undertaken in 2015.
In 2013 SalMar increased its shareholding in Villa Organic to 50.4 %, giving it a controlling interest in the enterprise. Villa Organic was a fully integrated aquaculture group, with activities along the entire value chain. Its fish farming activities were located in Finnmark. Villa Organic had a total of 16 licences for the production of farmed salmon. On 30 June 2014, SalMar and Villa Organic's other major shareholder (Lerøy Seafood Group AS) decided to divide the company between them. This was accomplished with effect from 1 July 2014, and SalMar's interests in the Villa Group were incorporated into SalMar Nord AS, in which SalMar had a 99.94 % shareholding as at 1 July 2014. Following the demerger, SalMar Nord owns eight licences, giving it control of the Laksefjord area in Finnmark. With effect from 1 July 2014, the business has been integrated into the segment Fish Farming Northern Norway.
For accounting purposes the demerger of the Villa group has been implemented with effect from 1 July 2014. Non-controlling interests in the Villa group were bought out with settlement in assets and liabilities. As a result, the shareholdings in the subsidiaries Romsdal Processing AS and Kirkenes Processing AS were divided between SalMar Nord AS and Lerøy Finnmark AS. This means that these two subsidiaries exited the Group with effect from 1 July 2014. The exit of subsidiaries and noncontrolling interests has affected the SalMar Group as shown in the table below.
| Effect of the acquisition on the balance sheet: | Book | Adjustment to | |
|---|---|---|---|
| NOK 1000 | value | fair value | Fair value |
| Intangible assets | 8 098 | 51 902 | 60 000 |
| Current assets | 31 063 | - | 31 063 |
| Cash and bank deposits | 223 | - | 223 |
| Deferred tax | -1 565 | -14 014 | -15 579 |
| Other liabilities | -33 289 | - | -33 289 |
| Net identifiable assets and liabilities | 4 530 | 37 889 | 42 418 |
| Goodwill | 14 024 | ||
| Non-controlling interests | -27 656 | ||
| Cash consideration | 28 785 |
| NOK 1000 | Exit of subsidiaries and non-controlling interests at 1.7.2014 |
|---|---|
| ASSETS | |
| Intangible assets | -151 676 |
| Property, plant & equipment | -106 110 |
| Financial assets | 2 475 |
| Total non-current assets | -255 311 |
| Inventory | -90 664 |
| Trade receivables | -13 546 |
| Other current receivables | -7 630 |
| Cash & cash equivalents | -140 911 |
| Total current assets | -252 750 |
| TOTAL ASSETS | -508 062 |
| Non-controlling interests | -332 003 |
|---|---|
| Total equity | -332 003 |
| Provisions | -42 295 |
| Interest-bearing long-term debt | -42 552 |
| Total non-current liabilities | -84 847 |
| Other current liabilities | -91 212 |
| Total current liabilities | -91 212 |
| TOTAL EQUITY AND LIABILITIES | -508 062 |
In connection with the demerger of the Villa group, shareholdings in the companies Romsdal Prosessing AS and Kirkenes Prosessing AS were divided between SalMar Nord AS and Lerøy Finnmark AS. A gain on the exit of subsidiaries has been estimated on the basis of the fair value of the subsidiaries' assets and liabilities. Since the fair value of the companies' assets and liabilities is deemed to correspond to their book value, their exit has not resulted in either a gain or loss for the Group.
Exit of non-controlling interests with settlement in assets and liabilities Non-controlling shareholders have been bought out with settlement in assets and liabilities. Assets and liabilities are assessed at fair value in connection with settlement. Fair value is deemed to equal the book value of the net assets which exit the group. The effect goes directly to a reduction in non-controlling interests' share of equity.
| Registered | ||||
|---|---|---|---|---|
| Company | office | Sector | Shareholding Voting share | |
| Norskott Havbruk AS | Bergen | Fish farming | 50,00 % | 50,00 % |
| Salmus AS | Leirfjord | Fish farming | 50,00 % | 50,00 % |
| Kirkenes Processing AS | Molde Harvesting of farmed salmon | 50,00 % | 50,00 % | |
| Romsdal Processing AS | Kirkenes | Harvesting and processing | 44,45 % | 44,45 % |
| Trøndersk Kystkompetanse AS | Dyrvik | Competence development | 20,00 % | 20,00 % |
All associates are recognised in accordance with the equity method.
| NOK 1000 Companies recognised in accordance with |
||||
|---|---|---|---|---|
| the equity method | Norskott Havbruk | Salmus AS | Other | Total |
| Opening balance 1 Jan 2015 | 520 423 | 0 | 3 292 | 523 712 |
| Additions of shares/contributions | 0 | 43 394 | 0 | 43 394 |
| Debt conversion | 0 | 0 | 7 858 | 7 858 |
| Share of the year's profit/loss | 41 408 | 0 | -1 166 | 40 242 |
| Items of comprehensive income | 58 475 | 0 | 0 | 58 475 |
| Dividend received | -46 000 | 0 | 0 | -46 000 |
| Closing balance 31 Dec 2015 | 574 306 | 43 394 | 9 984 | 627 681 |
Since none of the Group's associates is listed on a stock exchange, no observable market values exist.
The Group has the following investments in associated companies:
On 11 December 2015 the Group agreed to purchase 50 % of the shares in Salmus AS. Salmus AS owns 53.05 % of the shares in Kvitholmen AS, which in turn owns 86.38 % of the shares in Arnarlax Hf. At the time of the investment, the book value of Salmus AS's equity was NOK 47.1 million. SalMar paid a cash consideration of NOK 43.4 million for its investment. Excess values in the Group derive in their entirety from Arnarlax Hf's fish farming licences.
Passion for Salmon
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Operating revenues | 1 498 485 | 1 384 613 |
| Operating expenses | 1 376 914 | 1 152 509 |
| Fair value adjustments | -23 885 | 8 306 |
| Profit after tax | 82 816 | 191 079 |
| Current assets | 1 036 335 | 991 365 |
| Non-current assets | 880 285 | 693 437 |
| Current liabilities | 214 833 | 227 043 |
| Non-current liabilities | 552 783 | 416 519 |
| Equity | 1 149 005 | 1 041 240 |
| The Group's share of equity Book value 31 Dec 2015 |
574 503 574 306 |
520 620 520 423 |
Norskott Havbruk AS had no contingent liabilities or capital liabilities as at 31 December 2015.
The following table shows a summary of financial information relating to Norskott Havbruk AS, based on 100 % figures:
The following principles for the measurement of financial instruments have been applied to financial instruments in the balance sheet:
| NOK 1000 As at 31 December 2015 Assets |
Loans and receivables |
Assets at fair value in profit & loss |
Available for sale |
TOTAL |
|---|---|---|---|---|
| Investments in shares & other securities | - | - | 289 | 289 |
| Derivatives | - | 32 399 | - | 32 399 |
| Trade and other receivables | 996 942 | - | - | 996 942 |
| Bank deposits, cash & cash equivalents | 273 696 | - | - | 273 696 |
| Total | 1 270 638 | 32 399 | 289 | 1 303 326 |
| NOK 1000 As at 31 December 2015 Liabilities |
Liabilities at fair value in profit & loss |
Other financial liabilities at amortised cost |
TOTAL |
|---|---|---|---|
| Borrowings | - | 2 489 018 | 2 489 018 |
| Financial leasing agreements | - | 412 776 | 412 776 |
| Derivatives | 132 889 | - | 132 889 |
| Trade payables and other liabilities, excl. statutory liabilities | - | 1 005 381 | 1 005 381 |
| TOTAL | 132 889 | 3 907 175 | 4 040 063 |
| NOK 1000 As at 31 December 2014 Assets |
Loans and receivables |
Assets at fair value in profit & loss |
Available for sale |
TOTAL |
|---|---|---|---|---|
| Investments in shares & other securities | - | - | 519 | 519 |
| Derivatives | - | 4 419 | - | 4 419 |
| Trade and other receivables | 1 152 829 | - | - | 1 152 829 |
| Bank deposits, cash & cash equivalents | 166 963 | - | - | 166 963 |
| TOTAL | 1 319 792 | 4 419 | 519 | 1 324 730 |
| NOK 1000 As at 31 December 2014 Liabilities |
Liabilities at fair value in profit & loss |
Other financial liabilities at amortised cost |
TOTAL |
|---|---|---|---|
| Borrowings | - | 2 018 159 | 2 018 159 |
| Financial leasing agreements | - | 450 070 | 450 070 |
| Derivatives | 175 485 | - | 175 485 |
| Trade payables and other liabilities, excl. staturory liabilities | - | 615 226 | 615 226 |
| TOTAL | 175 485 | 3 083 455 | 3 258 940 |
| 2015 2014 |
||||
|---|---|---|---|---|
| NOK 1000 | Other | Other | Other | Other |
| Recognised fair value as at 31 Dec | receivables | current liabilities | receivables current liabilities | |
| Forward currency contracts | 0 | -132 889 | 0 | -147 437 |
| Financial fish trading contracts (Fish Pool) | 32 399 | 0 | 4 419 | -28 048 |
| Total | 32 399 | -132 889 | 4 419 | -175 485 |
The table below shows the company's forward currency contracts as at 31 December 2015. All contracts relate to the buying and selling of currencies against NOK. Forward contracts are entered into to reduce as far as possible the exchange rate risk on outstanding trade receivables and purchase/sales contracts entered into. Forward currency contracts are recognised at fair value in the balance sheet. The value of forward contracts is calculated on the basis of estimated forward exchange rates for the currencies concerned, the term of the contract, agreed currency amounts and the spot rate on the balance sheet date. The Group does not use hedge accounting in its recognition of forward currency contracts.
Realised gains/losses on forward currency contracts in the Group's main trading currencies are presented in the table below. The entire effect has been on the Group's sales revenues.
Financial fish sales/purchase contracts (derivatives) have been entered into on Fish Pool. The derivatives are recognised at fair value in profit and loss. Settlement of the contracts is due to take place in 2016. The fair value of the Fish Pool contracts calculated on the basis of the agreed settlement price in the contract, the fair value of the fish on the balance sheet date and the contract's term. The fair value of purchase contracts is calculated at NOK 32,399,000, based on the market price in effect on the balance sheet date. The Group had not entered into sales contracts on Fish Pool as at 31 December 2015.
Realised Fish Pool contracts are classified in profit and loss under Operational EBIT, while unrealised changes in the value of the Fish Pool contracts are classified as part of the fair value adjustment.
Realised Fish Pool contracts classified under operations came to NOK 8,733,000 in 2015. The corresponding figure for 2014 was NOK 29,266,000.
Derivatives are measured at fair value. On the balance sheet date, these were recognised in the balance sheet as follows:
| Product | Type | Currency Currency amount (1000) | Term | Exchange rate interval |
Book value/ Fair value TNOK |
|
|---|---|---|---|---|---|---|
| Forward | Sale | EUR | 115 903 | Q1 2016 - Q1 2017 | 8,354-9,616 | -47 495 |
| Forward | Sale | JPY | 1 818 680 | Q1 2016 - Q1 2017 | 0,0597-0,0730 | -7 953 |
| Forward | Sale | GBP | 35 136 | Q1 2016 - Q1 2017 | 10,434-13,206 | -28 757 |
| Forward | Sale | USD | 86 286 | Q1 2016 - Q1 2017 | 6,193-8,795 | -49 498 |
| Forward | Sale | SEK | 3 282 | Q1 2016 | 0,9927-1,0346 | -107 |
| Forward | Buy | EUR | 892 | Q1 2016 | 9,241-9,590 | 113 |
| Forward | Buy | JPY | 128 735 | Q1 2016 | 0,0665-0,0724 | 728 |
| Forward | Buy | GBP | 415 | Q1 2016 | 12,893-12,966 | 53 |
| Forward | Buy | USD | 417 | Q1 2016 | 8,680-8,7695 | 29 |
| Total | -132 889 |
Both Salmus AS and Kvitholmen AS are shareholding companies. Arnarlax Hf is an aquaculture company located in Iceland. Salmus AS is owned 50/50 by SalMar and Edinborg AS. Salmus's shareholders have an equal number of representatives on the company's board of directors. Pursuant to a shareholders' agreement, in the event of any disagreement between them, each party may request that the company be demerged. On this basis, the investment is deemed to be an associate in which SalMar has considerable influence.
Based on an overall assessment, in which size and complexity has been taken into consideration, Norskott Havbruk AS is deemed to be a material associate. Further information relating to this company may be found below.
Norskott Havbruk AS is located in Bergen and owns 100 % of Scottish Sea Farms Ltd, the second largest aquaculture company in the UK, with operations in mainland Scotland and Shetland. Norskott Havbruk is 50/50 owned by SalMar ASA and Lerøy Seafood AS. The board of directors has 4 members, with each shareholder represented by 2 directors. The shareholders alternate in having the board's chair. Since neither of the company's owners has overall control, it is considered to be an associate.
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| EUR | -27 272 | -5 888 |
| JPY | -13 106 | 4 053 |
| GBP | -32 241 | -9 748 |
| USD | -7 460 | -3 436 |
| Total | -80 079 | -15 018 |
Passion for Salmon
The Group's receivables are measured at amortised cost. Receivables denominated in foreign currencies are valued at the daily rate. Book value equals fair value.
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Trade receivables | 826 701 | 900 407 |
| Provisions for bad debts | -11 161 | -12 188 |
| Other short-term receivables | 258 288 | 292 644 |
| Other long-term receivables | 8 237 | 14 995 |
| Total | 1 082 066 | 1 195 858 |
| Included in the item Other short-term receivables above are prepaid expenses in the amount of Included in the item Other short-term receivables above are derivatives in the amount of Included in the item Other short-term receivables above are VAT refunds due in the amount of Included in the item Other long-term receivables above are the following, |
52 725 32 399 173 165 |
38 610 4 419 212 918 |
| falling due for payment in more than one year Included in the item Other long-term receivables above are pension assets in the amount of |
6 840 1 397 |
13 403 1 592 |
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Provisions for bad debt 1 Jan | 12 188 | 23 060 |
| Provisions for bad debts in acquired businesses | 0 | 0 |
| Provisions for bad debts 31 Dec | 11 161 | 12 188 |
| Change in provisions for bad debts during the period | -1 027 | -10 872 |
| Actual bad debts | 393 | 16 108 |
| Change in provisions for bad debts | -1 027 | -10 872 |
| Bad debts charged to expenses during the period | -634 | 5 236 |
Bad debts are classified as other operating expenses in profit and loss.
Changes in provisions for bad debts and bad debts charged to expenses during the period are presented below.
As at 31 December the company had the following trade receivables that had fallen due, but had not yet been paid:
See Note 2 for further details of the credit risk and foreign exchange risk associated with trade receivables.
| NOK 1000 | Total | Not due | <30 d | 30-45 d | 45-90 d | >90 d |
|---|---|---|---|---|---|---|
| 2015 | 826 701 | 626 018 | 99 990 | 8 286 | 10 807 | 81 600 |
| 2014 | 900 407 | 683 844 | 145 716 | 12 868 | 12 443 | 45 536 |
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Raw materials | 101 043 | 86 531 |
| Goods in progress (entirely biological assets) | 3 306 052 | 3 114 684 |
| Finished goods | 227 173 | 119 923 |
| Total | 3 634 268 | 3 321 138 |
Raw materials comprise mainly feed for smolt and marinephase fish production. It also includes raw materials for use in processing, as well as packaging. Stocks of biological assets are associated with SalMar's fish farming activities on land and at sea. Finished goods comprises in its entirety whole salmon, fresh and frozen, as well as processed salmon products.
The treatment of live fish for accounting purposes is regulated by IAS 41 Agriculture. IAS 41 contains a method hierarchy for the measurement of biological assets for accounting purposes. The main rule is that such assets shall be measured at fair value. The best estimate for the fair value of fish under 1 kg live weight is accumulated cost, while for harvestable fish over 4 kg live weight the fair value adjustment of the biomass is set to expected net profit/loss. For fish between 1 kg and 4 kg live weight the fair value adjustment of the biomass is set in accordance with IFRS 13. Biological assets valued in accordance with IFRS 13 are included in valuation level 3, under which the valuation is based on factors that do not derive from observable markets. See Note 2 for further information about valuation levels. The value of the biomass is determined quarterly, and is reviewed and verified at Group level. Valuation is performed for each segment and down to site level.
The fair value of the biomass is estimated on the basis of an informed, but subjective judgement. The main factors affecting the valuation of the biomass are the status of the biomass on the balance sheet date, including quality and size distribution, as well as market prices on the reporting date.
The market price on the balance sheet date for the specific weight category is adjusted for harvesting costs and wastage. Themarket price is also adjusted for quality variations. The sales prices used are based on external forward prices and/or the most relevant price information available for the period in which the fish is to be harvested.
Smolt are valued at cost.
relates to the following specific incidents:
Group has defined as exceptional biological incidents.
It is SalMar's policy and practice to recognise in profit & loss any incident-based mortality/wastage that is characterised as abnormal. The recognition of incident-based mortality is carried out at sites by means of an increase in the accumulated production cost per kg resulting from mortality that is more than 20 % higher than expected accumulated production costs given the site's underlying production conditions. Direct recognition of incident-based mortality/wastage is included in the recognised cost of goods sold, unless the mortality/wastage is due to circumstances warranting presentation on the line for exceptional biological incidents. No costs relating to incident-based mortality were recognised in 2015. IFRS. The review resulted in a report from the FSAN dated 17 November 2015 (www.finanstilsynet.no). Based on the FSAN's findings, the enterprises concerned established an industry group whose purpose is to be a discussion forum for improving their financial reporting. The industry group held several meetings during the autumn of 2015. The main goals of its efforts have been as follows: 1. To identify potential improvements in accounting practices and the disclosures contained in the notes in order to increase comparability between companies in the sector. 2. To develop a uniform model for measuring the fair value of the biomass in accordance with IAS 41.
report in a uniform and consistent manner in accordance with
SalMar's assessment of exceptional biological incidents -The compulsory harvesting out of salmon as ordered by the authorities -Individual episodes involving the escape of large numbers of fish No incidents have occurred in the past two years which the In relation to point 1 above, the companies have identified certain areas of improvement, and certain changes have been made to the model for the measurement of fair value and in the notes to the financial statements for the year ending 31 December 2015. Further improvements to the notes and accounting practices are planned to be implemented with effect from 31 December 2016.
In the autumn of 2014 the Financial Supervisory Authority of Norway (FSAN) initiated an evaluation of selected aspects of the financial reporting of aquaculture companies listed on the Oslo Stock Exchange. The purpose of this process was to discover the extent to which the aquaculture companies effect from 31 December 2016. The companies participating in the industry group are: Lerøy Seafood Group AS, Grieg Seafood ASA, SalMar ASA, Cermaq Group AS, P/F Bakkafrost and Marine Harvest ASA.
In relation to point 2 above, work got underway in 2015 and will be continued in 2016. The industry group's goal is to have a harmonised model ready for implementation with
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Biological assets 1 Jan | 3 114 684 | 3 077 150 |
| Increase due to production/purchase | 5 329 836 | 4 430 110 |
| Increase deriving from acquisitions | 0 | 0 |
| Reduction due to exit of subsidiaries | 0 | -72 553 |
| Reduction resulting from sale/harvesting | -5 285 729 | -4 274 054 |
| Fair value adjustments 1 Jan (reversed) | -828 864 | -874 833 |
| Fair value adjustment for exit of subsidiaries | 0 | -19 703 |
| Fair value adjustments 31 Dec (new) | 976 126 | 848 567 |
| Biological assets 31 Dec. | 3 306 052 | 3 114 684 |
| 2015 | 2014 | |
|---|---|---|
| Biomass fish < 4 kg gutted weight (tonnes) | 61 136 | 53 431 |
| Biomass fish > 4 kg gutted weight (tonnes) | 19 422 | 34 819 |
| Total biomass (tonnes) | 80 558 | 88 251 |
| Fair value adjustment fish < 4 kg gutted weight (NOK 1,000) | 610 425 | 380 353 |
| Fair value adjustment fish > 4 kg gutted weight (NOK 1,000) | 365 702 | 448 511 |
| TOTAL fair value adjustment of biological assets (NOK 1,000) | 976 127 | 828 864 |
| Cost price biological assets (NOK 1,000) | 2 329 925 | 2 285 820 |
| Book value of biological assets (NOK1,000) | 3 306 052 | 3 114 684 |
The most important parameters affecting the fair value of the biological assets presented above. The model makes use of quarterly forward prices based on the estimated harvesting time for the biomass. As at 31 December 2015 a price interval of NOK 43.60 to NOK 52.90 per kg has been stipulated. A price sensitivity analysis as at 31 December 2015 gives the following effect on the Group's operating profit (NOK 1,000):
| Price change + NOK 1/kg | + 50 463 |
|---|---|
| Price change - NOK 1/kg | - 50463 |
The Group's overall volume of biomass on the balance sheet date is also a material factor in an assessment of fair value. An overview of the Group's overall biomass and the size distribution within it is presented below. A sensitivity analysis of the biomass on the balance sheet gives the following effect on the Group's operating profit (NOK 1,000):
| Change in biomass + 1 % | + 17 139 |
|---|---|
| Change in biomass -1 % | - 17 139 |
Fish weighting more than 4 kg gutted weight are valued at the expected net profit/loss as indicated above. The threshold for when fish are valued at net profit/loss has been amended during the year from 4 kg round weight to 4 kg gutted weight. In the table above, the figures for 2014 are based on a threshold of 4 kg round weight.
As at 31 December 2015, the item "Bank deposits, cash & cash equivalents" included restricted tax deductions amounting to NOK 50,111,000 (2014: NOK 38,406,000). The Group had additional restricted funds associated with Fish Pool contracts in the amount of NOK 25,480,000 (2014: NOK 91,221,000).
The 20 largest shareholders as at 31 December 2015 were:
| No. | Shareholding | Voting share | |
|---|---|---|---|
| KVERVA AS | 60 500 000 | 53,40 % | 53,96 % |
| FOLKETRYGDFONDET | 8 324 725 | 7,35 % | 7,42 % |
| STATE STREET BANK AND TRUST CO. | 3 335 179 | 2,94 % | 2,97 % |
| J.P. MORGAN CHASE BANK N.A. LONDON | 2 758 075 | 2,43 % | 2,46 % |
| LIN AS | 2 005 200 | 1,77 % | 1,79 % |
| THE BANK OF NEW YORK MELLON | 1 199 063 | 1,06 % | 1,07 % |
| SALMAR ASA | 1 180 081 | 1,04 % | 0,00 % |
| CLEARSTREAM BANKING S.A. | 1 074 336 | 0,95 % | 0,96 % |
| PARETO AKSJE NORGE | 1 047 794 | 0,92 % | 0,93 % |
| JP MORGAN BANK LUXEMBOURG S.A | 976 509 | 0,86 % | 0,87 % |
| STATE STREET BANK AND TRUST CO. | 721 107 | 0,64 % | 0,64 % |
| MORGAN STANLEY & CO. INTERNATIONAL | 676 528 | 0,60 % | 0,60 % |
| STOREBRAND NORGE I | 613 924 | 0,54 % | 0,55 % |
| STATE STREET BANK & TRUST CO. | 595 375 | 0,53 % | 0,53 % |
| JPMORGAN CHASE BANK, N.A | 524 786 | 0,46 % | 0,47 % |
| J.P. MORGAN CHASE BANK N.A. LONDON | 491 221 | 0,43 % | 0,44 % |
| VERDIPAPIRFONDET ALFRED BERG NORGE | 490 464 | 0,43 % | 0,44 % |
| RBC INVESTOR SERVICES BANK S.A | 443 677 | 0,39 % | 0,40 % |
| KLP AKSJENORGE INDEKS | 439 584 | 0,39 % | 0,39 % |
| STATE STREET BANK AND TRUST CO | 425 326 | 0,38 % | 0,38 % |
| Total 20 largest shareholders | 87 822 954 | 77,51 % | 77,28 % |
| Total other shareholders | 25 477 045 | 22,49 % | 22,72 % |
| Total no. of shares | 113 299 999 | 100,00 % | 100,00 % |
As at 31 December 2015, the parent company's share capital comprised:
| NOK 1000 | No. | Face value | Book value |
|---|---|---|---|
| Ordinary shares | 113 299 999 | 0,25 | 28 325 |
* owned indirectly through the family-owned company GloMar AS, which has shares in the Kverva Group and includes shares owned and controlled by related parties. Account taken of own shares in Kverva AS.
The board has been granted two authorisations to raise the share capital by a maximum of NOK 2,830,000, through the issue of up to 11,318,670 shares. The authorisations are valid until the 2016 AGM or 30 June 2016 at the latest. The board has also been authorised to acquire treasury shares with a face value of NOK 2,508,000, a total of 10,029,999 or 30 June 2016 at the latest. Dividend A dividend of NOK 10 per share has been proposed, totalling NOK 1,121,199,000 as at 31 December 2015. Dividend is not paid on treasury shares.
** owned indirectly through the parent company in the Kverva Group, and includes shares owned and controlled by related parties. Account taken of own shares in Kverva AS.
*** owned indirectly through LIN AS, as well as shares in the Kverva Group. Account taken of own shares in Kverva AS.
shares. The board's authorisation is valid until the 2016 AGM,
| Name | Position | No. of shares | Shareholding | Voting share |
|---|---|---|---|---|
| Bjørn Flatgård * | Chair | 1 525 162 | 1,35 % | 1,36 % |
| Gustav Witzøe ** | Director | 57 166 047 | 50,46 % | 50,99 % |
| Leif Inge Nordhammer*** | President & CEO | 2 654 124 | 2,34 % | 2,37 % |
In 2014 SalMar entered into a new borrowing agreement with a term of 5 years. The credit facility comprises a term loan of 1,000,000,000, which has a 10-year repayment profile maturing after 5 years. There is also an investment and acquisition facility in the amount of NOK 2,000,000,000, which has a 33-year repayment profile maturing after 5 years. No drawdowns on this facility had been made as at 31 December 2015. In addition to this, there is a revolving credit facility amounting to NOK 1,500,000,000 and an agreed operating credit capped at NOK 500,000,000. Interest is based on so-called "current terms".
The Group has a multi-currency group account scheme with a credit ceiling of NOK 500,000. As at 31 December 2015 the Group had net deposits in the scheme. Deposits and drawdowns in different currencies relating to the group account scheme are recognised net in the Group's financial statements. of 60-84 months, apart from the capitalised leasing agreement for the InnovaMar facility which has a term of 20 years. Financial covenants
The most important financial covenants for the long-term financing of SalMar ASA are, respectively, a solvency requirement, which stipulates that the Group's recognised equity ratio shall exceed 35 %, and a profitability requirement, which stipulates that the Group's net interest-bearing debt to EBIT-DA ratio shall, on average, not exceed 4.5. However, under the terms of the agreement, the company may have an NIBD/ EBITDA ratio of up to 6.0 for up to three quarters.
This financing agreement covers all group companies with the exception of Vikenco AS and SalMar Japan K.K. Estimated annual instalments on leasing liabilities in 2016 amount to NOK 31,329,000. Leasing agreements have an original term The Group has entered into an agreement with the company's feed suppliers to extend the credit given on feed orders. The feed supplier has agreed the discounting of the trade payable with the Group's bank. Since the liability springs from supply agreements containing provisions for variable credit times, the liability is classified as a trade payable, and the change is included in operating activities in the statement of cash flow. As at 31 December 2015 the Group owed its bank NOK 173,277,000 in connection with this type of financing.
| NOK 1000 | ||
|---|---|---|
| Long-term interest-bearing debt | 2015 | 2014 |
| Debt to credit institutions | 2 480 429 | 1 889 703 |
| Leasing liabilities | 412 776 | 450 070 |
| Other non-current liabilities | 8 588 | 5 307 |
| Next year's instalment on long-term debt | -140 421 | -153 518 |
| Total long-term interest-bearing debt 31 Dec | 2 761 373 | 2 191 562 |
| Short-term interest-bearing debt | ||
| Debt to credit institutions | 0 | 123 149 |
| Next year's instalment on long-term debt | 140 421 | 153 518 |
| Total short-term interest-bearing debt 31 Dec | 140 421 | 276 667 |
| Total interest-bearing debt | 2 901 793 | 2 468 229 |
| Cash & cash equivalents | 273 696 | 166 963 |
| Total interest-bearing debt | 2 901 793 | 2 468 229 |
|---|---|---|
| Cash & cash equivalents | 273 696 | 166 963 |
| Net interest-bearing debt | 2 628 097 | 2 301 266 |
The book value of long-term debt is practically the same as fair value. Next year's instalments on bank loans and leasing agreements are classified as current liabilities in the balance sheet.
See Note 2 for details of the maturity profile of the Group's liabilities.
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Change in fair value of the biomass | 147 263 | -38 963 |
| Change in provisions for loss-making contracts | -91 932 | -30 629 |
| Unrealised change in value of Fish Pool contracts | 56 092 | -39 160 |
| Unrealised change in value of forward currency contracts | -71 491 | -123 597 |
| Recognised fair value adjustments | 39 932 | -232 349 |
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:
| NOK | EUR | JPY | USD | GBP | Other | Total | |
|---|---|---|---|---|---|---|---|
| Debt to credit institutions | -2 480 429 | -2 480 429 | |||||
| Leasing liabilities | -412 776 | -412 776 | |||||
| Other non-current liabilities | -8 588 | -8 588 | |||||
| Total long-term interest-bearing debt -2 901 793 | -2 901 793 | ||||||
| Cash & cash equivalents | 877 837 -485 111 -26 372 -33 042 -26 349 -33 265 | 273 696 | |||||
| Net interest-bearing debt | -2 023 957 -485 111 -26 372 -33 042 -26 349 -33 265 -2 628 097 |
Passion for Salmon
| NOK 1000 | ||
|---|---|---|
| The year's tax expense breaks down as follows: | 2015 | 2014 |
| Tax payable | 292 320 | 321 839 |
| Change in deferred tax | 62 143 | 90 601 |
| Effect of change in tax rate | -90 796 | 0 |
| Tax paid abroad | 2 005 | 618 |
| Surplus/shortfall in tax provisions in previous years | -10 781 | 306 |
| Tax on ordinary profit | 254 891 | 413 364 |
| Tax payable in the balance sheet | 2015 | 2014 |
| Tax payable in the year | 292 320 | 321 839 |
| Change in tax payable in previous years | 0 | 0 |
| Tax payable in the balance sheet | 292 320 | 321 839 |
| Breakdown of temporary differences | 2015 | 2014 |
| Intangible and operating assets | 1 766 234 | 1 705 703 |
| Financial leasing | 33 560 | 46 868 |
| Non-current financial assets | 0 | 404 |
| Inventory | 3 352 255 | 3 129 036 |
| Receivables | -5 243 | -8 017 |
| Other | -254 965 | -244 094 |
| Profit & loss account | 31 417 | 46 374 |
| Losses carried forward | 0 | 0 |
| TOTAL temporary differences | 4 923 259 | 4 676 274 |
| Deferred tax liabilities (+) / deferred tax assets (-) | 1 230 815 | 1 262 594 |
| Tax rate used when calculating deferred tax | 25 % | 27 % |
| Change in deferred tax in the balance sheet: | 2015 | 2014 |
|---|---|---|
| Deferred tax 1 Jan | 1 262 594 | 1 199 557 |
| Change in deferred tax in profit and loss | 62 143 | 90 601 |
| Change in deferred tax resulting from changed tax rate - effect recognised in profit and loss | -90 796 | 0 |
| Deferred tax associated with acquisitions | 0 | 15 579 |
| Deferred tax association with demerger - exit of subsidiaries and non-controlling interests | 0 | -42 295 |
| Deferred tax associated with equity transactions | -1 398 | 0 |
| Other changes | -1 728 | -848 |
| Deferred tax 31 Dec | 1 230 815 | 1 262 594 |
| Reconciliation from nominal to actual tax rates | 2015 | 2014 |
|---|---|---|
| Profit before tax | 1 383 686 | 1 628 841 |
| Expected tax at nominal tax rate | 373 595 | 439 787 |
| Effect of change in tax rate | -90 796 | 0 |
| Permanent differences (27 %) | -17 127 | -26 929 |
| Surplus/shortfall in tax provisions in previous years | -10 781 | 306 |
| Calculated tax expense | 254 891 | 413 164 |
| Effective tax rate | 18,4 % | 25,4 % |
| Permanent differences apply to the following: | ||
| Option expenses | 0 | 1 474 |
| Options redeemed | -3 040 | -2 759 |
| Share of profit/loss from associates | -10 865 | -25 957 |
| Other | -3 222 | 313 |
| Total | -17 127 | -26 929 |
The enterprise has a duty to provide an occupational pension scheme, under the Mandatory Occupational Pensions Act, and has a pension scheme that meets the requirements of this legislation.
In 2006 the Group switched from a defined-benefits pension plan to a defined-contribution pension scheme. Only those assets and liabilities associated with employees who were on sick leave or in receipt of disability benefits, in addition to the residual pensioners, remain in the defined-benefits scheme. As at 31 December 2015 the pension liability associated with the defined-benefits plan derives in its entirety from 7 pensioners. Liabilities associated with the AFP early retirement scheme are not included in the Group's pension calculations.
Total pension costs for the Group break down into two parts, one contribution-based and one benefits-based, as follows:
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Premiums paid into the defined-contribution scheme | 21 697 | 20 569 |
| Costs relating to the defined-benefits plan | 9 490 | 6 269 |
| Accrued employers' national insurance contributions | 1 875 | 1 148 |
| Year's pension costs, incl. employers' national insurance contributions | 33 062 | 27 986 |
| 2015 | 2014 | |
|---|---|---|
| 1 397 | -592 | |
| e (AFP) | ||
| 1 397 | 1592 | |
Premiums paid into the defined-contribution scheme 21 697 20 569 Costs relating to the defined-benefits plan 9 490 6 269 Accrued employers' national insurance contributions 1 875 1 148 Year's pension costs, incl. employers' national insurance contributions 33 062 27 986 Pension assets and liabilities recognised in the Group's balance sheet break down as follows: NOK 1000 2015 2014
Capitalised pension assets associated with secured scheme 1 397 1 592 Capitalised pension liaibilities associated with unsecured scheme (AFP) 0 0 Net pension assets 1 397 1 592
| Recognised liabilities secured through liens, etc: | 2015 | 2014 |
|---|---|---|
| Short-term debt to credit institutions | 0 | 123 149 |
| Long-term debt to credit institutions | 2 480 429 | 1 889 703 |
| Leasing liabilities and other non-current liabilities | 412 776 | 450 070 |
| Total | 2 893 205 | 2 462 922 |
| pilities | 2015 | 2014 |
|---|---|---|
| 4775556 | 4 392 172 | |
| 3634268 | 3 321 138 | |
| 815540 | 888219 | |
| 9 225 364 | 8601529 | |
Property, plant & equipment and licences 4 775 556 4 392 172 Inventory and biological assets 3 634 268 3 321 138 Trade receivables 815 540 888 219 Total 9 225 364 8 601 529
As at 31 December 2015 the Group had issued no guarantees with respect to third parties.
The Group has also entered into a 10-year leasing contract with Romsdalsfisk AS, which expires 1 April 2017. The contract is forthe lease of the Vikenco harvesting plant. The Group has a preferred right with respect to extending the lease. The leasing amount is divided into a fixed portion and a performance-related portion capped at NOK 300,000.
The Group has entered into a 5-year leasing contract with Wessel Invest AS. The contract relates to the lease of Kjørsvik Settefisk's premises and includes the lease of water rights.
| NOK 1000 | Less than 1 year | 2-5 years More than 5 years | Total | |
|---|---|---|---|---|
| Total future leasing payments | 29 956 | 75 686 | 4 267 | 109 908 |
Other current liabilities comprise:
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Accrued holiday pay | 66 333 | 59 718 |
| Accrued interest | 4 260 | 2 931 |
| Derivatives | 132 889 | 175 485 |
| Provisions for loss-making sales contracts | 126 125 | 34 193 |
| Provisions for future maintenance | 34 310 | 35 761 |
| Other accrued costs and provisions | 125 080 | 73 138 |
| TOTAL other current liabilities | 488 996 | 381 226 |
The Group's sales are primarily made through the subsidiaries SalMar Sales AS and Vikenco AS.
| The Group's revenues by geographic market: | 2015 | 2014 |
|---|---|---|
| Asia | 20,6 % | 20,9 % |
| Russia | 0,0 % | 2,5 % |
| USA/ Canada | 13,0 % | 6,6 % |
| Europe, excl. Norway | 50,8 % | 41,6 % |
| Norway | 15,4 % | 28,3 % |
| Other | 0,2 % | 0,1 % |
| Total | 100,0 % | 100,0 % |
| Payroll costs NOK 1000 | 2015 | 2014 |
|---|---|---|
| Salaries, incl. holiday pay and bonuses | 649 728 | 606 466 |
| Employers' national insurance contributions | 48 058 | 40 144 |
| Pension costs (see Note 19) | 31 187 | 26 838 |
| Options | 22 933 | 5 459 |
| Contract labour | 1 288 | 14 753 |
| Other benefits | 12 687 | 16 770 |
| Total | 765 881 | 710 430 |
No. of full-time equivalents employed during the financial year. 1 182,0 1 082,5
The remuneration (excl. VAT) paid to the Group's auditor breaks down as follows:
| Total | 1 756 | 2 519 |
|---|---|---|
| Other services | 232 | 345 |
| Tax advisory services | 34 | 110 |
| Other certification services | 143 | 140 |
| Statutory auditing services | 1 348 | 1 923 |
| NOK 1000 | 2015 | 2014 |
| 2015 NOK 1000 Senior executives |
Salary | Bonus | Benefits- in-kind |
Accrued pension expenses exercised |
RSUs |
|---|---|---|---|---|---|
| Leif Inge Nordhammer, CEO | 2 940 | 0 | 8 | 128 | 621 |
| Trond Tuvstein, CFO | 1 772 | 400 | 8 | 69 | 362 |
| Olav-Andreas Ervik, Director, Fish Farming | 1 623 | 250 | 8 | 65 | 346 |
| Gustav Witzøe, Director, Industry and Sales | 985 | 0 | 8 | 57 | 0 |
| Eva Haugen, Director, Quality Assurance/HSE | 1 164 | 200 | 8 | 68 | 238 |
| Tom Aleksandersen, Director, Strategy & Org. Develop.* | 1 650 | 400 | 7 | 50 | 0 |
* Took up post 1 March 2015
| NOK 1000 | ||
|---|---|---|
| The Group's revenues by currency: | 2015 | 2014 |
| NOK | 2 032 702 | 2 356 832 |
| JPY | 357 565 | 440 077 |
| GBP | 499 458 | 317 660 |
| USD | 1 964 552 | 1 645 134 |
| EUR | 2 442 204 | 2 397 203 |
| SEK | 29 721 | 28 982 |
| Total | 7 326 202 | 7 185 887 |
| Loans to and sureties granted on behalf of employees: | Loans | Sureties |
|---|---|---|
| Employees | 1 662 | 0 |
Remuneration paid to senior executives and members of the board: The SalMar Group has a management team comprising the CEO, CFO and the leaders of the largest business areas.
CEO Yngve Myhre stepped down in January 2014. He was entitled to salary payments during a 6-month period of notice, plus 6-months' severance pay.
The remuneration paid to the CEO and other senior executives at SalMar is based on the following main principles.
Basic salary is determined on the basis of the duties and responsibilities required of the position, as well as the expertise and length of service of the individual concerned. Salaries are intended to be competitive.
| 2014 NOK 1000 Senior executives |
Salary | Bonus | Benefits- in-kind |
Accrued pension expenses exercised |
RSUs |
|---|---|---|---|---|---|
| Leif Inge Nordhammer, CEO * | 2 621 | 350 | 8 | 53 | 0 |
| Yngve Myhre, CEO ** | 2 886 | 0 | 60 | 49 | 3 704 |
| Trond Tuvstein, CFO | 1 737 | 350 | 8 | 60 | 0 |
| Bjørn Larsen, Director, Fish Farming *** | 1 036 | 0 | 5 | 54 | 0 |
| Olav-Andreas Ervik, Director, Fish Farming **** | 1 538 | 350 | 9 | 132 | 0 |
| Gustav Witzøe, Director, Industry and Sales | 1 063 | 350 | 8 | 54 | 0 |
| Eva Haugen, Director, Quality Assurance/HSE | 1 130 | 350 | 8 | 77 | 0 |
| * Took up post 20 January 2014 ** Left post in January 2014 |
*** Left post 31 July 2014 | **** Took up post 1 August 2014 |
The bonus shall be determined and paid on the basis of the level of the position concerned and the added value which the individual or group of individuals has generated.
The company does not offer benefits-in-kind over and above that which is normal for senior executives in comparable companies.
Share-based incentive schemes The company wishes to utilise forms of remuneration which result in senior executives receiving shares, subscription rights or options in accordance with a specified programme. No other forms of remuneration linked to shares or the development of the share price are utilised by the company. The board may not waive the guidelines relative to this matter.
Senior executives shall at all times have competitive pension schemes.
Senior executives have a basic period of notice of six months. In certain cases, and depending on the position concerned, salary may be paid for a period of 6-12 months after employment has been terminated.
Other variable elements in the remuneration package The above not withstanding, the company shall not offer senior executives variable elements in the remuneration package or specific benefits in addition to their basic salary.
A statement relating to the determination of salaries and other benefits to senior executives at SalMar ASA has been approved by the board. For further details, please see the chapter on Corporate Governance.
Passion for Salmon
| Directors' fees | Directors' fees | |
|---|---|---|
| Board of directors NOK 1000 | 2015 | 2014 |
| Bjørn Flatgård, Chair | 480 | 300 |
| Gustav Witzøe | 150 | 95 |
| Kjell A. Storeide * | 375 | 233 |
| Tove Nedreberg ** | 353 | 220 |
| Merethe Helene Holthe | 200 | 190 |
| Bente Rathe *** | 125 | 0 |
| Pål Georg Storø, employee representative | 100 | 95 |
| Hanne Tobiassen, employee representative | 100 | 95 |
| Merete Gisvold Sandberg, employee representative | 50 | - |
| Geir Berg, employee representative | 50 | - |
* The fee includes NOK 75,000 in remuneration as chair of the Audit Committee. The corresponding amount in 2014 was NOK 42,500. ** The fee includes NOK 52,500 in remuneration as a member of the Audit Committee. The corresponding amount in 2014 was NOK 30,000.
*** The fee includes NOK 25,000 in remuneration as a member of the Nomination Committee.
The disclosed directors' fees are fees paid and reported to the tax authorities in the period. The payment profile for directors' fees was changed in 2015, and the disclosed fees for 2015 apply to fees for 1.5 periods. The corresponding fees for 2014 apply to one period.
Directors' fees payable to employee representatives are stated above. Total remuneration from the Group to employee-elected members of the board of directors, including directors' fees as stated above and redeemed RSUs, is as follows:
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Merete Gisvold Sandberg | 883 | - |
| Geir Berg | 966 | - |
| Pål Georg Storø | 1 380 | 1 167 |
| Hanne Kristine Tobiassen | 1 008 | 895 |
In accordance with the authorisation granted by the company's AGM on 4 June 2014, SalMar ASA's board of directors has introduceda share-based incentive scheme (Restricted Share Unit Plan) for senior executives and key personnel employed by the company and its subsidiaries. As at 31 December2015 the plan encompasses up to 577,214 shares, and has a term of three years. The company's liabilities under the plan will be covered by its existing holding of treasury shares.
Participants of the plan are granted Restricted Share Units (RSUs) free of charge. These will be released and transferred as shares to participants after an accrual period subject to predefined performance criteria. The shares are then transferred to the employee free of charge. The plan comprises three accrual periods of, respectively, one, two and three calendar years. Each accrual period covers 1/3 of the total annual RSUs in the plan. One RSU affords a contingent entitlement to one share. The award of RSUs in each of the three accrual periods rests on the following performance criteria:
The plan stipulates that RSUs will vest only if the participant is still an employee of the Group. The total gains from released RSUs during the course of one calendar year may not exceed 100 % of the participant's basic salary.
The fair value of RSU entitlements is calculated on the date they are awarded. The total fair value for the entitlements is capped at NOK 72,021,300 (2014: NOK 36,254,800). The cost is periodised over the accrual period, and a total of NOK 22,933,000 was charged to expenses in connection with the scheme in 2015 (2014: NOK 2,011,900). Provisions for employer's national insurance contributions linked to the scheme have also been made. The expense will become real to the extent that the performance criteria are met.
The fair value of the RSU entitlements that are not at market terms is set as the share price on the date the award was made. The probability of the performance criteria being met is taken into account when assessing how many RSU entitlements will be redeemed. The share price on the date of the 2015 award was NOK 148.00 (at the time of the 2014 allocation: NOK 123.00).
The fair value of the RSU entitlements that are at market terms is calculated on the basis of a Monte-Carlo simulation. The most important input data when calculating the value of these RSU entitlements are the share price on the date of the award, volatility, risk-free interest, expected dividend and accrual period. Based on the Monte-Carlo simulation, each RSU entitlement is worth NOK 119.07 (2014: NOK 118.73).
In 2015 119,919 RSUs were exercised. The market price per share at the time the RSUs were exercised was NOK 141.47. The value of the RSUs is treated as a salary payment to the individual employee.
A total of 64 people in the company, including the entire group management team, received in 2010, 2011 and 2012 a total of 1,835,000 options to purchase the company's shares. In the period from the granting of the options until 31 December 2014, a total of 11 people left the company and 453,520 options therefore lapsed. Members of the board of directors do not have options. The option scheme was terminated in 2014, and the remaining 264,609 options have been redeemed. Movements in the number of options outstanding for the active option scheme were as follows in 2014:
A total of NOK 3,447,000 was charged to expenses in accordance with the scheme in 2014.
| 2014 | |||
|---|---|---|---|
| Average strike | |||
| Movements in the no. of options outstanding and weighed average strike prices: price per share | Options | ||
| As at 1 Jan | 74,00 | 264 609 | |
| Granted during the year | - | - | |
| Lapsed during the year | - | - | |
| Exercised | 82,04 | -264 609 | |
| Expired | - | - | |
| As at 31 Dec | - | - ź |
| Movements in the no. of outstanding RSUs: | 2015 | 2014 |
|---|---|---|
| As at 1 Jan | 364 860 | - |
| Awarded during the year | 325 464 | 367 675 |
| Lapsed during the year | -25 277 | -2 815 |
| Redeem during the year | -119 919 | - |
| Adjustment | 32 086 | - |
| As at 31 Dec | 577 214 | 364 860 |
Vesting period for the outstanding RSUs at the close of the year:
| Date awarded | Vesting period | 2015 | 2 014 |
|---|---|---|---|
| 03.12.2014 | 2014-15 | - | 121 576 |
| 03.12.2014 | 2014-16 | 126 288 | 121 606 |
| 03.12.2014 | 2014-17 | 126 345 | 121 678 |
| 21.12.2015 | 2015-16 | 108 143 | |
| 21.12.2015 | 2015-17 | 108 201 | |
| 21.12.2015 | 2015-18 | 108 237 | |
| 577 214 | 364 860 |
| Group management have the following holdings of RSU entitlements: |
Holding 01.01 |
Awarded Adjustment | Redeem | Holding 31.12 |
|
|---|---|---|---|---|---|
| Leif Inge Nordhammer, CEO | 12 110 | 10 019 | 1 053 | -4 387 18 795 | |
| Trond Tuvstein, CFO | 7 099 | 6 098 | 621 | -2 573 11 245 | |
| Olav-Andreas Ervik, Director, Fish Farming | 6 755 | 5 919 | 585 | -2 446 10 813 | |
| Eva Haugen, Director, Quality Assurance/HSE | 4 662 | 4 005 | 405 | -1 689 | 7 383 |
| Tom Aleksandersen, Director, Strategy & Org. Development | - | 7 386 | - | - | 7 386 |
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Maintenance | 208 509 | 201 929 |
| Operating equipment | 71 865 | 68 990 |
| Direct input factors | 209 462 | 209 743 |
| Delivery costs | 559 532 | 445 217 |
| Other operating costs | 222 817 | 217 074 |
| Total | 1 272 186 | 1 142 953 |
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Net profit for the year (controlling interest's share) | 1 103 289 | 1 192 500 |
| Average no. of shares outstanding as at 1 Jan | 111 999 999 | 111 999 999 |
| Effect of share issue | - | - |
| Effect of treasury shares allocated to employees (see Note 25) | 119 919 | - |
| Average no. of shares outstanding through the year | 112 019 986 | 111 999 999 |
| Diluting effect of RSU entitlements granted (see Note 25) | 242 128 | 801 |
| Average no. of diluted shares outstanding through the year | 112 262 114 | 112 000 800 |
| Earnings per share | ||
| Basic | 9,85 | 10,65 |
| Diluted | 9,83 | 10,65 |
R&D costs include expenses relating to research and administrative personnel, technical equipment and facilities, and sums paid for external research services.
The criteria for capitalisation are deemed to have been met with respect to the Group's salmon lice project, as well as the offshore fish farm project (see Note 4). Other R&D costs are not deemed to have met the criteria for capitalisation, and those costs have therefore been charged to expenses. A total of NOK 47,203,000 in R&D costs was charged to expenses in 2015 (2014: NOK 53,086,000).
Group companies took to income NOK 8,926,600 in SkatteFUNN contributions in 2015 (2014: NOK 6,672,000). As at 31 December 2015 a further NOK 8,186,300 has been recognised as deferred revenues under the SkatteFUNN scheme. The corresponding figure as at 31 December 2014 was NOK 4,309,300.
The Group's parent company is SalMar ASA. The overall parent company is Kverva AS, which owns 53.4 % of the shares in SalMar ASA. The ultimate parent company is Kvarv AS, which prepares its own consolidated accounts in accordance with NGAAP.
| Transactions with related parties in 2015: | Sales | Purchases | Receivables | Liabilities |
|---|---|---|---|---|
| Associates of the SalMar Group | 2 589 | 14 261 | 1 916 | 741 |
| Companies controlled by the parent company Kverva AS | 86 158 | 8 877 | 18 558 | 0 |
| Associates of the parent company Kverva AS | 0 | 51 081 | 0 | 4 085 |
Transactions between the Group and related parties are undertaken on market terms and conditions. Dividends have also been received from associates. See Note 9 for further details.
Passion for Salmon
Financial accounts SalMar ASA 2015
Passion for Salmon
| OPERATING REVENUES AND OPERATING EXPENSES | Note | 2015 | 2014 |
|---|---|---|---|
| Sales revenues | 2 | 62 657 | 56 696 |
| Total operating revenues | 62 657 | 56 696 | |
| Salary and payroll costs | 3 | 41 362 | 40 976 |
| Depreciation of property, plant & equipment | 4 | 2 720 | 1 697 |
| Other operating expenses | 3 | 72 940 | 66 581 |
| Total operating expenses | 117 021 | 109 254 | |
| Operating profit/loss | -54 364 | -52 559 | |
| FINANCIAL INCOME AND FINANCIAL EXPENSES | |||
| Income from investments in subsidiaries | 5 | 1 227 708 | 1 108 218 |
| Income from investments in associates | 6 | 46 000 | 36 250 |
| Interest received from group companies | 71 303 | 91 250 | |
| Other interest income | 1 102 | 10 720 | |
| Other financial income | 40 519 | 125 | |
| Interest paid to group companies | 4 442 | 5 106 | |
| Other interest expenses | 50 610 | 71 636 | |
| Other financial expenses | 14 368 | 32 801 | |
| Net financial items | 1 317 211 | 1 137 019 | |
| Ordinary profit/loss before tax | 1 262 847 | 1 084 461 | |
| Tax | 12 | 319 992 | 281 317 |
| Profit after tax | 942 854 | 803 144 | |
| NET PROFIT/LOSS FOR THE YEAR | 942 854 | 803 144 | |
| ALLOCATIONS | |||
| Dividend provisions | 8, 9 | 1 121 199 | 1 120 000 |
| Transferred to/from other equity | 9 | -178 345 | -316 856 |
| TOTAL allocations | 942 854 | 803 144 |
NOK 1000
| ASSETS | Note | 2015 | 2014 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Intangible assets | |||
| Deferred tax assets | 12 | 0 | 10 460 |
| Total intangible assets | 0 | 10 460 | |
| PROPERTY, PLANT & EQUIPMENT | |||
| Land, buildings and other real property | 4 | 2 216 | 2 159 |
| Plant, equipment and operating consumables | 4 | 13 569 | 8 783 |
| Total property, plant & equipment | 14 | 15 785 | 10 942 |
| NON-CURRENT FINANCIAL ASSETS | |||
| Investments in subsidiaries | 5, 14 | 1 140 717 | 1 000 754 |
| Loans to group companies | 7, 11, 14 | 2 165 911 | 2 175 924 |
| Investments in associates | 6 | 206 283 | 162 890 |
| Investments in shares and other securities | 10 | 10 | |
| Other receivables | 7 | 588 | 786 |
| Total non-current financial assets | 3 513 509 | 3 340 363 | |
| Total non-current assets | 3 529 294 | 3 361 765 | |
| CURRENT ASSETS | |||
| Receivables | |||
| Trade receivables | 14 | 42 | 6 |
| Short-term receivables from group companies | 11, 14 | 1 409 895 | 1 279 297 |
| Other receivables | 14 | 14 553 | 20 659 |
| Total receivables | 1 424 490 | 1 299 963 | |
| Bank deposits, cash & cash equivalents | 14, 16 | 147 742 | 14 790 |
| Total current assets | 1 572 233 | 1 314 753 |
| ASSETS | Note | 2015 | 2014 |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Intangible assets | |||
| Deferred tax assets | 12 | 0 | 10 460 |
| Total intangible assets | 0 | 10 460 | |
| PROPERTY, PLANT & EQUIPMENT | |||
| Land, buildings and other real property | 4 | 2 216 | 2 159 |
| Plant, equipment and operating consumables Total property, plant & equipment |
4 14 |
13 569 15 785 |
8 783 10 942 |
| NON-CURRENT FINANCIAL ASSETS | |||
| Investments in subsidiaries | 5, 14 | 1 140 717 | 1 000 754 |
| Loans to group companies | 7, 11, 14 | 2 165 911 | 2 175 924 |
| Investments in associates | 6 | 206 283 | 162 890 |
| Investments in shares and other securities | 10 | 10 | |
| Other receivables | 7 | 588 | 786 |
| Total non-current financial assets | 3 513 509 | 3 340 363 | |
| Total non-current assets | 3 529 294 | 3 361 765 | |
| CURRENT ASSETS | |||
| Receivables | |||
| Trade receivables | 14 | 42 | 6 |
| Short-term receivables from group companies | 11, 14 | 1 409 895 | 1 279 297 |
| Other receivables | 14 | 14 553 | 20 659 |
| Total receivables | 1 424 490 | 1 299 963 | |
| Bank deposits, cash & cash equivalents | 14, 16 | 147 742 | 14 790 |
| Total current assets | 1 572 233 | 1 314 753 | |
| TOTAL ASSETS | 5 101 526 | 4 676 517 |
As at 31 December NOK 1000
| EQUITY AND LIABILITIES | Note | 2015 | 2014 |
|---|---|---|---|
| EQUITY | |||
| Paid-in equity | |||
| Share capital | 8, 9 | 28 325 | 28 325 |
| Treasury shares | 9 | -295 | -325 |
| Share premium fund | 9 | 415 285 | 415 285 |
| Other paid-in equity | 9 | 50 667 | 27 528 |
| Total paid-in equity | 493 982 | 470 813 | |
| RETAINED EARNINGS | |||
| Other equity | 9 | 565 729 | 744 073 |
| Total retained earnings | 565 729 | 744 073 | |
| Total equity | 9 | 1 059 711 | 1 214 887 |
| LIABILITIES | |||
| Deferred tax | 152 | 0 | |
| Total provisions | 152 | 0 | |
| OTHER NON-CURRENT LIABILITIES | |||
| Debt to credit institutions | 13, 14 | 2 400 000 | 1 800 000 |
| Long-term debt to group companies | 11 | 0 | 10 012 |
| Total other non-current liabilities | 2 400 000 | 1 810 012 | |
| CURRENT LIABILITIES | |||
| Debt to credit institutions | 13, 14 | 0 | 75 202 |
| Trade payable | 4 525 | 2 152 | |
| Tax payable | 12 | 272 153 | 285 225 |
| Dividend | 8, 9 | 1 121 199 | 1 120 000 |
| Public charges payable | 37 119 | 59 441 | |
| Short-term payables to group companies | 11 | 196 357 | 55 615 |
| Other current liabilities | 10 310 | 53 984 | |
| Total current liabilities | 1 641 664 | 1 651 618 | |
| Total liabilities | 4 041 816 | 3 461 631 | |
| TOTAL EQUITY AND LIABILITIES | 5 101 526 | 4 676 517 |
As at 31 December NOK 1000
| Note | 2015 | 2014 | |
|---|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES: | |||
| Ordinary profit before tax | 1 262 847 | 1 084 461 | |
| Tax paid during the period | 12 | -285 820 | 0 |
| Depreciation | 4 | 2 720 | 1 697 |
| Income from investments in subsidiaries | 5 | -1 227 708 | -1 108 218 |
| Income from investments in associates | 6 | -46 000 | -36 250 |
| Options charged to expenses | 3 | 3 801 | 3 761 |
| Change in trade receivables | 16 727 | -11 173 | |
| Change in trade payables | -5 595 | -47 045 | |
| Change in other time-limited items | -59 691 | 34 785 | |
| Net cash flow from operating activities | -338 719 | -77 982 | |
| CASH FLOW FROM INVESTING ACTIVITIES: | |||
| Payments for the purchase of property, plant & equipment | 4 | -7 563 | -3 458 |
| Change in intra-group balances | 11 | -13 647 | 48 990 |
| Net receipts of group contributions and dividends from subsidiaries | 5 | 1 085 478 | 138 294 |
| Receipts of dividends from associates and other investments | 6 | 46 000 | 36 250 |
| Net payments for the purchase of non-current financial assets | 5 | -43 394 | -29 034 |
| Net change in other investmens | 0 | 1 165 | |
| Net cash flow from investing activities | 1 066 874 | 192 207 | |
| CASH FLOW FROM FINANCING ACTIVITIES: | |||
| Long-term debt raised | 1 500 000 | 1 800 000 | |
| Long-term debt repaid | -900 000 | -1 991 682 | |
| Net change in overdraft | -75 202 | 75 202 | |
| Options redeemed | 0 | -3 893 | |
| Dividend (paid) | -1 120 000 | -896 000 | |
| Net cash flow from financing activities | -595 202 | -1 016 372 | |
| Net change in bank deposits, cash & cash equivalents | 132 952 | -902 147 | |
| Bank deposits, cash & cash equivalents as at 1 Jan | 14 790 | 916 937 | |
| Bank deposits, cash & cash equivalents as at 31 Dec | 147 742 | 14 790 | |
| Unused drawing rights | 2 500 000 | 3 124 798 |
As at 31 December NOK 1000
Gustav Witzøe Director
Frøya, 14th of April 2016
Tove Elin Nedreberg Director
Geir Berg Director/Employee representative
Bjørn Flatgård
Chair
Kjell A. Storeide Director
Bente Rathe Director
Leif Inge Nordhammer President & CEO
Merete Gisvold Sandberg Director/Employee representative
97
Passion for Salmon
The financial statements have been prepared in accordance with the Norwegian Accounting Act of 1998 and generally accepted accounting principles in Norway.
The accounting principles described below apply only to the parent company SalMar ASA. The notes relating to the SalMar Group are presented along with the Group's consolidated financial statements.
Preparation of the financial statements in accordance with generally accepted accounting principles requires that management make assessments, estimates and assumptions that affect the application of accounting principles, the recognised value of assets and liabilities in the balance sheet, revenues and expenses for the financial year, as well as information relating to uncertain assets and liabilities on the balance sheet date. Estimates and their underlying assumptions are based on historic experience and other factors which are deemed to be relevant and probable at the time the assessment is made. These assessments affect the book value of assets and liabilities where the valuation is not based on other sources. Estimates are assessed continually, and final values and results may deviate from these estimates. Changes in accounting estimates are recognised in the period in which the change takes place.
Assets intended for permanent ownership or use are classified as non-current assets. Other assets are classified as current assets and normally include items falling due for payment within one year, as well as items associated with the production cycle. The classification of current and noncurrent liabilities is based on the same criteria.
Non-current assets are valued at acquisition cost. If the recoverable portion of the non-current asset is lower than its book value, and the impairment is not expected to be temporary, the asset is written down to its recoverable value. Noncurrent assets with a limited economic life are depreciated systematically.
Current assets are valued at the lower of acquisition cost and fair value.
Other non-current liabilities are valued at par.
Revenue from the sale of goods is recognised when it is earned, ie. when the majority of both the risk and control of the item sold has been transferred to the customer. This will normally be when the item has been delivered to the customer. Revenues are recognised at the value of the consideration payable at the time the transaction took place. Services are taken to income as they are performed. Operating revenues are recognised less public charges, discounts, bonuses and other sales costs.
of fair value at the time the RSUs were granted, and the number of RSUs which are expected to accrue.
Fair value includes the effect of any market terms, but does not take account of the impact of any vesting terms that are not market terms. However, vesting terms that are not market terms affect the number of RSU that can be expected to be earned.
The total expense is periodised over the vesting period. On the balance sheet date, the company recalculates its estimates for the number of options that are expected to be earned. The company recognises the effect of any changes in the original estimates in profit and loss, with a corresponding adjustment in equity. The value of options relating to employees of subsidiaries is posted to investments in subsidiaries.
Trade receivables and other receivables are recognised at par less provisions for bad debts. Provisions for bad debts are determined on the basis of an assessment of the individual receivable.
Items of property, plant and equipment are capitalised at historic cost price and are depreciated over the asset's expected lifespan. Costs directly relating to maintenance of property, plant and equipment are charged to operating expenses as they arise, while enhancements or improvements are added to the asset's cost price and depreciated in line with the asset itself. If the recoverable portion of an item of property, plant and equipment is lower than its book value, the asset is written down to its recoverable value. The recoverable value is the higher of net sales value and value in use. Value in use is the present value of future cash flows which the asset will generate.
Subsidiaries, associates and other shares classified as noncurrent assets are valued in accordance with the cost method. Subsidiaries are companies in which SalMar ASA has a controlling influence, as a result of either legal or actual control. In principle, a controlling influence is deemed to exist when the company's direct or indirect shareholding exceeds 50 per cent of the voting capital. Associates are companies in which SalMar has a considerable influence. Considerable influence is normally deemed to exist when the company owns 20-50 per cent of the voting capital. Investments are valued at the shares' acquisition cost unless a write-down has been necessary. Write-downs to fair value are performed when the impairment is due to reasons that are not deemed to be of a temporary nature and are required under generally accepted accounting principles. Write-downs are reversed when the reason for the write-down no longer applies.
In the event of a decision to permit the cash settlement of options, the option liability will be reclassified from equity to liabilities. From the same date, the value of the option liability The company's statement of cash flow shows a breakdown of the company's cash flow by operating, investing and financing activity. The statement shows the individual activity's impact on liquidity. The statement of cash flow has been drawn up in accordance with the indirect method.
In 2015, 12 employees were awarded a total of 53,076 RSUs with respect to company shares, while 11 employees were awarded a total of 50,106 RSUs in 2014. The RSUs are earned over a 3-year period from the date they were awarded, which was 3 December 2014 and 21 December 2015 respectively, with 1/3 vesting annually. The fair value of the cost to SalMar ASA is calculated on the date of the award and is periodised over the vesting period. The perio-314,100). A provision for employers' national insurance contributions on the expense has also been made. In 2014 a further NOK 3,447,300 was recognised in expenses in respect of an option scheme that was terminated in 2014. Please see Note 25 to the consolidated financial statements for details of the share-based incentive schemes.
Dividend and other payouts are recognised as other financial income. If the dividend exceeds the share of withheld profit/ loss after acquisition, the surplus amount represents a repayment of invested capital, and the payouts are deducted from the value of the investment in the balance sheet.
The company has a defined-contribution occupational pension scheme. Pension premiums are charged to expenses as they arise, and the Group has no other liabilities over and above this annual payment.
The company has share-based incentive schemes, under which the company receives services from the employees in return for equity instruments (RSUs). The fair value of the services rendered by the employees in return for the RSUs awarded is recognised as an expense, with a corresponding increase in paid-in equity. The total amount charged to expenses over the vesting period is determined on the basis will be measured a new at the close of each period, with any changes recognised in profit and loss.
The tax expense is matched against profit/loss before tax. Tax relating to equity transactions is recognised in equity. The tax expense comprises tax payable (tax on the company's taxable income for the year as it appears in the income statement), and any change in net deferred tax. Deferred tax is calculated at the rate of 25 per cent on the temporary differences between accounting and tax values, as well as tax losses carried forward at the end of the financial year. Deferred tax liabilities and deferred tax assets are presented net in the balance sheet.
dised expense in 2015 comes to NOK 3,800,700 (2014: NOK
The parent company SalMar ASA is a holding company primarily engaged in the provision of administrative services to its subsidiaries. Consequently, the parent company's revenues derive solely from one business area, and are divided between revenues from intra-group services and other revenues as specified below.
| NOK 1000 | 2015 | 2014 |
|---|---|---|
| Revenues from provision of administrative services to group companies | 61 690 | 56 654 |
| Other revenues | 967 | 42 |
| Total | 62 657 | 56 696 |
| PAYROLL COSTS NOK 1000 | 2015 | 2014 |
|---|---|---|
| Salaries, incl. holiday pay & bonuses | 29 139 | 30 494 |
| Employers' national insurance contributions | 3 881 | 2 615 |
| Pension costs | 1 156 | 1 190 |
| Options/RSU | 3 801 | 3 761 |
| Other benefits | 3 385 | 2 916 |
| Total | 41 362 | 40 976 |
| No. of people employed (full-time equivalents) during the financial year | 31 | 28 |
Please see Note 24 to the consolidated financial statements for details of the remuneration paid to senior executives.
| Auditor NOK 1000 | ||
|---|---|---|
| The fee paid to the auditor, excl. VAT, breaks down as follows: | 2015 | 2014 |
| Statutory auditing services | 201 | 178 |
| Other certification services | 14 | 3 |
| Tax advisory services | 0 | 3 |
| Other services | 96 | 78 |
| Total | 311 | 261 |
| NOK 1000 | Real Operating equip property ment and fixtures |
TOTAL | |
|---|---|---|---|
| Acquisition cost 1 Jan 2015 | 2 159 | 14 044 | 16 203 |
| Additions | 171 | 7 392 | 7 563 |
| Acquisition cost 31 Dec 2015 | 2 330 | 21 436 | 23 766 |
| Acc. depreciation & write-downs 1 Jan 2015 Year's depreciation Acc. depreciation 31 Dec 2015 |
0 114 114 |
5 262 2 605 7 867 |
5 262 2 720 7 981 |
| Book value 31 Dec 2015 | 2 216 | 13 569 | 15 785 |
| Economic lifespan Depreciation plan |
No dep./3 years Straight line |
5-10 years Straight line |
|
| Annual leasing of off-balance sheet operating assets | 3 238 | 46 | 3 284 |
| COMPANY NOK 1000 | Registered office |
Voting share/ shareholding |
Book value 2015 |
Book value 2014 |
|---|---|---|---|---|
| SalMar Settefisk AS | Kverva | 100 % | 114 633 | 114 273 |
| SalMar Farming AS | Kverva | 100 % | 92 176 | 89 889 |
| SalMar Nord AS | Finnsnes | 100 % | 487 882 | 316 794 |
| SalMar Laksefjorden AS | Finnsnes | 100 % | 0 | 170 370 |
| SalMar AS | Kverva | 100 % | 357 479 | 241 650 |
| SalMar - Tunet AS | Kverva | 100 % | 7 306 | 7 278 |
| Hitramat Farming AS | Hitra | 51 % | 28 785 | 28 785 |
| Ocean Farming AS | Kverva | 91 % | 52 447 | 31 706 |
| TOTAL subsidiaries | 1 140 717 | 1 000 754 | ||
| SalMar ASA has recognised group contributions from the following subsidiaries (TNOK): - SalMar Farming AS - SalMar Nord AS - SalMar Settefisk AS |
2015 842 005 311 454 2 692 |
2014 592 000 341 309 0 |
||
| - SalMar Rauma AS - SalMar Laksefjorden AS - SalMar Organic AS |
71 556 0 0 |
0 12 233 162 676 |
||
| Total recognised income from investments in subsidiaries | 1 227 708 | 1 108 218 |
Investments in subsidiaries are recognised in accordance with the cost method.
With effect from 1 January 2015, the wholly owned subsidiary SalMar Laksefjorden AS has been merged into SalMar Nord AS. As a result, the investment in shares in SalMar Laksefjorden AS is included as part of the investment in SalMar Nord AS as at 31 December 2015.
Passion for Salmon
ANNUAL REPORT
| Registered | Voting share/ | Book value | Book value | |
|---|---|---|---|---|
| COMPANY NOK 1000 | office | shareholding | 2015 | 2014 |
| Norskott Havbruk AS | Bergen | 50 % | 162 787 | 162 787 |
| Salmus AS | Leirfjord | 50 % | 43 394 | 0 |
| Trøndersk Kystkompetanse AS | Dyrvik | 20 % | 103 | 103 |
| TOTAL associates | 206 283 | 162 890 |
Investments in associates are recognised in accordance with the cost method.
| Note 7 • Receivables falling due more than one year hence | |||
|---|---|---|---|
| NOK 1000 | 2015 | 2014 | |
| Other receivables | 149 | 201 | |
| Loans to employees | 439 | 585 | |
| Loans to group companies | 2 165 911 | 2 175 924 |
| COMPANY NOK 1000 | Recognised dividend |
finan. stat. | Equity in Profit/loss in last year-end last year-end finan. stat. |
|---|---|---|---|
| Norskott Havbruk AS | 46 000 | 1 012 520 | 85 545 |
| Salmus AS | 0 | 98 152 | -7 256 |
| Trøndersk Kystkompetanse AS | 0 | 1 727 | -26 |
| NOK 1000 | No. of shares | Face value | Book value |
|---|---|---|---|
| Ordinary shares | 113 299 999 | 0,25 | 28 325 |
Please see Note 16 to the consolidated financial statements for details of the largest shareholders and senior executives' holdings of company shares.
A provision has been made with respect to a dividend payout of NOK 10 per share, totalling NOK 1,121,199,000 as at 31 December 2015. No provision is made for dividends on the company's own treasury shares.
| Share | Treasury | Share | Other paid-in | Other | Total | |
|---|---|---|---|---|---|---|
| NOK 1000 | capital | shares premium fund | equity | equity | equity | |
| Equity as at 31 Dec 2014 | 28 325 | -325 | 415 285 | 27 528 | 744 073 | 1 214 887 |
| Year's change in equity: | ||||||
| Profit/loss in the period | 0 | 0 | 0 | 0 | 942 854 | 942 854 |
| Dividend provision | 0 | 0 | 0 | 0 | -1 121 199 | -1 121 199 |
| Redeemed options | 0 | 30 | 0 | -30 | 0 | 0 |
| Option cost recognised in equity | 0 | 0 | 0 | 23 169 | 0 | 23 169 |
| Equity as at 31 Dec 2015 | 28 325 | -295 | 415 285 | 50 667 | 565 729 | 1 059 711 |
A share-based incentive scheme has been entered into with senior company executives. Please see Note 3 for further details. Provisions with respect to dividend payouts are set out in Note 8.
The company has a statutory obligation to provide an occupational pension scheme under the Compulsory Occupational Pensions Act, and has a pension scheme that meets the requirements thereof.
The company has no defined-benefits pension schemes.
Premiums under the defined-contribution scheme are charged to expenses as they fall due. In 2015 the gross amount of NOK 1,156,200 was charged to expenses in connection with the defined-contribution pension scheme (NOK 1,189,500 in 2014).
Other short-term receivables from group companies, which totalled NOK 1,409,895,000 as at 31 December 2015, includes NOK 1,227,708,000 in group contributions receivable from group companies (NOK 1,108,218,000 in 2014). The figure for 2015 also includes NOK 112,271,000 in receivables from group companies participating in the group account scheme (NOK 98,624,000 in 2014). Other short-term receivables over and above this were ordinary trade receivables.
| Non-current receivables | Other short-term receivables | ||||
|---|---|---|---|---|---|
| NOK 1000 | 2015 | 2014 2015 |
|||
| Group companies | 2 165 911 | 2 175 924 | 1 409 895 | 2014 1 279 297 |
|
| Total | 2 165 911 | 2 175 924 | 1 409 895 | 1 279 297 | |
| Long-term debt | Other short-term payables | ||||
| NOK 1000 | 2015 | 2014 | 2015 | 2014 | |
| Group companies | 0 | 10 012 | 196 357 | 55 615 | |
| Total | 0 | 10 012 | 196 357 | 55 615 | |
The NOK 196,357,000 in other short-term payables to group companies as at 31 December 2015 includes NOK 171,451,000 in group contributions payable (NOK 22,740,000 in 2014). The remaining short-term payables to group companies were ordinary trade payables.
| NOK 1000 | ||
|---|---|---|
| Breakdown of the year's tax expense: | 2015 | 2014 |
| Tax payable | 318 445 | 291 365 |
| Change in deferred tax | 10 859 | -10 048 |
| Tax provisions (shortfall/excess) in previous years | -9 300 | 0 |
| Effect of change in tax rate from 27 % to 25 % | -12 | 0 |
| Tax on ordinary profit/loss | 319 992 | 281 317 |
| Breakdown of the year's taxable income | 2015 | 2014 |
| Profit before tax | 1 262 847 | 1 084 461 |
| Permanent differences | -43 132 | -42 548 |
| Change in temporary differences | -40 290 | 37 215 |
| Group contributions paid | -171 451 | -22 740 |
| Year's taxable income | 1 007 974 | 1 056 388 |
| Tax payable in the balance sheet | 2015 | 2014 |
|---|---|---|
| Tax payable for the year | 318 445 | 291 365 |
| Tax on group contributions paid | -46 292 | -6 140 |
| Tax payable in the balance sheet | 272 153 | 285 225 |
| Breakdown of temporary differences | 2015 | 2014 |
| Operating assets, incl. goodwill | 3 352 | 1 867 |
| Non-current financial assets | 6 | 54 |
| Profit & loss account | 137 | 171 |
| Provisions | 0 | -40 519 |
| Other differences | -2 887 | -314 |
| TOTAL temporary differences | 608 | -38 740 |
| Deferred tax liabilities (+) / deferred tax assets (-) | 152 | -10 460 |
| Deferred tax recognised in equity | -235 | 0 |
| Reconciliation from nominal to actual tax rate | 2015 | 2014 |
| Profit before tax | 1 262 847 | 1 084 461 |
| Expected tax on income at nominal tax rate | 340 969 | 292 804 |
|---|---|---|
| Permanent differences (27 %) | -11 646 | -11 488 |
| Tax provisions (shortfall/excess) | -9 331 | 0 |
| Estimated tax expense | 319 992 | 281 317 |
| Effective tax rate | 25,3 % | 25,9 % |
In 2014 SalMar entered into a new loan agreement with a 5-year term. The credit facility comprises a term loan amounting to NOK 1,000,000,000, which has a 10-year repayment profile, maturing after 5 years. In addition, there is an investment and acquisition facility amounting to NOK 2,000,000,000, which has a 33-year repayment profile, maturing after 5 years. As at 31 December 2015, no drawdowns had been made on this facility. Apart from this, there is a revolving credit facility amounting to NOK 1,500,000,000, as well as an operating credit capped at NOK 500,000,000. Interest rates are based on so-called 'current terms'.
The most important financial covenants for the long-term financing of SalMar ASA are, respectively, a solvency requirement, which stipulates that the Group's recognised equity ratio shall exceed 35 %, and a profitability requirement, which stipulates that theGroup's interest-bearing debt to EBITDA ratio shall, on average, not exceed 4.5. The agreement does, however, allow the Group to have an NIBD/EBITDA ratio of up to 6.0 for up to three quarters.
| Recognised debt secured through liens, etc. | 2015 | 2014 |
|---|---|---|
| Short-term debt to credit institutions | 0 | 75 202 |
| Long-term debt to credit institutions | 2 400 000 | 1 800 000 |
| Total | 2 400 000 | 1 875 202 |
| Book value of assets pledged as surety for recognised debt | 2015 | 2014 |
| Operating assets | 15 785 | 10 942 |
| Shares | 1 140 717 | 1 000 754 |
| Trade receivables | 42 | 6 |
| Receivables | 3 590 360 | 3 475 880 |
| Total | 4 746 903 | 4 487 582 |
| Operating assets | 15 785 | 10 942 |
|---|---|---|
| Shares | 1 140 717 | 1 000 754 |
| Trade receivables | 42 | 6 |
| Receivables | 3 590 360 | 3 475 880 |
| Total | 4 746 903 | 4 487 582 |
Under the agreement with its bank SalMar has assumed joint and several liability in connection with a group account overdraftscheme, limited upwards to NOK 500,000,000.
SalMar ASA has issued guarantees totalling NOK 17,000,000 on behalf of SalMar AS and NOK 80,000,000 on behalf of SalMar Farming AS with respect to a credit facility granted by SG Finans AS.
SalMar ASA has issued a guarantee totalling NOK 95,000,000 with respect to a long-term loan to SalMar AS from Innovation Norway.
SalMar ASA has issued a guarantee totalling NOK 5,000,000 to Nord-Trøndelag E-verk on behalf of SalMar Settefisk AS. The guarantee agreement was entered into on 1 January 2004, and is reduced by NOK 250,000 per year. As at 31 December 2015 the remaining amount guaranteed totalled NOK 2,000,000.
| NOK 1000 | ||
|---|---|---|
| Recognised debt secured through liens, etc. | 2015 | 2014 |
| Short-term debt to credit institutions | 0 | 75 202 |
| Long-term debt to credit institutions | 2 400 000 | 1 800 000 |
| Total | 2 400 000 | 1 875 202 |
SalMar ASA has issued a guarantee to Nordskag Næringspark AS for any and all amounts which SalMar AS owes Nordskag Næringspark AS under the leasing agreement between SalMar AS and Nordskag Næringspark AS. The guarantee is valid during the leasing period, as stipulated in the leasing agreement, plus a further three months.
SalMar ASA has issued a guarantee totalling NOK 23,606,000 to Billund Aquakulturservice Norge AS. The guarantee has been issued as surety for Troms Stamfiskstasjon AS's liabilities to its creditor in respect of a prime contract for the construction of a new smolt facility.
SalMar ASA has issued a guarantee to Graintec AS in connection with the construction of an offshore net cage for Ocean Farming AS. SalMar ASA guarantees that the supplier shall receive full settlement of any amounts due in connection with this agreement. The procurement from this supplier during the contract period is budgeted at NOK 40,000,000.
Please see Note 2 to the consolidated financial statements for further details relating to the management of financial and market risks to which the company and the Group are exposed.
As at 31 December 2015, the item Bank deposits, cash and cash equivalents included restricted funds totalling NOK 4,021,000, all of which related to employees' PAYE tax deductions. The corresponding figure the year before was NOK 3,053,000.
| Pa |
|---|
| ssi |
| on |
| fo |
| r S |
| alm |
| on |
Passion for Salmon
As we cultivate our raw material, every second counts. We are effective thanks to planning and teamwork. With knowledge and innovative solutions we build our future. Whatever task - we have one thing in common: Passion for Salmon
Frøya, 14th of April 2016
Tove Elin Nedreberg Director
Geir Berg
Director/Employee representative
Bjørn Flatgård Chair
Kjell A. Storeide Director
Bente Rathe Director
Leif Inge Nordhammer President & CEO
Merete Gisvold Sandberg Director/Employee representative
N-7266 Kverva Norway Phone +47 72 44 79 00 Fax +47 72 44 79 01 www.salmar.no
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.