PASSION FOR
IMPROVEMENT
A N N U A L R E P O R T 2 019
“SALMON”
BY PATRICK HUNT
Hunt is Kwakwaka’wakw and the youngest son of hereditary chief George and Mary Hunt. He is the
grandson of Tom and Emma Hunt, and May and Sam Henderson. His artwork “Salmon Princess”
will be installed on the bow and stack of our new wellboat in British Columbia, the Ronja Islander.
PASSION FOR
IMPROVEMENT
2
GRIEG SEAFOOD A N N U A L R E P O R T 2 0 19
Farming the oceans comes with a responsibility.
We are dedicated to provide more food from the
sea to people around the globe while reducing
our footprint and improving fish welfare. People,
partnerships, technologies and innovations will
help us get there. Step by step.
3
Our history and our future
5000 B.C.E
1850
1969
1970s
First fish farms reported in
China.
The first wild salmon
hatcheries established in
Norwegian salmon rivers.
The brothers Ove and Sivert
Grøntvedt release the first
salmon smolts in pens in
the sea at the island Hitra
in Norway.
Commercial salmon
farming of chinook, coho
and sockeye is established
around Sechelt in British
Columbia.
2013
2011
2010
2008
The Norwegian Government
launch the “green license”
scheme, with stricter
environmental standards.
Grieg Seafood currently has
eight green licenses.
Grieg Seafood British
Columbia is certified by
BAP.
Together with Bremnes
Seashore, Grieg Seafood
establish the sales
company Ocean Quality.
Grieg Seafood Rogaland is
certified by GLOBALG.A.P.
2015
2016
2017
2018
Grieg Seafood Shetland is
certified by GLOBALG.A.P.
Grieg Seafood Finnmark is
certified by GLOBALG.A.P.
Grieg Seafood harvests
75 000 tonnes.
Grieg Seafood achieves an
A- score from the Carbon
Disclosure Project.
Grieg Seafood launches
its GSF2020 improvement
program: a production
target of 100 000 tonnes
in 2020, with a cost at or
below industry average.
Grieg Seafood harvests
63 000 tonnes.
Grieg Seafood Finnmark
receives its first ASC certi-
fications.
4
ANNUAL REPORT 2019GRIEG SEAFOOD O U R H I S T O R Y A N D O U R F U T U R E
1973
1990s
1992
1998
Fish vaccines are introdu-
ced. As a result, the salmon
farming industry has
significantly reduced its use
of antibiotics.
Grieg Seafood Salmon
(trading company) and
Bioinvest (salmon farming
investor) are established.
Grieg Seafood Rogaland is
established.
The Norwegian Parliament
adopts a license system for
the country's growing aqua-
culture industry, with the
aim of strengthening local
communities along the
coast. Since then, salmon
farms have contributed with
jobs and revenues to small,
coastal communities.
2007
2006
2001
2000s
Grieg Seafood is listed at
Oslo Stock Exchange.
Grieg Seafood aquires
Hjaltland Ltd in Shetland,
the beginning of Grieg
Seafood Shetland.
Grieg Seafood merges
with the Volden Group and
establishes Grieg Seafood
Finnmark.
Grieg Seafood acquires
Scandic Marine Ltd. in
British Columbia and esta-
blishes Grieg Seafood BC.
The Norwegian Government
and the industry develop
the standard NS9415 to
ensure fish farms are
technically safe and prevent
the escape of farmed
salmon.
2019
2020
2025
2030
Grieg Seafood harvests
83 000 tonnes.
Grieg Seafood aims to
harvest 100 000 tonnes.
Grieg Seafood achieves
the top A-rating from the
Carbon Disclosure Project.
Grieg Seafood acquires
Grieg Newfoundland in
Eastern Canada
Grieg Seafood aims to
harvest at least 150 000
tonnes, to be the cost
leader in each region and
to have established a new
position in the value chain.
Grieg Seafood aims to have
reduced carbon emissions per kilo
by 30% (compared to 2017).
The seafood industry
Grieg Seafood
The future
5
Our organization
GRIEG SEAFOOD FARMS
We have hatcheries, farms and
processing in each region.
OCEAN QUALITY
Our sales company, jointly owned
with Bremnes Seashore AS.
2
5
1
3
4
6
1
2
3
ROGA L A ND
FINNM A RK
SHE TL A ND
4
BRITISH
COLUMBI A
25 217
25 000
38 000
17 000
20 000
32 362
11 273
14 120
7
8
5
6
7
8
BERGEN (HQ)
HOUS TON
BEI JING
SH A NGH A I
Harvested volume 2019
Harvest volume target 2020
For more information on the Group structure, refer to note 1 in the Group Accounts.
6
ANNUAL REPORT 2019GRIEG SEAFOOD O U R O R G A N I Z AT I O N
OUR VISION
ROOTED IN NATURE
FARMING THE OCEAN FOR A BETTER FUTURE
OUR VALUES
OPEN
We are open with each other. We share knowledge and ideas, and learn from each other. We meet new per-
spectives with an open mind. We are always honest – also in difficult situations. Our managers have an open
door and welcome suggestions for ways to improve.
We are open and transparent towards society. That is the only way we can earn people’s trust. We proac-
tively share honest information about our operations with the public, the authorities, and the media – even
before they ask. We invite the community to our facilities, participate in the public debate, and engage in
dialogue with other users of the fjords.
A MBITIOUS
Every day, we endeavor to do our job in the best possible way. We never settle for the average. We walk
the extra mile. We always strive to improve. We think big and set ambitious goals for everything we do.
We are not afraid of making bold decisions, even if they are tough and push us out of our comfort zone.
We embrace change and innovation. We prioritize our commitments and carry them out. Our ambitious goals
aim to make Grieg Seafood ever more profitable. Only then can we develop the salmon farming industry
further.
CA RING
We not only treat each other with respect, we care. We care about our people, and help them flourish
and develop their talents. We foster a caring environment – even in difficult situations and when hard
decisions must be made.
We care about our fish and the natural environment that is vital to the production of healthy salmon. We work
constantly to maintain good biological control and reduce our impact on the environment. We will pass healthy
fjords and salmon on to future generations.
We care about our communities. We recognize that the fjords belong to them, and we take their concerns
seriously. We are a good neighbor. We create opportunities and lasting value for society.
7
PA R T 01
OUR STORY
M A I N A C H I E V E M E N T S
K E Y F I G U R E S
C EO L E T T E R
O U R S C O R E B O A R D
O U R B U S I N E S S S T R AT EGY
O U R B U S I N E S S M O D E L
FA R M I N G T H E O C E A N F O R A
B E T T E R F U T U R E
T H E U N S U S TA I N A B L E
D E V E L O P M E N T G O A L S
O U R A P P R O A C H T O
S U S TA I N A B L E B U S I N E S S
10
12-13
14 -15
16 -17
18 -19
2 0 -2 5
2 6 -2 7
2 8 - 31
3 2- 3 3
3 4 - 41
G R O U P M A N A G E M E N T T E A M
4 2- 4 5
Content
8
ANNUAL REPORT 2019GRIEG SEAFOOD C O N T E N T
162
16 4 -167
16 8 -18 7
PA R T 0 2
PA R T 0 3
OUR PROGRESS
46
OUR RESULTS
C E R T I F I C AT I O N S A N D
L I C E N S E S
4 8 - 5 3
P R E S E N TAT I O N O F
T H E B O A R D O F D I R EC T O R S
H E A LT H Y O C E A N
Fish health and welfare
Sea lice control
Escape control
Limiting local emissions
Interaction with wild life
S U S TA I N A B L E F O O D
Safe and healthy food
Sustainable feed ingredients
Reducing carbon emissions
Climate risk
Waste management
P R O F I T & I N N O VAT I O N
The global salmon market
Ocean Quality and our markets
Economic productivity
Profitable growth
The Grieg Seafood shares
Analytical information
P EO P L E
Human rights and ethics
Embracing diversity
Creating attractive jobs
Keeping our employees safe
Anti-corruption
L O C A L C O M M U N I T I E S
Local value creation
Finding the path to shared prosperity
5 4
56-65
66-71
72-73
74-77
78-79
8 0
82-87
88-91
92-95
96-97
98-99
10 0
102-103
104-105
106-111
112-121
122-125
126-133
13 4
136-139
140-141
142-145
146-149
150-151
15 2
154-159
160-161
B O A R D O F D I R EC T O R S'
R E P O R T
C O R P O R AT E G O V E R N A N C E
18 8 -2 0 7
A N N UA L A C C O U N T S 2 019
2 0 8 - 312
Grieg Seafood Group
Grieg Seafood ASA
AU D I T O R ' S R E P O R T
AU D I T O R ' S S U S TA I N A B I L I T Y
R E P O R T
208-285
286-312
313 - 317
318 - 319
PA R T 0 4
APPENDIX
T C F D R E P O R T
G R I I N D E X
320
3 2 2- 3 2 9
3 3 0 - 3 4 3
9
10
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
C O N T E N T
PA R T 01
OUR STORY
M A I N A C H I E V E M E N T S
K E Y F I G U R E S
C EO L E T T E R
O U R S C O R E B O A R D
O U R B U S I N E S S S T R AT EGY
O U R B U S I N E S S M O D E L
FA R M I N G T H E O C E A N F O R A B E T T E R F U T U R E
T H E U N S U S TA I N A B L E D E V E L O P M E N T G O A L S
O U R A P P R O A C H T O S U S TA I N A B L E B U S I N E S S
G R O U P M A N A G E M E N T T E A M
12-13
14 -15
16 -17
18 -19
2 0 -2 5
2 6 -2 7
2 8 - 31
3 2- 3 3
3 4 - 41
4 2- 4 5
11
G R I E G S E A F O O D
Main achievements
GROUP
82 973
V S. 74 62 3 IN 2 018
Harvest volume (tonnes gwt)
13.1
V S. 14.7 IN 2 018
EBIT per kg (NOK)
19%
Return on capital employed (ROCE)
A
Recognized by the Carbon Disclosure Project as a leader for our
actions on climate change
2025
Launch of the GSF 2025 strategy, aiming for harvest volume
above 150 000 tonnes, cost leadership and value chain
repositioning
12
ROGALAND
25 217
V S. 16 2 9 3 IN 2 018
Harvest volume (tonnes gwt)
22.5
V S. 13.5 IN 2 018
EBIT per kg (NOK)
279g
Average weight of smolt transferred to
sea farms
93%
Survival rate
0
No sites affected by Pancreas
Disease the last half year
100%
All sites monitored and fed by our pilot
integrated operations center
ANNUAL REPORT 2019 PA R T 0 1 O U R S T O R Y
M A I N A C H I E V E M E N T S
FINNMARK
SHETLAND
BRITISH
COLUMBIA
32 362
V S. 2 9 774 IN 2 018
11 273
V S. 11 924 IN 2 018
14 120
V S. 16 6 32 IN 2 018
Harvest volume (tonnes gwt)
Harvest volume (tonnes gwt)
Harvest volume (tonnes gwt)
17.9
V S. 2 0.0 IN 2 018
EBIT per kg (NOK)
-6.0
V S. 2.8 IN 2 018
EBIT per kg (NOK)
5.2
V S. 17.5 IN 2 018
EBIT per kg (NOK)
94%
Superior share of salmon
OHSS
OHSS certified, the highest safety
standard in BC
89%
Survival rate increased from
83% in 2018
First Nations
Agreement with the Indigenous
Nation Ehattesaht Chinehkint
96%
Survival rate
10
Total of ten sites ASC certified
1
One new site granted
0.2%
Percentage of farmed salmon found
in samples taken from the Alta wild
salmon river
13
Key figures
FIGURE 1.1
H A R V E S T VOLUME 2019 (TONNE S GW T)
FIGURE 1.2
S A LE S RE V ENUE S 2019 (NOK 1 0 0 0)
FIGURE 1.3
EBIT * 2019 (NOK 1 0 0 0)
11 273
731 583
-67 235
73 315
25 217
1 538 871
568 229
14 120
861 361
32 362
1 815 257
580 157
ROGALAND
FINNMARK
BRITISH COLUMBIA
SHETLAND
* EBIT before fair value adjustment of biological assets
FIGURE 1. 4
H A R V E S T VOLUME (TONNE S GW T)
FIGURE 1.5
EBIT V S. PRICE
PRICE NQSALMON (NOK/KG)
EBIT/KG GWT
70
60
50
40
30
20
10
0
-10
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
90
80
70
60
50
40
30
20
10
0
14
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
K E Y F I G U R E S
8 274
861
SALES REVENUES
NO. OF EMPLOYEES
MNOK
FTE
13.11
EBIT/KG
2019
KEY FIGURES NOK 1 000
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
Sales revenues*
8 273 592
7 500 316
7 017 456
6 545 187
4 608 667
4 099 543
2 404 215
2 050 065
2 047 000
2 446 800
EBITDA
EBIT
1 498 157
1 334 473
1 105 533
1 341 662
261 311
483 820
484 330
-29 818
345 820
686 944
1 087 574
1 098 818
904 400
1 167 745
47 742
343 104
348 293
-191 162
205 613
639 754
EBIT after fair value adjustment
866 860
1 354 916
812 937
1 683 486
80 951
219 367
615 743
-93 099
-189 567
847 383
Profit/loss for the year
644 908
997 120
600 899
1 222 331
4 366
144 395
430 985
-147 188
-123 158
631 039
Cash flow from operations
1 455 994
819 841
708 877
953 113
367 282
156 541
317 282
202 733
215 406
594 731
Gross investments including financial leasing
investments
706 345
733 034
552 821
254 852
322 168
311 698
163 961
189 539
324 186
241 804
Total assets
8 934 684
8 142 490
7 152 615
6 768 038
5 935 777
5 351 599
4 590 593
4 070 279
4 172 197
4 057 628
NIBD according to covenants requirement
1 938 672
1 689 537
1 283 606
906 319
1 568 878
1 566 242
1 445 005
1 529 976
1 443 690
1 046 640
NIBD incl. factoring
Equity (incl. minority)
2 375 786
2 236 320
1 763 786
1 399 981
1 907 109
1 761 802
1 445 005
1 529 976
1 443 690
1 046 640
4 140 843
3 883 511
3 347 905
3 206 951
2 237 511
2 241 451
1 988 557
1 513 230
1 690 150
1 982 405
EBIT/kg
13.11
14.72
14.45
18.04
0.73
5.30
6.00
-2.73
3.42
9.96
Harvest volume (tonnes GWT)
82 973
74 623
62 598
64 726
65 398
64 736
58 061
70 000
60 082
64 214
Market price of salmon (NOK/kg) **
57.21
59.22
59.18
61.93
40.70
39.81
38.88
43.54
43.10
43.41
39.67
37.70
35.19
34.04
1.3
48%
22%
1.2
47%
24%
0.7
47%
33%
6.3
38%
1%
4.00
4.00
1.50
0.50
3.3
42%
10%
-
43%
12%
-
3.0
-51.3
25.45
32.47
37%
-6%
30.52
31.35
4.2
41%
7%
36.70
29.78
1.5
49%
20%
-
1.35
0.25
Group cost
NIBD/EBITDA
Equity %
Return on Capital Employed (ROCE)
Dividend per share (NOK)
Earnings per share (NOK)
1.4
46%
19%
4.00
5.61
8.81
5.02
10.74
-0.06
1.26
3.90
-1.33
-1.11
5.65
Total market value OSE (NOK 1 000)
15 666 178
11 423 023
8 067 580
9 122 785
3 461 522
3 182 367
2 735 719
1 379 026
463 397
2 210 908
Number of employees (full-time equivalent)
861
769
707
654
681
686
626
640
589
578
*Ref figure 1.2 - see Note 6 for more information on the calculation of total revenues **Average of weekly NQSALMON prices
15
CEO LE T TER
Dear shareholder
In 2019, Grieg Seafood took
another step on our journey of
sustainable growth. We harvested
more than we ever have, reaching
beyond our target of 82 000 tonnes.
I am very proud of our skilled employees and their dedication to
the improvement areas we are working on: post-smolt, digitali-
zation, biosecurity and fish welfare, as well as expansion oppor-
tunities.
Last year we saw results in all areas. We transferred bigger smolt
to the sea, and see that our strategy is starting to pay off. Though
it is still early days, the post-smolt fish are so far showing good
growth and are generally strong and healthy in the sea phase. Our
belief in post-smolt as a sustainable way forward for the industry
has been strengthened.
We are also at the very beginning of the digital transformation of
fish farming, and the outlook is promising. Our feed conversion
ratio has improved, partly due to our digitalization efforts. We
see increased survival during harmful algal blooms in BC due
to our digital mitigation systems. We are using data analytics
to analyze selected challenging areas, in search of previously
undiscovered connections. In 2019, one of these analyses uncov-
ered new information about the cause of pancreas disease (PD)
at some of our sites.
I am happy to report that salmon survival rates increased in the
company last year. We are passionate about improving fish health
and welfare in all regions, and work systematically to do so. We
also obtained a new site in Finnmark.
16
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
C E O L E T T E R
We are targeting a cost at or below the industry average in the
various regions. In 2019, we reached our cost target in Rogaland
and Finnmark due to improved biological performance. With
measures put in place, we believe we will reach our target in BC
this year as well. In Shetland, unfortunately, it will take longer
than expected to reach our cost target due to low volume and
biological challenges. We are not content with the current situ-
ation, but we see that our systematic improvement efforts are
having an effect. I am encouraged by an increased survival rate
from 83 percent to 89 percent on Shetland in 2019.
Achieving a harvested volume of 100 000 tonnes and increased
biological control in 2020 is the foundation for our new strategy
for the period to 2025. By then, we aim to harvest at least 150 000
tonnes, to achieve cost leadership in each region, and to re-po-
sition Grieg Seafood in the value chain from a pure commodity
supplier to a customer innovation partner. We will increase our
presence downstream through partnerships, category develop-
ment, and brand cultivation.
Sustainability is at the heart of our 2025 strategy. Reducing our
footprint and improving fish welfare is key to getting the license to
operate we need in our local communities to achieve our growth
target. Because good health, high survival, and low impact drive
cost down, sustainability is central to achieving cost leadership.
With customers increasingly focusing on the environment and
health, sustainability is also key to successfully achieving a stron-
ger presence in the market. Grieg Seafood is committed to playing
our part in solving the challenges that our industry faces. For
2019, we are proud to be included on the Climate A-list by the
Carbon Disclosure Project.
2020 has started in a way that none of us could have foreseen. The
COVID-19 pandemic has spread across the globe, and no indus-
Reducing our footprint
and improving fish welfare
is key to getting the
license to operate we need in
our local communities to
achieve our growth target.
A NDRE A S K VA ME
CEO, Grieg Seafood
try is unaffected. So far, however, production at Grieg Seafood
Nobody knows what lies ahead or how long the impact of COVID-
is going relatively well and according to plan. We see a reduced
19 will last. After many profitable years, Grieg Seafood is in a
demand from the HoReCa segment and increased demand from
robust financial condition. Still, we are preparing for all kinds
retail, as people are eating more at home. As of today, we are still
of scenarios. We are postponing some investments to increase
aiming to harvest 100 000 tonnes in 2020.
our buffer further, and we are making sure that our debt ratio
We have put in place many measures to keep our staff safe, and
class and consumer trends focusing on health and sustainabil-
I continue to be impressed by how solution-oriented and flexible
ity, we see huge opportunities for our fish in the market. We will
our employees are in this difficult situation. The vibrant company
do everything we can to ensure that we get through this crisis
is reasonable. In the long-run, though, with a growing middle
culture that we have been cultivating for years is today one of our
strengths. From the bottom of my heart, I want to thank all of
my colleagues in Grieg Seafood and Ocean Quality– from young
apprentices to management – for their dedication to the company.
and continue to create value for our shareholders, customers,
employees, and local communities alike for a long time to come.
For now, we will work hard, stay calm, and carry on.
17
Our scoreboard
PILLAR
KPI
HEALTHY
OCEAN
Survival rate*
TARGET
93%
Rogaland
Finnmark
Shetland
British Columbia
Use of antibiotics (g per tonne LWE)
No use of antibiotics
Rogaland
Finnmark
Shetland
British Columbia
Sea lice treatments** (g per tonne LWE)
Minimize use of pharmaceutical treatments
Rogaland
Finnmark
Shetland
British Columbia
Use of hydrogen peroxide** (kg per tonne LWE) Minimize use of pharmaceutical treatments
Rogaland
Finnmark
Shetland
British Columbia
Escape incidents
Zero escape incidents
Rogaland
Finnmark
Shetland
British Columbia
Carbon emission (kgCO2e per tonne GWT)
High quality product
30% reduction (from 2017) in emission/tonnes GWT by 2030
93% superior share
Rogaland
Finnmark
Shetland
British Columbia
Return on capital employed
Farming cost per kg (NOK)
12% p.a.
37.90 in 2020
Harvest volume (tonnes GWT)
100 000 tonnes in 2020
Absence rate
Below 4.5%
Rogaland
Finnmark
Shetland
British Columbia
Harassment
Workplace culture
Zero harassment cases
Above average score in Great Place to Work survey
Reputation amongst stakeholders
Good stakeholder reputation
Support our local communities
Collaborate and contribute to local community
SUSTAINABLE
FOOD
PROFIT &
INNOVATION
PEOPLE
LOCAL
COMMUNITIES
* Survival rate calculated according to the GSI standards. ** Amount of active pharmaceutical ingredients (APIs) used (gr/kg) per tonne of fish produced (LWE).
18
2016
2017
2019
STATUS
REFERENCE
126.9
93%
94%
83%
90%
0.0
0.0
0.9
5.2
0.2
2.5
0.3
18.5
42.4
76.0
0.0
0
0
na
88%
89%
93%
76%
33%
39.7
3.4%
6.1%
2.7%
1.6%
0
na
-
yes
91%
95%
89%
93%
0.0
0.0
1.7
18.3
0.2
1.0
5.9
0.1
10.8
13.4
82.7
9.2
0
0
0
0
421
81%
78%
93%
81%
24%
43.4
3.2%
4.4%
3.2%
0.9%
0
na
-
yes
2018
92%
96%
83%
88%
0.0
0.0
13.9
151.3
1.1
0.8
3.2
0.3
3.5
14.5
32.6
5.8
0
0
0
459
74%
86%
94%
84%
22 %
43.1
4.7%
5.4%
2.3%
1.8%
0
-
yes
1 (200 fish)
2 (1 446 fish)
2 (22 212 fish)
2 (4 500 fish)
64 726
62 598
74 623
82 973
93%
96%
89%
88%
0.0
0.0
29.2
87.0
0.0
0.3
2.0
0.5
11.9
0.0
12.2
6.0
0
0
0
514
75%
86%
94%
86%
19%
43.5
3.5%
4.9%
3.4%
2.0%
0
●
●
●
●
●
●
●
●
●
●
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●
●
●
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page 65
page 69
page 69
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page 94
page 84
page 107
page 113
page 113
page 149
89% (Norway)
79% (global)
Improving
yes
page 138
page 144
page 38-39
page 154-161
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
O U R S C O R E B O A R D
The colours indicate
● Within target ● On track to meet our target ● Unsatisfactory result
2019
STATUS
REFERENCE
2016
93%
94%
83%
90%
0.0
0.0
0.9
126.9
5.2
0.2
2.5
0.3
18.5
42.4
76.0
0.0
0
1 (200 fish)
2 (1 446 fish)
0
na
88%
89%
93%
76%
33%
39.7
2017
91%
95%
89%
93%
0.0
0.0
1.7
18.3
0.2
1.0
5.9
0.1
10.8
13.4
82.7
9.2
0
0
0
0
421
81%
78%
93%
81%
24%
43.4
2018
92%
96%
83%
88%
0.0
0.0
13.9
151.3
1.1
0.8
3.2
0.3
3.5
14.5
32.6
5.8
0
0
93%
96%
89%
88%
0.0
0.0
29.2
87.0
0.0
0.3
2.0
0.5
11.9
0.0
12.2
6.0
0
0
2 (22 212 fish)
2 (4 500 fish)
0
459
74%
86%
94%
84%
22 %
43.1
0
514
75%
86%
94%
86%
19%
43.5
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
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●
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●
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●
●
●
●
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page 65
page 69
page 69
page 73
page 94
page 84
page 107
page 113
page 113
page 149
page 138
page 144
page 38-39
page 154-161
19
Harvest volume (tonnes GWT)
100 000 tonnes in 2020
64 726
62 598
74 623
82 973
3.4%
6.1%
2.7%
1.6%
0
na
-
yes
3.2%
4.4%
3.2%
0.9%
0
na
-
yes
4.7%
5.4%
2.3%
1.8%
0
3.5%
4.9%
3.4%
2.0%
0
89% (Norway)
-
yes
79% (global)
Improving
yes
PILLAR
KPI
Survival rate*
HEALTHY
OCEAN
TARGET
93%
Use of antibiotics (g per tonne LWE)
No use of antibiotics
British Columbia
British Columbia
British Columbia
Rogaland
Finnmark
Shetland
Rogaland
Finnmark
Shetland
Rogaland
Finnmark
Shetland
Rogaland
Finnmark
Shetland
Rogaland
Finnmark
Shetland
British Columbia
Rogaland
Finnmark
Shetland
British Columbia
Rogaland
Finnmark
Shetland
British Columbia
Sea lice treatments** (g per tonne LWE)
Minimize use of pharmaceutical treatments
Use of hydrogen peroxide** (kg per tonne LWE) Minimize use of pharmaceutical treatments
Escape incidents
Zero escape incidents
British Columbia
Carbon emission (kgCO2e per tonne GWT)
30% reduction (from 2017) in emission/tonnes GWT by 2030
High quality product
93% superior share
Return on capital employed
Farming cost per kg (NOK)
Absence rate
12% p.a.
37.90 in 2020
Below 4.5%
Harassment
Workplace culture
Zero harassment cases
Above average score in Great Place to Work survey
Reputation amongst stakeholders
Good stakeholder reputation
Support our local communities
Collaborate and contribute to local community
* Survival rate calculated according to the GSI standards. ** Amount of active pharmaceutical ingredients (APIs) used (gr/kg) per tonne of fish produced (LWE).
SUSTAINABLE
FOOD
PROFIT &
INNOVATION
PEOPLE
LOCAL
COMMUNITIES
Our business strategy
FIGURE 1.6
SUS TA IN A BILIT Y DRI V E S
RE SULT
In 2016, we launched a growth program based on
existing farming licenses. We aim to produce 100 000
tonnes in 2020, which will serve as a platform for further
sustainable growth. In 2019, we launched our new
strategy for the period 2020–2025. We aim to strengthen
our position as a global supplier, and increase value
creation by repositioning the Company in the value chain.
FIGURE 1.7
OUR GROW TH
JOURNE Y:
H A R V E S TED TONNE S
We aim to harvest at least
150 000 tonnes in 2025.
63 000
2017
75 000
2018
83 000
2019
100 000
2020
150 000
2025
2 0
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
O U R B U S I N E S S S T R AT E G Y
SUS TA IN A BILIT Y DRI V ERS
SUCCE S S FACTORS
FIN A NCI A L TA RGE T S
• Sea lice control
• Escape control
• Disease control
• Survival
• License to operate
• Higher volume
• Superior quality
• Reduced cost
• ROCE: 12%
• 100 000 tonnes in 2020
• Cost at/below NOK 37.9/kg
• NIBD/EBITDA < 4.5
• Minimal sea lice medication
• Engaged employees
• NIBD/harvest volume: NOK 20/kg
• Preferred by customers and
• Dividend of 30-40% of net profit
consumers
• Wildlife management
• Carbon emissions
• HSE
• Work satisfaction
• Diversity
• Certifications
• Local value creation
Salmon farming is a long-term commitment, where sustainability and profit go hand in hand. In fact, sustainability drivers like sea lice
control and fish survival rates directly impact success factors like cost and volume. Our sustainability drivers must perform well if we
are to reach our financial targets.
2 1
OUR BUSINE S S S TR ATEGY 2017—2020
100 000 TONNES - A PLATFORM FOR
SUSTAINABLE GROWTH
SUSTAINABILITY
P OS T-SMOLT
S TR ATEGY
BIOSECURIT Y
A ND FISH
W ELFA RE
DIGITA LIZ ATION
IN THE SA LMON
INDUS TRY
E X PA NSION
OPP ORTUNITIE S
P OS T-SMOLT S TR ATEGY
BIOSECURIT Y A ND FISH W ELFA RE
During the first stages of their life, salmon are raised in onshore
We pursue a systematic, long-term approach to fish welfare.
hatcheries. Our post-smolt strategy enables us to delay the trans-
The key is investment and further development of preventive
fer of smolt to the sea until they are larger. We are piloting the
measures against dangers to the fish in the sea, such as sea lice,
program in Rogaland.
harmful plankton, low oxygen levels, infectious diseases, and low
Bigger smolt improves biosecurity because each salmon spends
less time in sea, which reduces exposure to biological risks like
Prevention will reduce handling and stress for the fish. It will
sea lice or diseases. It also increases flexibility with regard to
also reduce our environmental footprint by, for instance, reducing
the stocking of smolt and allows us to fallow for longer periods
the number of treatments needed. The result is stronger growth,
if necessary. In addition, post-smolt improves salmon survival
high harvesting quality, increased survival rates, and lower cost.
seawater temperatures.
rates because each salmon is more robust when entering the sea.
Post-smolt transfer also allows for a more efficient production cycle.
S TATUS
It takes less time to reach harvestable size in the sea, which frees up
•
Improved survival rates in Rogaland and Shetland.
capacity at farms and cuts the number of active sea sites. The result
• Less use of medical sea lice treatments.
is a lower environmental footprint per kilo, better fish health and
•
Improved EFCR - from 1.52 in 2018 to 1.28 in 2019 in Rogaland.
welfare, increased productivity, and lower cost.
S TATUS
• While an average smolt transferred to the sea in 2014 weighed
90g, the average smolt transferred in Rogaland weighted 279g
in 2019, and is expected to reach 410g in 2020.
• Good growth, increased survival, less disease and better sea
lice control due to post-smolt transfer in Rogaland.
• Test of post-smolt production in a floating closed-containment
aquaculture facility, the FishGLOBE, with promising results so far.
2 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
O U R B U S I N E S S S T R AT E G Y
DIGITA LIZ ATION
E X PA NSION OPP ORTUNITIE S
When digitalizing salmon farming, we apply advanced sensors,
We are looking for more sites and new locations in existing
big data, artificial intelligence, and automation, with the aim
regions, which will allow us to improve flexibility, biosecurity,
of generating better farming decisions. The goal is to enhance
and fish welfare.
operational and strategic decision making by adding data driven
decision support to experience-based knowledge in our daily
Expansion gives us greater flexibility in production, which helps
operations.
us to reach our targets on volume, cost, quality, fish welfare, and
We are working to simplify and standardize data acquisition.
Farmers are starting to get access to real-time data from the
pens to support decision-making. We have started utilizing big
S TATUS
environmental impact.
data analytics to understand and predict events, to improve
• One new site approved in Finnmark in 2019 and more applications
management decisions, and to prevent negative occurrences.
are under consideration.
We call it Precision Farming.
• Expansion of the post-smolt facility Tytlandsvik Aqua in Rogaland
Our digitalization efforts aim to improve insight, provide better
• Acquired Grieg Newfoundland in Eastern Canada in 2020.
commenced.
production control for farmers, increase resource utilization, and
improve area management. We have already gained new knowl-
edge on correlations between the fish and the environment, which
will impact both strategic and operational decisions. The result is
increased growth, reduced environmental impact, improved fish
welfare, increased productivity and lower cost.
S TATUS
• EFCR in Rogaland has improved, from 1.52 in 2018 to 1.28 in
2019, supported by centralized feeding by the operations center.
• Construction of the operational center in Rogaland is ongoing.
• BC had significant improvement to reduced mortality due to
plankton mitigation investments. Through monitoring, we noticed
a 400% increase in cautionary harmful plankton events, and a
300% increase in lethal plankton events.
• Analyses conducted support post-smolt with shorter time in
sea as a good solution for the industry.
• New digitalization strategy towards 2025 supporting the new
business strategy 2025 has been approved by the Board.
• A digital tool for optimizing feeding for site managers has been
implemented globally.
2 3
OUR BUSINE S S S TR ATEGY 2020 —2025
SCALING GLOBALLY THROUGH GROWTH
AND VALUE CHAIN INNOVATION
GLOBA L
GROW TH
COS T
LE A DER SHIP
VA LUE CH A IN
REP OSITIONING
Harvest volume above
150 000 tonnes by 2025
Drive competitiveness
in each region
Evolve from supplier
to innovation partner
SUSTAINABILITY
Going forward, Grieg Seafood will build on our existing platform
Grieg Seafood targets cost leadership in each region. To improve
from the last years. The strategy for 2020–2025 comprises three
operational performance, we will maintain a rigorous focus on
key strategic objectives for continued growth and business devel-
fish health and welfare. We will also drive performance improve-
opment. Increasingly sustainable farming practices is the very
ments through continuous research and development, and the
foundation of all areas of the strategy.
utilization of new technologies. We have identified a potential to
reduce cost by NOK 150–250 million by 2022.
We are aiming for an annual harvest of at least 150 000 tonnes
by 2025. We will focus on post-smolt investments, target new
We aim to increase the value of our products by becoming an inno-
licenses and seize opportunities within new technology. In some
vation partner for our customers. This will be achieved through a
regions, there is also potential for continued improvement of site
stronger presence in the market, based on partnerships, category
utilization. We participate in new growth initiatives, M&As, joint
development and brand cultivation.
ventures, and greenfield projects, and seek cooperation with
farmers in existing areas.
2 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
O U R B U S I N E S S S T R AT E G Y
2 5
Our business model
GSF 2 02 0
GSF 2 025
BREEDING
FRE SH WATER
FA RMING
SE AWATER
FA RMING
H A RV E S TING
SA LE S A ND
DIS TRIBU TION
VA LUE A DDED
PROCE S SING
RE TA IL /
HORECA
C ON SUMER
In Rogaland, we
have a broodstock
operation where
we breed for
specific traits,
such as strong
health or
resistance to sea
lice and diseases.
In all of our
regions, we have
RAS freshwater
facilities, where
the eggs are
hatched and the
salmon spend at
least the first year.
As part of our post-
smolt strategy, we
keep the salmon
longer on land in
all regions.
The salmon
live and grow
in the sea until
they reach a
harvestable size
of 4–5 kg.
We have
harvesting plants
in Rogaland
and Finnmark
in Norway, and
in Shetland in
the UK. We use
a harvesting
vessel in British
Columbia,
Canada.
Our subsidiary
Ocean Quality
In our 2025
strategy, we
handles sales and
will form closer
distribution in all
of our regions.
partnerships in
the market and
Our salmon is
found in retail
stores or on
the menu at
restaurants or
Every day, 900
000 meals made
from Grieg
Seafood salmon
are consumed by
increase the value
hotels. Today, we
people in more
have two HoReCa
than 50 countries.
of our salmon
through VAP.
brands, Skuna
Bay and Kvitsøy.
INPUT
N ATURE A ND BIOLOGY
– N ATUR A L CA PITA L
• Public natural resources: we lend
sea areas for our sites and fresh
water for our RAS facilities.
• Privately owned natural
resources:
1. Plantbased and marine feed
ingredients
2. Eggs
TECHNOLOGY
– TECHNOLOGICA L CA PITA L
• Farming equipment and
technology
FIN A NCI A L
– FIN A NCI A L CA PITA L
• Trust and investment from
investors
• Access to capital
PEOPLE
– HUM A N CA PITA L
• People (experience, ideas,
passion)
• Culture
• Corporate Governance
LICENCE TO OPER ATE
– P OLITICA L /SOCI A L CA PITA L
• Trusted among our key
stakeholders
• Favourable political conditions
2 6
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
O U R B U S I N E S S M O D E L
GSF 2 02 0
GSF 2 025
OUTCOME
BREEDING
FRE SH WATER
FA RMING
SE AWATER
FA RMING
H A RV E S TING
SA LE S A ND
DIS TRIBU TION
VA LUE A DDED
PROCE S SING
RE TA IL /
HORECA
C ON SUMER
In Rogaland, we
In all of our
have a broodstock
regions, we have
operation where
we breed for
specific traits,
such as strong
health or
resistance to sea
lice and diseases.
RAS freshwater
facilities, where
the eggs are
hatched and the
salmon spend at
least the first year.
As part of our post-
smolt strategy, we
keep the salmon
longer on land in
all regions.
The salmon
live and grow
in the sea until
they reach a
harvestable size
of 4–5 kg.
We have
harvesting plants
in Rogaland
and Finnmark
in Norway, and
in Shetland in
the UK. We use
a harvesting
vessel in British
Columbia,
Canada.
Our subsidiary
Ocean Quality
handles sales and
distribution in all
of our regions.
In our 2025
strategy, we
will form closer
partnerships in
the market and
increase the value
of our salmon
through VAP.
Our salmon is
found in retail
stores or on
the menu at
restaurants or
hotels. Today, we
have two HoReCa
brands, Skuna
Bay and Kvitsøy.
Every day, 900
000 meals made
from Grieg
Seafood salmon
are consumed by
people in more
than 50 countries.
ALMOST
1 400 000
HEALTHY MEALS PER DAY
OUR BRANDS
SK UN A BAY
Skuna Bay is our high-end HoReCa brand sold in the US. The
Skuna Bay fish is preferred by some of the top American chefs,
and is regularly served at the James Beard Award. Read more
here: https://www.skunasalmon.com/
K V IT SØY
Kvitsøy is our high-end HoReCa brand sold
in Europe, mainly to Italy and Spain.
2 7
Farming the ocean
for a better future
70% of the Earth is covered by ocean. Today, however,
we obtain only about 2% of our food from the sea. The
ocean can provide much more healthy nutrition to
people on all continents.
6–10
FIGURE 1.8
FEED CON V ERSION R ATIO
Feed conversion ratio (FCR)
measures the productivity of
different protein production
methods. A lower FCR
represents a more efficient
use of feed resources.
2.7–5
1.7–2
CHICKEN
PORK
CATTLE
1.2–1.5
FARMED
SALMON
2 8
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
FA R M I N G T H E O C E A N F O R A B E T T E R F U T U R E
The global population continues to grow rapidly, and fish farming represents one way to
meet the increasing demand for sustainable protein production and healthy food.
Because there are limits to the amount of wild fish that can be sustainably harvested,
aquaculture must meet the demand for more seafood in peoples’ diets. Sustainable
farming of fish and other marine species has an enormous potential globally. With a low
carbon footprint, a low feed conversion ratio and a low land and fresh water use, farmed
salmon continues to be one of the most eco-efficient forms of animal protein.
FIGURE 1.9
EDIBLE Y IELD
Edible yield measures how much of the animal is actually used for human consumption. Salmon
has a high edible yield compared to other animal proteins.
68%
FARMED ATL ANTIC
SALMON
46%
CHICKEN
52%
PORK
38%
L AMB
FIGURE 1.10
CA RBON FOOTPRINT
Salmon has a low carbon footprint compared to other animal proteins. Carbon footprint measures
the total greenhouse gas emissions caused directly and indirectly by production of an item. Carbon
footprint is measured as tonnes of carbon dioxide equivalent per tonne of edible protein.
0.60
FARMED ATL ANTIC
SALMON
0.88
CHICKEN
1.30
PORK
5.92
BEEF
Source: https://globalsalmoninitiative.org/en/sustainability-report/protein-production-facts/
2 9
THE CHALLENGES WE MUST SOLVE
Though we have made great progress in finding more
sustainable fish farming methods in recent decades,
many challenges remain:
1. ENSURING CO-EXISTENCE WITH OTHER SPECIES
It is our responsibility to protect biodiversity wherever we operate. Our aim is to use
farming methods that allow us to co-exist with other species, such as wild salmon, cod,
shrimp, wild mammals, and birds. Going forward, our industry must work hard to reduce
our environmental impact.
2 . IMPROV ING FISH W ELFA RE
While only a few fish from millions of eggs survive in the wild, farming fish in captivity
puts an ethical responsibility on us to safeguard our stocks’ survival, health, and welfare.
While we have worked hard to improve survival rates and fish health in recent decades,
much work remains to understand how we can improve animal welfare at our farms. This
also includes cleaner fish.
3. FINDING SUS TA IN A BLE FEED INGREDIENT S
As an industry, we need to develop new feed ingredients in order to grow sustainably. We
need novel marine ingredients, as well as novel protein ingredients.
4 . CUT TING CA RBON EMIS SIONS
While farmed salmon has a low carbon footprint compared to other animal proteins,
our industry must still cut more to contribute to achieving the Paris Climate Agreement.
New technologies must be developed to cut emissions in our operations and value chain.
5. RECYCLE RE SOURCE S
Our industry must develop a circular approach in more areas. The aim is to support the
circular economy and recycle resources throughout our value chain.
As the global pioneer and first-mover in developing food production in the ocean, the
salmon farming industry is spearheading new knowledge, innovation and technology
to find solutions to the challenges. As life below water is extremely complex, billions in
research & development investments are needed to advance within each area. As such,
the salmon farming industry must solve the challenges together, each company testing
out different solutions. Together we advance aquaculture practices.
3 0
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
FA R M I N G T H E O C E A N F O R A B E T T E R F U T U R E
31
The UN Sustainable
Development Goals
SUSTAINABLE OCEAN PRINCIPLES
Grieg Seafood has committed to the UN Global Compact
as part of the Grieg Group. Grieg Seafood has committed
to the Sustainable Ocean Principles established by the UN
Global Compact.
For more information, please see:
https://www.unglobalcompact.org/take-action/ocean
S T RE TCH GOA L S
SDG 2 — ZERO HUNGER
The salmon farming industry is driving developments in global aquaculture. As a result, we are making
a broader contribution to sustainable seafood production. Sustainable farming methods and practices,
biological and technical innovation, research, new knowledge, and government regulations developed
for the salmon farming industry can be transferred to the production of other marine species in other
parts of the world. The solutions we find not only make our own operations more sustainable, but also
advance the practices of fish farming industries in other countries. That way, we can truly contribute
to zero hunger.
SDG 13 — CLIM ATE ACTION
Farmed fish is one of the animal proteins with the lowest carbon footprint. Still, the salmon farming industry
must work to cut the carbon footprint of our salmon even further.
SDG 14 — LIFE BELOW WATER
We work to conserve and use oceans, seas, and marine resources sustainably. We have a responsibility
to protect marine biodiversity, and we strive to find new ways to reduce our environmental footprint and
improve the welfare of our fish.
SDG 17 — PA RTNER SHIP S FOR THE GOA L S
We cannot reach the goals we have set alone. We collaborate with authorities, research institutions,
other salmon farmers, NGOs, students, suppliers and others to advance sustainable aquaculture. We
share knowledge, expertise, and technology. We seek to be honest, exchange ideas, and learn from
those around us.
3 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
T H E U N S U S TA I N A B L E D E V E L O P M E N T G O A L S
W E A RE A L S O C OMMI T T ED TO
SDG 3 — GOOD HE A LTH A ND W ELL-BEING
The salmon we produce is a source of marine omega-3 and healthy for the human body.
SDG 4 — QUA LIT Y EDUCATION
We ensure that our employees receive the right training and development, so that the Company always
has the knowledge and expertise it needs.
SDG 5 — GENDER EQUA LIT Y
Gender equality and a diverse workforce, with people of different backgrounds, is not only our social
responsibility, it is also key to profitable growth.
SDG 6 — CLE A N WATER A ND SA NITATION
Fresh water is a scarce resource in some countries, but not in the regions in which we operate. However,
we have a responsibility to ensure efficient use of fresh water, and by using recirculating aquaculture
systems (RAS) for most of our freshwater facilities, we reuse 90-97% of our water.
SDG 8 — DECENT WORK A ND ECONOMIC GROW TH
We provide good jobs with fair conditions in rural areas. We contribute to economic growth in our local
communities in Norway, the UK, and Canada.
SDG 9 — INDUSTRY, INNOVATION AND INFRASTRUCTURE
We take part in research and innovation to find new solutions to our challenges , and advance global
food production in the ocean.
SDG 12 — RE SP ONSIBLE CONSUMP TION A ND PRODUCTION
We implement policies and processes to improve resource efficiency and reduce waste. We look for new
solutions to boost the circular economy.
SDG 15 — LIFE ON L A ND
We participate in projects to combat deforestation in our supply chain, and certify the soy we use for
our feed.
SDG 16 — PE ACE, JUS TICE A ND S TRONG INS TITUTIONS
We do business in a way that is inclusive, just, and accountable, and that promotes strong societies and
institutions.
3 3
Our approach to
sustainable business
OUR PILL ARS
SDG ALIGNMENT
HEALTHY OCEAN
SUSTAINABLE FOOD
TOPICS
• Fish health and welfare
• Safe and healthy food
• Sea lice control
• Escape control
• Limiting local emissions
•
Interaction with wild life
• Sustainable feed ingredients
• Reducing carbon emissions
• Climate risk
• Waste management
3 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
O U R A P P R O A C H T O S U S TA I N A B L E B U S I N E S S
In our long-term perspective, there is no contradiction between clean
seas, healthy fish and financial profit. It is our task to make these
aspects go hand in hand. Our overall target goes beyond short-term
profitability. With our five pillars, we are committed to sustainable and
long-term value creation for all of our stakeholders.
PROFIT & INNOVATION
PEOPLE
LOCAL COMMUNITIES
• Seafood demand
• Economic productivity
• Profitable growth
• Human rights and ethics
• Local value creation and local
• Embracing diversity
purchasing
• Creating attractive jobs
• Respect for Indigenous rights
• Keeping our employees safe
• Dialogue and engagement
• Anti-corruption
3 5
OUR MATERIALITY MATRIX FOR
SUSTAINABLE REPORTING
Together with our stakeholders, we have identified our most important risks and opportunities,
based on our operations and geographical locations.
C AT EG ORIE S
Healthy Ocean
Sustainable Food
Profit & Innovation
People
Local Communities
• Anticorruption
• Escape control
• Sea lice control
• Fish health & welfare
• Organic emission
• Medicines and chemicals
• Plastic waste
• GHG emissions
• Safe & healthy food
• Sustainable feed ingredients
• Economic performance
• Corporate governance & responsible business conduct
• Human rights
• Workplace safety (HSE)
•
Indigenous relations
• Visual and noise pollution
• Recycling & waste
• Community dialogue
management
• Local value creation
• Wildlife interactions
• Community
sponsorships
• Freedom of
association
• R&D/ innovation
• Diversity
•
Integrity
• Lifelong learning
(training, education)
• Data security & privacy
S
N
O
I
S
I
C
E
D
D
N
A
S
T
N
E
M
S
S
E
S
S
A
R
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MODER ATE
SIGNIFICA NT
M ATERI A L
SIGNIFICA NCE OF ECONOMIC, EN V IRONMENTA L A ND SOCI A L IMPACT S
The identified sustainability topics are based on the positive and negative environmental, social, and economic impacts that our stakeholders think Grieg Seafood may have. The
materiality analysis is based on stakeholder dialogues and evaluations by our global and regional management teams. The material topics identified define the content of this
report and are aligned with how we report our pillars. For more information, please see the GRI index in the Appendix of this Annual Report.
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ANNUAL REPORT 2019GRIEG SEAFOOD
PA R T 0 1 O U R S T O R Y
O U R A P P R O A C H T O S U S TA I N A B L E B U S I N E S S
3 7
STAKEHOLDER DIALOGUE
Our value Open guides our stakeholder dialogue. We
aim to be open and honest about our challenges, make
it easy for our stakeholders to hold us accountable, and
share how we are working to improve.
Engaging and collaborating with our stakeholders helps us under-
We engage actively and continuously with our stakeholders, and
stand and address our most material sustainability issues. Our
always maintain an open door for stakeholder feedback. Stake-
stakeholders span our five pillars and gaining their trust is integral
holders frequently contact us to discuss issues. We also engage
for our license to operate. Stakeholders are chosen according to
stakeholders proactively on matters where we believe we can
the impact they have on our business, and the economic, environ-
have significant impact, such as with feed suppliers. Ultimately,
mental and social impact we have on the stakeholders. Stakeholder
our stakeholders help us deliver healthy food and make positive
dialogue is also key to be able to grasp emerging opportunities for
impact throughout our value chain. The trust of all our stakehold-
our business, and to understand and mitigate risk.
ers is an important part of our license to operate.
STAKEHOLDER
KEY TOPIC
HOW WE ENGAGE
ACTIONS
EXAMPLE
N AT ION A L
AU T HORI T IE S /
REGUL AT OR S
• Sustainability
challenges.
• Balanced regula-
tion and long-term
value creation.
Meetings, site visits, and
correspondence.
We have an open dialogue with all
official authorities where we operate,
and collaborate on all aspects. We
welcome their efforts to enforce
regulations and engage in constructive
dialogue.
LO C A L
AU T HORI T IE S /
C OMMUNI T IE S
• Local employment
and purchasing.
• Contributions to
public life.
• Sustainability
challenges.
• Co-existence
with other local
interests.
Dialogue with special
interest groups locally,
open meetings, site
visits, and dialogue
through mainstream
media and digital
channels.
We recognize public concern for the
oceans, invite visitors to our farms
and participate in the public debate
about salmon farming. We try to find
solutions to accommodate other local
interests. In areas with Indigenous
populations, consent, dialogue and
relations with Indigenous representa-
tives are especially important.
In 2019, we hosted a
visit by the Norwe-
gian Minister of Trade,
Industry and Fisheries
to discuss establish-
ment of apprentice-
ships.
Before the local electi-
ons in Norway in 2019,
we arranged farm
tours for politicians
from different political
parties in Finnmark
and Rogaland.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
O U R A P P R O A C H T O S U S TA I N A B L E B U S I N E S S
STAKEHOLDER
KEY TOPIC
HOW WE ENGAGE
ACTIONS
EXAMPLE
S TA K EHOL DER
ORGA NIZ AT ION S /
NON -
G O V ERNMEN TA L
ORGA NIZ AT ION S
SH A REHOL DER S ,
IN V E S T OR S , A S SE T
M A N AGER S A ND
A N A LY S T S
CUS TOMER S
EMP LOY EE S
• Sustainability
challenges.
Correspondence,
meetings, media and
social media.
We collaborate with and seek advice
from actors that constructively seek
to improve the industry. That includes
several environmental organizations
and research institutions.
• Long-term
performance and
returns, both
on financial and
sustainability-re-
lated parameters.
• How we utilize
opportunities and
mitigate risk.
• Food safety.
• Health attributes.
• Quality.
• Certifications.
• Sustainability
challenges.
• Health and safety.
• A good working
environment.
• Personal develop-
ment.
• Fish welfare and
sustainability
challenges.
Quarterly presentations,
roadshows, meetings,
frequent dialogue,
capital market days,
and engagement with
relevant indexes.
We make every effort to maintain
a continuous, open, and honest
dialogue about our strategy and
results. We have also started enga-
ging with relevant indexes where we
are rated, to make sure they give
Grieg Seafood an accurate score.
Customer surveys,
frequent dialogue,
audits, visits and trade
fairs.
We have frequent dialogues with
our customers. We supply them
with material for dialogue with their
own stakeholders, and participate in
initiatives where our customers are
present.
Continuous dialogue
and meetings, intranet,
and employee surveys.
Frequent dialogue on all levels and
initiatives for training, education,
and development. We also engage
in dialogue with trade unions and
employee representatives. Focus on
developing a culture in line with our
values.
We have regularly
received advice
from the Rainforest
Foundation Norway on
deforestation risk in
our supply chain.
During 2019, we have
completed investor
roadshows in France,
Germany, Sweden,
Switzerland and the
UK.
We have engaged in
Cerrado Manifesto
Signatories of Support,
which aims to halt
deforestation in the
Brazilian Cerrado.
Many of our customers
are also signatories to
the initiative.
We use Workplace on
an almost daily basis
to inform employees
about developments,
build culture, and
cultivate engagement.
SUP P L IER S
• Our integrity.
• That we are a fair
and predictable
partner.
Dialogue, meetings,
conferences and corre-
spondence.
Ensuring that they comply with our
Code of Conduct, and that we have
a common understanding of ethics,
sustainability and the delivery of
goods and services. This particularly
pertains to our suppliers of fish feed
and staffing.
We have quarterly
meetings with our
feed suppliers, where
we discuss issues and
developments.
3 9
TRANSPARENT REPORTING ON OUR PROGRESS
This is an integrated report, in which we report our progress with
respect to all of our pillars. We believe that measuring and integrating
comparable, consistent, and reliable environmental, social, and
governance parameters is fundamental to making more informed
decisions and to facilitating long-term sustainable growth.
INDEX /FRAMEWORK
2019 RESULT
COMMENT
CDP C A RB ON DI S CLO S URE P R O JEC T
FA IRR INDE X C OL L ER FA IRR P R O T EIN
P R ODUCER INDE X
A
6th
Grieg Seafood has engaged with CDP since 2018.
Grieg Seafood is engaging with the index to better understand the
concerns of our stakeholders and issues we should address in our
reporting.
SUS TA IN A LY TIC S S U S TA IN A LY T IC S E S G
RI SK R AT ING
38.3 - High Risk
(where 0 is best)
Grieg Seafood has not engaged with the index so far, but will do so
going forward, to ensure that the index reflects our actual performance
on the different parameters.
GRI GLOB A L REP OR T ING INI T I AT I V E
Audited
This is our first report prepared in accordance with the GRI Standards.
G SI GLOB A L S A L MON INI T I AT I V E
Audited
The GSI issues an annual sustainability report covering 50% of the
salmon farming industry.
NUE S NOR W EGI A N C ODE OF P R A C T ICE
FOR C ORP OR AT E G O V ERN A NCE
In compliance
We adopted the Norwegian Code of Practice for Corporate Governance
in 2007.
OECD GUIDEL INE S FOR MULT IN AT ION A L
EN T ERP RI SE S
O SE O SLO S TO CK E XCH A NGE
TCFD TA SK FOR CE ON CL IM AT E-REL AT ED
F IN A NCI A L DI S CLO S URE S
–
–
–
We adhere to principles and standards for responsible business
conduct.
We follow the Euronext guidance on ESG reporting.
Our first TCFD report is included as part of this Annual Report.
For more information, see the GRI Content Index and the TCFD index in the Appendix to this report.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
O U R A P P R O A C H T O S U S TA I N A B L E B U S I N E S S
41
Group
management team
4 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
G R O U P M A N A G E M E N T T E A M
GROUP MANAGEMENT
A NDRE A S K VA ME (1962)
Chief Executive Officer (from 2015)
BACKGROUND Andreas Kvame has international experience from change management and
improvements in the aquaculture industry from a number of companies. He has previously
worked as CEO of Scanbio AS, and as director of sales and supply at Mowi, where he was also
responsible for the integration of Stolt Seafarms, Panfisk, and Fjord Seafood.
EDUCATION Kvame has an educational background in agriculture and aquaculture.
NUMBER OF SHARES 31.12.2019 39 165 (0.04%)
NUMBER OF OPTIONS 31.12.2019 400 000
ATLE H A R A LD SA NDTORV (1967)
Chief Financial Officer (from 2009)
BACKGROUND Atle Harald Sandtorv has extensive experience of mergers and acquisitions,
with responsibility of pursuing growth and structural changes. He has previously served as
CFO of Bennex and Tide.
EDUCATION Sandtorv holds a master's degree in business and economics.
NUMBER OF SHARES 31.12.2019 24 208 (0.02%)
NUMBER OF OPTIONS 31.12.2019 200 000
K NUT UTHEIM (1966)
Chief Operational Officer Farming (from 2014)
BACKGROUND Knut Utheim has 30 years of experience within the aquaculture industry, with
the focus on salmon farming and biology. He has previously served as a regional director with
Mowi and as COO of farming at Stolt Seafarm, among others.
EDUCATION Utheim has an aquaculture degree.
NUMBER OF SHARES 31.12.2019 23 507 (0.02%)
NUMBER OF OPTIONS 31.12.2019 200 000
K ATHLEEN O. M ATHISEN (1971)
Chief Human Resource Officer (from 2016)
BACKGROUND Kathleen O. Mathisen has extensive experience of business-driven HR activities,
focusing on the human capital in the organization, mainly from the international offshore oil and
gas industry. She has previously worked as vice president HR at Dof Subsea, among others.
EDUCATION Mathisen has taken several management courses, including courses within leader-
ship and sustainability.
NUMBER OF SHARES 31.12.2019 7 536 (0.01%)
NUMBER OF OPTIONS 31.12.2019 132 712
4 3
REGIONAL MANAGEMENT
M A RV IN D. “ROCK Y ” BOSCHM A N (1961)
Regional Manager Grieg Seafood British Columbia (from 2014)
BACKGROUND Rocky Boschman has been working in the salmon farming industry for more than
30 years. He has held various management positions, including production manager at Stolt
Seafarm and operations manager at Mowi. He also held the position of saltwater production
director at Grieg Seafood BC.
EDUCATION Boschman has an MBA and a bachelor's degree in marine biology.
NUMBER OF SHARES 31.12.2019 6 324 (0.01%)
NUMBER OF OPTIONS 31.12.2019 135 056
A LE X A NDER K NUDSEN (1974)
Regional Manager Grieg Seafood Rogaland (from 2008)
BACKGROUND Alexander Knudsen has more than 20 years of experience from various positions
within the aquaculture industry. Knudsen worked at Øvrebø Fisk, which was acquired by Grieg
Seafood in 1997, since then he has held several positions at Grieg Seafood Rogaland.
EDUCATION Knudsen has a degree in economics and business administration.
NUMBER OF SHARES 31.12.2019 22 165 (0.02%)
NUMBER OF OPTIONS 31.12.2019 200 000
ROY-TORE RIK A RDSEN (1967)
Regional Manager Grieg Seafood Finnmark (from 2014)
BACKGROUND Roy-Tore Rikardsen has more than 20 years of experience from the aquaculture
industry. He has held various positions, including production manager seawater at Lerøy Aurora,
regional manager at Akva Group, and sales consultant at Ewos.
EDUCATION Rikardsen has an engineering degree within environment and marine technology.
NUMBER OF SHARES 31.12.2019 19 565 (0.02%)
NUMBER OF OPTIONS 31.12.2019 200 000
GR A NT CUMMING (1971)
Regional Manager Grieg Seafood Shetland (from 2016)
BACKGROUND Grant Cumming has almost 20 years of experience of salmon farming. He has
previously served as site manager at Mowi and production manager at Orkney Seafoods. He joined
Grieg Seafood Shetland in 2005 as production manager. He has also been lecturing in aquaculture.
EDUCATION Cumming has a degree in zoology and a master's degree in mariculture science.
NUMBER OF SHARES 31.12.2019 7 283 (0.01%)
NUMBER OF OPTIONS 31.12.2019 142 437
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 1 O U R S T O R Y
G R O U P M A N A G E M E N T T E A M
OTHER MEMBERS OF THE GROUP MANAGEMENT TEAM
K RISTIN A FURNE S (1987)
Group Communication Manager (from 2019)
BACKGROUND Kristina Furnes has seven years of experience within strategic communications,
PR, public affairs, journalism and public administration. Her previous positions include client
director at the communications agency Geelmuyden Kiese and freelance journalism.
EDUCATION Furnes has a master's degree in political science and government.
NUMBER OF SHARES 31.12.2019 0
NUMBER OF OPTIONS 31.12.2019 N/A
NIN A W ILLUMSEN GRIEG (198 3)
Manager Business Development (from 2017)
BACKGROUND Nina W. Grieg has more than ten years of experience within strategy and oper-
ations. Previous positions include advisory and project management roles at Accenture, PwC,
and Grieg Shipbrokers. She joined Grieg Seafood in 2015.
EDUCATION Willumsen Grieg holds a master of science degree in technology, industrial
economics, and technology management.
NUMBER OF SHARES 31.12.2019 0
NUMBER OF OPTIONS 31.12.2019 N/A
TROND K ATHENE S (1962)
Chief Digital Officer (from 2011)
BACKGROUND Trond Kathenes has more than 20 years of experience from strategy development
and execution, ICT management, and business process improvements. He is a recognized driver
for change. He has previously been a partner at @dvice Human Resources and Conferit, CEO
of Global Quality Manning, ICT manager at Rieber& Son, and business development manager
at Capgemini.
EDUCATION Kathenes has an educational background in strategy and operations.
NUMBER OF SHARES 31.12.2019 0
NUMBER OF OPTIONS 31.12.2019 N/A
4 5
G R I E G S E A F O O D
4 6
ANNUAL REPORT 2019 PA R T 0 2 O U R P R O G R E S S
C O N T E N T
PA R T 0 2
OUR PROGRESS
C E R T I F I C AT I O N S A N D
L I C E N S E S
H E A LT H Y O C E A N
Fish health and welfare
Sea lice control
Escape control
Limiting local emissions
Interaction with wild life
S U S TA I N A B L E F O O D
Safe and healthy food
Sustainable feed ingredients
Reducing carbon emissions
Climate risk
Waste management
4 8 - 5 3
P R O F I T & I N N O VAT I O N
5 4
56-65
66-71
72-73
74-77
78-79
8 0
82-87
88-91
92-95
96-97
98-99
The global salmon market
Ocean Quality and our markets
Economic productivity
Profitable growth
The Grieg Seafood shares
Analytical information
P EO P L E
Human rights and ethics
Embracing diversity
Creating attractive jobs
Keeping our employees safe
Anti-corruption
L O C A L C O M M U N I T I E S
Local value creation
Finding the path to shared prosperity
10 0
102-103
104-105
106-111
112-121
122-125
126-133
13 4
136-139
140-141
142-145
146-149
150-151
15 2
154-159
160-161
47
Our certifications
and special licenses
It is important for both our local communities and
customers to know that our farming practices are
sustainable. To reassure them, our farms are certified
by independent bodies. In Norway, we also have some
special farming licenses with specific requirements.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 O U R P R O G R E S S
C E R T I F I C AT I O N S A N D L I C E N S E S
ASC certifica-
tion of all sites
in all regions. In
Finnmark and
Canada we aim to
achieve this within
2021, while the
timeline is not set
for Rogaland and
Shetland.
Maintain
certification of all
farms in Norway
and the UK.
CERTIFICATE/
LICENSE
A SC
WHAT
STATUS
AIM
Aquaculture Stewardship Council (ASC) was
founded in 2010 by World Wide Fund for Nature
(WWF) and IDH Sustainable Trade Initiative
to establish global standards for sustainable
seafood production.
At year end 2019, ten of our
20 active sites in Finnmark
have received ASC certi-
fication: Sarnes, Hesten,
Mårsanjarga, Vinnalandet,
Bergsnes, Davatluft, Kleppe-
nes, Tinnlandet, Laholmen,
and Vedbotn.
GLOBA LG. A .P
Global Good Agricultural Practices is a standard
for both agriculture and aquaculture. The
standard covers food safety, animal welfare,
sustainability, employment, and traceability.
GlobalG.A.P is particularly important for custo-
mers in Europe.
All our farms in Norway and
the UK are certified.
(Not relevant for Canada)
BA P
Best Aquaculture Practices is a standard for
aquaculture that covers practices in all produ-
ction stages of fish farming. BAP is particularly
important for customers in the United States.
All our farms in Canada are
certified.
(Not relevant for Norway and
the UK).
Maintain
certification on all
farms in Canada.
GREEN
LICENSE S
EDUCATION
LICENSE S
Green Licenses in Norway have stricter
environmental criteria. The sea lice limit is half
that of regular licenses, it has stricter criteria
for escape prevention technologies, and the
amount of medical treatments permitted per
generation is limited.
Grieg Seafood has eight
green licenses in Finnmark.
Maintain our
green licenses in
Finnmark.
Education licenses in Norway are given to
universities, colleges, or high schools offering
aquaculture-related courses of study. Salmon
farming companies can lease education licen-
ses from the educational institution. Part of the
training will then take place at their salmon
farms.
Grieg Seafood leases one
education license from
Nordkapp High School in
Finnmark, and one education
license from Strand High
School in Rogaland.
Maintain our
education licenses
in Finnmark and
Rogaland.
BROODS TOCK
LICENSE S
The purpose is to produce roe and milt from
salmon with improved and/or specific traits.
Grieg Seafood has three
broodstock licenses in
Erfjord in Rogaland.
Maintain our
broodstock
licenses.
R&D LICENSE S
The purpose is to encourage important rese-
arch projects that can bring the Norwegian
aquaculture industry forward.
Grieg Seafood had in 2019
one R&D license in Rogaland.
We have applied
for renewal of our
R&D license.
49
ASC
The Aquaculture Stewardship Council (ASC) promotes responsibly farmed seafood through its certification and labelling program.
Fish farms that meet the ASC´s standards gain the right to sell their products bearing the ASC logo. This gives farms a public endor-
sement of their responsible practices and gives consumers the reassurance that they are making an ethical purchase.
ASC-certified salmon is a responsible choice, helping the consumer to care for the natural environment and support local communities.
BIODI V ERSIT Y
Requirement to minimize impacts on the local ecosystem in a number of ways, such as the development and
implementation of an impact assessment to protect birds, marine mammals, and sensitive habitats.
FEED
Requirement to adhere to strict limits to minimize the use of wild fish as a feed ingredient.
P OLLUTION
Requirement to measure various water parameters (phosphorus, oxygen levels, etc.) at regular intervals, and
remain within set limits. Copper release into the water must be minimized and monitored.
DISE A SE S
Requirements to minimize disease outbreaks. A Fish Health Management Plan detailing steps for biosecurity
management must be implemented at the farm. Survival rates must be high.
SOCI A L
Requirements based on the core principles of the International Labor Organization (ILO).
For more information, visit: https://www.asc-aqua.org/
COLLABORATIONS
THE GLOBAL SALMON INITIATIVE (GS))
GSI, established in 2013, is a group of 17 companies which together control over 50% of the world’s salmonid
production. GSI member companies have committed to cooperation and transparency. and the initiative has
developed industry-specific performance indicators. GSI was recognized by the World Wildlife Fund (WWF)
as a best-practice pre-competitive industry collaboration in 2019. The member companies transparently
report company-wide data on key sustainability criteria each year as part of the GSI Sustainability Report.
For more information on this report, see https://globalsalmoninitiative.org/en/.
BELLONA
The Bellona Foundation is a Norwegian, independent non-profit organization that aims to meet and fight
climate-related challenges, by identifying and implementing sustainable environmental solutions. Grieg
Seafood and Bellona are collaborating on opportunities and challenges specifically related to plastic waste.
Read more about our plastic project in the "Waste management" section.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 O U R P R O G R E S S
C E R T I F I C AT I O N S A N D L I C E N S E S
THE SEAFOOD INNVATION CLUSTER
The cluster aims to foster strategic collaboration, initiate partnerships, and facilitate collaboration
processes in the whole seafood value chain, to solve challenges and make the industry more sustainable.
The cluster is a Norwegian Centre of Expertise. Grieg Seafood has been an active member of the NCE
cluster since the start.
KOMPETANSEKLYNGE LAKS (SALMON
COMPETENCE CLUSTER)
Kompetanseklynge Laks in Finnmark is a collaboration between the local municipalities, the Sami
Parliament, the salmon industry, the Norwegian Fishermen's Association, wild salmon management and
research bodies. The cluster is researching various interactions between farmed and wild salmon in Alta,
where one of the world’s most famous wild salmon rivers, the Alta river, is located. The aim is to learn
more about interactions to avoid impact on wild salmon. Grieg Seafood is a founding partner of the cluster
and currently a member of the board.
ASC FEED STANDARD
ASC decided in 2013 to devolop a common, global standard for aquaculture feed. Grieg Seafood is an active member of the steering commit-
tee. The standard will define requirements for both responsible factory practices and responsible ingredients for the main ingredient
groups used in fish feed. The standard will be launched late 2020 or early 2021.
CLIMEFISH
Climefish is a research project funded by the EU. The overall goal is to ensure that the increase in seafood production comes from areas
and species with potential for sustainable growth, given the expected climate risk and developments. Grieg Seafood is a key stakeholder
in the part of the project that discuss how future climate-change can affect ocean temperatures and salmon farming in the North Atlantic.
For more information, please see https://climefish.eu/grieg-seafood-asa/.
51
We take part in
innovation to develop
the industry further
FISHGLOBE
We work with FishGLOBE, a company that has
developed, built and is testing a new patented
solution for closed-containment aquaculture in
sea. The business concept is to offer a solution
that makes salmon farming more profitable,
more sustainable, and with improved fish welfare.
HARMFUL ALGAE MONITORING
PROGRAM (H.A.M.P.)
Grieg Seafood BC has a partnership with
Vancouver Island University and the H.A.M.P.
program, collecting and analyzing 20 years of
plankton data. Salmon farming companies send
their preserved water quality samples to H.A.M.P
for analysis. We are working to transfer the data
into modern data analytical tools. So far, great
progress has been made in how to use online
environmental monitored parameters to control
and improve our daily operations.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 O U R P R O G R E S S
I N N O VAT I O N T O D E V E L O P T H E I N D U S T R Y F U R T H E R
AQUACLOUD
The AquaCloud platform, launched by the Seafood
Innovation Cluster, is a cloud-based platform that
aims to help fish health managers and resear-
chers improve the industry’s response to sea lice.
AquaCloud represents a new innovation platform
that will bring together expertise from fish health
managers, researchers, and data scientists to
give new insights from the massive amount of
data generated by the industry every day.
CTRL AQUA
We work with Centre for Research-Based Inno-
vation in Closed-Containment Aquaculture to
develop technological and biological innovati-
ons to make closed-containment aquaculture
systems (CCS) a reliable and economically viable
technology. The results will be used in strategic
parts of the Atlantic salmon production cycle,
contributing significantly to solving the challen-
ges that currently limit the envisioned growth in
aquaculture.
DATA ANALYTICS
We use data analytics to analyze the data that we
are collecting from our operations. The aim is to
learn about new, previously unknown connections
between our salmon and the ecosystem, and drive
knowledge based decisions in our operations.
POST-SMOLT
Through our investments in Tytlandsvik Aqua
(33% shareholding) and Nordnorsk Smolt (50%
shareholding), we produce large smolt up to
1 000g. Larger smolt size will significantly cut
seawater production time, reducing the fish
stocks’ exposure to sea lice, disease, and other
challenges.
5 3
ROOT ED IN
HEALTHY
OCEAN
Improving Aquaculture
Farming salmon with practices that keep the fish and oceans healthy has
a direct positive impact on our harvested volume, cost, quality, license to
operate, and employee engagement.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
I N T R O
5 5
Fish health and welfare
Good fish health and welfare is both an ethical
responsibility and the most important measure we
can to do ensure good growth, higher harvesting
quality and lower cost.
OUR PRINCIPLES
Good fish health implies that the highest possible number of fish thrive, grow normally,
and survive to the end of their life cycle.
We take a preventative, systematic and long-term approach to fish health and welfare,
doing what we can to ensure that our fish are robust, healthy, and happy from the very
outset.
We have a survival target rate of 93% (12 months rolling) for fish at sea.
We apply Area-Based Management and collaborate with neighboring fish farmers to
prevent and contain diseases.
In case sea lice treatments are needed, we must find the correct balance between the
welfare of our fish and the potential impact on the local environment, and avoid parasite
resistance to existing treatments.
We do our best to avoid using antibiotics in all forms, to preserve their effectiveness
and to minimize resistance against antibiotics. We only use antibiotics as a last resort.
Cleaner fish should have just as good health and welfare as our salmon, and we are
working to reach this goal.
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ANNUAL REPORT 2019GRIEG SEAFOOD
PA R T 0 2 H E A LT H Y O C E A N
F I S H H E A LT H A N D W E L FA R E
HOW WE WORK TO IMPROVE
FIGURE 2.1
DENSIT Y IN THE PENS
FISH W ELFA RE EFFORT S
• We are implementing welfare indicators from the Fishwell
project, a research project that compiled a manual on which
indicators to use to assess salmon welfare. Grieg Seafood
participated in the manual’s creation. It has already been
implemented in Finnmark, and we will implement the same
indicators in all our regions.
• Procedures to avoid stressing the fish, for example, when
handling, transporting or treating the fish.
> Prior to treatment, fish health personnel or veterinarians must
assess whether the fish are robust enough to receive treat-
ment.
• Harvesting procedures in accordance with requirements from
customers and regulations to prevent suffering.
> The fish are euthanized by stunning shortly after leaving the
seawater. For instance, in Shetland, the salmon must be
stunned and killed no more than 15 seconds after leaving
seawater.
• Grieg Seafood Shetland is assured according to the animal
welfare charity, RSPCA.
OV ER A LL FISH HE A LTH EFFORT S
• Selection of high-quality roe with qualities that suit the condi-
tions where the fish will be farmed. Senior management coor-
dinates roe purchasing, to ensure a uniform high standard.
• Policies and procedures to ensure good fish health in general.
> Based on regulations and standards for fish health and welfare.
> Regional fish health plans, because each area has its own
challenges.
> Available for employees through quality assurance systems. In
BC, the document management program DATS ensures digital
sign-off when procedures have been read.
• Different feed programs for each stage of the salmon’s life
cycle, to optimize health and welfare.
• There are ongoing fish health and welfare training programs
for all employees, with refresher course at least every third
to fifth year.
• Cooperation between our regions to learn from best practice
internally and externally.
FISH BIOMASS: 2.5%
WATER: 97.5%
A regular seawater pen is at least 97.5% water and 2.5% fish
biomass, providing space for the fish in our facilities to allow
for comfort and a healthy growth cycle.
5 7
HOW WE WORK TO IMPROVE
DISE A SE A ND H YGIENE EFFORT S
USE OF A NTIBIOTIC S
• Smolt should be healthy, vaccinated and have verified smolt-
• Our antibiotics policy aims to completely avoid the use of anti-
ification status before transfer to sea.
• Prevent spread of diseases by strict control of live fish trans-
ports and disinfection of boats and equipment transferred
between sites and zones.
biotics.
> Only used after adequate risk assessment to treat bacterial
diseases without vaccines or reduced effect of vaccines.
> Only used on small salmon, to ensure low quantities of
antibiotics and harvestable salmon contain no residues.
• Prevent increase of pathogens on sites by hygienic standards
• Use is subject to strict internal regulations. All use requires
and daily removal of dead or sick individuals.
senior management approval, and prescriptions are signed by
certified fish health personnel.
• Regular fish health inspections and screening programs at
all sites by authorized fish health personnel to achieve early
• We do not allow use of antibiotics as non-therapeutic treatment
detection of diseases and implement early measures.
or use of antibiotics as a growth promoter. We do not use anti-
biotics routinely and never use antibiotics if the welfare of the
• Fallowing periods in accordance with local regulations as a
fish is not threatened.
minimum, or until acceptable benthic thresholds are met.
Synchronized fallowing periods with other fish farmers in the
• The type of antibiotics we use in BC is FDA approved, but the
area.
use is off-label as Yellowmouth disease is not specified by the
FDA (Food and Drug Administration).
EN V IRONMENTA L MONITORING
• The type of antibiotics we use in the UK is not on the list of
• Monitoring of environmental conditions that may affect the
Highest Priority Critically Important Antibiotics.
fish, such as temperature, oxygen levels, and water quality. In
our freshwater facilities, we control and adjust these factors
to ensure healthy growth conditions for the fish.
EFFORT S TO IMPROV E HE A LTH
A ND W ELFA RE OF CLE A NER FISH
• Daily monitoring and inspection of fish condition and behavior.
• Cleaner fish are either farmed or wild where fishing quotas are
regulated by authorities.
• Regions with specific challenges may perform additional
monitoring.
• Established practices to ensure that the cleaner fish are as
REGION A L EFFORT S
• Finnmark focuses on careful handling of the fish in cold water.
• BC focuses on controlling harmful algae.
robust and healthy as possible.
• Optimizing vaccination programs.
• Screening before release into the pens.
• Shetland focuses on improving the gill health program, where
we monitor water quality and gill health, as well as algae.
• Tailor-made, artificial kelp forests in the pens where the
• Specific feed in the pens, tailor-made for the cleaner fish.
• Rogaland focuses on improving pancreas disease (PD) immu-
nity with new and effective vaccines, with good results.
cleaner fish can hide, avoid stress, rest, and sleep.
• We are in the process of revising and improving our policies
for cleaner fish. This includes working more systematically to
report and reduce mortality. We will start sharing mortality
numbers in 2020.
5 8
ANNUAL REPORT 2019GRIEG SEAFOOD
PA R T 0 2 H E A LT H Y O C E A N
F I S H H E A LT H A N D W E L FA R E
5 9
THE MOST COMMON ATLANTIC SALMON DISEASES
These diseases also exist naturally in wild salmon. However, an outbreak of disease in a pens with higher densities than in the
wild, causing bigger problems than in the nature, where fish have less contact with each other. This applies to animal husbandry
in general.
DISEASE NAME
CAUSE AND EFFECT ON THE SALMON
TREATMENT
F URUNCULOSIS
Infectious disease caused by a bacteria of the
Aeromonas subspecie salmonicida. It affects Atlantic
salmon in both fresh water and seawater. The disease
can cause high acute mortality, and lead to sores and
boils on the skin.
Controlled mainly by
vaccination and good
husbandry practice.
PA NCRE A S
DISE A SE (PD)
Disease caused by the Salmonid Alpha virus (SAV). It
affects the fish’s ability to digest feed and can cause
loss of appetite, emaciation, and increased mortality.
It is a contagious virus and transmits between fish and
between pens.
Controlled mainly
by management and
mitigation practices.
Vaccination provides
additional protection,
and selective breeding
of PD-resistant salmon
has also contributed to
reducing the incidence
of PD.
GEOGRAPHIC
AREAS
Scotland, Norway,
Canada, and USA
Europe
INFEC TIOUS
S A LMON
A NEMI A (IS A )
GILL DISE A SE S
Caused by the infectious salmon anemia virus. It
attacks the blood vessels and causes internal bleed-
ing. The disease can develop in an acute course with
high mortality. However, in its more insidious form, the
infection may be latent in the fish for several months
before an outbreak occurs.
Controlled through the
culling or harvesting of
affected fish, in addition
to other biosecurity and
mitigation measures.
Vaccines are available.
Canada, Chile,
Scotland, Ireland,
Norway
General term used to describe different gill diseases.
They may be caused by different infectious agents,
such as amoeba, viruses, or bacteria, as well as
environmental factors including algae or jellyfish
blooms. In some cases, the disease may be caused by
a single factor, but in most cases the cause is complex
and multifactorial, and the primary cause is unknown.
Gill disease is a welfare issue, as well as being an
important cause of mortality.
Controlled through
good husbandry and
management practices.
Canada, Scotland,
and Norway
CA RDIOM YOPA-
TH Y S Y NDROME
(CMS)
Caused by the newly discovered Piscine myocarditis
virus (PMCV). It infects heart muscle cells and leads
to inflammation in the heart and increased mortality.
Mortality typically occurs late in the production cycle,
causing economic impact.
Controlled mainly
through good husbandry
and management
practices.
Canada, Scotland,
and Norway
6 0
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
F I S H H E A LT H A N D W E L FA R E
DISEASE NAME
CAUSE AND EFFECT ON THE SALMON
TREATMENT
W INTER ULCER
(MORITELL A
V ISCOS A )
Y ELLOW MOU TH
/ MOU TH ROT
Often caused by the bacterium Moritella viscosa. It
occurs at low water temperatures. In addition to being
a welfare issue causing sores, the disease also leads
to increased mortality and reduced quality at harvest.
Controlled through
good husbandry,
management practices,
and vaccination.
Caused by the filamentous bacterium Tenacibacu-
lum maritimum. It typically occurs during the first
few weeks after transfer to the sea. It causes yellow
plaques around the palate and teeth, which can
develop into lesions and result in mortality.
S A LMONID
RICK E T T SI A L
SEP TICA EMI A
(SR S)
Caused by the bacteria Piscirickettsia salmonis. The
disease occurs in both fresh- and saltwater. It causes
hemorrhages, lesions in the skin and nodules in
several organs. In acute cases, death may be the only
sign of disease.
Controlled through
therapeutic treatments
using sulfa-based
antibiotics, multiple
treatments are often
required.
Controlled through
good husbandry and
management practices.
Commercial vaccines
are available but tend to
show limited effect.
GEOGRAPHIC
AREAS
Canada, Scotland,
and Norway
Canada and USA
Canada
THE PRV VIRUS
Piscine orthoreovirus (PRV) is an ubiquitous virus that can infect salmonids. The virus is geographically distributed in Norway, the
United Kingdom, Ireland, Chile, the United States and Canada. It exists in nature and can be found in both farmed and wild salmonids.
PRV has been associated with the disease heart and skeletal muscle inflammation (HSMI). Even so, high levels of PRV have been
detected in wild and cultured salmonids with no evidence of disease. Why some infected fish develop disease and others do not, is not
known. It may indicate that additional factors in addition to PRV is required for disease development, such as environmental factors
or PRV strain differences. In Canada for instance, the virus seems to have a low ability to cause disease and research suggests that
infected salmon may test positive, but that they are not always infectious.
Like all farm animals living a natural environment, farmed salmon are exposed to pathogens and may at some point in time become
infected from some natural reservoir. Good husbandry and management practices are essential to decrease impact of disease. In
Canada, Grieg BC has since 2016 routinely been screening every batch of smolts for PRV before they are transferred to ocean pens.
To this date every test has been negative. It is important to continue the research and try to identify and monitor the timing of infe-
ction. By doing so, there is hope to pinpoint the source and potentially find ways to mitigate the spread of PRV.
61
HARMFUL ALGAL BLOOM
Under certain conditions, phytoplankton (tiny microscopic plants) may grow out of
control and form harmful algal blooms (HABs). These blooms can produce extremely
toxic compounds that have a detrimental effect on fish, shellfish, mammals, birds,
and even people.
A bloom does not have to produce toxins in order to be harmful to the environment.
It can also cause anoxic conditions, where oxygen is depleted from the water. Dense
blooms can block light to organisms lower in the water column, or even clog or
damage fish gills.
Mitigation
Harmful algal blooms are one of the biggest challenges to fish health and welfare in
British Columbia. We have developed a substantial algae mitigation program in BC,
comprising of the following main aspects:
• Constant monitoring of potential algal blooms, for instance by using NASA satellite
images or collaboration with local floatplane pilots.
• Technology to detect harmful algae in real-time, with microscopes at the sites and an
online library of harmful algae species, helping staff to assess whether algae in the
sea are harmful or not.
• Mitigation protocol and system in place, should harmful algae occur. Feeding is
reduced or stopped, and an upwelling system transfers clean, algae-free water from
the depths to the top of the pen, creating a protective “bubble” in the pen.
• Data from oxygen sensors are linked to the oxygenation system at sites with low
oxygen levels in the water column.
• A program using big data to predict harmful algal blooms is under development.
While we still see mortality from harmful algae, the incidents are less severe than
before, due to our mitigation efforts.
We have transferred some of the program to our operations in Shetland, and will, in light
of the deadly algal bloom in northern Norway in 2019, implement part of the program in
Norway as well.
6 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
F I S H H E A LT H A N D W E L FA R E
6 3
RESULTS
FIGURE 2.2
SUR V I VA L R ATE AT SE A , ROLLING 12
MONTHS
2016-2018
2019
100%
95%
90%
85%
80%
75%
TARGET: 93%
ROGALAND
FINNMARK
SHETLAND
BRITISH COLUMBIA
Survival is reported in accordance with the standards of the Global Salmon Initiative. Survival is defined as: (Total number of mortalities at sea in the last 12 months – total
number of culled fish due to illness or similar and not included in the harvested number)/(closing number of fish at sea the last month + total number of mortalities at sea
the last 12 months + total number of harvested fish the last 12 months + total number of culled fish (due to illness or similar and not included in the harvested number)) X 100.
Freshwater mortalities are reported separately.
ROGAL AND
SHETL AND
BRITISH COLUMBIA
With 93%, we reached our survival rate target. The
survival rate was impacted by pancreas disease (PD)
from 2017 through mid-2019. At the end of 2019, none
of our sites were infected with PD. The reduction of
mechanical delousing treatments also contributed
positively to the survival rate.
FINNMARK
We reached our target, with a survival rate of 96% in
2019 due to good biological conditions.
The survival rate has been affected by gill diseases,
Furunculosis and winter ulcers, in addition to
mechanical delousing treatments. Our measures to
improve smolt health and robustness, which also
include a change in our vaccination program, have
improved smolt quality and increased survival at
sea. We have increased our capacity to perform
non-medicinal delousing treatments, and have
therefore reduced the number of medical treat-
ments.
The survival rate has been impacted by low oxygen
levels during algae and plankton blooms. A harmful
algal bloom (HAB) incident in 2018 impacted our
farms severely, affecting the survival rate for 2018
and 2019. Our algae mitigation system is steadily
improving, and has enabled us to stabilize the
survival rate in periods of challenging environmental
conditions. Delousing treatments in well boats have
also affected the survival rate.
6 4
ANNUAL REPORT 2019GRIEG SEAFOOD RESULTS
PA R T 0 2 H E A LT H Y O C E A N
F I S H H E A LT H A N D W E L FA R E
FIGURE 2.3
M A IN CAUSE S FOR REDUCED SUR V I VA L IN 2019
FIGURE 2. 4
USE OF A NTIBIOTICS
MAIN CAUSE
NUMBER OF FISH
TONNES OF FISH
REGION
2016
2017
2018
2019
Infectious
Bacterial
Gill infections
Virus
Non-Infectious
Life cycle
Treatments
Physical
672 189
200 939
40 293
1 213 178
537 117
381 440
530
146
2 192
1 607
902
Clinical diseases in Finnmark during the year include HSMI and winter ulcers, while
in Rogaland the main diseases were CMS, AGD and complex gill disease. In Shet-
land, we experienced Furunculosis, multiple gill diseases, and winter ulcers during
the year. In BC, we had challenges with yellowmouth, in addition to winter ulcers.
We are working to improve survival rates through general health and welfare
measures, a preventive and targeted approach to diseases and sea lice, mitigation
against algae and low oxygen levels.
We report diseases, mortality, and other fish health indicators for our Norwegian
entities to the Norwegian authorities on a weekly basis. This is publicly available
information, please visit https://www.barentswatch.no/en/fishhealth/.
FIGURE 2.5
SUR V I VA L R ATE IN FRE SH WATER
REGION
Rogaland
Finnmark
Shetland
British Columbia
Tytlandsvik Aqua
Nordnorsk Smolt
2019
92%
87%
95%
63%
99%
99%
In the wild, only a small percentage of fertilized eggs survive and become adults.
That is our biological starting point. Over the years, more knowledge has allowed us
to improve quality of breeding, the eggs and survival rates, but we still experience
mortality especially in the very early phase. We work systematically in the various
stages in the lifecycle to improve survival rates.
In Rogaland, the main losses happened in the early life phase, until 1 gram. In
Finnmark, main losses were related to low quality eggs. In Shetland, loss happened
in the yolksac phase and during the first feeding period. Unfortunately, in BC, we lost
a significant number of fry due to an unusual incident of bromide exposure.
The part-owned Tytlandsvik Aqua and Nordnorsk Smolt facilities are included, as
they are essential to our post-smolt strategy. Both are on-growing facilities, with
lower mortality.
Rogaland
1 057
Finnmark
Shetland
0.00
0.00
0.93
0.00
0.00
0.00
0.00
0.00
0.00
1.65
13.90
29.18
British Columbia
126.93
18.30
151.26
87.00
Amount of active pharmaceutical ingredient (API) used (in grams) per tonne of fish
produced (LWE), both in seawater and fresh water.
There has been no use of antibiotics at our Norwegian operations in recent years,
due to good results from vaccines and efforts to ensure good fish health.
In Shetland, the use of antibiotics in 2019 was related to Furunculosis and winter
ulcers. The introduction of a new vaccination program has reduced the incidents of
winter ulcers this winter, and we expect a reduction of the use of antibiotics going
forward.
The use of antibiotics in BC was related to treatment of yellowmouth. The use
of antibiotics is too high, and we are installing infrastructure that will allow us
to lower water temperatures and salinities to aid in limiting the transmission of
diseases. We also pursue non-therapeutic means to manage disease, such as
vaccines and a healthy diet.
Through our post-smolt strategy we have better control of our fish’s environment
for a longer period of time. It will also make the fish more robust before being
transferred to the sea, and a shorter period at sea will reduce exposure to biolog-
ical risks. This in turn will reduce the risk of disease outbreaks and the need for
antibiotics.
The figures for 2014-2018 have been amended compared to previous reporting, due
to changes in the calculation from gross production to net production. Amend-
ments: Shetland - 2016 amended from 0.8. BC- amended from 294.9 in 2016, 18.0 in
2017 and 150.3 in 2018.
FIGURE 2.6
COS T OF REDUCED SUR V I VA L IN 2019
REGION
Rogaland
Finnmark
Shetland
British Columbia
Total
COST NOK 1000
26 127
15 055
77 186
73 327
191 694
Cost recognized as abnormal mortality in the income statement. See note 7 in the
Group Accounts for additional information.
6 5
Sea lice control
Controlling sea lice levels is one of the most impor-
tant measures to protect wild salmon, as well as the
health and welfare of farmed salmon. Sea lice treat-
ments are expensive and resource intensive. We aim
to keep sea lice levels low at all times.
FIGURE 2.7
OUR A PPROACH TO SE A
LICE CONTROL
OUR PRINCIPLES
Our main approach to sea lice control is prevention. We aim to keep adult female sea
lice levels low to achieve a low infection pressure.
When the sea lice limit rises and approach legal limits, our policy is to perform continuous
assessment and apply additional measures.
If we need to use sea lice treatments, we favour non-chemical delousing methods, to
avoid affecting the environment and other species in the ocean. However, when selecting
treatment, fish welfare and potential resistance to sea lice treatments are also considered.
If, as a last resort, we need to use medical treatments, we revolve the use of various
medicines to avoid resistance to the treatments.
We collaborate with neighbouring fish farmers to control sea lice in the areas we operate in.
6 6
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
S E A L I C E C O N T R O L
HOW WE WORK TO IMPROVE
WORKING TO IMPROVE SEA LICE CONTROL
1. BREEDING, FEED
2. POST-SMOLT
3. NON-MEDICAL CONTROL
WITHOUT HANDLING
4. CLEANER FISH
5. NON-MEDICAL CONTROL
WITH HANDLING
6. MEDICINES
1.
2.
3.
When available, we use roe that has
proven more resistant to sea lice.
4.
Post-smolt reduces the time at sea and
reduces the exposure to sea lice, which
improves sea lice control.
We use sea lice skirts, to prevent sea lice
from entering the pens.
We use lump suckers and wrasse, which
eat sea lice. Rogaland in particular has
succeeded in understanding how to use
wrasse effectively. We use lump suckers
at all green licenses in Finnmark. In
Shetland, we are conducting tests on how
to increase the lump suckers' efficiency
in eating more sea lice.
5.
We use mechanical treatments, such
as fresh water, to avoid affecting the
environment. The methods are selected
when conditions are favorable.
6.
Only as a last resort do we use medical
treatments.
67
HOW WE WORK TO IMPROVE
OTHER SE A LICE EFFORT S
• Systematic monitoring of sea lice levels.
> In Norway and the UK, we count sea lice every week.
> In BC, we follow local regulations. Here the frequency of
counts depends on sea lice levels. When new regulations
EFFORT S TO REDUCE EN V IRONMENTA L
IMPACT OF SE A LICE TRE ATMENT S
• All sea lice medicine is strictly regulated.
• While we try to avoid using medicinal sea lice treatments at all,
are implemented in 2020, all sites will be counted every
there are some instances when it is necessary. In such cases,
second week in periods of high sea lice pressure. In BC,
we try to take as much care of the environment as possible.
farmed salmon usually catch sea lice from the wild salmon
passing farms on their way to the rivers to spawn. Here,
• We also have procedures to prevent the release of water
unlike Norway, the wild salmon population greatly outnum-
containing delousing medication in areas close to shrimp fields
bers the farmed salmon population.
or spawning grounds, in compliance with regulations from the
Norwegian Environment Agency.
• We hold inter-regional meetings to learn best practice sea lice
management from each other.
• We follow closely ongoing research projects that are looking
into the potential impact of sea lice treatments on other
• Long and synchronized fallowing periods reduce the sea lice
marine species.
pressure on the next generation.
• We take part in the AquaCloud artificial intelligence project,
which aims to be able to predict sea lice levels in advance and
use preventative methods in cases of outbreaks.
OUR REGIONS HAVE COMPREHENSIVE PLANS AND STRATEGIES FOR SEA LICE CONTROL
ROGA L A ND
FINNM A RK
In Rogaland, we aim to use wild-caught wrasse as our primary
In Finnmark, we mainly use sea lice skirts and lump suckers.
method, as well as post-smolt. Freshwater treatment is also used.
SHE TL A ND
BRITISH COLUMBI A
In Shetland, we favor the use of sea lice skirts in areas that are
In BC, sea lice skirts are used as a preventative measure, and
not too exposed to strong currents and wind. However, fresh-
hydrogen peroxide has been used to reduce sea lice pressure.
water and mechanical treatments have been the main methods
used to reduce sea lice pressure in 2019.
6 8
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
S E A L I C E C O N T R O L
RESULTS
FIGURE 2.8
H Y DROGEN PEROX IDE TRE ATMENT S
FIGURE 2.9
SE A LICE TRE ATMENT S
REGION
Rogaland
Finnmark
Shetland
2016
2017
2018
2019
18.45
10.79
3.46
11.94
42.43
13.36
14.53
0.00
75.96
82.72
32.58
12.23
IN BATH
Rogaland
Finnmark
Shetland
2016
2017
2018
2019
1.88
0.00
0.00 0.00
0.02
0.90
0.72
0.21
1.99
5.70
2.98
1.79
British Columbia
0.00
9.17
5.83
6.01
British Columbia
0.00 0.00 0.00
0.00
Amount of active pharmaceutical ingredients (API) used (kg) per tonne of fish produced
(LWE).
We use preventative methods against sea lice and avoid using hydrogen peroxide
whenever possible. We used no hydrogen peroxide in Finnmark in 2019. In
Rogaland, it has been used to treat large numbers of fish at the same time, as a
targeted and efficient measure to reduce high sea lice levels.
In Shetland, hydrogen peroxide has been used to treat amoebic gill disease (AGD),
in addition to sea lice treatment. The reduction in hydrogen peroxide usage is a
result of a change to freshwater treatments.
The use of hydrogen peroxide in BC is at a similar level to the year before.
Hydrogen peroxide is made up of water with an extra oxygen molecule. It was
previously considered a sea lice treatment that did not impact the environment. At
the moment, research is into whether hydrogen peroxide affects other species in
the ocean is ongoing. Grieg Seafood is following this research closely.
IN FEED
Rogaland
Finnmark
Shetland
2016
2017
2018
2019
3.32
0.15
1.09
0.03
0.14
0.06
0.08
0.10
0.47
0.22
0.21
0.17
British Columbia
0.28
0.14
0.32
0.52
Amount of active pharmaceutical ingredients (APIs) used (gr) per tonne of fish
produced (LWE).
Use of bath treatments has decreased in recent years. We also aim to minimize the
use of sea lice treatments distributed through feed. We are primarily focusing on
preventive solutions like cleaner fish, sea lice skirts, post-smolt transfer.
In Rogaland, no medical treatment was used in the period from July to October, as
a result of using wrasse effectively. In Shetland, in-bath treatments were replaced
by freshwater treatments in 2019, while the use of in-feed treatment has also been
reduced as it has been deemed less effective.
69
SE A LICE LE V EL S IN OUR REGIONS
FIGURE 2.10
SE A LICE LE V EL S ( A DULT FEM A LE S) IN ROGA L A ND
FIGURE 2.11
SE A LICE LE V EL S ( A DULT FEM A LE S) IN FINNM A RK
0.5
0.4
0.3
0.2
0.1
0.0
0.5 Limit of adult female
sea lice per fish per site
2019
2018
2017
2016
0.2 Limit when wild salmon
smolt migrate from the rivers
and pass the salmon farms
0.5
0.4
0.3
0.2
0.1
0.0
0.5 Limit of adult female
sea lice per fish per site
2019
2018
2017
2016
0.25 Limit of adult female sea lice
per fish per site on green licenses
0.2 Limit when wild salmon smolt migrate
from the rivers and pass the salmon farms
JAN
FEB MAR
APR
MAY
JUN
JUL
AUG SEP
OCT
NOV
DEC
JAN
FEB MAR
APR
MAY
JUN
JUL
AUG SEP
OCT
NOV
DEC
Our sites in Rogaland are located in areas defined as “yellow – moderate sea lice
density” under the Norwegian traffic light system (2018–2019). It is defined as
"green - low sea lice density" from 2020.
Grieg Seafood Rogaland has had success with preventive methods, and by planning
and using wrasse effectively we are managing to reduce the number of sea lice
treatments. One of the main initiatives aimed at increasing sea lice control is our
post-smolt strategy, which shortens the time spent at sea and thereby reduces sea
lice pressure per fish.
Finnmark has low sea lice levels all year round. Generally lower seawater
temperatures in the region are an advantage, and the interconnectivity between the
sites is low. We use targeted preventive methods such as sea lice skirts and cleaner
fish to ensure that the sea lice level is low.
We report sea lice levels and sea lice treatments for our Norwegian entities to the
Norwegian authorities on a weekly basis. This is publicly available information. For
detailed information on sea lice levels and the various sea lice treatments at each
of our Norwegian sites, visit https://www.barentswatch.no/en/fishhealth/.
FIGURE 2.12
SE A LICE LE V EL S ( A DULT FEM A LE S) IN SHE TL A ND
FIGURE 2.13
SE A LICE LE V EL S ( A DULT FEM A LE S) IN BRITISH COLUMBI A
8.0
6.0
4.0
2.0
0.0
2019
2018
2017
2016
8.0
6.0
4.0
2.0
0.0
2019
2018
2017
2016
JAN
FEB MAR
APR
MAY
JUN
JUL
AUG SEP
OCT
NOV
DEC
JAN
FEB MAR
APR
MAY
JUN
JUL
AUG SEP
OCT
NOV
DEC
In general, sea lice levels in Shetland are higher than in Norway. In the past year,
we have increased our non-pharmaceutical treatment capacity, and have been able
to reduce the amount of pharmaceutical ingredients compared to previous years.
Sea lice levels above two adult females per fish are reported to the regulating
authority, Marine Scotland. Actions are required when the sea lice level increases
above six females per fish.
BC is heavily influenced by sea lice pressure from wild salmon each autumn. We
have tested, and continue to test, preventive methods such as sea lice skirts to
keep the sea lice level stable. However, when the sea lice level increases, we carry
out the type of treatment we consider most appropriate. The threshold in BC is
an average of three motile sea lice. To ensure comparability within our region, we
measure the sea lice levels as adult females. We aim to keep the sea level below 0.5
mature female sea lice.
7 0
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
S E A L I C E C O N T R O L
SALMON FARMING AND BIODIVERSITY
The areas where we farm salmon have their own unique biodiversity. While many factors, like global warming, increase in predator stocks,
or other industries can impact wild species, it is our responsibility to ensure that our operations can co-exist with the wild species around
us. We must use farming practices with the smallest possible environmental impact, and work continuously to reduce our impact further.
W ILD S A LMON
FIGURE 2.14 FA RMED S A LMON IN RI V ERS
Salmon farming can potentially impact wild salmon if we do not use respon-
3.5
sible farming practices. High levels of sea lice, especially when the vulnerable
wild salmon smolt are passing farms on their way to the ocean, can affect the
3.0
3.0
3.0
3.0
health and possibly the survivability of wild salmon. In areas where the wild
2.5
salmon is of the Atlantic species, escapes may cause interbreeding between
farmed and wild salmon in the rivers, and interfere with the genetic uniqueness
2.0
2.0
2.0
Alta River
Repparfjord River
of the local wild salmon population. While little research exists on the potential
transmission of diseases from salmon farms to wild salmon, the possibility of
such impacts does exist. Responsible salmon farming practices, like good sea
lice and disease control as well as zero escapes, are fundamental to ensuring
co-existence with the wild salmon.
Salmon farming in the Alta river and the Repparfjord river in Finnmark is moni-
tored in collaboration with the Norwegian Institute for Nature Research, the
management of the Alta rivers, and the West Finnmark Hunting and Fishing
Association. Anglers are encouraged to send salmon scale samples to the
1.5
1.0
0.5
0.0
1.0
0.8
0.8
1.12
1.0
0.15
0.0
0.2
2013
2014
2015
2016
2017
2018
2019
Percentage of farmed salmon based on analysis of scales taken from wild-caught salmon
in the Alta river and the Repparfjord river in the period June 1 to August 31 every year.
Norwegian Institute for Nature Research, which analyze whether they are
Grieg Seafood is also involved in several wild salmon enhancement projects in
from a farmed or wild salmon. Grieg Seafood is the project manager on this
British Columbia, such as the Oyster River Enhancement Society and Nootka
program, as part of our commitment to co-existence between wild salmon and
Sound Watershed Society. As wild salmon is an important part of Indigenous
the salmon farming industry.
culture, we have an even greater responsibility to avoid causing harm.
COD A ND W HITE FISH
CRUS TACE A NS
While research has yet to establish a link between farmed salmon and the
Laboratory tests show that sea lice medication can impact crustaceans if
coastal cod population in Norway, many coastal fishermen are concerned that
they come into contact with it. For some medicines, this applies even in
salmon farms impact cod spawning grounds in fjord areas. Grieg Seafood has
smaller doses. However, it is uncertain whether crustaceans actually do
engaged in a research project conducted by the Norwegian Institute of Marine
come into contact with sea lice medication after treatment in the ocean,
Research, which will study this issue in Frakkfjord, Finnmark. The research
because factors like currents, temperature, and other natural aspects
project is financed by the Research Council of Norway. A number of individual
impact how the substances break down. More research to improve our
cod are caught and labeled, and released in three different fjords – a fjord with
knowledge is underway.
existing salmon farms, a fjords where a salmon farm will be established, and
a fjord with no salmon farms. The cod are traced by acoustic devices, provi-
In any case, we are working to avoid using sea lice medicines. Use of
ding information on their behavior. The project started last summer and will
such medication has declined significantly in recent years. In line with the
continue for five years.
precautionary principle, Norway has also prohibited the release of sea lice
treatment baths near shrimp fields.
Salmon farms are believed to impact the cod, pollock, and other wild fish
that eat surplus feed, which may spill out through the pens. Some fishermen
believe that such wild fish have a reduced quality. Research by Nofima, the
Institute of Marine Research, and the Norwegian Institute for Nature Research,
which evaluated the quality of pollock that ate salmon feed around sea farms,
concluded that quality of the fish was not reduced. In any case, we work hard
to avoid overfeeding and see positive results from moving feeding operations
from the farms to larger units.
7 1
Escape control
Escaped farmed Atlantic salmon can mix genetically
with wild Atlantic salmon stocks, and it is our respon-
sibility to use farming methods that minimize farmed
salmon’s impact on the wild salmon population.
OUR PRINCIPLES
We have zero tolerance for escapes from our farms in all regions.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
E S C A P E C O N T R O L
HOW WE WORK TO IMPROVE
• High technical standards at our sites. We have implemented
• Regular inspections of vessels, moorings, and facilities to
the technical minimum requirement given by the govern-
verify compliance.
ment, the NYTEK standard, at all facilities in Norway to avoid
escapes during harsh weather.
•
Inspections before and after harsh weather.
• BC uses double nets on all pens.
• We strive to ensure that employees attend courses on escape
• Procedures to avoid escapes before, during and after oper-
also receive risk and procedural training, and do not carry out
prevention at least every third to fifth year. New employees
ations.
> Divers and/or an ROV are used before and after the transfer
or treatment of fish.
> In Finnmark, an ROV is used continuously during opera-
tions.
work operations alone until they have completed the neces-
sary training.
RESULTS
FIGURE 2.15
E SCA PE INCIDENT S
REGION
Rogaland
Finnmark
Shetland
British Columbia
2016
2017
2018
2019
0
1*
2**
0
0
0
0
0
0
0
2***
0
0
0
2
0
* One incident with 200 fish escaped. ** Two incidents with 829 and 617 fish
escaped. *** Two incidents where we reported 500 and 21 712 escapes.
In May 2019, 500 smolt escaped from Grieg Seafood Shetland. The
incident was a result of equipment failure during transfer from the
delivery boat to the sea farm. Procedures to avoid similar incidents
have been implemented. It proved impossible to recover the escaped
salmon.
We also reported a loss of 4 000 fish. We had at harvest a deviation
between number harvested out and smolt input. Small sharks had
managed to get into the pen, and escape might have occurred. It
was agreed with the authorities that the deviation of 4 000 fish was
registered as an escape.
We have estimated that fish escapes in 2019 resulted in a financial
loss of approximately NOK 500 000.
7 3
Limiting local emissions
Local emissions from salmon farming may affect the
environment in the ocean under or around the pens.
Local emissions can be excess feed, feces from the fish
or copper from the fish net.
OUR PRINCIPLES
In line with the precautionary approach, we aim to minimize local
emissions.
With the current production methods in open pens, some organic
emissions must be anticipated. The impact from such emissions
must be kept below limits and levels considered acceptable by
national authorities.
Our footprint should never be irreversible.
ORGANIC EMISSIONS
Fish feces are a part of the natural eco-system. When a
shoal of fish enters an ocean area or a fjord system, fecal
emissions from the fish occur naturally. Fish feces contain
nutrients, and like manure from agricultural animals, they
act as fertilizers for new life. In the ocean, these nutrients
sustain the growth of small plankton, which may be eaten by
bigger species and thereby move up the natural food chain.
However, too many nutrients in one area can cause eutrop-
hication, which can potentially harm the existing fauna in an
eco-system. While the feces of wild fish are widely distributed
around the fjord system, salmon farms contain a lot of fish in
a smaller area, and the risk of eutrophication increases. On
the seabed beneath a farm, there will also be some tempo-
rary impact on the benthic fauna due to organic emissions.
Therefore, the release of organic emissions is strictly monito-
red and regulated in all of the countries in which we operate.
When a farm is removed or fallowed for a period, the seabed
recovers and goes back to its original state after some time.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
L I M I T I N G L O C A L E M I S S I O N S
HOW WE WORK TO IMPROVE
REDUCING E XCE S S FEED
• We monitor the seabed under and around our sea farms, and
• We are working to reduce excess feeding by using underwa-
perform benthic testing during peak biomass.
ter cameras, so that we can stop feeding when the fish are
satisfied.
• Local regulations impose fallowing periods after each genera-
tion, to ensure the environment under and around the pen can
• We have an integrated operation center in Rogaland, where we
recover. If the local environment is not sufficiently restored
can develop specialized feeding expertise. We are also build-
according to independent monitoring, we must extend the
ing an integrated operation center in Shetland, with a similar
fallowing period before transferring new fish to the pens or
design and functionality as in Rogaland. In BC, a cluster of
sites are being fed from one feeding station.
reduce production at the site concerned.
> In Rogaland and Finnmark, regulations impose a fallowing
REDUCING IMPACT FROM FECE S
period of at least two months.
> In Shetland, the fallowing period is at least six weeks, but
normally we fallow for two or three months.
• When selecting sites, we choose those with good currents and
exchange of water, which disperse the feces into a wider area
> In BC, the fallowing period is three months, although the
seabed is often healthy and restored straight after harvesting.
of the fjords, mitigating their negative impact.
REDUCING OTHER EMIS SIONS
• We support copper-free antifouling solutions on our nets.
> BC was 100% copper free in 2019.
> Finnmark will be copper free by the end of 2020.
> Rogaland aims to be copper free within the next two years.
> Shetland has been copper free, but is currently using copper-
based paints on some sites in an effort to promote good gill
health (to prevent gill damage due to net cleaning). Shetland
is actively looking for alternatives to copper based paints to
return to 100% copper free.
7 5
RESULTS
Each country has it’s own score system for benthic tests of the sea bed under the farm. In Norway, farms must take sea bed tests (B
test) on peak biomass production/max load, and also take test in the area around the farms regularly (C test). Benthic testing on peak
biomass is also performed in BC and Shetland.
FIGURE 2.16
ROGA L A ND (B RE SULT S)
Very good
Good
92%
8%
Poor
0%
Very poor
Test not
yet taken
0%
0%
FIGURE 2.17
FINNM A RK (B RE SULT S)
Very
good
Good
Poor
Very
poor
Sites with hard
seabed (do not
get a score)
Test not
yet taken
(new sites)
29%
10%
24%
10%
10%
19%
FIGURE 2.18
SHE TL A ND
Satisfactory Borderline
Unsatisfactory
50%
25%
25%
12.5% because they are tidal sites, 12.5% due to
environmental impact
BRITISH COLUMBIA
•
There is no regulatory scoring system in place today. Regulations require us to
conduct benthic tests at the time of peak biomasse at each farm, and fallow the
farm after ended production cycle until the seabed of the site is remediated.
If Beggiatoa (a genus of bacteria which indicates organic impact) covers
>
more than 10% of the compliance zone, the site is not considered remedi-
ated and must fallow for longer.
The results of the test must be accepted by an independent third party.
>
76
ROGAL AND
Grieg Seafood has together with other salmon farming companies engaged an inde-
pendent, environmental monitoring program in Rogaland, to ensure that organic
emissions from all the farms do not altogether impact the fjords significantly.
The program monitors the water quality and possible eutrophication in the Ryfylke
fjord system. The results from 2019 shows that the environmental condition in the
fjord system is good.
According to the Risk Report of Norwegian Fish Farming from the Institute of
Marine Research, the risk of impact from organic waste from fish farming is low
and the environmental condition good in Rogaland (PO2).
FINNM ARK
We aim for a higher percentage of good scores. Longer fallowing periods are in
place for sites with unsatisfactory scores, and a new generation will not be stocked
until the impact is reversed and the site has received an acceptable score. We are
also working hard to get more sites in Finnmark, which will reduce the organic
impact. In addition, we are testing out new models to help us better place the farms
in relation to the currents, which will reduce the organic impact.
According to the Risk Report of Norwegian Fish Farming from the Institute of
Marine Research, the risk of impact from organic waste from fish farming in
Finnmark (PO12) is low and the environmental condition good. Compared to
Western Norway, there is much less fish farming in Finnmark altogether, reducing
the risk. An environmental study from 2017 of organic impact from fish farming in
the Alta fjord, showed low impact on the fjord system. Organic materials decom-
pose slower in low seawater temperatures.
SHE TL AND
We aim for a higher percentage of “satisfactory” scores. Improvement measures
are longer fallowing periods, but also a reduction in the maximum number of grown
fish we can have at a site. We are also installing feeding cameras to reduce excess
feeding. We work with Scottish Environmental Protection Agency (SEPA) to find the
right way ahead for each site.
The Scottish benthic monitoring system is based on modelling, which do not
accurately predict the environmental impact on tidal sites. As a result, some of our
sites get unsatisfactory scores not due to a greater than permitted level of envi-
ronmental impact on the sea bed, but because the results are different from those
predicted by the hydrographic model. Out of the four sites that have an unsatisfac-
tory result, two are tidal sites. SEPA is working with the sector to determine better
ways of monitoring these particular sites.
• Grieg Seafood BC takes monthly seabed tests to map our the impact through
the years and production cycle. We see that the sites recover more quickly than
expected.
• Grieg Seafood BC usually fallow the sites for approximately three months.
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
L I M I T I N G L O C A L E M I S S I O N S
7 7
Interaction with wild life
Farms are often located in areas abundant with
birdlife and marine mammals. As a responsible
salmon farming company, we do what we can to
avoid conflicts with wild animals.
OUR PRINCIPLES
We try to arrange operations and facilities in a way that
minimize our impact on local wild life.
Weapons are not allowed on our sites.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 H E A LT H Y O C E A N
I N T E R A C T I O N W I T H W I L D L I F E
HOW WE WORK TO IMPROVE
• Where relevant, we use equipment that minimizes the risk of
• Potential conflicts with wild animals are evaluated when we
injury to wildlife, such as strong nets or anti-predator equip-
consider new sites.
ment. For example, we use protection on the pens to prevent
marine mammals from injury if they come into contact with
• We try to avoid using Acoustic Deterrent Devices (ADDs)
the farm, and we have bird net covers on the pens. We are
because some research state that they impact the navigation
also planning to invest in more equipment that is not harmful
systems of certain marine mammals.
to wild animals.
• We generally only euthanize animals that are injured, and
choose alternative ways to protect farms against intruders.
> In BC, we are prohibited from killing wildlife. We aim to
release any animal that gets stuck in our pens unharmed.
In case of injured animals, we will call on external assis-
tance.
OUR RESULTS
FIGURE 2.19
DE A D BIRDS A ND M A RINE M A MM A L S
REGION
Rogaland
Finnmark
Shetland
British Columbia
2017
2018
2019
Birds
Marine
mammals
20
18
0
0
0
0
1
0
Birds
24
1
0
0
Marine
mammals
Birds
Marine
mammals
0
0
0
0
2
2
2
14
0
0
0
0
We are not content with reporting any dead birds, and will continue to work on measures to avoid any dead animals.
The ASC standard sets the level.
7 9
ROOT ED IN
SUSTAINABLE
FOOD
Improving Food Quality
We work to make practices more sustainable along the entire value
chain. Focus areas expand from safe and healthy food, traceability
and feed to carbon emissions and waste management.
8 0
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 S U S TA I N A B L E F O O D
I N T R O
8 1
Safe and healthy food
Salmon is a good source of the vital long-chain omega
3-fatty acids DHA and EPA. We humans cannot produce
these fatty acids ourselves and must obtain them from
the foods we eat.
OUR PRINCIPLES
We farm salmon that is safe to eat and healthy for our bodies.
Full traceability and strict quality control at every stage
of production.
Open communication about our farming methods and
standards with customers.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 S U S TA I N A B L E F O O D
S A F E A N D H E A LT H Y F O O D
HOW WE WORK TO IMPROVE
SA FE FOOD
PRODUCT SA FE T Y
• All food products contain trace amounts of environmental
• We have Hazard Analysis and Critical Control Point (HACCP)
contaminants.
> In Norway and the UK, the limits on such substances in
seafood are set by the European Food Safety Authority
systems at our processing plants, approved by national food
safety authorities. HACCP is a management system which
maintains food safety through the analysis and control of
(EFSA), based on the best available research.
biological, chemical, and physical hazards - from raw materi-
> In BC, the limits are set according to the requirements by
the destination country of the exported seafood product.
als, production, procurement, and handling, to manufacturing,
distribution, and consumption of the finished product.
• Dioxins, PCBs, dioxin-like PCBs, and heavy metal have been
• Before harvesting the fish, we perform a risk analysis of each
released into the ocean by human industrial activities for many
location to assess levels of environmental pollutants, residual
decades. Fatty fish from Northern Europe, which is turned into
foreign substances and bacteria.
fish oil, may be a source of such substances in salmon feed.
• We maintain a constant focus on high standards of hygiene at
• Environmental contaminants in our feed and fish are kept far
our processing plants.
below the safe limits set by the food safety authorities around
• We are working to develop a uniform approach to monitoring,
the world. In our monitoring program we include dioxin, PCBs,
with weekly reporting and customized action plans.
dioxin-like PCBs and heavy metals.
• We set standards for transport and storage.
• At the end of 2018, EFSA published new scientific advice, which
suggested lowering the allowed limit of these substances in
food. Grieg Seafood has started to further purify the fish oil
GSF GROUP QUA LIT Y NE T WORK
used in our feed.
• Our GSF Group Quality Network performs a continuous review
• Ethoxyquin is an antioxidant that can be used as an additive to
of hygiene-related challenges at our processing plants.
prevent oxidation and preserve high quality of feed raw mate-
• Microbiology and safe food production is the main area of
rials during transport. Grieg Seafood is no longer using raw
focus, especially the prevention of Listeria monocytogenes.
materials with added ethoxyquin in Norway and the UK, and
• We work to prevent introduction, contamination and establish-
will stop using it in Canada in 2020.
ment of Listeria in the production environment and have plans
MONITORING A ND TR ACE A BILIT Y
to remove Listeria if detected.
• We perform thousands of Listeria tests every year at our
harvesting plants, both on the fish and in the plant environ-
• We have a fully integrated value chain from roe to harvest,
ment.
and the production management program Fishtalk and trading
system Maritech provides documentation and full traceability.
Fishtalk also provides a complete record of all feed used and
S TA NDA RDS A ND CERTIFICATIONS
treatments applied.
• The certifications BAP and GLOBALG.A.P. cover our entire
• Systems to register and follow up customer feedback and
supply chain.
complaints.
• Our sales company, Ocean Quality, is chain of custody certified
• EU Directive 96/23 EC requires a monitoring program for
according to GlobalG.A.P and ASC.
undesirable substances in aquaculture products, to ensure
• Grieg Seafood Shetland operates according to standards such
that food does not contain residues above legal limits.
> In Norway, the program is administered by the Food Safety
Authority and the Institute of Marine Research. Since the
program began in 1998, residue levels have remained
significantly below the recommended maximum limits.
• We include heavy metals and dioxin/PCB in our monitoring
program.
as those from the British Retail Consortium (BRC), Protected
Geographic Federation, and Kosher.
8 3
RESULTS
FIGURE 2.20
EN V IRONMENTA L CONTA MIN A NT S A ND LIMIT S 2019 FOR S A MPLE S OF GRIEG SE A FOOD S A LMON
Environmental contaminant
Lead
Mercury
PCB 6
EU limit
0.3 mg/kg
0.5 mg/kg
75 µg/kg
Dioxins PSDD/F TEQ excl LOQ
3.5 pg/g
Samples
Median
Max
Median
Max
Median
Max
Median
Max
Norway
<0.05 mg/kg
<0.05 mg/kg
0.0085 mg/kg
0.018 mg/kg
4.60 µg/kg
5.69 µg/kg
0.03685 pg/g
0.198 pg/g
Shetland
<0.05 mg/kg
<0.05 mg/kg
0.018 mg/kg
0.025 mg/kg
3.33 µg/kg
5.51 µg/kg
0.14 pg/g
1 pg/g
British Columbia
<0.05 mg/kg
<0.05 mg/kg
0.005 mg/kg
0.02 mg/kg
-
-
-
-
Our sampling for PCBs, dioxins, PCB-like dioxins and heavy metals are taken on all farms at the end of the production cycle. Samples from each site are tested according to
standard analytical methods by external laboratories. BC does not source fish oil form areas where all of these contaminants can be a challenge, and therefore the samples
are less comprehensive.
FIGURE 2.21
LIS TERI A CONTA MIN ATION IN 2019
REGION
Rogaland
Finnmark
Shetland
British Columbia
Number of samples* Listeria detected (%)
2 136
2 406
1 564
572
5.2%
1.3%
2.1%
2.1%
*Number of samples of end product and plant environment.
Our Listeria sampling is done on key points on the production line to ensure food
safety. Samples are taken regularly to show variations over time. We also test
finished product for Listeria. Samples are analyzed according to standard methods
by external laboratories.
If Listeria is detected, action plans are executed in the form of extra thorough
cleaning and the replacement of equipment. Relevant customers are informed.
Most of them have measures in place to manage Listeria for the fish they buy, even
when Listeria is not found at the harvesting plant.
FIGURE 2.22
SUPERIOR SH A RE
REGION
Rogaland
Finnmark
Shetland
British Columbia
2016
2017
2018
2019
88%
89%
93%
76%
81%
78%
93%
81%
74%
86%
94%
84%
75%
86%
94%
86%
We categorize our salmon as superior, ordinary or production grade. Superior
quality has a positive overall impression with good meat quality and no external
damage or faults. The superior share is calculated as a percentage of net biomass,
excluding discards. Please see the section "Analytical information" for further
details.
We have corrected the superior share for the years 2016-2018 due to exclusion of
discards. Previous reporting was: Rogaland with 85% in 2016, 79% in 2017 and 73%
in 2018. Finnmark with 88% in 2016 and 85% in 2018.
The share of superior quality fish in Rogaland was impacted by PD from 2017 until
mid-2019. Quality improved the second half of 2019. Claims were mainly related to
melanin.
In Finnmark, colder sea temperatures in general can cause winter ulcers, which
affects the superior share. Winter ulcers and melanin were the main reasons for
claims in 2019.
In Shetland, the share of superior quality fish is consistently high, although it has
been somewhat affected by gill-related diseases and mechanical sea lice treat-
ments. Claims were mainly related to melanin.
The share of superior quality in BC has been rising in recent years, despite algal
bloom incidents. Claims during the year were related to pigmentation, texture or
soft flesh.
8 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 S U S TA I N A B L E F O O D
S A F E A N D H E A LT H Y F O O D
8 5
Salmon & health
Salmon is healthy food. Fish and seafood
contain a number of nutrients that are vital
to the human body.
IODINE
Iodine is important for maintaining a normal
metabolism. Iodine deficiency can lead to meta-
bolic changes, which may cause reduced growth
and mental retardation.
V ITA MIN D
Vitamin D is necessary to maintain the calcium
level in our bodies. It is also important to build
and maintain our skeletons. The body can only
produce vitamin D itself when the skin is exposed
to direct sunlight, or if our diets includes natural
sources of vitamin D. Fatty fish and fish liver
contains vitamin D.
SOURCE: S A L MONFACT S.C OM
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 S U S TA I N A B L E F O O D
S A F E A N D H E A LT H Y F O O D
V ITA MIN B12
Vitamin B12 is essential when the body grows
new cells. Because we constantly need a lot of red
blood cells, we can develop anemia if we don`t
have enough of this vitamin.
V ITA MIN A
Vitamin A contributes to healthy eyesight and
a strong immune system. The vitamin is also
essential for healthy fetal development and has
a positive impact on reproductive health.
SELENIUM
Selenium is important for the body's immune
system because it helps to fight damaging chemi-
cal processes in the body. Selenium also seems
to protect us against pollutants and heavy metals.
PROTEIN
Protein builds and maintains all the cells in our
body. Proteins consist of various amino acids, and
the ones the body cannot produce itself are called
essential amino acids. They must be obtained
through our diet.
OMEGA-3 FAT T Y ACIDS
Omega-3 fatty acids prevent and slow down the
development of cardio vascular diseases. These
fatty acids are also among the vital building
blocks for our brain. Most important are the two
long-chain fatty acids, DHA and EPA.
8 7
Sustainable
feed ingredients
Fish feed is the most important and costly input factor
in salmon farming. Sustainable sourcing has long been
an important issue, and a lack of sustainably fished
marine ingredients has made feed producers substitute
marine fish oil and fish meal with plant-based ingredi-
ents. As the aquaculture industry continues to expand,
we strive to source new feed ingredients in order to grow
sustainably.
OUR PRINCIPLES
Input factors in fish feed, both marine ingredients and plant-
based ingredients, should come from sustainable sources.
We comply with the ASC standard for how much fish meal and
fish oil we have in our feed.
We recognize the need to develop novel marine and plant based
feed ingredients.
FEED INGREDIENTS AND RISKS
We have focused on several supply chain risks connected to feed ingre-
dients for several years. Overfishing can be a risk connected to marine
ingredients, and deforestation can be a risk connected to some plant
based ingredients. We have set specific sourcing requirements to feed
suppliers on these aspects. During 2020, we will conduct a broader
risk assessment of our feed ingredients, which will include assessment
areas like carbon footprint, human rights and more.
8 8
FIGURE 2.23
FEED INGREDIENT S 2019
12%
3%
5%
14%
10%
23%
10%
23%
BEANS
GUAR
SOY
WHEAT
RAPESEED OIL
FISHOIL
FISHMEAL
WHEAT GLUTEN
This illustrates the average of raw material content in our feed used
in Norway and UK. In BC, the content is somewhat different as in
general protein from vegetable are replaced by poultry-bi product.
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 S U S TA I N A B L E F O O D
S U S TA I N A B L E F E E D I N G R E D I E N T S
HOW WE WORK TO IMPROVE
REQUIREMENT S FOR FEED SUPPLIERS
• From 2020, 100% of the marine ingredients in the feed we
use, will comply with the sustainability standard set by Marine
Stewardship Council (MSC), Iceland Responsible Fisheries
Management (IRFM) Certification Program, Alaska Respon-
sible Fisheries Management Program, or the International
Fishmeal and Fish Oil Organization Responsible Supply Stan-
dard (FIPs).
• No marine ingredients come from illegal, unreported, or
unregulated fisheries.
• 100% of soy ingredients are certified according to the sustain-
ability standards Proterra or Round Table on Responsible Soy.
These standards ensure that the soy we use has not contrib-
uted to deforestation.
•
In our Supplier Code of Conduct, we require our suppliers
to minimize their environmental impact, with a particular
emphasis on the exploitation of limited resources and on
deforestation. Our suppliers are expected to identify and
monitor their impact and implement measures where needed.
DE V ELOPING MORE SUS TA IN A BLE FEED
• We are in dialogue with suppliers to cooperate on developing
novel sustainable feed ingredients, such as insect meal.
• We cooperate with other players in the industry, such as the
GSI, to encourage feed producers to increase their focus on
sustainable ingredients.
• We are a member of the steering committee for the develop-
ment of a new global ASC standard for fish feed.
• We encourage our suppliers to participate in the International
Fishmeal and Fish Oil Organization (IFFO), and its work on a
standard for responsible resource use.
• We have been a partner to an R&D project, CO2 Bio, that uses
carbon dioxide from the oil and gas industry to produce algae
as an alternative fish feed ingredient. In 2019, we withdrew
from this project and will look for alternatives.
FUNDING FOR SOY FARMERS IN THE
CERRADO COALITION
Our mission is to end soy-related deforestation in the
Cerrado, while facilitating expansion of the Brazilian soy
industry on already cleared land.
The problem
The Brazilian Cerrado stores huge amounts of carbon and
is home to 5% of the world’s animals and plants. Still, the
savannah is one of the world’s deforestation frontiers. The
habitat is being rapidly cleared to make way for soy and
beef plantations. Once covering an area larger than the UK,
France and Germany combined, now only half of its original
extent and native vegetation remains. An additional 2,000
hectares are being lost every day, equivalent to the area of
Greater London every three months.
The solution
Grieg Seafood has together with Tesco and Nutreco
launched the Funding for Soy Farmers in the Cerrado
Coalition. We aim to raise the critical funding needed to
implement a Brazilian-led innovative financial mecha-
nism to end deforestation from soy in the Cerrado. This
funding will be used by Brazilian stakeholders to develop
and implement the mechanism to provide the financial
incentives necessary to support farmers to transition to
producing soy only on existing agricultural land.
“Although the soy we use in our salmon feed is certified
and deforestation-free in and of itself, the Funding Coali-
tion gives us an opportunity to make a greater industry
impact further back in our value chain. There is no contra-
diction between ending soy related deforestation and conti-
nued development of the local soy industry in the Cerrado.
We hope many companies will join us, both in and outside
the salmon sector, to make that happen.”
— Andreas Kvame, Grieg Seafood CEO
Grieg Seafood will contribute with 2 dollars per ton soy we
use in our feed for five years, starting when the financial
mechanism is launched.
Grieg Seafood is also in the Steering Committee of Cerrado
Manifesto Signatories of Support, together with Tesco
(chair), Ahold Delhaize, APG, Avara Foods, CGF, FAIRR,
Nestlé, Nutreco, PRI, Robeco, SIM and Unilever. For more
information, please visit: www.businessforthecerrado.com/
8 9
RESULTS
FIGURE 2.24
FISH ME A L FFDRM
FIGURE 2.25
FISH OIL FFDRO
FDDRM
Norway
UK
BC - Canada
2016
0.56
0.83
0.63
2017
0.73
1.12
0.46
2018
0.54
0.76
0.46
2019
0.38
0.64
0.37
FDDRO
Norway
UK
BC - Canada
2016
1.61
2.04
1.90
2017
1.75
1.89
1.48
2018
1.64
2.09
1.88
2019
1.97
1.44
1.39
ASC DEMAND: 2.52
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Norway
UK
BC - Canada
ASC DEMAND: 1.20
3.00
2.50
2.00
1.50
1.00
0.50
0.00
2016
2017
2018
2019
2016
2017
2018
2019
The forage fish dependency ratio (FFDR) represents the amount of wild fish needed
to produce sufficient fishmeal and fish oil for one kilo farmed salmon. Both are well
below the ASC limit.
We use little fish meal and fish oil in our feed. Our FFDRm figures shows a continuous
reduction and that we were a net producer of marine protein in 2019 in all regions.
We used less fish oil in 2019 than the year before, except in Norway. We are still well
below ASC requirements.
FIGURE 2.26
ECONOMIC FEED CON V ERSION R ATIO (EFCR)
REGION
Rogaland
Finnmark
Shetland
British Columbia
9 0
The eFCR describes the amount of feed required to produce one kilo of farmed salmon.
It is calculated as the total weight of feed divided by net production (harvested weight).
In Rogaland, we had less impact from pancrease disease in 2019 compared to 2018,
which improved the feed conversion rate. Due to our efforts related to algae moni-
toring and improved feeding during challenging situations, we managed to reduce
the feed conversion rate in BC.
2018
2019
1.52
1.17
1.44
1.54
1.28
1.21
1.47
1.41
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 S U S TA I N A B L E F O O D
S U S TA I N A B L E F E E D I N G R E D I E N T S
9 1
Reducing
carbon emissions
Though farmed salmon has a low carbon
footprint compared to other protein sources,
we must reduce our carbon emissions
further.
OUR PRINCIPLES
We must play our part in reducing greenhouse gas emissions
in order to reach the Paris Agreement´s objectives.
Our target is to cut greenhouse gas emissions by 30% per kilo
by 2030, from a 2017 baseline.
9 2
COOPERATING TO REDUCE SCOPE 3
EMISSIONS
Grieg Seafood will take part in a test with transportation suppli-
ers, where salmon from Finnmark will be moved from trucks
to train through Sweden to get to the south of Scandinavia. It
is estimated that carbon emissions for this distance can be
reduced by approximately 66%.
THE CARBON DISCLOSURE PROJECT
In 2019, Grieg Seafood was given an A rating by the Carbon
Disclosure Project (CDP) for our climate disclosures and
actions towards a low-carbon future. Even though fish has a low
carbon footprint, cutting more emissions from our operations
and supply chain is one of the challenges we must solve in our
industry. For more information on the CDP, visit www.cdp.net.
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 S U S TA I N A B L E F O O D
R E D U C I N G C A R B O N E M I S S I O N S
HOW WE WORK TO IMPROVE
SCOPE 1 A ND 2
SCOPE 3
• Our largest direct source of emissions is from the fuel that
• We are working to include Scope 3 GHG emissions in our
powers our boats, vehicles, and on-site electricity generators.
reporting, and will publish the results in 2020. Our main emis-
We are testing out a variety of new technologies to reduce the
sion drivers are transport, airfreight and feed.
carbon footprint of these sources, such as replacing the diesel
• We are working to reduce our emissions, both within Scope
engines used at sites with battery packs or hybrid solutions.
> We are also testing out new solutions. For instance, in
Rogaland, we have a test project on one of our farms with
a wind turbine and solar panel.
1, 2 and 3. We will adopt Science-Based Targets to meet the
goals of the Paris Agreement.
• We have tested out methods to chill the salmon after harvest-
ing, which made it possible to avoid ice in packaging and
• Our preventative approach to sea lice control will also reduce
reduced the carbon footprint per kilo of packed salmon. We
our carbon footprint, as use of large vessels in treatments also
will invest in this equipment in the years to come.
lead to greenhouse gas emissions (GHG).
• We maintain a regular dialogue with our suppliers of feed,
• Before making any investments, we evaluate their potential
goods and services, and we discuss what they are doing to
carbon emissions and environmental impact.
reduce their GHG emissions. Some of our suppliers already
• The Grieg Seafood´s head office is a certified Eco Lighthouse.
have their own GHG reduction targets. Going forward, we will
The certification process involves an evaluation of energy
encourage others to clarify their goals.
consumption, supply management, waste management, trans-
port use, sewage treatment, system criteria and the working
environment.
9 3
RESULTS
FIGURE 2.27
GREENHOUSE GA S EMIS SIONS
REGION
Scope
Scope 1
ROGALAND
Scope 2 location based
Total (scope 1+2)
Scope 1
FINNMARK
Scope 2 location based
Total (scope 1+2)
Scope 1
SHETLAND
Scope 2 location based
TOTAL EMISSIONS (tCO2e)
EMISSIONS (kgCO2e) / TONNES
2017
2018
3 753
3 721
420
4 173
4 540
567
5 107
8 071
2 265
456
4 177
7 134
420
7 554
9 813
2 741
2019
9 211
424
9 634
4 779
696
5 474
10 507
1 494
2017
2018
2019
230
256
382
224
254
169
Total (scope 1+2)
Scope 1
10 336
12 554
12 001
857
1 053
1 065
5 974
9 143
14 867
Scope 2 location based
768
783
685
BRITISH
COLUMBIA
ASA
OQ
Total (scope 1+2)
Scope 1
Scope 2 location based
Total (scope 1+2)
Scope 1
Scope 2 location based
Total (scope 1+2)
Scope 1 (tCO2e)
6 742
9 926
15 552
702
597
1 101
-
5
5
-
-
-
4
4
-
-
-
3
3
-
2
2
22 338
29 811
39 363
4 025
4 404
3 304
TOTAL GROUP
Scope 2 location based (tCO2e)
Total scope 1 + location based scope 2
26 363
34 215
42 667
421
459
514
Our total greenhouse emissions increased by 25% compared to last year, while
production increased by 11%. Measured as C02 equivalents per tonne harvested, the
increase is 12%.
In Shetland, the harvested volume decreased by 5%, while total emissions decreased
by 4%. Emissions per tonne rose by 1%.
In Rogaland, total emissions more than doubled from 2018 to 2019. The increase is
due to a 55% increase in the harvested volume, and a considerable increase in the
consumption of marine gas oil (MGO), which is mainly used for well boat services.
Measured in terms of emissions per tonne, the increase from 2018 to 2019 is 49%.
In Finnmark, the decrease of both total emissions and emissions per tonne harvested
is due to the reclassification of 3 299 tCO2e of marine gas oil consumption from Scope
1 to Scope 3 based on a change in operational ownership at the start of 2019. Exclud-
ing this reclassification, total emissions increased by 16%, while the increase per
tonne is 7%. The harvested volume rose by 9%. Measures taken to reduce green-
house gas emissions during the year includes connecting three production sites to
the electrical grid, and installing batteries on four production vessels, enabling diesel
electric production. With the installation of heat pumps, on-shore electricity, and
hybrid solutions, we were able to save 521 tCO2e in 2019. At the same time, these
measures increased our electricity consumption by 63 tCO2e. The net reduction of
these measures came to 458 tCO2e.
In BC, the 57% increase in total emissions is attributable to a substantial increase in
the consumption of diesel to power our sites. Due to a 15% decrease in the harvested
volume compared to the year before, emissions per tonne rose by 85%.
Because we are growth oriented, and are therefore targeting higher production and
harvest volumes, we expect an increase in our total emissions going forward. Never-
theless, we will continue to work towards our goal of a reduction per kilo.
In Finnmark, we have started to observe the benefits of using onshore electric-
ity instead of diesel generators to operate a growing number of production sites.
However, we are not satisfied with the substantial increases in Scope 1-emissions,
especially in Rogaland and BC. Well-boat services make up a substantial proportion
of our emissions, and the decisions we take about whether to provide these services
ourselves or outsource them to external service providers, have a considerable influ-
ence on our Scope 1 emissions. In 2019, we were able to significantly increase the
level of detail of our data collection, and aim to include Scope 3 in our reporting in
2020. Capturing all emission data on an individual production site basis allows us to
compare the energy intensity of each production site across all regions, and to develop
strategic low-carbon transition plans for 2020 and beyond.
94
ANNUAL REPORT 2019GRIEG SEAFOOD RESULTS
PA R T 0 2 S U S TA I N A B L E F O O D
R E D U C I N G C A R B O N E M I S S I O N S
FIGURE 2.28
GREENHOUSE GA S EMIS SIONS
45 000
Scope 1 (tCO2e)
Scope 2 location based (tCO2e)
3 304
39 363
4 404
29 881
4 025
22 338
0
2017
2018
2019
Our greenhouse gas emissions are reported in accordance with the Corporate
Accounting and Reporting Standard, developed by the Greenhouse Gas Protocol
Initiative (GHG protocol), using the operational approach. 2017 is our baseline year,
as this was our first year of complete and verified data.
Scope 1 emissions are those that are directly emitted by Grieg Seafood’s activities and
include emissions from the combustion of fossil fuels for generators, heating, and our
own vehicles. Emissions are calculated on the basis of recorded energy cost using
local energy prices. We also have a relatively small consumption of hydrofluorocar-
bons for cooling, which are included in Scope 1. All Scope 1 emission factors used are
from DEFRA (Department for Environment Food and Rural Affairs, UK Government).
Scope 2 emissions are indirect emissions relating to third-party generation of the
electricity we consume at our sites. Emissions are reported as location-based and
market-based emissions in accordance with the GHG protocol. Location-based factors
are from the International Energy Agency (IEA), using three-year rolling averages,
while market-based factors are from RE-DISS (Reliable Disclosure Systems for
Europe), apart from Canada which come from Green-E. Underlying data is collected
from financial cost and on-site meters.
9 5
Climate risk
The effects of climate change, such as extreme
weather, warmer seawater, and rising sea levels
can have financial impact in the coming decades.
Knowledge of the possible financial consequences
of global warming, and the integration of climate
risk, is an essential part of our risk management
strategy.
OUR PRINCIPLES
Climate-related risks are mapped as part of our overall risk
management strategy.
We are committed to transitioning to a low-carbon economy
together with the rest of the world.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 S U S TA I N A B L E F O O D
C L I M AT E R I S K
HOW WE WORK TO IMPROVE
• Climate-related risks are mapped in accordance with the
• When considering our exposure to climate-related risks and
recommendations of the Task Force on Climate-Related
opportunities, we also consider exposure in our value chain.
Financial Disclosures.
• Our climate-related risks include the physical risks of climate
risks and opportunities.
change, such as disruption of operations due to extreme
weather, and the impact of the transition to a lower-car-
• To ensure that our long-term strategic decisions enable us to
bon economy. Transition risk covers market risk, such as
be a sustainable and preferred agent in the low-carbon future,
constraints on emissions; regulatory risks, such as impo-
we will conduct scenario analyses and assess the related
• As a part of our 2025 strategy, we will address climate-related
sition of carbon tax; technology risks, such as competition
financial impacts.
from land-based fish farming or lab-produced proteins; and
reputational risk.
OUR RESULTS
See our TCFD report in the Appendix to this Annual Report.
9 7
Waste management
Our waste should always be disposed of in
compliance with prevailing regulations, and
recycled whenever possible.
OUR PRINCIPLES
We make every effort not to pollute the environment where
we farm our salmon.
As much waste as possible should be recycled and fed back
into the circular economy.
Plastic should be recycled and not end up in the ocean.
9 8
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 S U S TA I N A B L E F O O D
WA S T E M A N A G E M E N T
HOW WE WORK TO IMPROVE
FRE SH WATER
FA RMING EQUIPMENT
• Most of the tanks in our fresh water facilities are Recirculating
• Old farming equipment is safely removed, and we are working
Aquaculture Systems (RAS), which recycle at least 90–97% of
to establish an effective recycling system. Project to improve
the water used.
recycling practices will be implemented in 2020.
• We engage in annual beach clean-ups around our farms.
BIOLOGICA L WA S TE
• Fish trimmings and dead fish from the farms are disposed of
separately, and processed into fish silage. Depending on quality,
it may be used for animal feed, biofuel, or fertilizer.
• Organic waste from our fresh water facilities are recycled and
used as biofuel or fertilizer. We currently do this in Rogaland,
Finnmark, and BC. In Shetland, the organic waste is currently
used for biogas production.
OCEAN PLASTICS
Ocean plastics is pollution, which can impact fish and life below water negatively. While the aquaculture industry has been less
conscious of plastics from operations going astray in the past, awareness has increased during recent years.
Grieg Seafood has a partnership with the NGO Bellona, where Finnmark is
• Develop plastics products that last longer and are easier to recycle
piloting a project on plastics. Main parts of the initiative are:
together with suppliers, such as sea lice skirts and artificial kelp forests
• Mapping sources of plastics in operations. At our sites, cages, moorings
for cleaner fish.
and ropes, nets, feeding tubes, sea lice skirts, and shelter for cleaner
• Work with suppliers to develop return schemes. For instance, nets
fish are the main sources of plastics. A typical site with ten cages of
made of nylon can be reused in various textiles and carpets, or turned
90 x 90 meter pens contains approximately 360 000 kg of plastic. It is
into other nylon products.
estimated that 0.5% of this, 1 800 kg, disappears.
The project will be implemented in other regions in the coming years. Grieg
• Developing plastics accounting, an overview of all plastics bought. The
Seafood Finnmark will extend the pilot and start evaluating the value chain.
aim is to recycle all plastics and avoid leakages.
• Making recycling of plastics easier at sites with separate containers, and
create a culture for reducing use of plastics and recycle what is used.
As part of the Grieg Group, we have also partnered with the World Wildlife Fund to reduce ocean plastics in Asia. The project has clear ambitions: 50%
reduction of plastic pollution in three Philippine port cities by 2023.
9 9
ROOT ED IN
PROFIT &
INNOVATION
Improving Performance
Without a profitable business, we will not be able to farm healthy salmon
for people to eat all over the world. To achieve good financial results,
our farming methods need to be both cost-effective and sustainable.
10 0
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
I N T R O
10 1
The global
salmon market
Grieg Seafood is part of a global salmon market.
We supplied approximately 4% of the global
volume of Atlantic salmon harvested in 2019
and aim to increase this to almost 5% by 2020.
FIGURE 2.29
ATL A NTIC S A LMON CONSUMP TION IN 2019
FIGURE 2.31
NQSALMON WEEKLY AVER AGES (NOK /KG) (LESS DISTRIBUTOR MARGIN OF NOK 0.75)
100
80
60
40
20
0
2019
2018
2017
2016
2015
1
5
9
13
17
21
25
29
33
37
41
45
49
53
≥ Source: https://salmonprice.nasdaqomxtrader.com/public/home?0
≤ Source: Kontali - Production and market update Feb 2020*
*All market data is based on reports from Kontali Analyse AS.
OTHER 30%
EU 44%
RUSSIA 4%
JAPAN 2%
USA 20%
FIGURE 2.30
ATL A NTIC S A LMON H A R V E S T IN 2019
OTHER 9%
CANADA 6%
UK 7%
CHILE 27%
NORWAY
52%
10 2
ANNUAL REPORT 2019GRIEG SEAFOOD
PA R T 0 2 P R O F I T & I N N O VAT I O N
T H E G L O B A L S A L M O N M A R K E T
GLOBAL MARKET DEVELOPMENTS IN 2019
The global harvest of Atlantic salmon increased by 7.4% in 2019,
It is estimated that consumption in most major markets increased
continuing an upward trend seen over several years. A total of
in 2019, except for Russia and Japan which decreased by 9% and
2 325 600 tonnes GWT was estimated to have been harvested
2%, respectively. The largest relative increases in consumption
globally in 2019, up from 2 164 590 tonnes in 2018. The largest
were found in the USA and the EU, with 8% and 6%, respectively.
contributors to the increase in supply were Norway, Chile, and
the UK, with an increase in output of 72 000, 27 180, and 27 000
Salmon spot prices noted on NASDAQ Salmon Index (NQSALMON)
tonnes, respectively. The Chilean industry has mustered an
had a notable price drop from August to October, with the lowest
impressive recovery after its difficulties in 2016, while Norway
price of NOK 39.75 per kg. Prices stabilized in November and
has seen incremental growth in harvested volumes as farmers
ended the year at NOK 77.07. After five years of sharply rising
have adapted to challenging biological conditions over the past
prices, the 12-month average NQSALMON for 2019 (less distrib-
few years. Canada, on the other hand, experienced a 2 610 tonne
utor margin of NOK 0.75) came to NOK 57.21 compared to NOK
reduction in the volume harvested in 2019.
59.22 in 2018.
GLOBAL MARKET EXPECTATIONS
Kontali estimates that the supply of Atlantic salmon will increase
For the past 25 years, literally all new fish volumes have come
by 4% worldwide in 2020. This is based on a forecast increase in
from aquaculture. Wild fishing has long had to deal with smaller
output of 3% in Norway, 4% in Chile, 33% in Iceland, and 6% in
catches, quotas, and other regulatory restrictions. Since 1990,
the Faroe Islands.
the volume of farmed fish has multiplied more than six-fold, with
salmon making up less than 2.5% of the volume.
At year-end 2019, the consensus was that the global demand
for Atlantic salmon would remain high. Combined with limited
In line with the ongoing global megatrends relating to health and
possibilities for increasing the harvested volume, prices were
sustainability, there has been growing interest in the health and
also expected to remain high. However, the market situation in
potential environmental benefits that can be gained from sustain-
2020 has been impacted by the coronavirus (COVID-19) pandemic.
able aquaculture. At the moment, Europe is the largest and most
The escalation of both spread of the disease and the measures
mature market for Atlantic salmon, consuming more per capita
taken to combat it is currently causing extreme uncertainty for
than other continents. There are, however, countless ongoing
producers and processors, as well as for consumers. Industry
initiatives to introduce salmon to more and more new consumers
reports point to a boost in sales to the retail segment, while sales
across the globe. An increase in consumption per capita in large
to the HoReCa segment is essentially closed. Market distribution
markets and growing economies such as the USA, Brazil, China,
going forward is both uncertain and challenging.
and India is expected to contribute to rising demand for Atlantic
salmon over time.
Looking further ahead, there is a consensus in the market that
the existing coastal open-pen aquaculture industry will achieve
modest organic growth. This development will primarily be
driven by the opening of new sites and areas for sea farms, new
and improved technologies and farming practices, and better
cooperation both between industry players and with the public
authorities. In addition to this incremental growth, more experi-
mental attempts to farm salmon, either offshore or on land, may
supplement the traditional salmon farming industry with addi-
tional volumes in the longer term.
10 3
Ocean Quality
and our markets
By focusing on sustainable farming practices and
good fish health and welfare, we can provide the
healthy, tasty, and high-quality product that our
customers demand.
OUR PRINCIPLES
Our operations span the entire value chain from roe to
harvestable fish, primary processing, packaging, and sales.
Our farming regions sell their fish to Ocean Quality, which resells
it to third parties for further processing, or to other customers
for consumption as is.
Ocean Quality aims to be a preferred and reliable global supplier.
FIGURE 2.32
OUR M A RK E T S IN 2019
OTHER 5%
ASIA 16%
NORTH AMERICA
15%
UK 12%
EU 53%
10 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
O C E A N Q U A L I T Y A N D O U R M A R K E T S
OCEAN QUALITY
OUR MARKET EXPECTATIONS
Headquartered in Bergen, Norway, Ocean Quality is the sales
2020 started well, with high market activity. In March 2020,
organization of Grieg Seafood (60% shareholding) and Bremnes
however, the COVID-19 situation impacted the salmon marked,
Seashore (40% shareholding). The Ocean Quality Group also has
with a shift in demand from hotels and restaurants to super-
sales companies in Shetland and North America which sell Grieg
market retailers, as people started to eat more at home. So far,
Seafood’s salmon in these regions. In 2019, Ocean Quality sold
production in Grieg Seafood is going relatively well and according
125 530 tonnes of salmon, an increase in volume of more than
to plan, and sales have remained more or less at normal level.
9% compared to the 114 720 tonnes it sold in the year before.
Most of our salmon is trucked from Norway or the UK to European
Grieg Seafood accounted for 66% of the total volume sold in 2019.
customers, or from Canada to our American customers. Having
OUR MARKET DEVELOPMENT IN 2019
In 2019, the Grieg Seafood Group's (including Ocean Quality) sales
production in more than one continent gives us more flexibility
and reduces logistical difficulties. Exporting salmon by air is a
challenge due to the reduced availability of commercial flights.
We are working closely with freight carriers and customers to
find appropriate solutions.
revenues amounted to NOK 8 274 million, corresponding to an
The production cycle of salmon is 12-16 months in sea, and adjust-
increase of NOK 773 million or 10.3% from 2018. Continental
ing supply in the short term is difficult. Logistical challenges or
Europe is by far our most important market, representing 53%
changes to demand will cause short to medium-term mismatch
of our sales revenues. The market distribution of sales varies year
between supply and demand, and potentially pressure on spot
on year, depending on the harvested volumes across our regions.
prices. The spot market price of fresh whole salmon is trending
The main change in our sales distribution was an increase to the
down, in particular for large sized salmon. While expert opinions
EU, from 51% in 2018 to 53% in 2019, due to the increased volume
indicate that the virus situation in some European countries and
from our Norwegian farming regions. At the same time, sales
in the USA will get worse before it improves, the market situation
directed to the UK market decreased from 17% in 2018 to 12%
is improving and gradually returning close to a normal situation
in 2019.
in China.
OCEAN QUALITY IS COMMITTED
TO HIGH STANDARDS
Reliable year-round supply that meets customer requirements.
Fresh and healthy products.
Traceability and food safety.
Quality control and sustainability of raw materials.
Fish health, welfare, and environmental care.
Although the market situation is uncertain, Ocean Quality
currently expects to sell 150 125 tonnes in 2020, correspond-
ing to an increase of 13% compared to 2019. Grieg Seafood´s
harvest will account for 100 000 tonnes of this sales volume. In
the medium and long term, there is a clear market trend towards
increased demand for certified and specialty products. Grieg
Seafood is working continuously to adapt to changing customer
preference. Our efforts to increase the number of ASC-certified
sites is one example of this. After the HoReCa markets have
recovered from COVID-19, we are committed to improve sales
of our high-end products like our Skuna Bay brand from BC or
Kvitsøy from Rogaland. Skuna Bay salmon is sold to gourmet
restaurants in major American cities, while the majority of the
Kvitsøy Salmon brand is sold to the Italian and Spanish markets.
As part of our 2025 strategy, we also aim to to re-position Grieg
Seafood in the value chain from a pure commodity supplier to
a customer innovation partner. We will increase our presence
downstream through partnerships, category development and
brand cultivation.
10 5
Economic
productivity
By focusing on sustainability and driving
forward improvements at our farming
operations, we aim to create value for
all our stakeholders.
OUR PRINCIPLES
Improving sustainability is key to increasing our profits.
By focusing on reducing our environmental impact and improving
fish welfare, we aim to increase the harvested volume and reduce
production cost.
We aim to provide our shareholders with a competitive return on
capital invested and have set a ROCE target of 12%.
Our investments reflect our growth strategy: digitalization, post-
smolt, biosecurity, and fish welfare, including a continuous
evaluation of expansion opportunities.
10 6
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
E C O N O M I C P R O D U C T I V I T Y
RESULTS
PROFIT A ND LOS S
2019 was characterized by good market conditions and continu-
EBIT for the Group before fair value adjustment of biological
ous improvement across our operations. We reached a harvested
assets ended at NOK 1 088 million, a decrease of about 1%
volume of 82 973 tonnes, which was almost 1 000 tonnes above
compared to last year. The EBIT per kg of NOK 13.11 was positively
our target of 82 000 tonnes and approx. 11% higher than in 2018.
affected by the harvested volume and high spot prices. Lower cost
The average spot price for 2019 (NASDAQ Salmon Index average,
in Rogaland and Finnmark contributed positively, while cost in BC
less a distributor margin of NOK 0.75) was NOK 57.21 per kg, down
and Shetland were impacted by challenging biological conditions.
by NOK 2.01 per kg compared to last year. The Group´s sales
The total farming cost per kg for the Group came to NOK 43.54
revenues increased by NOK 773 million to NOK 8 274 million. In
compared to NOK 43.10 in 2018.
addition to a strong market for our product, these results were
achieved by maintaining a strict focus on sustainability, driving
forward improvements at our farming operations and increased
harvest volume. Total cost, excluding depreciation and write
downs, came to NOK 6 806 million, an increase of NOK 590 million
compared to 2018. The rise in cost mainly relates to a higher
harvested volume.
FIGURE 2.33
K E Y FIGURE S
FIGURE 2.3 4
GROS S IN V E S TMENT S
Growth investments
Maintenance investments
Harvest volume (GWT)
NOK MILLION
Sales revenues
EBITDA
EBIT
2015
2016
2017
2018
2019
4 609
6 545
7 017
7 500
8 274
261
1 342
1 106
1 334
1 498
48
1 168
904
1 099
1 088
Harvest volume (tonnes GWT)
65 398
64 726
62 598
74 623
82 973
EBIT/ kg (NOK)
0.73
18.04
14.45
14.71
13.11
Return on Capital Employed (ROCE)
1%
33%
24%
22%
19%
NOK MILLION
1 000 TONNES
86
76
66
56
800
600
400
200
0
2015
2016
2017
2018
2019
10 7
RESULTS
CA SH FLOW
the year before. Ocean Quality AS entered into a new factoring
Operating activities
The Group had a net positive cash flow from operating activities of
agreement during the year, with the factoring company purchas-
ing all credit-insured trade receivables from Ocean Quality. Net
NOK 1 456 million in 2019, compared to NOK 806 million the year
interest-bearing debt (NIBD) totaled NOK 2 376 million, compared
before. There was a change in working capital of NOK 5 million
to NOK 2 236 million at year-end 2018. NIBD at year-end 2019
during the year. This mainly related to increased biomass, in accor-
includes leases classified as operational leases according to
dance with our growth strategy, and increased trade receivables as
the superseded standard, IAS 17, which have been recognized
a result of a high sales volume towards the end of the year.
in the balance sheet after the adoption of IFRS 16. NIBD accord-
Investing activities
Net cash flow from investing activities totaled NOK -382 million
1 939 at year-end 2019, compared to NOK 1 690 million in in 2018.
The NIBD/harvested volume ratio was 23.4 at year-end 2019,
in 2019, compared to NOK -593 million the year before. The
compared to 22.3 in 2018. The NIBD/EBITDA ratio came to 1.4 at
largest investment in 2019 was related to several new sea sites
year end-2019, compared to 1.3 the year before.
ing to loan covenants (refer to APM for description) totaled NOK
in Finnmark, totaling almost NOK 185 million, together with the
expansion of our Gold River Hatchery in BC. Access to high-quality
smolt is key to ensuring production growth through improved fish
DIRECT ECONOMIC VA LUE GENER ATED
health and better survival in sea, and is a cornerstone in our oper-
Taxes are important sources of government revenue. They are
ational strategy in all regions. Obtaining new farming locations
central to the fiscal policy and macroeconomic stability of coun-
in Finnmark is a key part of our strategy to improved utilization
tries and are acknowledged by the United Nations to play a vital
of our maximum allowed biomass in the region, through better
role in achieving the Sustainable Development Goals. Further,
flexibility in production and harvest planning.
they are a key mechanism by which organizations contribute to
Financing activities
Net cash flow from financing activities came to NOK -1 000 million
the UK and Canada for Grieg Seafood. By reporting our taxes
paid country-by-country, we indicate our scale of activity and the
in 2019 compared to NOK -347 million the year before. The Group´s
contribution we make through tax in these jurisdictions. Living up
gross interest-bearing liabilities, including lease liabilities, had a
to our obligation to comply with tax legislation and our responsi-
net increase of NOK 194 million during the year. The Group applied
bility to our stakeholders to meet their expectations of good tax
IFRS 16 from 1 January 2019, affecting interest-bearing liabilities
practices is extremely important to us.
the economies of the countries in which they operate, i.e. Norway,
at a total of NOK 380 million at 31 December 2019. Please refer
to Note 11 and 26 for further information. During the year, Ocean
Quality AS entered into a new factoring agreement, in which the
factoring company purchases all credit-insured trade receivables
from Ocean Quality AS, which had a significant positive effect on
total factoring liabilities at year-end. Furthermore, financing activ-
ities were negatively affected by the payment of dividends totaling
NOK 462 million to shareholders and non-controlling interests.
FIGURE 2.35
TOTA L TA X E S (INCOME A ND PROPERT Y TA X ) PA ID IN 2019
(NOK 1 0 0 0)
Norway
Shetland
British Columbia, Canada
Total taxes paid
130 037
4 665
2 056
136 758
FIN A NCI A L P OSITION A ND LIQUIDIT Y
The information on the creation and distribution of economic value
As of 31 December 2019, the book value of total assets was NOK
shall provide a basic indication of how we create wealth for our
8 935 million, up from NOK 8 142 million at the same time in
stakeholders. In addition, the components of the economic value
2018. NOK 374 million of this increase are due to the adoption of
generated and distributed sharpen Grieg Seafood’s economic
IFRS 16 (see Note 11). Total equity amounted to NOK 4 141 million,
profile, permit a different interpretation of the economic figures
corresponding to an equity ratio of 46% at year end. The return on
and outline the overall economic value retained from the Group’s
capital employed (ROCE) was 19%, compared to our target of 12%.
ordinary operations during the year. In 2019, the economic value
retained came to NOK 735 million, corresponding to an increase
of about 55% compared to 2018.
The Group had a good level of free liquidity and unutilized credit
facilities at the end of the year, with an available bank credit
framework of NOK 955 million. Factoring liabilities amounted to
NOK 86 million at year-end 2019, compared to NOK 573 million
10 8
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
E C O N O M I C P R O D U C T I V I T Y
FIGURE 2.36
DIRECT ECONOMIC VA LUE GENER ATED A ND DIS TRIBU TED
FIGURE 2.37
VA LUE GENER ATED IN 2019
NOK MILLION
Value generated
Revenues
Value distributed
2015
2016
2017
2018
2019
4 609
6 545
7 017
7 500
8 274
9%
7%
2%
6%
1%
Salaries and personnel expenses
409
483
483
541
611
Operating cost
Raw materials and consumables used
2 739
3 287
3 724
3 853
4 182
Other operating expenses
1 236
1 457
1 725
1 822
2 013
24%
51%
Payments to providers of capital
Net interest and other financial items
Paid dividends
Payments to government
Estimated taxation
Value retained
All figures compiled from the audited Group Accounts.
118
55
14
38
91
179
339
709
62
474
198
351
64
467
280
474
75
462
196
735
Salaries and personell expenses
Raw materials and consumables used
Other operating expenses
Net interest and other financial items
Paid dividends
Estimated taxation
Value retained
10 9
110
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
E C O N O M I C P R O D U C T I V I T Y
GRIEG SEAFOOD PRECISION FARMING
A IM
To develop our experience-based salmon farming processes by introducing smart techn-
ology and data analytics enabling our employees to make better decisions throughout
the value chain.
RE SULT S SO FA R
• We used regression analyses to better understand the cause of PD in Rogaland.
• We have analyzed drivers for growth and mortality in Shetland. The results back up
our improvement strategy in the region.
• We are developing a model for daily prediction of harmful algal blooms (hetero-
sigma).
• We analyze causes of winter wounds to improve fish welfare.
• We see improved feed conversion ratio partially due to our Operations Center in
Rogaland.
• Though digital tools, we compare the effect from feeding on growth, regardless of fish
size, between all sites.
HOW W E WORK
Operations Centers
• We have tested a pilot installation for integrated operations for our marine facilities in
Rogaland.
• The Operations Center has gradually taken over responsibility and execution of
several production-related tasks. An integrated management and control system that
monitors and provides decision support in operational processes in the site.
• The goal is to improve fish health and welfare through closer monitoring with early
warning algorithms, better coordination of on-site operations and optimizing the feed
factor.
A HUB for analyses
• We have started building a HUB for analyses for the entire Group, and conducted data
analyses in all regions. Analyses consist of regressions, machine learning and AI, as
well as prediction models.
111
Profitable growth
By combining skilled and motivated people with new
technology, and increasingly farming salmon on
nature’s terms, we aim to ensure sustainable
and profitable growth in the years ahead.
OUR PRINCIPLES
By focusing on a number of different areas to reduce our
environmental impact, fish welfare will be improved and, as a
result, the harvested volume will increase and production cost
will decrease.
In 2020, we are aiming for a harvest volume of 100 000 tonnes,
with a production cost at or below a weighted industry average
of NOK 37.90 per kg.
We believe that improving sustainability is key to increasing
profits in the salmon farming industry.
112
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
P R O F I TA B L E G R O W T H
HOW WE WORK TO IMPROVE
•
Improve the utilization of our current capacity.
• Produce larger smolt to reduce production time at sea, thereby
reducing exposure to biological challenges while increasing
fish welfare and survival rates.
• Optimize feeding by using advanced sensor systems, real-time
monitoring, and automation.
• Continuous monitoring of environmental parameters,
combined with big data and artificial intelligence, to predict
biological conditions.
RESULTS
FIGURE 2.38 H A R V E S T A ND GROUP COS T
TONNES GWT
100 000
NOK/KG
Total harvested volume (tonnes GWT)
Group cost excl. headquarters (NOK/kg)
80 000
60 000
40 000
20 000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020E
58
53
48
43
38
33
28
113
Grieg Seafood Rogaland
Grieg Seafood Rogaland AS farms salmon in Rogaland on the west
coast of Norway. The company has 19* seawater license equivalents
and two licenses for land-based production of smolt. We also operate
our own brood-stock activity in Erfjord. All the salmon we harvest in
this region is processed and packed at our own facilities.
Our operations contribute significantly to local value creation. For
remotely from this facility. Precision farming will ensure more
further detail, see the "Local Communities" section.
efficient feeding, leading to reduced cost and improved growth
OPER ATION A L PRIORITIE S
going forward.
Grieg Seafood Rogaland aims to reduce production time at sea
from 18 to 12 months, with an average smolt size increasing to
OPER ATION A L RE SULT S
410 grams in 2020. Larger smolt will significantly reduce seawater
A total of 25 217 tonnes was harvested in 2019, an increase of 55%
production time, making the fish less exposed to challenges such
compared to the 16 293 tonnes harvested in 2018. The increase
as sea lice and Pancreas Disease (PD). In 2018, the average weight
in the harvested volume was primarily linked to strong biological
of smolt transferred to sea in Rogaland was 178 grams. In 2019, this
performance, combining favorable sea temperatures with good
increased to 279 grams, with individuals larger than 550 grams.
fish health and continuous efforts to keep sea lice pressure low.
An important part of our post-smolt strategy is the expansion of
Revenue amounted to NOK 1 539 million, with an average price
Tytlandsvik Aqua in Rogaland, where we have a 33.33% ownership.
achieved of NOK 61.03 per kg.
Our sites in Rogaland are located in Norwegian Production Area 2,
Seawater production was strong throughout the year, with a
which received a green light under Norway’s recently introduced
survival rate of 93% (calculated according to the GSI definition),
“traffic light” system. This means that the area’s production
compared to 92% in 2018.
capacity may be increased by up to 6%. Grieg Seafood Rogaland
has worked methodically to sustainably combat the challenge of
The cost per kg of harvested salmon decreased from 2018 to 2019.
sea lice and has used cleaner fish as a preventive measure. We did
The reduction was primarily achieved through the strong farming
not perform any sea lice treatments between July and October.
performance in 2019, and mitigation of the challenges related to
PD has been a long-term challenge in Rogaland, negatively
biological performance, we expect the cost level in Rogaland for
PD and lice that we experienced in 2018. Based on the current
affecting feeding and reducing growth rates. Two of our sites were
2020 to remain stable.
affected by PD going into 2019, but by year-end, all of our sites
were free of the disease. This has been a key factor in the strong
EBIT per kg before fair value adjustments amounted to NOK 22.53
performance delivered by Rogaland in 2019.
in 2019, compared to NOK 13.48 in 2018.
As part of our Precision Farming project, we launched our first
pilot of an integrated operations center in Rogaland in Septem-
ber 2018. All sites in Rogaland are now being monitored and fed
*We have 18 license numbers, but one of our licenses is doubled, which
in practice means we have 19 licenses. In addition, we have a long-term
rental agreement with Rogaland County for one license, which means that
we make use of 20 license equivalents in total.
114
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
P R O F I TA B L E G R O W T H
25 217
TONNE S GW T H A RV E S TED
22.53
EBIT/KG (NOK )
FIGURE 2.39
RE SULT S FOR ROGA L A ND
ROGALAND
2014
2015
2016
2017
2018
2019
Harvest (tonnes GWT)
12 778
15 236
18 367
18 111
16 293
25 217
Revenue (NOK million)
572.6
661.2
1 140.4
1 150.2
959.6
1 538.9
EBIT (NOK million)
EBIT / kg (NOK)
77.8
6.1
83.5
466.8
393.1
219.6
568.3
5.5
25.4
21.7
13.5
22.5
FIGURE 2. 40
EBIT A ND H A R V E S T ROGA L A ND
Harvest (tonnes GWT)
EBIT/kg (NOK)
30 000
25 000
20 000
15 000
10 000
5 000
0
H ARVEST (TONNES GWT)
EBIT/KG (NOK)
30
25
20
15
10
5
0
2015
2016
2017
2018
2019
115
Grieg Seafood Finnmark
Grieg Seafood Finnmark AS farms salmon in Finnmark, the northern-
most county in Norway. Of the company's 28 seawater licenses, eight
are “green licenses” and therefore subject to stricter environmental
standards. In addition, we own one freshwater license. In general, the
salmon we harvest is processed and packed at our local facility in Alta.
Our operations contribute significantly to local value creation. For
of continued growth, safeguarding survival rates, and lowering
further detail, see the "Local Communities" section.
cost through the stocking of larger smolt.
OPER ATION A L PRIORITIE S
OPER ATION A L RE SULT S
As in all our regions, we focus on improving fish welfare and
A total of 32 362 tonnes was harvested in 2019, an increase of
achieving a high survival rate. Camera surveillance and sensor
9% compared to 2018. Favorable farming conditions, with low
technology are utilized to continuously monitor the environment.
seawater temperatures and a continuous focus on fish welfare,
As a result of our efforts in the area of sustainable production,
contributed to a survival rate of 96% (calculated according to
we had achieved ASC certification of ten sites in Finnmark by
the GSI definition). Revenues totaled NOK 1 815 million, and the
year-end 2019.
average price achieved was NOK 56.09 per kg.
Flexibility is a requirement to achieve better utilization of our
The cost per kg of salmon harvested increased slightly in 2019
capacity, and we are continuously looking for opportunities to
compared to 2018. Growth rates in 2019 were somewhat impacted
secure access to good new locations. In 2019, we were granted
by low seawater temperatures, and the mortality of fish with a
approval for a new location in the Hammerfest area.
slightly larger average size negatively affected the achieved
Biological conditions in Finnmark were favorable throughout the
mance in Finnmark was strong in 2019, with a very low mortality
year, with consistently low sea lice levels. We utilized our option to
rate and a favorable sea lice situation.
economical feed conversion rates. However, biological perfor-
increase our MAB by 470 tonnes, in accordance with the Norwe-
gian “traffic light” system.
EBIT per kg before fair value adjustments came to NOK 17.93,
compared to NOK 19.98 in 2018.
The expansion of the Adamselv smolt facility was completed at
the end of 2018. This helped increase the average size of smolt
transferred to the sea in Finnmark from 135 grams in 2018 to 184
grams in 2019. Together with the acquisition of 50% of Nordnorsk
Smolt AS during the year, this is an important step in our strategy
116
ANNUAL REPORT 2019GRIEG SEAFOOD
PA R T 0 2 P R O F I T & I N N O VAT I O N
P R O F I TA B L E G R O W T H
32 362
TONNE S GW T H A RV E S TED
17.93
EBIT/KG (NOK )
FIGURE 2. 41
RE SULT S FOR FINNM A RK
FINNMARK
2014
2015
2016
2017
2018
2019
Harvest (tonnes GWT)
26 470
19 481
22 104
22 831
29 774
32 362
Revenue (NOK million)
975.3
797.9
1 244.3
1 265.2
1 671.3
1 815.3
EBIT (NOK million)
205.9
124.0
447.1
351.9
594.9
580.2
EBIT / kg (NOK)
7.8
6.4
20.2
15.4
20.0
17.9
FIGURE 2. 42
EBIT A ND H A R V E S T FINNM A RK
Harvest (tonnes GWT)
EBIT/kg (NOK)
35 000
30 000
25 000
20 000
15 000
10 000
5 000
0
H AR VEST (TONNES GWT)
EBIT/KG (NOK)
25
20
15
10
5
0
2015
2016
2017
2018
2019
117
Grieg Seafood Shetland
Grieg Seafood Shetland Ltd farms salmon in Shetland and the Isle of
Skye in Scotland. We have 17 active seawater sites and one fresh-
water location. We process our salmon at our own facility in Lerwick.
Our operations contribute significantly to local value creation. For
OPER ATION A L RE SULT S
further detail, see the "Local Communities" section.
A total of 11 273 tonnes was harvested in 2019, compared to 11 924
tonnes in 2018. Revenues amounted to NOK 731.6 million, with an
average price achieved of NOK 64.90 per kg.
OPER ATION A L PRIORITIE S
The aquaculture industry in Shetland has experienced a variety
Biological conditions in Shetland have been challenging in the
of biological challenges over the years. We cooperate closely with
past year due to gill-related diseases, algae, and plankton, in
other sea farmers in the region to secure a sustainable marine
combination with high sea lice pressure. As a result of healthier
biology. Whole farming areas operate with coordinated fallowing
and more robust smolt, improved vaccine strategies and continu-
periods and sea lice counting, and treatment activities are coor-
ous improvement of the handling and treatment of fish at sea, the
dinated between farmers.
12-month survival rate has increased from 83% in 2018 to 89% in
Over the last four years, we have cut production from 27 to 17
sites, focusing our production to the best sites with the strongest
Loss of production, combined with extensive efforts to miti-
biological control. We have implemented routines and systems for
gate biological challenges, impacted the cost per kg of salmon
monitoring and mitigating algae-related issues. Other measures
harvested in 2019. By improving our smolt quality and continuing
to ensure strong biosecurity, improved fish welfare, and control of
to focus on initiatives to improve biosecurity and fish welfare we
the sea lice situation include the use of aeration systems, cleaner
expect to be able to reduce the cost going forward.
2019 (calculated according to the GSI definition).
fish, sea lice skirts, and freshwater treatments.
The EBIT per kg before fair value adjustments amounted to NOK
We have a strong focus on improving our smolt quality to ensure a
-5.96, compared to NOK 2.83 in 2018.
more robust and healthy fish, which is essential for good growth.
In 2019, we saw the first IPN-free generation go through our
nursery, and we believe this can improve performance at sea
going forward.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
P R O F I TA B L E G R O W T H
11 273
TONNE S GW T H A RV E S TED
-5.96
EBIT/KG (NOK )
FIGURE 2. 4 3
RE SULT S FOR SHE TL A ND
SHETLAND
2014
2015
2016
2017
2018
2019
Harvest (tonnes GWT)
19 231
16 370
13 541
12 056
11 924
11 273
Revenue (NOK million)
852.5
773.5
859.8
745.9
799.9
731.6
EBIT (NOK million)
81.1
-164.9
176.6
EBIT / kg (NOK)
4.2
-10.1
13.0
68.7
5.7
33.8
-67.2
2.8
-6.0
FIGURE 2. 4 4
EBIT A ND H A R V E S T SHE TL A ND
Harvest (tonnes GWT)
EBIT/kg (NOK)
25 000
20 000
15 000
10 000
5 000
0
H AR VEST (TONNES GWT)
EBIT/KG (NOK)
12
8
4
0
-4
-8
-12
119
2015
2016
2017
2018
2019
Grieg Seafood British Columbia
Grieg Seafood BC Ltd farms salmon on the east and west sides of
Vancouver Island, and along the Sunshine Coast north of Vancouver.
The company has 20 seawater licenses and one license for land-
based production of smolt. We do not process our own salmon in B.C.
All of our sites are located in traditional First Nation territories.
OPER ATION A L RE SULT S
Our relations with the Mowachaht Muchalat, Tlowitsis and Ehat-
A total of 14 120 tonnes was harvested in 2019, down from 16 632
tesaht Chinehkint First Nations are good, and are very important
tonnes in 2018. The decrease was mainly due to the production
to us. For further details on our local community initiatives, see
and fallowing cycle of our farming areas. In 2020, we expect a
the "Local Communities" section.
OPER ATION A L PRIORITIE S
Access to high-quality smolt is key to ensuring sustainable
significant increase in the volume harvested, because we had 60
percent more biomass at sea at the end of 2019 than at year-end
2018. Revenues amounted to NOK 861 million, with an average
price achieved of NOK 61.01 per kg.
production growth. With the expansion of the Gold River smolt
The cost per kg of salmon harvested increased from 2018 to 2019,
facility, Grieg Seafood BC expects to increase its smolt capacity
mainly as a result of several of our locations being affected by
from 500 tonnes to 900 tonnes in early 2021.
biological challenges throughout the year of 2019. The survival
Harmful Algal Blooms (HAB) represent a major biological risk in
nition). Going forward, we expect to mitigate the loss of fish and
BC. We continuously monitor and analyze algae movements and
boost growth by leveraging our continuous monitoring efforts
oxygen levels, using high-grade sensor equipment and satellite
to better predict and prepare for algae and plankton incidents.
imagery. Aeration systems have been installed to allow feeding
during challenging situations and mitigate harm. Investments
The EBIT per kg before fair value adjustments came to NOK 5.19,
in seagoing production equipment will play an important role in
down from NOK 17.49 in 2018.
rate for the year was 88% (calculated according to the GSI defi-
maintaining good production levels and increasing survival rates
when environmental conditions are difficult.
12 0
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
P R O F I TA B L E G R O W T H
14 120
TONNE S GW T H A RV E S TED
5.19
EBIT/KG (NOK )
FIGURE 2. 45
RE SULT S FOR BRITISH COLUMBI A
BRITISH COLUMBIA
2014
2015
2016
2017
2018
2019
Harvest (tonnes GWT)
6 257
14 311
10 715
9 600
16 632
14 120
Revenue (NOK million)
277.8
573.9
611.2
580.3
1 075.3
861.4
EBIT (NOK million)
EBIT / kg (NOK)
-47.8
-7.6
13.3
0.9
80.5
120.2
290.9
7.5
12.5
17.5
73.3
5.2
FIGURE 2. 4 6
EBIT A ND H A R V E S T BRITISH COLUMBI A
Harvest (tonnes GWT)
EBIT/kg (NOK)
18 000
15 000
12 000
9 000
6 000
3 000
0
H AR VEST (TONNES GWT)
EBIT/KG (NOK)
20
15
10
5
0
2015
2016
2017
2018
2019
12 1
The Grieg
Seafood shares
We aim to provide an attractive return to our share-
holders and contribute to the correct pricing of our
shares. To achieve this, we proactively share honest
information about our operations.
OUR PRINCIPLES
Our ambition is to create shareholder value and deliver compet-
itive returns relative to comparable investment alternatives.
Our dividend should average 30-40% of the Group's net profit
after tax before fair value adjustments.
12 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
T H E G R I E G S E A F O O D S H A R E S
OUR SHARES AND SHAREHOLDERS
THE RETURN ON OUR SHARES
Grieg Seafood was listed on the Oslo Stock Exchange on 21 June
Our ambition is to create shareholder value and deliver competi-
2007, under the ticker GSF. We have only one class of shares, and
tive returns relative to comparable investment alternatives. The
all shares carry the same rights. As of 31 December 2019, the
return on our shares derives from a combination of the dividend
Company had 110 448 313 shares outstanding, at a nominal value
paid and share price appreciation.
of NOK 4.00 per share (excluding treasury shares).
Grieg Seafood’s share price increased by 37% in 2019. The closing
As of 31 December 2019, we had 4 968 shareholders, with our ten
price at 31 December 2019 was NOK 140.30, compared to NOK
largest investors holding 71.5% of our shares. Norwegian-based
102.30 at year-end 2018. Our dividend yield was 2.9% in 2019,
shareholders own the majority of the Company’s shares, with Per
and adjusted for a dividend payout of NOK 4.00 per share, the
Grieg Jr. and the Grieg family controlling 52.8% of the outstanding
total return on our share was 40.0% in 2019. By comparison, the
shares as of 31 December 2019. A further 5.5% was controlled by
Oslo Stock Exchange Total Return Index (OBX) and the Oslo Stock
OM Holding AS, and 4.6% by the Norwegian National Insurance
Exchange Seafood Index (OBSFX) produced a return of 14.1% and
Fund (Folketrygdfondet) as of year-end 2019. Grieg Seafood ASA
18.1% respectively. The total accumulated dividend since our
held a total of 1 213 687 treasury shares as of 31 December 2019.
initial public offering in 2007 is NOK 15.60.
For a detailed breakdown of our 20 largest shareholders, please
see note 17 in the Group Accounts.
Over the past five years, the salmon farming industry has expe-
rienced a tremendous increase in profitability and market capi-
Our shareholders reside in all parts of the world, with a clear
talization. Driven by high demand and increased prices, the Grieg
concentration in Europe. Over the last six years, Grieg Seafood
Seafood share has yielded a return of 438% over the past five
has experienced an upsurge in interest from investors, and we
years, compared to 253% for the OBSFX, and 62% for the OBX.
have more than doubled the percentage of non-Norwegian share-
Since the release of shares following the exercise of forward
holders since 2013. Excluding our majority shareholder, the Grieg
contracts in 2016 (see below), the return on the Grieg Seafood
family, which is based in Bergen, Norway, most of the sharehold-
share has substantially outperformed the Seafood Index.
ers come from the EU, the UK, or the USA.
FIGURE 2. 47
GEOGR A PHICA L OW NERSHIP IN 2013
FIGURE 2. 4 8
GEOGR A PHICA L OW NERSHIP IN 2019
USA 2%
EU 7%
UK 2%
USA 5%
OTHER 1%
EU 13%
UK 14%
NORWAY 67%
NORWAY 88%
12 3
THE LIQUIDITY OF OUR SHARES
DIVIDEND AND DIVIDEND POLICY
Since May 2016, the liquidity of our shares has increased signifi-
We aim to provide our shareholders with a competitive return on
cantly compared to previous years. This development was trig-
invested capital, through the payment of dividends in addition to
gered by Mowi ASA realizing a set of old forward contracts,
share price increases. Dividend will be evaluated twice a year.
acquiring nearly 29 million shares in Grieg Seafood ASA, and
The dividend payout should amount to 30-40% of the Group's net
immediately selling them in the market. Following this injection of
profit after tax, before fair value adjustments on biological assets.
shares into the open market, the Grieg Seafood share has ranked
At the same time, the Group's net interest-bearing debt per kg
approximately 25th in terms of trading volume among the shares
harvested salmon should remain at NOK 20, with possibilities to
on the Oslo Stock Exchange from 2017 to 2019. In 2019, a total of
increase during period of growth investments. Dividends declared
72 million shares were traded, with a median of 240 801 shares
and paid may be adjusted to satisfy the targeted level of debt.
per trading day.
In 2019, a dividend of NOK 4.00 per share was paid out. This corres-
ponds to a payout ratio of 55% on profit after tax for 2018. The
high payout ratio reflects a sound financial position and strong
financial performance.
For more information about key figures and share trading statis-
tics, please visit the Oslo Stock Exchange's web page www.oslo-
bors.no – Grieg Seafood (GSF).
KEY FIGURES
2014
2015
2016
2017
2018
2019
Number of shares at year-end (incl. own shares)
111 662 000
111 662 000
111 662 000
111 662 000
111 662 000
111 662 000
Number of shares traded
Number of shareholders
Total value of shares traded per day (NOK million)
Average number of shares traded per day
Median number of shares traded per day
13 108 181
8 251 926
167 281 077
143 109 533
116 144 510
72 001 397
1 028
1.34
52 433
32 100
1 156
0.94
33 008
19 562
4 390
31.64
661 190
317 820
4 433
40.68
570 158
486 933
5 124
42.07
466 444
411 341
4 968
33.7
289 162
240 801
Total market value OSE (NOK 1 000)
3 182 367
3 461 522
9 122 785
8 067 580
11 423 023
15 666 179
Share price 31.12 (NOK)
Average share price (NOK)
Lowest closing price (NOK)
Highest closing price (NOK)
Price/Earnings ratio*
Price/Book ratio**
Pay-out ratio (%)***
Enterprise value (EV)****/Capital employed (CE)*****
Enterprise value (EV)****/EBITDA
Enterprise value (EV)****/EBIT before fair value adjustments
Dividend yield (%)
Return on Capital Employed (ROCE)
28.5
26.1
21.8
29.8
79.17
1.42
0%
1.41
10.15
14.31
0.0%
10%
31.0
28.2
23.1
33.6
-114.81
1.53
139%
1.38
20.40
111.64
1.6%
1%
81.7
52.7
26.7
84.5
11.38
2.81
-556%
2.64
7.77
8.92
1.8%
33%
72.3
71.5
58.0
85.1
12.26
2.41
56%
2.27
8.81
10.77
5.5%
24%
102.3
92.2
66.2
131.9
14.61
2.95
68%
2.71
10.14
12.31
3.9%
22%
140.3
118.0
96.8
146.8
19.57
3.79
55%
3.16
11.93
16.43
2.9%
19%
* P/E is calculated as Profit after tax, excluding non-controlling interest and fair value adjustments, divided on total number of shares. **P/B is calculated as Profit after tax,
excluding non-controlling interest and fair value adjustments, divided on equity to controlling interest. *** Pay-out ratio is calculated as the dividend paid out in a year divided
by the earnings before fair value in the prior accounting year. **** EV is calculated as market capitalization excl. treasury shares pluss NIBD. ***** CE is calculated as NIBD
plus equity net of booked fair value adjustment of biomass net of tax.
12 4
ANNUAL REPORT 2019GRIEG SEAFOOD
PA R T 0 2 P R O F I T & I N N O VAT I O N
T H E G R I E G S E A F O O D S H A R E S
INVESTOR RELATIONS
FIGURE 2. 49
DI V IDEND PA ID
Dividend paid
Dividend paid per share
Grieg Seafood provides information to, and communicates with,
the capital markets, including shareholders, potential investors,
analysts, portfolio managers, investment banks, and others inter-
ested in our share. Investor relations activities are primarily
aimed at giving the market a correct picture of our activities and
future prospects. In connection with the release of our quarterly
financial results, we arrange presentations to create a greater
understanding of our operations. In addition, we hold meetings
with existing and potential investors. In 2018, we held our first
Capital Markets Update, where we presented our goals, strat-
egy, operations, financial developments, and outlook. Investors,
analysts, the media, and other stakeholders were invited. We
expect to host a Capital Markets Day in 2020, depending on the
coronavirus situation. For more information and the dates of our
Annual General Meeting and quarterly presentations in 2020, visit
our website www.griegseafood.com.
500
400
300
200
100
0
NOK MILLION
NOK
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
FIGURE 2.50
FI V E Y E A R REL ATI V E PERFORM A NCE
Volume
GSF
OBSFX
OBX
SHA R E PRICE ( NOK)
MILLION OF SHAR ES TRADED (30 DAYS AVER AGE)
160
140
120
100
80
60
40
20
0
02.01.15
02.01.16
02.01.17
02.01.18
02.01.19
02.01.20
Source GSF: https://www.oslobors.no/ob_eng/markedsaktivitet/#/details/GSF.OSE/overview
Source OBSFX: https://www.oslobors.no/ob_eng/markedsaktivitet/#/details/OBSFX.OSE/overview
Source OBX: https://www.oslobors.no/ob_eng/markedsaktivitet/#/details/OBX.OSE/overview
3.0
2.5
2.0
1.5
1.0
0.5
0.0
12 5
Analytical information
and alternative
performance measures
Our ambition is to be open and transparent with
respect to all our stakeholders. This is the only way
we can earn their trust. By sharing honest and rele-
vant information about our operations and the salmon
farming industry, we aim to contribute to an improved
understanding and correct valuation of our shares.
12 6
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
A N A LY T I C A L I N F O R M AT I O N
VALUE CREATION
VALUE DRIVERS
Creating shareholder value is a prerequisite for company growth
With ROCE as our starting point, we break down our performance
and survival. Return on Capital Employed (ROCE) is our ultimate
based on the profitability of our product (EBIT per kg before fair
financial performance indicator. We also believe that sustainabil-
value adjustment) and developments in invested capital (fixed
ity and financial results go hand in hand. We need good financial
assets and working capital). We have a long-term goal of deliv-
results to develop our operations sustainably. However, we also
ering a ROCE of at least 12% per year. Our EBIT performance is
need sustainable operations to safeguard our long-term financial
driven by a multitude of operational factors that affect both reve-
results and performance. This lays the foundation for our strategy
nues and cost. Producing salmon takes two to three years from
– to create stakeholder value through sustainable production of
roe to harvest, and while the cost of a harvested fish accumulates
Atlantic salmon at the lowest possible cost.
through the production period, it does not impact the profit and
loss statement (apart from fair value adjustment) before the fish
is harvested. Although EBIT per kg (before fair value adjustment)
is an important external benchmark measure for our regions,
our operational focus is not on the cost of the harvested fish, but
on the development of the cost drivers affecting our production
volume and the cost of salmon to be harvested in the future.
FIGURE 2.51
ACHIE V ED PRICE (NOK /KG)
75
65
55
45
35
25
Shetland
Finnmark
British Columbia
Rogaland
NQSALMON
FIGURE 2.52
ROCE A ND EBIT/KG
ROCE %
40%
30%
20%
10%
0%
Return on Capital Employed (ROCE)
EBIT before fair value (NOK/kg)
NOK/KG
35
30
25
20
15
10
5
0
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
FIGURE 2.53
OTHER RE V ENUE DRI V ERS IN 2019
REGIONS
Survival rate
Superior quality share
Rogaland
Finnmark
Shetland
British Columbia
93%
75%
96%
86%
89%
94%
88%
86%
12 7
REVENUE DRIVERS
H A RV E S T VOLUME
PRICE S
How much salmon we harvest depends on the number of smolt
Our main product, whole gutted salmon, is largely traded as a
transferred to the sea, and how well that fish performs in terms
commodity, and the prices achieved largely reflect a general
of growth and survival. In line with our growth ambitions, we
market price. The prices we achieve will, to some extent, deviate
transferred approximately 25 million smolt to the sea in 2019.
from the market price, based on quality, sales contracts, and our
Fish growth and survival rates at sea can be affected by innu-
ability to place our salmon effectively in the market. Our ambition
merable factors, but certain factors are of critical importance:
is to sell our salmon at or above market prices, and we measure
• Seawater temperatures
• Seawater conditions
• Diseases and health issues
• Sea lice
our price achievement relative to the relevant observed market
price.
There are several reference prices for salmon. In Norway, Fish
Pool provides historic price information, as well as future salmon
derivative prices FCA Oslo as part of the NASDAQ Salmon Index
We strive to produce the highest quality salmon at a competitive
(NQSALMON). In the USA, Urner Barry provides reference prices
cost, overcoming the challenge posed by the above-mentioned
for North American salmon in Seattle and Chilean salmon in
factors. By effectively preventing and combatting sea lice and
Miami. Market prices are correlated across regions, but signifi-
health issues, and by understanding our salmon’s behavior, we
cant short-term variations between markets are not uncommon.
work continuously to improve survival and growth rates.
Our total production volumes are limited by our farming licenses,
which impose Maximum Allowed Biomass (MAB) restrictions on
the volume of fish we can have at sea at any given time. In Shet-
land and British Columbia, the limitations are imposed only on
a per site basis, while the Norwegian system also introduces
limitations on defined areas and per company. Effective utilization
of farming licenses, equipment, and personnel requires sophisti-
cated and detailed planning of stocking, feeding, and harvesting
activities across sites and regions.
QUA LIT Y
Diseases, winter ulcers, and other biological issues may affect
the quality of our product. We categorize the quality of our salmon
as superior, ordinary or production grade. "Superior" quality
salmon has a positive overall impression with good meat quality
and no external damage or faults. Downgraded salmon has from
minor to significant external and/or internal faults or damage,
and therefore commands a lower price. In Norway, downgraded
salmon is priced according to standard discount rates. For salmon
classified as "ordinary", the standard discount is NOK 1.50-2.00
per kg GWT. For salmon classified as "production grade", the
discount is NOK 5.00-15.00 per kg GWT, depending on the extent of
the impairment. In other countries, price deductions compared to
"superior" salmon are less standardized, but the same principles
apply. As other companies in the salmon farming industry may
use other quality categories and criteria for grading their salmon,
the quality share may not be comparable between the companies.
12 8
FIGURE 2.5 4
PRODUCTION COS T IN 2017-2019
Feed cost
Admin
Deprecation
Smolt
Other
2019
2018
2017
32%
44%
14%
5%
5%
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
A N A LY T I C A L I N F O R M AT I O N
COST DRIVERS
The cost of the inputs needed to raise a live salmon from roe to
across locations and regions. For salmon generations fully
harvest accounts for the bulk of our production cost. In addi-
harvested in 2019, our survival rates also varied. Grieg Seafood
tion, the cost of harvesting and processing our salmon, as well
Finnmark achieved a survival rate of 96% (calculated according to
as general administration, make up our total operational cost.
GSI definition). In our financial statements, we expense mortality
We track our performance, both internally and externally, through
by month or for the generation to date. Costs associated with
the farming cost per kg of harvested salmon. Most important is
"normal" mortality are retained kept in the book value of the
tracking the cost drivers that influence the cost of salmon to be
remaining inventory, contributing to an increased cost when the
harvested in the future, namely survival and growth.
fish are harvested and sold.
exceeding a threshold level, deemed to be extraordinary, either
SA LMON SURV I VA L
SA LMON GROW TH
A vast number of factors can affect salmon survival rates, such
Our profitability is also influenced by how quickly our salmon
as diseases, algal blooms, water conditions, predation, and sea
grow, and how efficiently feed is converted into weight gain (feed
lice treatments. In the industry as a whole, approximately one out
conversion rate). Water temperatures, biological conditions,
of five of the smolt transferred is lost during the seawater growth
farming practices, and fish survival are key drivers for salmon
phase. The number of fish lost per generation varies immensely
growth. Higher seawater temperatures increase growth, but
FIGURE 2.55
ECONOMIC FEED CON V ERSION R ATE
Shetland
Finnmark
British Columbia
Rogaland
Group
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1.0
2015
2016
2017
2018
2019
12 9
also increase biological risks in the form of diseases, sea lice,
COS T OF H A RV E S TED SA LMON
and algal blooms. This may in turn result in lost feeding days,
Our cost base consists mainly of feed, smolt, salaries, treat-
lower growth, and reduced survival. Through the introduction
ments, administration, well boats, harvesting cost, and depreci-
of improved sensor technology, use of advanced image analysis,
ation. In recent years the industry has faced acute challenges with
and other technologies, we continuously improve our ability to
respect to sea lice. This has caused an increase in cost related
make informed decisions about feeding and protective measures.
to direct treatment and increased investments in equipment and
technologies. This development has had a noticeable effect on
Efficient feed conversion is crucial to meeting our future cost
the relative allocation of cost factors, as well as the total cost
targets. Feed accounts for 44% of our total cost per kg harvested
level in the industry. In terms of cost per kg, however, the loss
fish. Strong and healthy fish, combined with high feed quality and
of harvested volumes has had a significantly larger impact than
good feeding practices, is key to achieving low production cost.
the direct cost increases. As production cost per kg have risen
We measure our farming performance through feed conversion
in recent years, the directly variable cost of feed has become a
rates (amount of fish feed used to produce one kg of live salmon)
smaller part of the total incurred cost per kg produced salmon.
and relative growth indices (achieved growth compared to own
At the same time, other cost, such as salaries, health cost, and
and feed supplier expectations). Salmon growth, survival rates,
maintenance, have become a larger share of the total.
and the economic feed conversion rate (EFCR), are strongly
connected to fish health, disease, and sea lice. Treatments,
In recent years, we have seen an increase in total cost across
fasting, and reduced appetite impact growth negatively, reduce
all our farming regions. In addition to an increase in health cost
our harvested volumes, and increase the cost per kg of harvested
related to disease and sea lice treatments, smolt cost and depre-
ciation have increased due to expansion of our smolt facilities and
extensive investments in various item of high-tech equipment. In
Shetland, we have experienced significant challenges related to
lice and diseases, resulting in reduced survival, low harvested
volumes, and therefore high cost per kg. However, our cost per
kg remained relatively stable from 2018 to 2019.
fish.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
A N A LY T I C A L I N F O R M AT I O N
131
KEY PERFORMANCE INDICATORS AND
ALTERNATIVE PERFORMANCE MEASURES (APM)
We believe that our financial statements only partially reflect the underlying performance of our operations. We are
therefore working continuously to develop key operational performance indicators and alternative performance
measures that we believe better describe our performance. The APMs listed below have been consistently applied
over time, with one exception: the calculation of net interest-bearing debt for covenant purposes. From the first
quarter of 2016, we removed the non-controlling interest Bremnes Fryseri AS's share of Ocean Quality AS’s bank
deposits from the calculation.
APM
DEFINITION AND CALCULATION
REASON FOR APPLYING APM
EBIT
= EBI T BEFORE FA IR
VA LUE A DJUS T MEN T OF
BIOLOGIC A L A S SE T S
Operating profit incl. amortization and
depreciation excl. fair value adjustment of
biological assets.
Unless otherwise specified, EBIT before
fair value adjustment of biological assets is
shortened to EBIT (earnings before interest
and taxes). This also applies to all key figures
where EBIT is a component, including:
EBIT margin (%)
EBIT/ kg GWT
ROCE
EBITDA
= EBI T DA BEFORE FA IR
VA LUE A DJUS T MEN T OF
BIOLOGIC A L A S SE T S
Operating profit before amortization and
depreciation excl. fair value adjustment of
biological assets.
Unless otherwise specified, EBITDA before
fair value adjustment of biological assets is
shortened to EBITDA. This also applies to all
key figures where EBITDA is a component,
including:
EBITDA margin (%)
NIBD/EBITDA
The equity ratio is calculated both with and
without consolidation of Ocean Quality Group.
The bank syndicate equity covenant definition
is exclusive of Ocean Quality. It covers only
Grieg Seafood companies both with regards to
equity and total liabilities, excluding effects of
IFRS 16.
EQUIT Y R ATIO
E XCLUDING OCE A N
QUA LIT Y
13 2
EBIT before fair value adjustment provides
a more informative result, as it does not
consider future gains or losses on fish not
yet sold. The fair value adjustment has a
non-operational nature and can affect the
comparability of our performance from period
to period. EBIT before fair value adjustment
is generally considered the standard industry
measure for profitability.
EBITDA before fair value adjustment provides
a more informative result, as it does not
consider future gains or losses on fish not
yet sold. The fair value adjustment has a
non-operational nature and can affect the
comparability of our performance from period
to period.
The equity ratio is applied to measure financial
solidity in accordance with the Group's
covenant requirements.
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P R O F I T & I N N O VAT I O N
A N A LY T I C A L I N F O R M AT I O N
APM
NIBD
ROCE
DEFINITION AND CALCULATION
REASON FOR APPLYING APM
NIBD/EBITDA is a measure of financial solid-
ity and is one of the covenants in our bank
agreement. When calculating NIBD/EBITDA,
NIBD is calculated according to method 2
and EBITDA is before fair value adjustment of
biological assets and consolidation of Ocean
Quality Group.
ROCE measures the return on invested
capital. Fair value adjustment of biological
assets is extracted, as this reflects future
gains or losses on fish not yet sold, which can
affect the comparability of performance from
period to period.
Net interest-bearing debt (NIBD) comprises
non-current and current debt to financial
institutions, after deducting cash and cash
equivalents.
NIBD is calculated in three ways:
1) For ROCE calculation: including all long-
term and current debt to credit institu-
tions, incl. IFRS 16 effect and factoring
liabilities.
2) Including all long-term and current debt
to credit institutions incl. IFRS 16 effect,
but excl. factoring liabilities.
3) For covenant calculation as required
by the bank syndicate: as in method
2, but cash and cash equivalents are
reduced with an amount corresponding to
Bremnes Fryseri AS 40% share of Ocean
Quality AS bank deposits, and lease liabil-
ities (former IAS 17 operational leases
only) are excluded. This method is used
for calculation of NIBD/EBITDA.
Return on capital employed (ROCE) is calcu-
lated using values before fair value adjust-
ment of biological assets and is calculated as
follows:
ROCE for the year is calculated as the
average of the ROCE for each of the years
four quarters. Quarterly ROCE is calculated
as quarterly EBIT before fair value adjust-
ment of biological assets multiplied by four
such to annualize the EBIT figure. Then, this
annualized EBIT figure is divided by the sum
of NIBD plus equity before fair value adjust-
ment of biological assets.
The quarterly values for NIBD and equity are
calculated as Opening balance plus Ending
balance divided by 2. NIBD is calculated
according to method 1, described in the NIBD
section above.
EP S
A DJUS T ED FOR FA IR
VA LUE OF BIOLOGIC A L
A S SE T S
Adjusted earnings per share (adj. EPS) is
calculated as net profit after tax minus
non-controlling interests plus/minus fair
value adjustment of biological assets net of
tax effects, divided by the number of shares.
The fair value adjustment of biological assets
is extracted to avoid future gains or losses
on fish not yet sold due to its non-operational
nature. Adj. EPS is used to calculate the
dividend payout ratio (dividend paid per share
relative to adj. EPS).
13 3
ROOT ED IN
PEOPLE
Improving Culture
Every single day, whether it is sunny, stormy or freezing cold, our
fantastic employees are out there working hard in the hatcheries, on
the farms or at the harvesting plants. Their passion and dedication
drive Grieg Seafood forward.
13 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P E O P L E
I N T R O
13 5
Human rights
and ethics
Respecting the rights and dignity of
all human beings is the very basis of
a civilized society. Businesses, or any
other entities, should not compromise
on human rights.
OUR PRINCIPLES
We adhere to the Universal Declaration of Human Rights and
ILO Conventions.
Through the Grieg Group, we are also a signatory to the UN Global
Compact, where these particular rights are emphasized:
• We uphold freedom of association and recognize the right to
collective bargaining in all regions.
• We do not tolerate child labor, forced, or compulsory labor.
• We conduct our activities without discrimination, we treat our
employees fairly and compensate fairly.
We are currently working to implement the United Nations
Guiding Principles on Business and Human rights in our opera-
tions and supply chain.
We have zero tolerance for bullying, unwanted sexual attention
and harassment.
Employees have a right to privacy.
13 6
NON-DISCRIMINATION
Always show respect for individuals as individuals, and do not
treat people as members of a class (race, ethnicity, national
or other origin, disability, age, gender, sexual orientation,
language, religion, or any other characteristic).
Base employment decisions on job qualifications (e.g. educa-
tion, prior experience) and merit. Positive discrimination is
tolerated in order to achieve equality and diversity.
Provide a work environment free from harassment and bullying.
Consult with higher-level management, if a conflict arises
between these provisions and the laws, customs, or practices
of a particular area.
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P E O P L E
H U M A N R I G H T S A N D E T H I C S
HOW WE WORK TO IMPROVE
IN OUR OW N OPER ATIONS
• All our employees are required to complete and abide by our
Code of Business Conduct program, which includes our ethical
> GlobalG.A.P has requirements related to the work envi-
ronment such as workers’ health, safety and welfare. We
standards, employee rights, applicable laws, and regulations.
provide ongoing training to update our employees on the
• Some regions also have additional courses:
> Grieg Seafood Shetland has 15 hours of mandatory training
on human rights for the staff representatives, who then
requirements in aquaculture, safe chemical handling,
and awareness about food safety. Through GLOBALG.A.P.
Certification, employees also receive adequate health and
inform the employees through town hall meetings.
safety training, and a preventive measure and emergency
> Grieg Seafood Finnmark has a course in non-discrimina-
response plan is in place.
tion, which 76% of the employees have taken.
• Our Code of Business Conduct and the culture we have built,
> BAP has requirements towards unsafe working conditions,
eliminating of forced child labor, fair wages and appropriate
start from the top, with our Board of Directors and our owners.
terms of employment.
• Our third-party certifications include independent audits of
• We have a whistleblower channel operated via an external
human rights practices:
> ASC has requirements related to ILO rights, prohibits the
use of child or forced labor, and has HSE requirements.
service provider, EY. Our whistleblower channel is available
to all employees at Workplace and through our intranet.
SEXUAL HARASSMENT
All our employees are entitled to be treated with dignity
and respect. Sexual harassment in the workplace will not
be permitted or accepted. Sexual harassment may include
unwelcome physical, verbal or non-verbal conduct, but may
appear in other forms as well.
Definition of sexual harassment
Sexual harassment is unwanted conduct of a sexual nature.
The unwanted nature of sexual harassment distinguishes it
from behavior that is welcome and mutual.
IN OUR SUPPLY CH A IN
• Our suppliers are required to follow our Supplier Code of
Conduct. This means they are expected to adhere to global
standards for good corporate practice, including the United
Nations Global Compact, the OECD Guidelines for Multina-
tional Enterprises, the Norwegian Code of Practice for Corpo-
rate Governance and International Labor Standards on Forced
and Child Labor.
•
In Norway we are obligated by law to set the same standards
for our suppliers and partners with respect to the provision of
proper training, competitive wages, and good working condi-
tions, as we do for our own employees. We will work towards
implementing the same requirements in all of our regions.
• Going forward, we will undertake human rights due diligence
to identify, prevent, mitigate, and account for human rights
impacts in our supply chain.
RIGHT TO PRI VACY
• The introduction of the General Data Protection Regulation
(GDPR) is an ongoing process that impacts our way of handling
CARE FOR PEOPLE - FAIR EMPLOYMENT
personal data.
All activities shall be conducted with respect for individuals
as individuals, and without discrimination. We do not tolerate
any form of forced labor and are committed to the abolition
of child labor.
• We have developed policies and guidelines for data security
and privacy that apply to all regions according to the GDPR
standard. The regulation gives all our employees more control
of their own personal data and ensures that the information
is protected.
13 7
RESULTS
FIGURE 2.56
UNIONIZED EMPLOY EE S (%) AT Y E A R END 2019
Region
Rogaland
Finnmark
Shetland
British Columbia
ASA
Ocean Quality
We accept and welcome union memberships among employees. Grieg Seafood has
established a good and involving relationship with our Union representatives and
cooperate in more internal improvement projects than just salary negotiations.
The numbers reflect union memberships in Fellesforbundet and The Norwegian Food
and Allied Workers Union (NNN), which are the most common unions for operational
positions in our industry. We do not log all types of memberships, such as members of
positions with university education. We do not track the number of unionized employ-
ees in Shetland due to legal restrictions.
%
31%
40%
-
0%
0%
0%
FIGURE 2.57
CODE OF CONDUCT PROGR A M
FIGURE 2.58
H A R A S SMENT INCIDENT S
FIGURE 2.59
W HIS TLE BLOW ER CA SE S
100
percent
0
0
100% of our employees have completed
our Code of Conduct program.
No harassment incidents were
reported in 2019.
No cases were reported through our
whistle blower channel in 2019.
FIGURE 2.60
TR A INING ON HUM A N RIGHT S
OUR EMPLOYEES' RIGHT
Declarations of Consent
Right to correct erroneous information
Right to access personal information
Right to limited processing of information
Right to erase personal information
Right to oppose processing of information
Right to breach notification
Right to transmit information to new
Right to be informed
employer
13
percent
In 2019, 113 employees, constituting 13% of our total
employees, were given training on human rights.
The training equals 281 hours.
13 8
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P E O P L E
H U M A N R I G H T S A N D E T H I C S
TRANSPORTATION AND RISKS
Most of our salmon is transported by trucks to the Euro-
pean or North American markets. There are some particular
risks connected to this part of our supply chain, which we are
aware of and working on.
In Norway, truck drivers from abroad may not always be
equipped for driving during winter conditions. While regu-
lations on the matter are strict, some are still breaching the
rules, which can potentially cause deadly road accidents in
our local communities. Such breaches are particularly severe
in Finnmark, where winter conditions occur during large
parts of the year. To mitigate the challenge, Grieg Seafood
Finnmark is taking part in the “Safe trucking” project organi-
zed by the Norwegian Seafood Federation. Before each truck
leaves the processing plant, employees check whether tires
and other trucking conditions are suitable for driving during
cold temperatures. Trucks not deemed fit for driving, will not
receive any cargo, and police is contacted when appropriate.
So-called “social dumping”, to use cheaper foreign labour,
can be another issue in the transportation sector serving
Norway. While most follow the regulations, some transpor-
tation companies are accused of bending the rules regarding
employee rights or HSE. Grieg Seafood is mainly working
with large transportation suppliers to reduce these risks, and
require all Norwegian regulations to be followed. We are also
working on improving requirements to transportation compa-
nies, making them more comprehensive.
13 9
Embracing
diversity
Diversity is not only the right thing
to do ethically. It leads to greater employee
retention and improves productivity. Bringing
together employees with different experiences,
backgrounds and educations spurs creativity
and can lead to new and innovative ideas.
OUR PRINCIPLES
We embrace diversity with respect to employee gender,
age, ethnicity, physical abilities, personality, skills, expe-
riences, and backgrounds.
RESULTS
FIGURE 2.61
THE SHE INDE X 2019
THREE IMPORTANT TASKS FOR
MAKING CHANGES TOWARDS
AN EQUAL WORKFORCE
Bold leadership
Top management have defined policies,
strategies, goals and practices.
Measuring equality targets openly
A diverse leadership team that sets, shares
and measures equality targets openly.
An empowering environment
One that trusts employees, respects
individuals and offers equal opportunities.
01.
02.
03.
14 0
8TH
2018
2019 H1
2020 H1
We report on the SHE Index in order to be transparent about our organiza-
tion and to improve our gender balance. The SHE Index scores companies
based on the gender balance in management teams at different levels,
as well as the companies´ policies to improve female representation in
management. The SHE Index will from 2020 be published once a year. Our
goal is to improve gender balance and diversity to become the preferred
employer by choice.
The methodology used in the index has changed several times. In H2 2019,
we received 29th place due to such changes. In 2020, however, the She
index adjusted the weighting of the Index to have more focus on the policies
and practices that will create a long-term change. Change takes time, and
we should pay more attention to the work being done to create positive
changes for diversity and inclusion. In 2019, Grieg seafood performed many
initiatives and established procedures and guidelines on how to improve
our gender balance. This include a fair pay and benefit policy for all of our
employees regardless of gender.
12TH8THANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P E O P L E
E M B R A C I N G D I V E R S I T Y
HOW WE WORK TO IMPROVE
IN OUR OW N OPER ATIONS
• We offer parental leave to both women and men in accordance
• We strive to attract more female workers to reduce the gender
with local laws.
gap, to which end we are keen to facilitate flexible working.
• We have a fair and transparent recruitment process, and strive
IN OUR SUPPLY CH A IN
to have both female and male candidates in the final round of
• We expect our suppliers to conduct their activities with respect
interviews.
for individuals as individuals, and without discrimination.
• We report on the SHE Index because we believe that what gets
measured gets done.
• We support Women in the Scottish Aquaculture Industry
(WiSA). WiSA promotes the diverse and rewarding careers
that are available in aquaculture, to encourage more women
to enter the sector. It also supports the progression, oppor-
tunities, and development of women who already work in
aquaculture.
RESULTS
FIGURE 2.62
NUMBER OF EMPLOY EE S (F TE) A ND GENDER BA L A NCE AT Y E A R-END 2019
ROGALAND
FINNMARK
SHETLAND
BRITISH COLUMBIA
ASA
OCEAN QUALITY
0%
35
55
36
44
12
20
Female
Male
TOTAL
122
201
153
127
13
43
100%
157
256
189
171
25
63
861
At the close of 2019, the Grieg Seafood Group had 861 employees including full-time
and temporary workers. Women make up 23% of the workforce, while 77% are men.
The ratio between male and female employees is similar across the regions. The
management and support functions at Grieg Seafood ASA, and the sales teams at
Ocean Quality, have the highest proportion of female employees.
Employee data is registered in a specific HR database. Only HR personnel are allowed
access to register employee data, and the data is reviewed regularly to ensure data
quality.
141
Creating
attractive jobs
To reach our goals and resolve the challenges we face,
we need the best people. A good working environment
is key to attracting and retaining the best talents.
OUR PRINCIPLES
Our goal is to attract the best skills, and to be the preferred
employer, regardless of industry.
We believe in life-long learning, and aim to help our employees
develop and reach their individual potential.
We have a fair and transparent recruitment process and offer
fair compensation.
A good working environment creates attractive jobs.
We live by our values Open, Ambitious and Caring.
14 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P E O P L E
C R E AT I N G AT T R A C T I V E J O B S
HOW WE WORK TO IMPROVE
COMPENSATION
EMPLOY EE DE V ELOPMENT
• Our pay and benefits policies are based on a bi-annual survey
• We offer employees training and further education to support
to ensure that we always pay market rates or above for all jobs.
the development of necessary skills.
We comply with the laws and regulations related to employ-
ment protection, compensation, and working hours in the
• We offer aquaculture apprenticeships.
countries where we operate.
• All our employees have written employment contracts. Most of
Precision Farming scheme, we aim to offer untraditional and
our employees are employed on a permanent basis, though we
exciting positions. Sensor technology, big data, and analytics
also use temporary employees, particularly in our process-
demands further development and training of our employees,
ing facilities. There are some differences in the payment and
and will also attract people with new skills to the industry.
• Through the use of new technology and digitalization, e.g. our
benefit arrangements for temporary employees due to the
number of hours worked.
• All permanent employees are part of our annual bonus
DI A LOGUE A ND CULTURE
program.
• We hold quarterly feedback meetings to discuss important
initiatives with our union representatives in order to encourage
• We have an employee share program and share our profits
good and constructive dialog.
with our employees.
• We focus on internal communication. Through our shared
communications platform, Workplace by Facebook, all our
employees are given a voice and an opportunity to participate
actively in discussions, and to share knowledge and informa-
tion across borders.
14 3
RESULTS
FIGURE 2.63
GRE AT PL ACE TO WORK 2019
FIGURE 2.64
NUMBER OF EMPLOY EE S COMPLE TING
TR A INING OR FURTHER EDUCATION IN
2019
FIGURE 2.65
NUMBER OF A PPRENTICE S Y E A R-END
2019
79
percent
34
23
Great Place to Work assesses and evaluates orga-
nizations and the practices that underpin workplace
culture based on the experience of employees.
We are proud to announce that Grieg Seafood´s opera-
tions in Finnmark, Rogaland and Bergen, Norway, have
received the Great Place to Work certification. This is
a step towards becoming one of the best companies to
work for in Norway. Grieg Seafood Norway received a
score of 86%. The average score for European compa-
nies was 57%, the best score being 89%. The Grieg
Seafood Group received an overall score of 79%.
We will continue our structured approach to working
with and including our employees in order to find
better solutions in their day-to-day work.
FIGURE 2.66
T Y PE OF WORK ER AT Y E A R-END 2019
ROGALAND
FINNMARK
SHETLAND
BRITISH COLUMBIA
ASA
OCEAN QUALITY
0%
130
220
176
166
24
63
In Rogaland, Finnmark and Shetland, a total of 34
employees received their certificate of apprenticeship
in 2019. In cooperation with North Island College, Grieg
Seafood British Columbia prepared the “Seawater
Technician Advancement Program” (TAP) in 2019. The
program will provide mandatory additional training
for technicians, as well as further training for higher
positions within aquaculture.
Permanent
Temporary
Contractor
TOTAL
27
21
178
36
4
260
13
189
5 1
172
1
3
5
28
68
100%
895
87% (779 of 895) of our workers are permanent employees. Temporary workers
consist mainly of seasonal workers and apprentices. Most of our apprentices are
offered a permanent position with us after their apprenticeship is over. Contractors
are mainly used in Norway during peak periods of harvesting.
Employee data is registered in a specific HR database. Only HR personnel are allowed
access to register employee data, and the data is reviewed regularly to ensure data
quality.
14 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P E O P L E
C R E AT I N G AT T R A C T I V E J O B S
FIGURE 2.67
NUMBER OF FULL TIME A ND PA RT TIME EMPLOY EE S IN 2019
FIGURE 2.68
T Y PE OF WORK ER SPLIT BY GENDER IN 2019
Full-time
Part-time
Region
Permanent Temporary Contractor
Total
Region
Rogaland
Finnmark
Shetland
British
Columbia
ASA
Ocean Quality
Total
Female
Male
Female
Male
Total
26
46
32
41
11
20
176
108
197
152
127
13
43
640
9
9
4
3
1
0
14
4
1
-
-
0
26
19
157
256
189
171
25
63
861
Female
Male
Female
Male
Female
Male
Female
Male
Female
Male
Female
Male
Rogaland
Finnmark
Shetland
British
Columbia
ASA
Ocean
Quality
Total
31
99
46
174
31
145
40
126
12
12
20
43
4
23
9
27
5
8
4
1
0
1
0
0
3
18
1
3
0
0
0
1
0
3
3
2
38
140
56
204
36
153
44
128
12
16
23
45
779
82
34
895
14 5
Keeping our
employees safe
Accidents can be prevented through the
development of adequate operating proce-
dures, a safety-focused corporate culture,
and by improving equipment quality. We
never compromise on health and safety.
OUR PRINCIPLES
Our mission is to provide a safe work place, ensure compliance
and minimize future potential liabilities. We work systematically
to safeguard our employees´ health, safety and working environ-
ment. The aim is to prevent and manage work-related injuries,
illness, accidents, and fatalities.
We target an absence rate of below 4.5% in each region.
We have a zero-tolerance philosophy for accidents.
Health and safety are serious and important matters for Grieg
Seafood, and we want our employees to know this and act
accordingly every single day.
14 6
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P E O P L E
K E E P I N G O U R E M P L O Y E E S S A F E
HOW WE WORK TO IMPROVE
SYS TEMS, PROGR A MS A ND RISK A S SE S SMENT
RE V IE W ING A ND REP ORTING
• We use occupational health and safety systems and standards
• We carry out yearly reviews of our health and safety procedures.
in line with local regulations in each country (we are currently
implementing one in our UK operations):
> Norway: Working Environment Act, Internal Control Regu-
lations
> UK: Health & Safety at Work Act 1974
> BC: Work Safe BC
• All aspects of work are covered by our health and safety systems.
• We have dedicated HSE Managers in each region.
• On a regular basis, the Health and Safety committees repre-
sented by all areas of our operations, monitor and review HSE
incidents and accidents together. Feedback from employees is
reviewed and, if necessary, implemented in procedures.
• Employees can report hazards to their line manager or the
• All health and safety managers are certified according to local
H&S Advisor by any method they feel comfortable (directly,
laws, and ensure that all personnel are well trained in health
phone, message apps, email), including our anonymous whis-
and safety at work.
tleblowing service. Grieg Seafood has a "no reprisal" policy
when it comes to reporting health and safety issues, described
• We introduced a safety excellence program, Brainsafe, in
in our Code of Conduct.
Grieg Seafood BC in 2018, which was a pilot project. The
project is still undergoing and we will in 2020 decide whether
• All incidents are recorded in our health and safety system,
to roll it out globally or consider other safety programs for
and reviewed. After corrective action is taken, the result of
global implementation.
the action is disseminated to the rest of the region for imple-
mentation.
• Job risks in each department are formally evaluated and cate-
gorized using a risk matrix. Job hazard assessments are also
carried out for non-routine jobs.
CRE ATING A N HSE CULTURE
• All employees receive health and safety training when they
PROMOTING EMPLOY EE HE A LTH
• External health services provide health checks and advice
to employees. In some regions they are represented on our
Health and Safety committees.
join the Company, and are required to re-take the courses
• We provide a health-plan for employees, ranging from dental
regularly.
and medical to counselling depending on the region.
• To ensure that all our employees understand and follow our
• We offer a variety of health programs to the employees
Safety Management Principles, each and every one:
> is encouraged to take responsibility for their own personal
(competitions, gym membership).
safety in everything they do.
• An employee Health & Wellness program is in place in BC,
> understands the importance of working for the safety of
focusing on improving our employees´ physical and mental
others.
health.
> is required to engage and communicate with colleagues to
support safe behavior and compliance.
IN OUR SUPPLY CH A IN
• We have annual HSE exercises to ensure that everyone knows
•
In our Supplier Code of Conduct, we expect suppliers to
what to do in case of an emergency.
provide a safe and healthy environment for their workers
and contractors, and minimize workers´ exposure to poten-
tial safety hazards. Furthermore, we expect our suppliers to
adhere to all applicable laws and regulations.
147
SAFETY MANAGEMENT PRINCIPLES
All locations shall establish annual safety
targets with action plans (what, who, when).
A safety assessment shall be carried out for
all jobs, equipment, and potentially hazardous
materials.
All locations shall have high standards of
housekeeping.
Annual audits of HSE-related activities shall be
conducted.
All managers shall carry out safety walks (Walk
- Observe - Communicate).
All regions shall have safety procedures, to
help facilitate a safety focus throughout the
organization.
All employees shall participate in safety meet-
ings on a regular basis.
A program for systematic and regular safety
training shall be in place.
The use of personal protective equipment and
life jackets shall be specified for employees,
contractors, and visitors.
All accidents and near-misses shall be reported
and investigated, including a root-cause analy-
sis, and corrective actions implemented within a
reasonable period of time.
RESULTS
FIGURE 2.69
A BSENCE R ATE IN 2019
6.00%
1.98%
1.56%
0.00%
Short term
Long term
TARGET: 4.50%
2.85%
2.01%
1.21%
2.17%
0.51%
1.53%
0.25%
0.50%
ROGALAND
FINNMARK
SHETLAND
BRITISH COLUMBIA
ASA
OCEAN QUALITY
In Rogaland and Finnmark, the absence rate has decreased compared to the year before, while in Shetland and British Columbia the absence rate increased.
The absence rate in Finnmark is above our target of 4.5%, mainly due to long-term sickness. We are monitoring developments.
14 8
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 P E O P L E
K E E P I N G O U R E M P L O Y E E S S A F E
FIGURE 2.70
FATA LITIE S IN 2019
0
We had no fatalities in 2019.
FIGURE 2.72
S A FE T Y INDICATORS IN 2019
Region
Rogaland
Finnmark
Shetland
British Columbia
ASA
Ocean Quality*
FIGURE 2.71
A BSENCE R ATE
Absence
Short-term
Long-term
Total
2018
1.29%
2.02%
3.31%
2019
1.69%
1.50%
3.19%
Hours worked
Total work related injuries
High consequence work-related injuries
195 766
361 799
327 469
256 370
45 916
125 800
9
20
11
25
0
0
0
2
0
1
0
0
* Estimated based on number of employees and general annual working hours.
Health and safety incidents are registered in our systems, and reviewed as part of
the monthly HSE meetings. In BC, quality control of incident data is achieved through
support from a third party.
Injuries are caused mainly by being struck by objects, handling equipment, squeezes,
cuts, slips, and falls. According to risk assessment, the injuries posing high-risk
consequences are being struck by an object, squeezes and cuts. During 2019, the
high consequence injuries were related to being struck by an object and squeezes.
The injuries were assessed, and reported to other sites to prevent similar accidents
from happening.
FIGURE 2.73
H1-FACTOR /LTIR
Region
Rogaland
Finnmark
Shetland
British Columbia
ASA
Ocean Quality
H1-factor/LTIR*
Absence rate
2016
2017
2018
2019
9
13
10
72
0
na
11
24
13
16
0
na
24
18
24
38
0
0
15
22
15
35
0
0
2016
3.42%
6.10%
2.67%
1.58%
0.30%
na
2017
3.17%
4.40%
3.15%
0.88%
1.00%
na
2018
4.65%
5.40%
2.25%
1.81%
0.12%
0.62%
*H1-factor/LTIR: number of lost-time injuries divided by the total number of hours
worked, multiplied by 1 000 000. Permanent and temporary employees are included in
our incident data. Information on contractors is not currently available. Absence rate
for OQ in 2016 and 2017 is not available due to incomplete information.
2019
3.54%
4.86%
3.38%
2.04%
0.25%
0.50%
149
Anti-corruption
Business integrity is essential to
become a preferred provider of
sustainably produced salmon.
OUR PRINCIPLES
RESULTS
We have zero tolerance for all forms of fraud, corruption,
facilitation payments, kickbacks, bribery and other misconduct.
IN V E S TIGATIONS
IN V E S TIGATIONS
In February 2019, the European Commission launched
In February 2019, the European Commission launched
an investigation to explore potential anti-competitive
an investigation to explore potential anti-competitive
behavior in the Norwegian salmon industry. Grieg
behavior in the Norwegian salmon industry. Grieg
Seafood is one of the companies under investigation.
Seafood is one of the companies under investigation.
Based on the EU investigation, US competition authori-
Based on the EU investigation, US competition authori-
ties launched their own investigation into the matter in
ties launched their own investigation into the matter in
November 2019. By the end of the year, four class-ac-
November 2019. By the end of the year, four class-ac-
tion lawsuits had been filed by minor customers in the
tion lawsuits had been filed by minor customers in the
USA and two in Canada. Grieg Seafood is not aware of
USA and two in Canada. Grieg Seafood is not aware of
any anti-competitive behavior within the Group; not in
any anti-competitive behavior within the Group; not in
Norway, the EU, the USA, or in Canada. We are fully
Norway, the EU, the USA, or in Canada. We are fully
collaborating with European and American authorities
collaborating with European and American authorities
in this matter and will follow up the lawsuits in the USA
in this matter and will follow up the lawsuits in the USA
and Canada accordingly.
and Canada accordingly.
15 0
ANNUAL REPORT 2019GRIEG SEAFOOD
RESULTS
PA R T 0 2 P E O P L E
A N T I - C O R R U P T I O N
HOW WE WORK TO IMPROVE
• Our Code of Conduct sets out a zero-tolerance policy with
•
In our Supplier Code of Conduct, we state our zero-tolerance
respect to anti-corruption, bribery, and money-laundering.
policy. We expect our supplier to adhere to the same princi-
ples and to never enter into agreements or understandings
• We continuously assess our own operations and those of our
with competitors, or engage in other conduct, that undermines
suppliers with regards to corruption risk, as part of our risk
competition.
management framework.
• Members of group and local management are encouraged
not to hold shares or accept board positions in companies
that Grieg Seafood has commercial relations or competes
with. All relations that may involve a conflict of interest must
be reported, to ensure that business decisions are made by
impartial staff members.
NON- COMPLI A NCE
CORRUP TION
In January 2018, Ocean Quality AS was suspected of exporting
We did not experience any confirmed incidents of corruption in
salmon with PD (Pancreas Disease) to China. The case was
2019. However, we did have two incidents where two employees
dropped in January 2020 after the Norwegian authorities con-
in OQ UK and two employees in OQ in Norway were asked to
cluded that Ocean Quality had done nothing wrong.
resign due to breach of internal Code of Conduct and policies.
We had no corruption incidents that resulted in the termination
or non-renewal of contracts with a business partner.
FIGURE 2.74
NON-COMPLI A NCE W ITH L AW S A ND REGUL ATIONS IN 2019
Area of non-compliance
Description
Fines (NOK)
Number of
non-monetary sanctions
Dispute resolution
mechanisms
Penalty of MNOK 1.4 from the Norwegian Directorate of
Fisheries related to incorrect positioning of pens at sea.
Fine of MNOK 2.5 related to the export of salmon silage
without appropriate certification. The incident took place
between 2010 and 2014.
3 904 510
N.a.
N.a.
0
0
0
0
0
Environmental
Social
Economic
None
None
None
151
ROOT ED IN
LOCAL
COMMUNITIES
Improving Relationships
We are grateful to our local communities for giving us permission
to farm salmon in their fjords and inlets. In return, we do not only
do what we can to ensure local biodiversity and sustainable farming
methods. We also contribute to vibrant local communities in the
many rural areas where we operate.
15 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 L O C A L C O M M U N I T I E S
I N T R O
15 3
Local value creation
We are grateful to our local communities for
giving us permission to farm salmon in their
fjords. We need their license to operate to
achieve sustainable growth.
OUR PRINCIPLES
We use local suppliers as often as we can.
We hire local apprentices and support aquaculture schools and
training facilities.
We engage in local environmental projects related to our fish
farming.
We support sports and cultural activities in our local communities.
We strive to achieve good relations and a good dialogue with our
local communities.
15 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 L O C A L C O M M U N I T I E S
L O C A L VA L U E C R E AT I O N
LICENSE TO OPERATE
RESPECT FOR INDIGENOUS RIGHTS
We regard the basis of our license to operate to be two-fold. First, it is
In British Columbia, Grieg Seafood is farming in areas that belong to
based on the public’s trust that we always work to reduce our environ-
Indigenous peoples, while Finnmark has been home to the Sami people
mental footprint and improve fish welfare. We report on our efforts
for millennia. We recognize that these groups have special rights, as
in these areas in the chapters Healthy Ocean and Sustainable Food.
acknowledged to them by the United Nations Declaration on the Rights
Secondly, it is based on our ability to give back to local communities.
This is primarily achieved by creating well-paying, full-time jobs in
of Indigenous Peoples (UNDRIP), and we take particular care to avoid
infringing on such rights.
rural areas, by paying local taxes, by using local suppliers of goods
British Columbia is in the middle of a reconciliation process with its
and services as often as possible, by hiring local apprentices, and by
more than 300 Indigenous peoples. In 2019, the province enshrined
supporting local sporting and cultural activities. Grieg Seafood aims
UNDRIP into law. Grieg Seafood supports the implementation of
to be open and honest with local communities about our production
UNDRIP in BC, and is, together with our First Nations partners, the
methods, our successes, and our remaining challenges. We view it as
province, and other businesses, on a journey to discover what the path
our responsibility to engage in constructive dialogue with all stakehol-
of reconciliation will look like.
ders and groups that are impacted by our activities.
In Finnmark, Grieg Seafood is also in a process to understand how we
can advance Indigenous culture where we farm salmon.
THE GRIEG FOUNDATION
Our largest shareholder, the Grieg Group, contributes to sustainable
development in a broader perspective. The Grieg Foundation indirectly
owns 13% of Grieg Seafood, and a part of the dividend paid to sharehol-
ders goes to charitable projects via the Grieg Foundation. Read more here:
https://griegfoundation.no/.
15 5
Grieg Seafood
Rogaland
157
employees
565 000 000NOK
purchase from local
suppliers in Rogaland
COMMUNITY STORIES
ORGANIZ ATIONS
We support organizations that engage in ocean-related activities,
such as the diving club Sletta Dykkerklubb. Amongst other things,
they collect litter and plastics from the ocean.
64%
of total purchase was from local suppliers
CULTUR AL E VENTS
We support cultural events for children and young people, so that
those who cannot afford it also have the chance to participate in
cultural activities. In Stavanger, for instance, we support Barnas
Mablis, a cultural event for children who are not on holiday during
the summer.
SPORTS CLUBS
We support sports clubs in all the municipalities where we have
farms. Our aim is to contribute to the health and social life of local
children and young people.
RIPPLE EFFECTS
In 2017, a ripple effect study was conducted on behalf of Grieg
Seafood Rogaland. It found that Grieg Seafood Rogaland has an
indirect employment effect of about 200 jobs in the private sector,
and 111 jobs in the public sector.
15 6
733 167NOK
donated to local cultural
and sports activities
1 500 000NOK
on local road and
telecom infrastructure projects
15 900 000NOK
support from the Norwegian Aquaculture Fund to
municipalities where we operate
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 L O C A L C O M M U N I T I E S
L O C A L VA L U E C R E AT I O N
Grieg Seafood
Finnmark
256
employees
COMMUNITY STORIES
MED AK TIV SOMMER
We support Med Aktiv Sommer in North Cape, an outdoor summer
holiday scheme for young people, where learning perseverance
is a key element.
BUL IN ALTA
We support BUL in Alta, a sports club for children and young
people. Our support allows the club to reduce fees for member-
ship and equipment.
“JEG FANT, JEG FANT” L ATHARI
We sponsored the artist workshop “Jeg fant, jeg fant” for chil-
dren and adults, where nature meets art. It takes place in the
nature reserve Lathari and focuses on nature, fairy tales, local
belonging, recycling and sustainability. In 2019, about 317 young
and old participated.
847 000 000NOK
purchase from local suppliers
in Troms and Finnmark
66%
of total purchase was
from local suppliers
2 463 000NOK
donated to local cultural
and sports activities
2 800 000NOK
fiber optic infrastructure project for telecom conne-
ction for two of our sites. Of this, approximately NOK
300 000 was spent to ensure connection to local
private homes and cabins.
122 000 000NOK
support from the Norwegian Aquaculture Fund to
municipalities where we operate
15 7
Grieg Seafood
British Columbia
COMMUNITY STORIES
FIELD OFFICE IN GOLD RIVER
In 2019, we opened a field office, which is staffed one day a week.
We established the office in recognition of the importance of this
community, where ourhatchery is located and where we use the
local government's dock to transport harvested fish. Members of
the public can come to the office to find out about job vacancies,
inquire about Grieg sponsorship of events, and arrange for farm
tours.
DONATIONS T O LOCAL FOOD BANK S
In November 2019, we donated 1 650 kilos of farmed salmon to
eight food banks in smaller BC communities where young families
and seniors living on pensions are unable to afford high-quality
protein.
NATIONAL CANADA DAY CELEBR ATIONS
Each July 1 in the community of Sayward, a team of Grieg volun-
teers prepares a salmon barbecue lunch for the community as
part of their national Canada Day celebrations. Residents of
Sayward and nearby towns participate in the parade and events
after enjoying a barbecue lunch.
15 8
171
employees
10%
of employees with an
Indigenous background
779 000 000NOK
purchase from local
suppliers in B.C.
83%
of total purchase was
from local suppliers
1 328 000NOK
donated to local cultural
and sports activities
2 525 000NOK
contributed to upgrading the Ehattesath Chinehkint
First Nation's dock in Zeballos BC, for the transport of
farmed fish
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 L O C A L C O M M U N I T I E S
L O C A L VA L U E C R E AT I O N
Grieg Seafood
Shetland
189
employees
COMMUNITY STORIES
THE SHETL AND FOLK FE STIVAL
The Shetland Folk Festival has been running for 40 years and
brings many international folk performers from all over the
world to Shetland. It also provides a stage for the superb local
folk musicians for which Shetland is famous. We have been a
sponsor for over ten years.
SPONSORING DANCE WORK SHOP
Last summer, we sponsored local third-year dance student Emily
Briggs from Scalloway to run a week-long dance workshop at her
local community center, the Scalloway Youth Centre Trust. The
class offered a chance for young people from the community to
explore the medium of dance for the first time.
THE FEBRUARY SHETL AND SWIM MEET
Together with H Williamson & Sons, we sponsored the February
Shetland Swim Meet run by Shetland Lerwick Amateur Swim-
ming Club.
670 000 000NOK
purchase from local
suppliers in Scotland
70%
of total purchase was
from local suppliers
234 000NOK
donated to local cultural
and sports activities
3 113 000NOK
or £24.75 per tonne harvested salmon contributed
in local tax to the Crown Estate
15 9
Finding the
path to shared
prosperity
Grieg Seafood BC and their
Indigenous partners are together
exploring what reconciliation means
for the salmon farming industry
going forward.
In 2019, the Government of British Columbia passed Bill 41, which
officially implemented into law in the province the United Nations
Declaration on the Rights of Indigenous Peoples (UNDRIP). British
Columbia will renew its relationship with Indigenous peoples,
based on the recognition of rights, respect, co-operation and
partnership.
Grieg Seafood BC supports the implementation of UNDRIP.
“It is important to us as a company to respectfully appreciate
the rich history, knowledge and rights of coastal Indigenous
peoples, while acknowledging that we operate our farms, hatch-
eries and offices on their traditional lands and waterways with
their permission,” says Rocky Boschman, Managing Director of
Grieg Seafood BC.
It sounds nice on paper, but how will it change Grieg Seafood’s
operations in practice? According to Boschman, the company
must go beyond engagement required by regulators.
“It means changing – changing how we communicate, how we
involve our Indigenous partners in our operations and, most
importantly, how we think and act as a company.”
The industry’s first Director of Reconciliation
OD Hansen was added as the Director of Reconciliation in Grieg
Seafood BC in February 2020. Hansen will connect with coastal
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 2 L O C A L C O M M U N I T I E S
C A S E S T O R Y
Indigenous communities then liaise with Grieg BC’s employees
to help the company move towards reconciliation.
This is the first role of its kind in the BC salmon farming industry,
one that works to shift workplace culture internally by working
with Indigenous communities externally.
“This position will be an educational tool so that everyone has
an appreciation of where they are and why they’re here,” says
Hansen. “We should appreciate that we are allowed to be here.
It’s important to have that appreciation because then we can
build relationships and partnerships that work for everyone,
as opposed to a process where you check off [the exercise of]
consultation and have no regard for the desires of the Indigenous
peoples.”
He says the onus is now on industry as well as government to
keep reconciliation going.
“We must show that we are serious about working with Indig-
enous communities, about listening to them, and following up.
Taking their advice and requests and doing something with it.”
New Partners – the Ehattasaht Chinehkint
On July 16, 2019 Grieg Seafood BC and the Ehattesaht Chinehkint
signed an impact benefit agreement at our Campbell River office.
In addition to financial contributions, Grieg will also provide
employment, training and business opportunities for members
of the Nation.
“We have had ongoing communications with the Ehattesaht
Chinehkint for nearly ten years.” says Marilyn Hutchinson, Direc-
tor of Indigenous & Community Relations. “Negotiations toward
an agreement can only begin after the trust has been developed
by face-to-face meetings over a period of time. It is important for
both partners that all interests are acknowledged in the agree-
ment and we were able to do this in a respectful way.”
Grieg BC’s farms that currently operate in Ehattesaht territory
are located in the Esperanza Inlet off the west coast of Vancou-
ver Island. These include Steamer Point, Hecate and Esperanza
farms.
This is Grieg BC’s third impact benefit agreement with a coastal
Nation. Twelve Grieg BC farms operate in agreement with three
Nations in whose territories the farms are located, and 10 per
cent of Grieg BC’s workforce includes Indigenous persons.
"We must show that we are
serious about working with
Indigenous communities,
about listening to them,
and following up."
OD H A NSEN
Director of Reconciliation, Grieg Seafood BC
From the signing ceremony between Grieg Seafood
BC and the Ehattesaht Chinehkint on July 19 2019
OD Hansen, Grieg Seafood BC’s new Director of
Reconciliation, in a floatplane on his way to a farm
161
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C O N T E N T
PA R T 0 3
OUR RESULTS
P R E S E N TAT I O N O F T H E B O A R D O F D I R EC T O R S
B O A R D O F D I R EC T O R S' R E P O R T
C O R P O R AT E G O V E R N A N C E
A N N UA L A C C O U N T S 2 019
Grieg Seafood Group
Grieg Seafood ASA
AU D I T O R ' S R E P O R T
AU D I T O R ' S S U S TA I N A B I L I T Y S TAT E M E N T
16 4 -167
16 8 -18 7
18 8 -2 0 7
2 0 8 - 312
208-285
286-312
313 - 317
318 - 319
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Presentation of the
Board of Directors
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
P R E S E N TAT I O N O F T H E B O A R D O F D I R E C T O R S
PER GRIEG JR (1957)
Chair of the Board (from 2009)
A SBJØRN REINK IND (1960)
Vice Chairman (from 2011)
FIELD OF EXPERTISE Business
development
BACKGROUND Per Grieg Jr. has been
actively involved in Grieg Seafood ASA
FIELD OF EXPERTISE Food industries
BACKGROUND Asbjørn Reinkind has
extensive experience from the food
industry and branded products, as well
K A RIN BING ORGL A ND (1959)
Board member, Member of the
Audit Committee (from 2013)
FIELD OF EXPERTISE Business finance
BACKGROUND Karin Bing Orgland has
acquired extensive experience over a
since its foundation in 1992, and has
as from aquaculture. Previous positions
long career in the financial sector and is
played a major role in building up the
include CEO of Denja, Toro, and Rieber
a professional board member. She has
Grieg Seafood Group. He has estab-
& Søn, as well as Hydro Seafood Group.
held different management positions
lished numerous companies within
He has also served as chair of Pieters
within DNB, including group executives
different business sectors and has held
Group, Seafarm Invest, and Sjøtroll
vice president corporate and personal
several directorships.
Havbruk, and as a member of the boards
banking.
EDUCATION
• MSc in Marine Systems Design from
the Norwegian University of Science
of several companies in the marine
sector, including Fiskeriforskning,
Domstein ASA and Pronova Biocare.
and Technology (NTNU)
• MBA in Finance and Management
EDUCATION
• MSc in Economics and Business
EDUCATION
MSc in Economics and Business Admin-
istration from the Norwegian School of
Economics (NHH)
from INSEAD
CURRENT POSITIONS
CEO at Grieg Aqua AS
Administration from the Norwegian
School of Economics (NHH)
CURRENT POSITIONS
• Chair of the Board at GIEK and Entur
• Advanced Management Programme
AS
at INSEAD, France
• Member of the Board and Chair of
• Management degree from IMD,
the Audit Committee at Storebrand
CITIZENSHIP Norwegian
Switzerland
ASA and KID ASA
NUMBER OF SHARES 31.12.2019
58 961 996 (52.80%), together with the
CURRENT POSITIONS
• Deputy Chair at Biomar Group
• Member of the Election Committee at
Orkla ASA and Arcus ASA
Grieg family
• Chair of the Board at Grilstad AS,
CITIZENSHIP Norwegian
Isbjørn IS AS and Nofitech Holding AS
• Board member at Holding Cage/
NUMBER OF SHARES 31.12.2019 0
Mørenot AS
CITIZENSHIP Norwegian
NUMBER OF SHARES 31.12.2019
120 000 (0.11%)
16 5
SOLVEIG M. R. NYGA ARD (1955)
Board member (from 2018)
TORE HOL A ND (196 4)
Board member (from 2018)
SIRINE FODSTA D (1970)
Board member (from 2019)
FIELD OF EXPERTISE Fish health
FIELD OF EXPERTISE Aquaculture
FIELD OF EXPERTISE Business
organization & transformation
BACKGROUND Solveig Nygaard has
been working with fish health for 35
BACKGROUND Tore Holand has 30 years
of experience from key positions in the
years and is a specialist in fish diseases.
aquaculture industry. Previous positions
BACKGROUND Fodstad has extensive
experience from the public and private
Nygaard has accumulated extensive
include CEO of Midt-Norsk Havbruk
sectors, with a focus on people issues
experience from a variety of fish health
and CFO of SinkaBerg-Hansen and
and the HR function. Norges Bank
projects and various companies, includ-
Arnøylaks. He has held numerous board
Investment Management, Norsk Hydro,
ing as CEO of FoMAS. Furthermore,
positions in salmon farming companies.
Deloitte and Centrica are amongst the
she has participated a program under
the auspices of the Research Council of
Norway.
EDUCATION
• Degree in veterinary medicine from
the Norwegian College of Veterinary
Medicine
companies she has worked at. She has
EDUCATION
Bachelor’s degree in fishery economics
designed and successfully implemented
large transformation programs in highly
and aquaculture from Bodø University
complex global corporations and govern-
College
ment departments.
CURRENT POSITIONS
• Chair of the Board at Emilsen Fisk
EDUCATION
BA in Economics/French and BBA in
• Degree in business administration
AS
Business Admin from Pacific Lutheran
from BI Norwegian Business School
• Chair of the Board at Eidsvaag AS
University WA, US
Stavanger
CURRENT POSITIONS
Independent adviser
CITIZENSHIP Norwegian
CITIZENSHIP Norwegian
CURRENT POSITIONS
CEO at Grieg Maturitas AS and Grieg
NUMBER OF SHARES 31.12.2019 0
Maturitas II AS
CITIZENSHIP Norwegian
NUMBER OF SHARES 31.12.2019 0
NUMBER OF SHARES 31.12.2019 0
None of the board members have share options.
For more details of the Board of Directors, please visit our website: https://www.griegseafood.no/grieg-seafood-asa/directors/
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167
Board of
Directors’ report
HIGHLIGHTS 2019
Earnings driven by highest ever harvested volume and contin-
Biological improvements in BC and Shetland, but still high
ued strong prices.
cost.
Harvested volume of 82 973 tonnes, up 11% compared to 2018
Smolt quality in Shetland improved, leading to increased
and according to target.
survival rate from 83% to 89% in Shetland.
EBIT per kg of NOK 13.11, compared to NOK 14.72 in 2018.
Smolt investments starting to pay off, as average smolt size
is increasing.
Dividend payout of NOK 4.00 per share due to good profitability
Ten sites ASC certified in Finnmark by the end of the year, and
during the year.
ASC certification process ongoing in BC.
High financial flexibility due to strong solidity and liquidity.
Awarded A rating by the Carbon Disclosure Project for actions
on climate change.
Strong biological performance in Norway resulting in lower
cost.
Launch of GSF 2025 strategy, targeting harvest volume in excess
of 150 000 tonnes, value chain repositioning and cost leadership.
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ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
B O A R D O F D I R E C T O R S ' R E P O R T
GRIEG SEAFOOD’S VISION AND AMBITIONS
The Grieg Seafood Group is one of the world's leading salmon farmers. The Group
has licenses for seawater farming and land-based smolt production in Finnmark and
Rogaland in Norway, British Columbia in Canada, and Shetland in the UK. In 2019, the
Group harvested a total of 82 973 tonnes of Atlantic salmon. Its entire output was sold
through the sales company Ocean Quality.
The Group was established in 1992 and has over the years grown to become a leading
industry player. The Group's vision "Rooted in Nature – farming the ocean for a better
future", represents how the Group intends to make a difference and what it aims to accom-
plish. It also encompasses the foundation for the Group's operational development – a
healthy ocean, sustainable food, profitable growth and innovation, good jobs for everyone,
and local value creation. Short-term, the Group aims to harvest 100 000 tonnes in 2020 at
a cost equal to or below the industry average, building a platform for sustainable growth
for the longer term. By 2025, the Company aims to harvest at least 150 000 tonnes and
drive competitiveness through cost leadership in each region. The Company also has an
ambition to evolve from a purely commodity supplier into an innovation partner, through
increased involvement downstream. Sustainable farming practices are the foundation
of the three focus areas towards 2025.
The Company’s long-term growth ambitions are built on a continued focus on post-smolt
initiatives, new licenses, new technologies, maximizing site utilization, and continuous
evaluations of potential merger and acquisition (M&A) opportunities. To achieve cost
leadership in each region, Grieg Seafood will maintain its rigorous focus on fish health
and welfare, and drive digitalization through continuous research and development and
the utilization of new cutting-edge technologies throughout its operations.
TA RGE T S A ND ACHIE V EMENT S
The scoreboard is an overview of a set of key performance indicators for the Group´s
five pillars, which is used to track developments according to the current 2020 strategy.
The increase in the survival rate in Shetland from 83% in 2018 to 89% in 2019 is a result
of measures taken to ensure healthier and more robust smolt, as well as continuous
improvement of the handling and treatment of the fish in sea.
The post-smolt strategy provides better control of the environment of the fish for a longer
period of time. It makes the fish more robust before being transferred to sea and reduces
exposure time to biological risks in sea. The total use of antibiotics, sea lice treatment and
hydrogen peroxide, measured as gram API per tonne net growth for the period, decreased
by 30% compared to 2018. Medicine is used to fight illness and subject to strict regula-
tions. Because sea lice are developing a resistance to medical treatments, the industry
is transitioning from medical to mechanical treatment. The use of wrasse to combat sea
lice has provided good results in Rogaland.
We regret to report two escape incidents in Shetland during the year, with a loss of 4 500
fish. Investigations were performed and procedures to avoid future escapes have been
implemented,
169
The Group targets to reduce carbon emissions per kilo by 30% in 2030. We are not satis-
fied with the increase of 12% in carbon emissions per kilo harvested from 2018 to 2019.
Grieg Seafood reports to the Carbon Disclosure Project (CDP). Even though fish has a low
carbon footprint, cutting more emissions from both own operations and the supply chain
is a challenge that the Grieg Seafood will continue to work on. The Board is proud that the
Company has been awarded the highest rating, A, by the CDP for its climate disclosures
and actions towards a low-carbon future.
The Group does not compromise on health and safety, and follows up accidents and
absence rates. We are below the target of 4.5% absence rate in all regions, except in
Finnmark which ended at 4.9% due to long-term sickness.
In the beginning of 2019, a Group communication manager was hired as part of the efforts
to improve dialogue with the stakeholders. During the year, we have actively engaged
with our stakeholders. Examples of the stakeholder dialogue can be found in Part 1 of
this Annual Report.
The Group aims for a cost at or below industry average in 2020, which was set at NOK
37.9 per kilo as part of the GSF 2020 strategy in 2017. The farming cost has increased
from NOK 39.7 in 2016 to NOK 43.5 in 2019. Rogaland and Finnmark have competitive
cost levels driven by good biological performance and successful post-smolt strategy.
In British Columbia and Shetland we have environmental challenges which still needs
to be solved. Operational measures implemented in British Columbia are promising. In
Shetland, unfortunately, it will take longer than expected to reach the cost target due to
low volume in addition to biological challenges.
Creating shareholder value is the prerequisite for growth and survival, and return on
capital employed (ROCE) is the Group´s ultimate performance target. Sustainability and
financial results are interdependent. The ROCE for 2019 was 19%, well above the target
of 12% per year.
OPERATIONAL REVIEW AND SEGMENTS
2019 was another strong year for Grieg Seafood, and was marked by good market condi-
tions and continuous improvement across all operations. This was achieved by main-
taining a strict focus on sustainability and driving forward improvements in farming
operations.
The global harvest volume of Atlantic salmon increased by 7.4% compared to 2018. The
main increase came from Norway, due to higher smolt stockings, and Scotland due to
improved production. Canada experienced a reduction in harvested volume. Consumption
also increased in most markets in 2019, with the highest increase in the EU and the USA.
Monthly average salmon spot prices varied from NOK 39.75 to NOK 77.07, with an annual
average of NOK 57.21 compared to NOK 59.22 last year. Contract prices were in general
somewhat higher than spot prices during the year. The Group´s contract share was 22%
in Norway and 24% in the UK. As a result of an efficient Ocean Quality sales organization,
the Group was able to achieve prices above spot, even with a high proportion of spot sales.
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ANNUAL REPORT 2019GRIEG SEAFOOD
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This helped us deliver our highest annual revenue ever.
Feed comprised 44% of the Group´s cost in 2019. Feed prices are sensitive to change in
currency rate, marine and vegetable raw material prices, seasonal variation, fish catches,
and production. Good access to feed raw materials and a strong NOK/USD exchange rate
contributed to stable feed prices throughout 2019.
Grieg Seafood harvested a total of 82 973 tonnes of fish in 2019, an 11% increase from
2018. This was slightly above expectations. Improved utilization of seawater licenses
through a larger and more stable biomass was the most important factor behind the
increase in production and harvested volume. Tools such as oxygen sensors and digitally
assisted feeding are a vital part of our strategy and growth initiatives. Better predic-
tion and industrial monitoring of both feeding and biological development ensure stable
growth in accordance with our plans.
Throughout 2019, operational performance varied between regions. While Finnmark
and Rogaland exceeded expectations, operations in BC and Shetland were impacted by
challenging biological conditions, which resulted in somewhat higher cost. Long-term
initiatives to address biological challenges in BC and Shetland continued to yield positive
results throughout the year, and in Shetland in particular biological improvements led
to higher survival rates.
2019 started with good production across all regions, due to favorable temperatures and
a good fish health situation, especially in Rogaland and Finnmark. We managed to avoid
previous challenges related to PD in Rogaland, and were not affected by the harmful algal
bloom in Norway during the spring. Taken together, the first two quarters showed a very
strong performance for the Group as a whole.
During the summer and early fall, production remained very strong in Rogaland, while
low sea temperatures negatively impacted growth in Finnmark. Challenges related to
algae and environmental conditions negatively impacted feeding and growth in BC, while
the UK faced challenging conditions related to gill health and sea lice pressure.
During the early winter, conditions improved across all regions and production was
strong. However, some challenges remained in the UK. We initiated a strategic assess-
ment of our operations on Skye in 2019, as the synergy between our farming areas on
Shetland and Skye are low. The evaluation has not yet been completed.
For the year as a whole, we were able to surpass our forecast harvested volume by almost
1 000 tonnes, with a total harvest of 82 973 tonnes.
Access to equipment and measures to address biological challenges in a timely and
effective manner has increased cost in recent years, and a proactive approach is therefore
required to minimize the consequences. Grieg Seafood’s objective is to ensure sustainable
growth in the years ahead by combining skilled and motivated people and new technology,
and to increasingly farm salmon on nature’s terms.
Smolt production was good during the year. The Group continues to follow its growth
strategy and transferred 25 million smolt to the sea during 2019, with an average weight
of 191 grams per smolt.
17 1
For 2020, Grieg Seafood has a long-standing ambition of reaching a harvested volume
of 100 000 tonnes, with cost equal to or below the industry average. At the start of 2020,
this volume target is well within reach.
ROGA L A ND
Rogaland harvested 25 217 tonnes in 2019. This was above expectations and 55% up on
2018. Sales revenues amounted to NOK 1 538.9 million, compared to NOK 959.6 million
in 2018. The higher revenue is mainly explained by higher harvested volumes, increased
average weight at harvest, and improved biological performance.
Price achievement was good compared to 2018, mainly due to improved quality and
increased average weight at harvest. This was partly offset by somewhat lower spot
prices in the second and the third quarters.
Biological performance was very good in 2019, with high production and utilization of the
maximum allowed biomass (MAB). The average survival rate for the year met our target
of 93% (calculated according to the GSI definition), up from 92% in 2018. The cost per kg
decreased compared to 2018, due to biological improvements.
EBIT before fair value adjustment of biological assets for the year totaled NOK 568.3
million, which corresponds to NOK 22.53 per kg. Comparable figures for 2018 were NOK
219.6 million and NOK 13.48 per kg, respectively.
In previous years, Grieg Seafood Rogaland has faced challenges with sea lice and
pancreas disease (PD), which have negatively impacted feed and growth rates, thus
increasing cost. As of mid-2019, none of the sites in Rogaland were affected by PD.
Grieg Seafood Rogaland aims to reduce the time fish are kept at sea from 18 to 12 months,
primarily by increasing average smolt size to 500 grams by 2020. While the average weight
of smolt transferred to the sea was 173 grams in 2018, this increased to 279 grams in
2019, with some individuals weighing up to 550 grams.
As part of Grieg Seafood’s digitalization efforts, a pilot integrated operations center is
monitoring all sites in Rogaland. Precision Farming will ensure more efficient feeding,
leading to reduced cost and improved growth going forward.
By focusing on its stated operational priorities, Grieg Seafood Rogaland has improved its
performance and maintains its forecast for 25 000 tonnes harvested in 2020.
FINNM A RK
Finnmark harvested 32 362 tonnes in 2019, an increase of 9% compared with 2018. The
average weight at harvest was 4.01 kg, and the superior share for the year was unchanged
at 86%. Earnings were somewhat impacted by lower spot prices in the second and third
quarters, in addition to lower average weights toward the end of the year due to MAB
harvesting. The majority of the harvested volume was skewed towards the second half
of 2019, which was somewhat unfavorable due to a fall in spot prices towards the end
of the year. Sales revenue for the year totaled NOK 1 815.3 million, compared to NOK
1 671.3 million in 2018.
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Production and biological performance were strong during the year, with a survival rate
of 96%, well above the target of 93%. The cost per kg increased sightly compared to 2018,
mainly due to early harvest of a few sites in the second and third quarters due to winter
ulcers, and mortalities with a slightly larger average size.
EBIT before fair value adjustments ended at NOK 580.2 million or NOK 17.93 per kg,
compared to NOK 594.9 million and NOK 19.98 per kg in 2018.
Grieg Seafood Finnmark is focused on continuing to improve fish welfare and survival
rates. Camera surveillance and sensor technology are used to continuously monitor the
environment and take appropriate actions. Biological conditions were favorable in 2019,
however medical treatments were performed during the year due to increasing sea lice
levels. Grieg Seafood Finnmark works towards sustainable production, and at the end
of 2019, ten out of 27 sites were ASC certified.
Grieg Seafood Finnmark was allocated a new location in the Hammerfest area at the
start of October 2019, and smolt were transferred to this location a month later. Acquiring
additional farming locations is a key component in improving the utilization of resources,
assets, and licenses in the region.
Production at the smolt facility in Adamselv and at Nordnorsk Smolt AS (50% share-
holding) is progressing as planned, which is important to increase access to larger,
high-quality smolt going forward. Grieg Seafood Finnmark expects to harvest 38 000
tonnes in 2020.
SHE TL A ND
Shetland harvested 11 273 tonnes in 2019, compared to 11 924 tonnes in 2018. Price
achievement was impacted by lower spot prices during the period, and total revenues
amounted to NOK 731.6 million, compared to NOK 799.9 million in 2018.
Despite biological challenges related to gill diseases, algae and plankton, combined
with high sea lice pressure, the quality of fish harvested throughout the year was high.
Average weight at harvest remained at 4.30 kg, with a superior share of 94% in both 2018
and 2019. Furthermore, the use of healthier and more robust smolt, combined with a
new vaccination strategy and continuous improvement in the handling and treatment of
fish during seawater production, resulted in a survival rate of 89%, up from 83% in 2018.
Loss of production combined with extensive efforts to mitigate biological challenges
impacted the cost per kg, which increased compared to 2018.
EBIT before fair value adjustment of biological assets for 2019 came to NOK -67.2 million
or NOK -5.96 per kg, compared to NOK 33.8 million and NOK 2.83 per kg, respectively, in
2018. As part of the accounting principle of recognizing abnormal mortality as a cost in
the income statement, a write-down of NOK 77.2 million was recognized during the year,
increasing cost by NOK 6.85 per kg.
Grieg Seafood Shetland cooperates with other sea farmers in the region to secure
sustainable marine biology. Production is concentrated at the best sites with the strongest
biological control, and routines and systems for monitoring and mitigating algae-related
17 3
issues have been implemented. Other measures to ensure strong biosecurity, improved
fish welfare, and control of the sea lice situation include the use of aeration systems,
sea lice skirts, and freshwater delousing treatments. The sea lice level remained high
during the year, and both medical and non-medical sea lice treatments were carried out.
Grieg Seafood Shetland has managed to improve smolt quality, which is essential for
good growth and reduced cost, and the survival rate for smolt transferred to the sea has
risen. On the basis of its focus on initiatives to improve biosecurity and fish welfare, Grieg
Seafood Shetland expects to harvest 17 000 tonnes in 2020.
BRITISH COLUMBI A
Grieg Seafood British Columbia (BC) harvested 14 120 tonnes in 2019, compared to
16 632 tonnes in 2018. The lower harvested volume was primarily due to cyclicality in site
utilization as a result of fallowing procedures in the region.
Price achievement per kg decreased compared to 2018, due to lower spot prices. However,
this was partly offset by higher average weights at harvest. The superior share for the
year ended at 86%, up from 84% in 2018. Sales revenues for 2019 ended at NOK 861.4
million, compared to NOK 1 075.3 million in 2018.
Biological conditions in 2019 were challenging, with algal blooms and plankton causing
acute low oxygen levels at times. Combined with high sea lice pressure, this had a nega-
tive impact on production and cost, which increased compared to 2018. Despite chal-
lenging conditions, the use of aeration systems enabled high feeding rates and improved
seawater production. The overall survival rate for the year was 88%, similar to 2018.
EBIT before fair value adjustment of biological assets came to NOK 73.3 million, which
corresponds to NOK 5.19 per kg, compared to NOK 290.9 million and NOK 17.49 per kg in
2018. As part of the accounting principle of recognizing abnormal mortality as a cost in
the income statement, a write-down of NOK 73.3 million was recognized during the year,
increasing cost by NOK 5.19 per kg.
Access to high-quality smolt is key to ensuring sustainable production growth. The expan-
sion of the Gold River smolt facility is proceeding as planned, and Grieg Seafood BC is
expected to increase its smolt capacity from 500 tonnes to 900 tonnes by the end of 2020.
Harmful Algal Blooms (HAB) represent a major biological risk in BC. Algae movements
and oxygen levels are therefore continuously monitored and analyzed using high-grade
sensor equipment and satellite imagery. In addition, aeration systems have been installed
to enable feeding during challenging situations. Investments in sea production equipment
will play an important role in maintaining good production levels and increasing survival
rates during challenging environmental conditions.
Grieg Seafood BC will continue its efforts within the areas of algae mitigation and digital
monitoring in order to increase the harvested volume and reduce cost. It expects to
harvest 20 000 tonnes in 2020.
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SA LE S – OCE A N QUA LIT Y
All Grieg Seafood’s salmon is sold through the sales company Ocean Quality (OQ). The
company also sells fish from Bremnes Fryseri AS, including fresh, processed, and frozen
salmon.
Ocean Quality handles marketing, sales, and distribution. Through sales companies in
Norway, the UK, Canada and the USA, Ocean Quality sells fish to Europe, Asia, the USA,
and Canada. Europe is the dominant market, representing 65% of total sales in 2019.
During its nine years of operation, Ocean Quality has established good customer relations
and is therefore able to return solid profits to the salmon producers. Ocean Quality sold
a total of 125 530 tonnes in 2019, compared to 114 720 tonnes in 2018.
Overall demand for Atlantic salmon remained strong in 2019 with demand for branded and
certified, high-quality products increasing. This included the Grieg Seafood brands; Skuna
Bay and Kvitsøy. By the end of 2019, Grieg Seafood had achieved ASC certification at ten of
its 27 sites in Finnmark, and is working to certify more sites in Finnmark and also in BC.
In January 2018, Ocean Quality AS was suspected of exporting salmon with pancreas
disease (PD) to China. The case was dismissed in January 2020 after the Norwegian
authorities concluded that Ocean Quality had done nothing wrong.
FINANCIAL PERFORMANCE
GROUP FIN A NCI A L S TATEMENT S
The consolidated financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS).
PROFIT A ND LOS S
Sales revenue and harvested volume
Grieg Seafood harvested a total of 82 973 tonnes in 2019, compared to 74 623 tonnes in
2018. The higher volume, combined with continued strong prices, generated revenues of
NOK 8 273.6 million, up from NOK 7 500.3 million in 2018. The higher harvested volume is
a result of Grieg Seafood’s overall growth strategy, and derives mainly from higher utiliza-
tion of current production capacity, in addition to improved biology and better fish health.
The global supply of Atlantic salmon has flattened out, while underlying demand has
strengthened. This resulted in a shortage of salmon and high prices, a situation that
is expected to persist. However, short-term price fluctuations may occur. To offset the
effects of possible fluctuations, Grieg Seafood has adopted a policy to ensure that some
20–50% of all production in the coming years is hedged at fixed prices. In 2019, the share
of fixed-price contracts was 22% in Norway and 24% the UK.
Farming cost
The total farming cost per kg for the Group came to NOK 43.54 in 2019, compared to NOK
43.10 the year before. This includes write-downs due to abnormal mortality of NOK 2.31
17 5
per kg, compared to 2.78 per kg in 2018.
Use of raw materials and consumables, which consist mainly of our biomass in freshwater
and seawater in addition to feed, ended at NOK 4 182.0 million, a cost increase of NOK
329.1 million compared to last year due to the increased harvest volume and a slightly
higher cost of fish harvested.
Salaries and personnel expenses for the year ended at NOK 610.8 million, an increase
of NOK 69.8 million compared to 2018. The increase was driven by 42 new employees,
in addition to more farming activities driven by the volume increase. Other operating
expenses ended at NOK 2 013.0 million, an increase of NOK 191.4 million compared to
2018, which is also related to the increase in production and harvested volume. Digi-
talization projects also generated an increased operating cost during the testing and
implementation phase. The group also had increased cost related to attorneys' fees in
connection to the investigation from European Commission and US competition authori-
ties. IFRS 16 affects other operating expenses positively by NOK 126.5 million, as opera-
tional leases are replaced by depreciation and interest on lease liabilities.
EBIT
Depreciation and amortization came to NOK 410.6 million in 2019, an increase of NOK
174.9 million compared to 2018. The main reason for the increase is the effect of IFRS 16,
which increased depreciation by NOK 120.7 million in 2019. The remaining depreciation
is related to the new smolt plant in Finnmark which was completed at the end of 2018.
Investment in new sites and production technology has also driven up depreciation.
EBIT for the Group before fair value adjustment of biological assets ended at NOK 1 087.6
million, compared to NOK 1 098.8 million in 2018.
EBIT per kg came to NOK 13.11, compared to NOK 14.72 per kg in 2018. EBIT per kg was
positively affected by the increased harvested volume and high spot prices. However,
biological challenges related to algae and environmental conditions in BC and Shetland
negatively impacted cost.
Fair value adjustment
Fair value adjustments of biological assets in 2019 were negative in the amount of NOK
220.7 million, and the EBIT after fair value adjustments came to NOK 866.9 million. In
2018, fair value adjustments of biological assets were positive in the amount of NOK 256.1
million, while EBIT after fair value adjustments totaled NOK 1 354.9 million. The nega-
tive changes in 2019 is mainly due to lower forward salmon prices in the global market
compared to the end of 2018. The relation between the time of harvest and fluctuations
in price also has a negative effect.
Financial items
Net financial items came to NOK -26.2 million, bringing profit before tax to NOK 840.6
million. In 2018, net financial items came to NOK -78.0 million, while profit before tax
totaled NOK 1 276.9 5 million. The decrease in financial items is due to positive effects in
currency gain compared to 2018.
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Taxes
Taxes for the year amounted to NOK 195.7 million, bringing the net profit for the period to
NOK 644.9 million. Taxes in 2018 amounted to NOK 279.8 million, while net profit ended
at NOK 997.1 million.
FIN A NCI A L P OSITION
The Group's recognized asset value as at 31 December 2019 was NOK 8 934.7 million,
compared to NOK 8 142.5 million at the end of 2018. Goodwill amounted to NOK 109.5
million, while the value of farming licenses was NOK 1 133.6 million.
The value of property, plant, and equipment including right of use assets totaled NOK
2 957.9 million. Investment in non-current tangible assets relates mainly to new farming
sites in Finnmark, totaling NOK 185 million, expansion of the Gold River hatchery in BC.
and the expansion of smolt capacity in Finnmark and Rogaland.
As at 31 December 2019, the Group’s equity amounted to NOK 4 140.8 million, compared
to NOK 3 883.5 million in 2018. The equity ratio at the end of the year was 46%, compared
to 48% the year before.
The Group's net interest-bearing liabilities totaled NOK 2 375.8 million at year-end 2019. This
figure includes factoring liabilities of NOK 86.1 million. In 2018, the comparable figure was
NOK 2 236.3 million, of which factoring amounted to NOK 573.4 million. During the year, the
Group has through Ocean Quality AS entered into a new factoring agreement, in which the
factoring company purchases all credit-insured trade receivables from Ocean Quality AS.
Net interest-bearing liabilities excluding factoring and IFRS 16 lease liabilities, as per
bank covenants, totaled NOK 1 938.7 million (NOK 1 689.5 million in 2018). The bank
syndicate consists of Nordea and DNB.
The Grieg Seafood Group’s loan agreements include two term loans of NOK 600.0 million
and EUR 60.0 million, respectively; a revolving credit facility of NOK 1 000.0 million,
which during the year was extended to NOK 1 300.0 million; and an overdraft facility of
NOK 100.0 million.
At the end of the year, NOK 769.0 million of the revolving credit facility and the overdraft
facility had been drawn down. NOK 98.3 million was repaid during the year.
Current loan agreements also allow the Group to utilize up to NOK 600 million for leasing.
The majority of the Group's new feed barges and operational equipment are leased. At
the end of 2019, operational lease liabilities (classification according to IAS 17) amounted
to NOK 379.8 million, while financial lease liabilities (classification according to IAS 17)
amounted to NOK 452.1 million.
According to the Group’s loan covenants, the equity ratio is calculated excluding Ocean
Quality, and was 51% at year-end 2019, compared to 53% at year-end 2018.
As at 31 December 2019, the Group had a good level of free liquidity and unutilized credit
facilities, with available cash and credit facilities of NOK 955 million.
17 7
CA SH FLOW
Net cash flow from operations ended at NOK 1 456.0 million in 2019, up from NOK 805.9
million in 2018. The increase is mainly related to changes in working capital due to
biomass transfers.
Net cash flow from investment activities amounted to NOK 381.5 million, compared to NOK
592.5 million in 2018. Investment in non-current assets and intangible assets amounted
to NOK 706.3 million, of which NOK 181.4 was financed by financial leasing and NOK 155.5
by operational leasing. Last year’s figure was NOK 733.0 million, of which NOK 169.2
million was financed by leasing. In line with its growth strategy, the Group has invested
substantially in smolt production, biosecurity, and digitalization.
Net cash flow from financing activities came to NOK -1 000.0 million, compared to NOK
-346.6 million in 2018. The change is due to the derecognition of financial assets (factoring
agreement) of NOK 487.3 million in 2019. As mentioned above, drawdowns on the credit
facility increased in 2019 due to the effect of IFRS 16 on operational lease. A dividend of
NOK 462.0 million, or NOK 4.00 per share, was paid in 2019. NOK 20.3 million of this was
paid by Ocean Quality to non-controlling interests.
Cash and cash equivalents increased by NOK 74.5 million during the year, and available
cash totaled NOK 214.5 million as at 31 December 2019.
GRIEG SEAFOOD ASA
PROFIT FOR THE Y E A R
The parent company’s financial statements are prepared in accordance with Norwegian
accounting principles (NGAAP).
The parent company recorded an operating loss of NOK 87.4 million in 2019, compared
to a loss of NOK 61.7 million in 2018. The increase in operating cost is due to legal fees
related to the EU investigation, share options, and cost associated with our Precision
Farming project.
The company has a syndicated loan provided 50/50 by DNB and Nordea. The financing
agreement includes two term loans of NOK 600.0 million and EUR 60.0 million, a revolving
credit facility of NOK 1 300.0 million, alongside overdraft facilities of NOK 100.0 million.
The agreement has a term of five years and matures on 28 February 2023. At the end
of the year, the company had a total revolver credit facility and overdraft facility of NOK
1 400.0 million, of which NOK 769.0 million was available for utilization.
Accrued dividends from Ocean Quality, in the amount of NOK 14.7 million (NOK 20.1
million in 2018), and Group contributions from subsidiaries in the amount of NOK 862.4
million (NOK 611.0 million in 2018), contributed to a positive financial result. Unrealized
gains/losses on foreign exchange relating to non-current loans from Group companies
amounted to NOK 29.8 million for the year, while net unrealized currency gains amounted
to NOK 29.0 million.
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ANNUAL REPORT 2019GRIEG SEAFOOD
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Interest expenses from external financing increased slightly in 2019. This is due to
increased funding compared to 2018. The Group was in compliance with its covenants
throughout the year, which had a positive effect on the interest margin. The equity ratio
at year-end was 46%, compared to 41% last year.
During the year, there were two dividend payments of NOK 2.00 per share. The total
payout for the year came to NOK 441.8 million, or NOK 4.00 per share. The last payment
was approved by the AGM (Annual General Meeting) on 13 June 2019.
The parent company´s net cash flow from operations in 2019 totaled NOK -159.9 million,
compared to NOK -146.9 million in 2018.
Cash flow from investing activities came to NOK 349.5 million (NOK 333.0 million in 2018).
The decrease is due to lower repayments of loans from Group companies compared to
2018.
Net cash flow from financing activities came to NOK -189.0 million, compared to NOK
-337.8 million in 2018. In 2019, dividends were paid, while loans to subsidiaries increased.
Cash and cash equivalents increased marginally during the year. As at 31 December 2019,
available cash totaled NOK 6.4 million.
FIN A NCI A L RE SULT S A ND A LLOCATIONS – GRIEG SE A FOOD A SA
The aim of the Group is to offer a competitive return on invested capital to its shareholders
through a combination of dividends and share price appreciation.
The Group’s dividend policy is that the dividend should, over time, average 30-40% of the
Group's net profit after tax before fair value adjustment of biological assets. At the same
time, the Group’s net interest-bearing debt per kg harvested salmon should remain at
NOK 20.
The Board has resolved to request an authorization provided by the Annual General
Meeting to pay dividend later in 2020.
The parent company, Grieg Seafood ASA, recorded a gain of NOK 667.0 million for 2019,
which the Board proposes the Annual General Meeting allocates as follows:
Additional dividend paid out, not accrued previous year
Transferred to other equity
NOK 220.9 million
NOK 446.1 million
GOING CONCERN
The market situation in the beginning of 2020 has been impacted by the COVID-19 pandemic.
Grieg Seafood's operations are currently running as normal. Although there has been a
shift in the market, the demand is still there, while marked prices have been impacted.
17 9
Read further in the "Outlook" section. The Group will follow the market situation closely,
and measures will be taken to ensure continued shareholder value.
The Board is of the opinion that the financial statements give a true and fair presentation
of the Group’s assets and liabilities, financial position, and financial results. Based on the
above presentation of the Group’s results and financial position, and in accordance with the
Norwegian Accounting Act, the Board confirms that the annual financial statements have been
prepared on a going concern basis, and that the requirements for so doing have been met.
RISK AND RISK MANAGEMENT
The Group is exposed to risks in numerous areas, such as biological production, the
effects of climate change, compliance risk, the risk of accidents, changes in salmon
prices, the risk of political trade barriers, etc. The current coronavirus outbreak poses a
material risk, affecting most of our operational areas, and is classified as a market risk.
The Group’s internal controls and risk exposure are subject to continuous monitoring and
improvement, and efforts to reduce risk in different areas have a high priority. Manage-
ment has established a framework for managing and eliminating most of the risks that
could prevent the Group from attaining its goals. For further information, see the corpo-
rate governance section in this Annual Report.
In the following, only some of Grieg Seafood´s risks will be discussed.
FIN A NCI A L RISK
The Group operates within an industry characterized by high volatility, which entails
greater financial risk. 2019 provided a good financial market for the aquaculture industry,
with good access to liquidity.
The Group renegotiated its syndicated bank loan agreement in 2018, which will secure the
working capital needed to achieve its growth targets. The agreement matures in 2023.
Financial and contractual hedging is a matter of constant consideration, in combination
with operational measures. Management draws up rolling liquidity forecasts, extending
over five years. These forecasts are based on conservative assumptions for salmon prices
and form the basis for calculating liquidity requirements. This forecast also forms the
basis for financing needs. At the end of 2019, the Group had NOK 955 million in available
liquidity. During the year, the Group increased the limit on its revolving credit facility by
NOK 300 million. The revolving credit is flexible, as it can be drawn upon within a month,
or for a longer period, depending on the Group´s need for liquidity.
Currency risk
In translating the operating income and balance sheet items of foreign subsidiaries,
the Group’s major currency exposure is to CAD and GBP. The strategy is to reduce the
currency risk by funding the businesses in their local currencies. All long-term loans from
the parent company to subsidiaries are in the local currency. Such loans are regarded as
a net investment, as they are not repayable to the parent company. The subsidiaries will
always require long-term funding. The currency effect of this net investment is included
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in the Group’s consolidated statement of other comprehensive income (OCI).
Income and currency risk have been transferred to the sales company, Ocean Quality.
The production companies sell in local currencies to the sales company, which hedges
its transactions against currency fluctuations related to CAD/USD, EUR/NOK, GBP/EUR,
and USD/NOK, and, if required, other currencies.
At year-end, contracts had been concluded up until the first quarter of 2021. Long-term
foreign currency contracts are hedging instruments, where unrealized currency gains
or losses are recognized through other comprehensive income (OCI) in the financial
statements. The currency situation is continuously assessed against the volatility of the
currencies. The remaining net exposure is frequently monitored.
Interest rate risk
The Group is exposed to interest rate risk through its borrowing activities, and to fluc-
tuating interest rate levels in connection with the financing of its activities in the various
regions. The Group's existing loans are at floating interest rates, but separate fixed-rate
contracts have been entered into to reduce interest rate risk. It is the Group´s policy to
have 20–50% of its interest-bearing debt hedged through interest rate swap agreements.
A given proportion shall be at floating rates, while consideration will be given to enter-
ing and exiting hedging contracts for the remainder. The interest rate swap agreement
changes with the three months NIBOR.
Liquidity risk
In line with the Group's growth strategy, to harvest 100 000 tonnes in 2020 and ensure
sustainable growth, interest-bearing liabilities have increased. The Group has invested
substantial amounts during the year and built up its biomass, as well as paid out a divi-
dend. This year’s refinancing has made the Group financially equipped to carry out further
investments in increased smolt stocking and new locations for sea production.
At year end, the Group had a good level of free liquidity. Ocean Quality in Norway and
the UK each have factoring agreements that cover the financing of outstanding receiv-
ables. The agreement for Ocean Quality UK means that any significant risk and control
of trade receivables remains with Ocean Quality UK. Ocean Quality AS entered into a new
factoring agreement in 2019. Under this agreement, the factoring company purchases
all credit-insured trade receivables from Ocean Quality AS. The factoring agreement
is a financial arrangement, as the factoring company does not assume any credit risk.
Management monitors the Group’s liquidity reserve, which comprises a loan facility, bank
deposits, and cash equivalents, based on expected cash flows. This is carried out at Group
level in collaboration with the operating companies. Management and the Board seek
to maintain a high equity ratio, to be well positioned to meet financial and operational
challenges. Considering the dynamic nature of the industry, the Group aims to maintain
funding flexibility.
OPER ATION A L RISK
The greatest operational risk relates to biological developments within the Group’s smolt
and aquaculture operations. The book value of live fish in the balance sheet at year-end
was NOK 3 438 million. To reduce this risk, the Group focuses on the production of Atlantic
salmon as its main product. Employee training and the establishment of good internal
18 1
routines to reduce operational risk is a priority.
The aquaculture industry has experienced major issues with sea lice and algae in recent
years. The Group collaborates actively with the authorities and other aquaculture players
to implement measures and initiate activities to reduce biological risk. One of the initia-
tives is joint fallowing and zoning. A digitalization process has been initiated across the
Group to facilitate operational improvements. Through the utilization of sensor technol-
ogy, the Group aims to reduce the algae challenges in BC and Shetland. The introduction
of sensor technology to monitor algal blooms enables the Group to determine at an early
stage the type of algae and the appropriate feeding response. This is of vital importance
as different types of algae have different effects on the salmon.
Salmon price developments are highly volatile, with major fluctuations within relatively
short time spans. However, there has been a stable rise in demand for salmon over
recent years, while the growth in supply has been limited. This development is expected
to continue going forward. Supply is also impacted by other factors, such as government
regulations, sea temperatures, sea lice, outbreaks of disease, and other indirect and
direct factors, which affect production and hence also supply.
CLIM ATE RISK
The climate plays an important role in Grieg Seafood’s operations. The Company recog-
nizes that climate change is likely to present a range of challenges to the aquaculture
industry. Without proactive adaptation, salmon farming may become more vulnerable
to physical risks such as damages caused by extreme weather, disease due to higher
seawater temperature, in addition to regulatory risk, technology risk, market risk and
reputational risk. However, climate change may also offer opportunities, including the
adoption of resource efficiencies and waste management initiatives.
Grieg Seafood is currently developing policies to ensure adequate management of climate
change, and its impact on the business. This includes the disclosure of climate-related
information based on Task Force on Climate-related Financial Disclosures (TCFD) recom-
mendations, which can be found in the Appendix to this Annual Report.
M A RK E T RISK
There are several issues that could affect the sale of salmon in 2020. After the outbreak
of the COVID-19 pandemic, authorities worldwide have implemented strict measures
to reduce and slow its spread. These measures are likely to impact global economic
activity, which might also affect global demand for salmon. Furthermore, Grieg Seafood
might experience disruptions to its supply chain upstream or downstream. Air traffic
restrictions may impact the aquaculture industry’s capacity to transport products to
end-markets globally, which may have different impacts on salmon prices in different
markets, and on Grieg Seafood’s operations in Norway, Shetland, and British Columbia.
The outcome of the UK’s departure from the European Union (Brexit) represents an uncer-
tainty for the Scottish salmon farming industry and for Norwegian exporters. Once the
Brexit transition period comes to an end, the salmon industry will experience operational
and economic changes in trade between the UK and the rest of the world. Approximately
68% of farmed Scottish salmon was destined for markets outside the UK in 2019. For
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ANNUAL REPORT 2019GRIEG SEAFOOD
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Grieg Seafood Shetland, 20% of the volume in 2019 went to other markets. Although the
Board believes the potential post-exit problems will be temporary, some challenges will
have to be resolved and adapted to.
CORPORATE AND SOCIAL RESPONSIBILITY
Sustainability underpins Grieg Seafood’s operations – it is our license to operate and our
motivation to perform. Sustainability is also core business, driving results and generating
value for all stakeholders. Grieg Seafood’s overarching goal is to sustainably produce
food in the ocean, expressed in the Company’s vision "Rooted in nature – farming the
ocean for a better future".
The vision demonstrates the commitment to corporate responsibility by operating prof-
itably and sustainably in a manner that conforms with fundamental ethical norms and
respect for the individual, the society and the environment.
This sustainability strategy is built on the five pillars: Healthy ocean, Sustainable food,
Profit & innovation, People and Local Communities. These pillars define our focus areas.
They are founded on external expectations, based on dialogues with stakeholders, and
the Company’s own goals and ambitions.
The Company’s reporting on corporate social responsibility is based on several stan-
dards, such as the Euronext guidance on ESG reporting, OECD guidelines for multinational
enterprises, the Global Reporting Initiative (GRI), the Global Salmon Initiative (GSI), Task
Force on Climate-related Financial Disclosures (TCFD) amongst other. Grieg Seafood is
also committed to the UN Global Compact as part of the Grieg Group, and has signed the
Sustainable Ocean Principles. Our sustainability strategy is described in Part 1, while
our activities and results are presented in Part 2 of this Annual Report.
RE SE A RCH A ND DE V ELOPMENT
– ACHIE V ING SUS TA IN A BLE GROW TH
Innovation and research in the areas of biology and technology are a prerequisite for
sustainable farming, maintaining healthy oceans, and farming profitability going forward.
Grieg Seafood continuously allocates resources for research and development. Through
active participation in national research projects and local tests and trial projects in the
various regions, the Group contributes to the industry’s advancement.
Active projects report on their progress throughout the year. The project plan is reviewed
annually, summarizing completed projects and prioritizing new ones. The Group's R&D
focus is on operational projects that contribute to short and long-term solutions to
biological and technical challenges, and improved operational efficiency. The projects
are numerous and span a wide area, ranging from fish health and fish welfare to effective
use of large units, feeding control, and the optimization of smolt production in large recir-
culation units. Please refer to Part 2 for an introduction to some of the collaborations.
18 3
EMPLOY EE S
To reach goals and to solve challenges, Grieg Seafood needs the best people, regardless
of gender or background. The majority of the Group’s employees, including managers,
are men. In total (including Ocean Quality), 861 people were employed in the Group at 31
December 2019, of whom 202 were women and 659 were men. The Group’s employment
policy facilitates the recruitment and retention of qualified employees of both genders.
A good working environment is key to attracting and retaining the best talent.
Human resources are managed locally in compliance with local rules and instructions,
and in accordance with the Group’s guidelines. We are working continuously to strengthen
global routines and guidelines for HR and HSE throughout the Group, and actively seek
to reduce sick leave and the number of HSE incidents. Our working environment is good.
The Company’s employee policy is described in detail under the “People” section in this
Annual Report.
Business integrity is essential for the Group, and we have no tolerance for fraud, corrup-
tions and other misconduct. In 2019, two employees in Ocean Quality UK were asked to
resign due to breach of our Code of Conduct.
To strengthen our corporate culture and encourage employee loyalty, Grieg Seafood
continues to give its employees the opportunity to become shareholders in the Company.
The Board wishes to thank all our employees for their dedication, efforts and contribu-
tions in 2019.
CORP OR ATE GOV ERN A NCE
Grieg Seafood ASA seeks to comply, where applicable, with the Norwegian Code of Prac-
tice for Corporate Governance, last revised on 17 October 2018. The Company’s corporate
governance policies and practices are disclosed in the "Corporate governance" section in
this Annual Report, and on the website www.griegseafood.com.
POST-BALANCE SHEET EVENTS
In January 2018, Ocean Quality AS was suspected of exporting salmon with pancreas
disease (PD) to China. The case was dismissed in January 2020 after the Norwegian
Authorities concluded that Ocean Quality had done nothing wrong.
14 January 2020, Grieg Seafood notified the Norwegian Food Safety Authority (FSA) of
the possibility of an outbreak of infectious salmon anemia (ISA) in fish at our Laholmen
site in Nordkapp. The suspicion was confirmed by the FSA on 23 January. The fish were
of harvestable size, and have now been harvested out in accordance with the procedures
and requirements set by the FSA.
In February 2020, Norway’s Ministry of Trade, Industry and Fisheries presented its
updated “traffic light” scheme, allowing a net national increase in the production of
18 4
ANNUAL REPORT 2019GRIEG SEAFOOD
PA R T 0 3 O U R R E S U LT S
B O A R D O F D I R E C T O R S ' R E P O R T
salmon and trout of approximately 23 000 tonnes per year. The classification of Grieg
Seafood Rogaland’s sites has been amended from yellow to green.
In February 2020, Grieg Seafood signed a Share Purchase Agreement (SPA) for the
acquisition of Grieg Newfoundland AS in Newfoundland, Canada. Grieg Seafood aims
to harvest at least 150 000 tonnes of Atlantic salmon by 2025. Growth will be achieved
through post-smolt investments, M&A activity, and organic growth. The acquisition of
Grieg Newfoundland AS is an important step towards realization of the 2025 strategy
because it includes exclusivity for salmon farming in Placentia Bay, which has a farmable
area bigger than the Faroe Islands. The project currently comprises licenses for 11 sea
sites, of which three have been approved, three are expected to be approved in 2020,
and the rest are in various stages of application. The project has a long-term annual
harvest potential of 30 000–45 000 tonnes of Atlantic salmon. The first phase targets an
annual harvested volume of 15 000 tonnes, to be reached by 2025, with the first harvest
in 2022/2023. The project includes a high-end Recirculating Aquaculture System (RAS)
facility, which is currently under construction. The freshwater RAS facility is planned to
include a hatchery, a smolt facility, and three post-smolt modules with a potential annual
capacity of 7 000 tonnes upon completion.
OUTLOOK
The market situation in the beginning of 2020 has been impacted by the COVID-19
pandemic, which is spreading rapidly globally. The escalation of both spread and
measurements taken is currently causing high uncertainties for producers and proces-
sors, as well as for end consumers.
M A RK E T
Although market demand remains, there has been a significant decrease in demand from
hotel, restaurants and catering (HoReCa) and increased demand from retail. Airfreight is
a challenge, but the transport of goods between countries on trucks remains relatively
good. With farming operations located in close proximity to both the European and the US
market, Grieg Seafood's dependence on cross-Atlantic distribution is limited.
PRODUCTION
Grieg Seafood's operations are currently running as normal, and the salmon is harvested
according to plan. As food producers, the industry is recognized as an essential func-
tion in Norway, Canada and the UK. The Governments want production to continue and
have signaled that they are willing to facilitate that where necessary. The Company is
maintaining a good dialogue with the authorities in Norway, the UK and Canada through
industry organizations, discussing possible arrangements to safeguard salmon farming
operations in various scenarios. On a broader scale, initiatives implemented by author-
ities to avoid contamination in the general population reduce the risk of supply chain
disturbances.
18 5
EMPLOY EE S
Grieg Seafood's priority is the wellbeing of its employees, their families and the local
communities where we operate, and the Company complies fully with the authorities'
recommendations in all locations. The Company has implemented measures to limit
contamination, with crises management teams operating in the head office and in each
region. The regions have conducted local risk assessments and implemented measures
accordingly, such as limiting contact between shifts, hygiene measures and home office
where possible. Companies in our supply chain have also implemented measures to avoid
contamination and keep operations running safely.
FIN A NCI A L P OSITION
Grieg Seafood has a solid financial position. The loan agreement includes two term loans
of NOK 600 million and EUR 60 million, with maturation in 2023. During the third quarter
of 2019, the revolving credit facility was increased by NOK 300 million, to NOK 1.3 billion.
The Company also has an overdraft facility of NOK 100 million. At 31 December 2019, the
cash and credit facilities totaled NOK 955 million. Net interest-bearing liabilities, excl.
factoring and IFRS 16, were NOK 1.9 billion. NIBD/EBITDA was 1.4 and the equity ratio
was 46%.
The Company´s dividend policy states that the average dividend should correspond to
30-40% of profit after tax, before fair value adjustment of biological assets. At the same
time, the net-interest bearing debt per kg harvested salmon should be NOK 20, with
possibilities to increase during period of growth investments. Dividends will be adjusted
to satisfy the targeted level of debt.
We might reassess or postpone some of the investments scheduled for 2020 to ensure
a solid financial position. However, we aim to continue with our 2020 and 2025 strategy,
including the integration of Grieg Newfoundland into our operations.
GUIDING 2020
For 2020, Grieg Seafood has guided on a total harvest of 100 000 tonnes GWT with cost at
or below industry average. The full medium- and long-term implications of the coronavi-
rus pandemic remain uncertain. However, based on the current situation, the Company
will harvest according to the Q1 guiding of 16 800 tonnes, and the Company's volume
target for 2020 remains in place.
18 6
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
B O A R D O F D I R E C T O R S ' R E P O R T
STATEMENT FROM THE BOARD OF DIRECTORS AND CEO
We hereby confirm that, to the best of our knowledge, the financial statements for the period from 1 January to 31 December 2019 have
been prepared in accordance with applicable accounting standards and give a true and fair view of the Group and of the Group’s assets,
liabilities, financial position, and overall results. We also confirm that the Board of Directors’ Report gives a true and fair view of the
development and performance of the business and the position of the Company and the Group, as well as a description of the principal
risks and uncertainties facing the Company and the Group.
Bergen, 8 April 2020
The Board of Directors of Grieg Seafood ASA
ASBJØRN REINKIND
Vice Chair
PER GRIEG JR.
Chair
KARIN BING ORGLAND
Board Member
SOLVEIG M.R. NYGAARD
Board Member
TORE HOLAND
Board Member
SIRINE FODSTAD
Board Member
ANDREAS KVAME
CEO
18 7
Corporate governance
18 8
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
With our vision of farming the ocean for a better future, Grieg
RISK S REL ATED TO CLIM ATE CH A NGE
Seafood demonstrates its commitment to corporate responsi-
One of the many factors that could materially and adversely
bility by operating profitably and sustainably in a manner that
affect our business and financial results, is the long-term
conforms with fundamental ethical norms and respect for the
effect of climate change on general economic conditions and
individual, society as a whole, and the environment. In pursuit
the salmon farming industry in particular, along with changes
of this vision while protecting our core values, we will face risks
in the supply of feed raw materials and requirements to cut
to our business strategy, operational risks, and risks associated
carbon emissions. More information on our risk management
with the protection of our employees, other assets, and reputa-
procedures, and risks related to climate change in particular,
tion. Because our risk management is clearly connected with a
is included in the Board of Directors report in Part 3 of this
multitude of stakeholder expectations, this approach includes
Annual Report.
maintaining a regular dialogue with our stakeholders, as they
are the basis for our license to operate. Transparency and dis-
closure are vital in building trust, and by engaging in a dialogue
COMPLI A NCE
with our stakeholders we are able to better understand the role
As salmon farming is a highly regulated industry, we are subject
we play in local communities and in society as a whole.
to strict standards for fish welfare, environmental impact, food
GOV ERN A NCE S TRUCTURE
production and production equipment. We must also comply with
operational requirements related to the use of medicines and
chemicals, biomass levels, sea lice levels, density and water
Grieg Seafood believes that strong corporate governance is an
quality, etc. We report regularly to authorities, for instance, on
essential element in achieving our overall objectives and acting
biomass levels, sea lice levels, disease outbreaks and mortal-
as a responsible organization. The Board of Directors is commit-
ity for salmon and cleaner fish. We are also subject to regular
ted to sound corporate governance, and our governance struc-
inspections and audited from local, national and international
ture helps enable the Board to fulfill its fiduciary duties to our
stakeholder groups and authorities. For more information of our
shareholders and helps ensure our long-term success. The Board
ASC certificates, see www.griegseafood.com.
exercises oversight of strategic, operational and financial matters,
including the elements and dimensions of our major risks. The
Audit Committee, which consists of two members of the Board of
CODE OF CONDUCT A ND BUSINE S S BEH AV IOR
Directors, has been given a particular responsibility to monitor
Our Values and Code of Conduct underpin the way we conduct
critical business risks and address the quality and effectiveness
ourselves and our approach to corporate social responsibility.
of relevant risk-reducing measures. The Audit Committee reviews
Our Code of Conduct sets out the ethical principles and standards
our policies at least annually and assesses our risk management
that must be upheld by each and every employee, and any agent
quarterly. As our group management team, consisting of 11 senior
that acts on our behalf, including our Board of Directors. Through
executives, represents all aspects of our farming operations, we
our Supplier Code of Conduct, we demonstrate that we expect
have not set up a committee to deal specifically with economic,
no less from our value chain. As part of our risk management,
environmental and social issues. The Board of Directors holds the
we continuously assess all our operations for risks related to
group management team accountable for following its strategies,
corruption. Corruption is not considered a significant risk and we
maintaining a high standard of ethical and responsible business
have controls in place to minimize exposure to it.
conduct, taking care of our employees and safeguarding human
rights, and for assessing risks related climate change and the
Grieg Seafood refrains from anti-competitive behavior, anti-trust
environment. The group management team convenes quarterly.
and monopolistic practices, as this can severely affect consumer
We have a dedicated, cross-functional Sustainability Team, led by
choice, pricing and other factors that are essential to efficient
the Chief Sustainability Officer, consisting of members of the group
salmon markets. For more information, see the People section
management team and employees with particular functional
in this Annual Report.
responsibilities. Day-to-day implementation and assessment
are, however, a line management responsibility. This means that
corporate social responsibility is an integral component of all our
operations, for all management teams, units, and departments.
18 9
Principles of
Corporate Governance
Adopted by the Company’s Board of Directors
on 20 April 2007 and updated on 8 April 2020.
FIGURE 3.1
GRIEG SE A FOOD´S COMPLI A NCE W ITH THE NOR W EGI A N CODE OF PR ACTICE FOR CORP OR ATE GOV ERN A NCE
Section of the Norwegian Code of Practice for Corporate Governance
Deviation from the Code of Practice
1.
Statement of corporate governance
2.
Activities
3.
Share capital and dividends
4.
Equal treatment of shareholders and transactions with related parties
5. Negotiablility
6.
General Meeting
7. Nomination Committee
8.
Corporate Assembly and Board of Directors - composition and independence
9. Work of the Board of Directors
10. Risk management and internal control
11. Directors' fees
12. Remuneration of executive personnel
13.
Information and communication
14. Company takeover
15. Auditor
19 0
No deviation
No deviation
No deviation
No deviation
No deviation
Two deviations, see the text below
Two deviations, see the text below
No deviation
No deviation
No deviation
No deviation
No deviation
No deviation
No deviation
No deviation
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
1. IMPLEMENTATION AND REPORTING
ON CORPORATE GOVERNANCE
PRE SENTATION OF CORP OR ATE GOV ERN A NCE
Responsibility for ensuring that the Company has good corporate governance rests
with the Board of Directors. The Board and management annually review Grieg Seafood
Group’s principles and code of practice for corporate governance.
The Company abides by the Norwegian Code of Practice for Corporate Governance as
recommended by the Norwegian Corporate Governance Board (NUES) on 17 October 2018.
The Grieg Seafood Group follows NUES’s latest recommendations and has updated its
existing rules and defined values in accordance with changes to the Norwegian Code of
Practice published in 2014.
The Company has adopted the “follow or explain principle” with respect to the Code’s
application. This means that the Company provides an explanation whenever it deviates
from the Code.
This Annual Report offers a full account of the Company's principles for corporate gover-
nance and it is also available on www.griegseafood.com.
Deviations from the Norwegian Code of Practice: None
2. BUSINESS
GRIEG SE A FOOD A SA
The Company's business is defined in Article 3 of its Articles of Association:
“The object of the company is to engage in the production and sale of seafood and in
naturally related activities, including investment in companies engaged in the production
and sale of seafood and in other naturally related activities”.
The Company is established and registered in Norway and is required to comply with
Norwegian law, including laws and regulations pertaining to companies and securities.
GRIEG SE A FOOD A SA’S V ISION A ND OV ER A LL OBJECTI V E S
Grieg Seafood’s vision is “Rooted in nature - farming the ocean for a better future”,
creating long-term value for shareholders and other stakeholders through sustainable
and cost-efficient growth. Operationally, Grieg Seafood strives to find the right balance
between environmental, social and economic impacts. Through our five pillars, Grieg
Seafood is committed to creating sustainable and long-term value. Sustainability is core
to the industry and strongly impacts our financial performance. Our strategy for 2020
– 2025 is rooted in its desire for sustainable salmon farming. Focus areas are global
growth, cost leadership and value chain repositioning.
19 1
The Board of Directors has established objectives, strategies, and risk profiles for the
Company’s defined business scope, in order to create value for its shareholders. The
Board has an annual plan for its endeavors and follows a five-year cycle in its strategy
work. This includes a review of risk areas and internal controls, as well as approving the
strategy, objectives and risks relating to sustainable development.
The Company aims to comply with all relevant laws and regulations, and with the Norwe-
gian Code of Practice for Corporate Governance. This also applies to all companies
controlled by the Group. In as far as it goes, this statement of principle therefore applies
to all companies within the Group. The Company has its own Code of Conduct, which all
employees and contract workers must abide by.
M A N AGEMENT OF THE GROUP
Control and management of the Group is divided between the shareholders, represented
by the General Meeting, the Board of Directors, and the Group CEO, and is exercised in
accordance with prevailing company legislation.
Deviations from the Norwegian Code of Practice: None
3. EQUITY AND DIVIDENDS
EQUIT Y
At any given time, the Group shall have a level of equity and a capital structure that are
appropriate to the Group’s cyclical activities. The Board requires that, as a minimum,
equity consistently complies with current loan covenants.
As at 31 December 2019, the Company's consolidated equity was NOK 4 141 million,
equivalent to 46% of total assets, and a debt-to-equity ratio of 1.16. The Board of Directors
considers the current capital structure to be satisfactory in relation to the Company’s
objectives, strategy, and risk profile.
DI V IDEND
The Group’s objective is to give shareholders a competitive return on invested capital
through dividend payments and appreciation in the value of the share, at a level at least
equivalent to other companies with comparable risk.
Any future dividend will depend on the Group’s future earnings, financial situation, and
cash flow. The Board believes that the dividend paid should develop in line with the
Group’s profit growth, while at the same time ensuring that equity remains at a healthy
and optimal level. In addition, the Board must ensure that there are adequate financial
resources to prepare the way for future growth and investment, and meet its desire to
minimize capital cost.
19 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
The Board of Directors at Grieg Seafood has adopted a dividend policy whereby the
average dividend, over a period of several years, should correspond to 30 – 40% of profit
after tax before fair value adjustment of biological assets.
Furthermore, a net interest-bearing debt per harvested kg of NOK 20 is considered
reasonable. Based on this, the size of the dividend could be corrected both up and down
to stay within the margin as per above.
During the year, the Company has paid out a dividend of NOK 4.00 per share. This corre-
sponds to a pay-out ratio of 55% of net profit after tax, adjusted for fair value adjustments
with respect to the previous year’s accounts.
BOA RD AUTHORIZ ATION
The Board can request the AGM to grant a general mandate to pay out dividends in the
period until the next AGM. An explanation must be given for the Board´s proposal. The
dividend will be based on the Group's current policy. Dividends should be paid on the
basis of the last financial statements approved within the scope of the Norwegian Public
Limited Companies Act. Upon authorization being granted, the Board determines from
which date the shares are to be traded ex-dividend.
The Board has a general authorization to increase the Company’s share capital through
share subscription for a total amount not exceeding NOK 44 664 800, divided into not
more than 11 166 200 shares at the nominal value of NOK 4.00 each. The authorization
covers merger decisions as provided for in Section 13-5 of the Norwegian Public Limited
Companies Act. The Board is entitled to increase the share capital on several occasions
and to itself determine the amount of the share capital increase in each case.
As at 31 December 2019, no shares have been issued pursuant to this authorization.
This authorization remains in effect until 30 June 2020.
The Board has a general authorization to acquire the Company’s own (treasury) shares
in accordance with the provisions of Chapter 9 of the Norwegian Public Limited Compa-
nies Act for an aggregate nominal amount not exceeding NOK 44 664 800. The Company
shall pay not less than NOK 4.00 per share and not more than NOK 180.00 per share
when acquiring treasury shares. As at 31 December 2019, no shares have been acquired
pursuant to this authorization.
This authorization remains in effect until the next AGM, but not later than 30 June 2020.
The Company will observe the Norwegian Code of Practice in respect of new proposals
to authorize the Board to implement capital increases and acquire the Company’s own
shares.
Deviations from the Norwegian Code of Practice: None
19 3
4. EQUAL TREATMENT OF SHAREHOLDERS AND
TRANSACTIONS WITH RELATED PARTIES
SH A RE CL A S S
The Company has one class of shares, and all shares carry the same rights. As at 31
December 2019, the Company had 111 662 000 outstanding shares, including treasury
shares.
TRE A SURY SH A RE S
If the Company trades in its own (treasury) shares, the Norwegian Code of Practice’s
provisions relating to the equal treatment of shareholders and transactions with close
associates shall be observed.
As at 31 December 2019, the Company held 1 213 687 treasury shares.
A PPROVA L OF AGREEMENT S W ITH SH A REHOLDER S A ND OTHER
REL ATED PA RTIE S
All non-immaterial transactions between the Company and a shareholder, board member,
or a senior employee or their related parties, shall be subject to a valuation by an inde-
pendent third party. If the consideration exceeds one-twentieth of the Company’s share
capital, transactions of this kind shall be approved by a General Meeting of Shareholders,
in so far as this is required under Section 3-8 of the Norwegian Public Limited Companies
Act.
There were no transactions with related parties in 2019 pursuant to the requirement
above. For further details see Notes 14, 17, and 22 to the Group Accounts in this Annual
Report.
CA PITA L INCRE A SE S
Should shareholders’ preferential subscription right be waived, the Norwegian Code of
Practice shall be observed. There were no capital increases in 2019.
Deviations from the Norwegian Code of Practice: None
5. SHARES AND NEGOTIABILITY
There are no limitations with regards to owning, trading, or voting for the Company’s
shares. All shares are freely negotiable to all parties.
Deviations from the Norwegian Code of Practice: None
194
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
6. GENERAL MEETINGS
The Company’s highest decision-making body is the General Meeting of shareholders.
With respect to the timing and facilitation of General Meetings, the Board of Directors
will do its best to ensure that as many shareholders as possible may attend and exercise
their rights, thereby making the General Meeting an effective forum for the views of
shareholders and the Board of Directors.
The Company’s Annual General Meeting (AGM) shall be held each year before the end of
June. The AGM shall consider and, if thought fit, adopt the annual financial statements,
the annual report, and the proposed dividend, as well as deciding on other matters which
under current laws and regulations pertain to the AGM.
The Board may convene an Extraordinary General Meeting (EGM) at whatever time it
deems necessary or when such a meeting is required under current laws or regulations.
The Company’s auditor and any shareholder or group of shareholders representing more
than 5% of the Company’s share capital may require the Board to convene an EGM.
The Board must give at least 21 days’ notice that a General Meeting is to be held. During
this period, the notice and documents pertaining to matters to be considered at the
General Meeting shall be accessible on the Company’s website. The same applies to
the Nomination Committee’s recommendations. When documents are made available
in this manner, the statutory requirements for distribution to shareholders do not apply.
Nevertheless, a shareholder may ask to be sent physical documents concerning matters
to be considered at the General Meeting.
The deadline to register for attendance at the General Meeting is set by the Board in the
notice, normally five days prior to the meeting’s scheduled date.
Shareholders can vote on each individual matter, including on each individual candidate
nominated for election. Shareholders unable to attend may vote by proxy. An authoriza-
tion form containing a vote option for each agenda item will be enclosed with the notice
of meeting. Shareholders may also authorize the Board’s chair or the Group CEO to vote
on their behalf.
The Company will publish the minutes of General Meetings in accordance with the stock
exchange regulations, in addition to making them available for inspection at the Compa-
ny’s registered offices.
The Board’s chair, a member of the Nomination Committee and the Group CEO will be
represented at the General Meeting. The Board’s chair will normally chair the General
Meeting. The Board of Directors will ensure that, if it so requests, the General Meeting
also is able to appoint an independent chair.
The Board shall not contact the Company’s shareholders outside the General Meeting in
a manner which could be deemed to constitute preferential treatment or which could be
in conflict with current laws or regulations.
19 5
The Nomination Committee proposes candidates for election to the Board by the AGM.
In 2019, Grieg Seafood Group held its AGM on 13 June.
Deviations from the Norwegian Code of Practice:
GSF Group deviates from the code of practice in two ways.
1.
The AGM is not led by an independent chair, but by the Board’s chair. This is in accor-
dance with its Articles of Association. Given the matters considered by the AGM, an
independent chair has not been considered necessary. In cases that involve related
parties, the AGM is chaired by an independent board member.
2. Not all members of the Board or the Nomination Committee attend the AGM. The
Board of Directors considers it sufficient that the Board’s chair and the chair of the
Audit Committee, are present. Other board members and members of the Nomina-
tion Committee attend as needed.
7. NOMINATION COMMITTEE
On 13 February 2009, the AGM approved a resolution to establish a Nomination Commit-
tee. This is described in Article 8 of the Articles of Association. At the same time, the AGM
adopted instructions for the Nomination Committee. According to these instructions,
the Nomination Committee should safeguard the interests currently embodied in the
Norwegian Code of Practice for Corporate Governance.
The present Nomination Committee was elected at the AGM on 13 June 2019.
Nomination Committee
Elisabeth Grieg
Yngve Myhre
Helge Nielsen
Role
Chair
Member
Member
Considered independent
Served since
Term expires
No
Yes
No
12.06.2018
07.06.2017
18.06.2012
AGM 2020
AGM 2021
AGM 2021
The members of the nomination committee are elected for two years. At least 2/3 of
the members of the Nomination Committee shall be independent of the Board and may
not be members of the Board. The Group CEO cannot be a member of the Nomination
Committee. The Nomination Committee shall have meetings with the directors, Group
CEO, and relevant shareholders.
Details about the Nomination Committee members are available on the Company´s
website.
The Nomination Committee´s recommendation to the AGM should be submitted well
ahead of time and accompany the notice of the AGM, no later than 21 days before the
meeting. The Nomination Committee’s recommendations must include information about
196
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
the candidate´s impartiality, competence, age, education, and professional experience.
Upon proposal for re-election, the recommendation should include additional informa-
tion about how long the candidate has been a board member, as well as details about
attendance at board meetings.
All shareholders are entitled to submit proposals to the Nomination Committee for candi-
dates to the Board of Directors and other appointments. Proposals must be submitted
to the Nomination Committee no later than two months prior to the AGM. Information on
how to propose candidates can be found on the Company’s website.
When the recommendation comprises candidates for the Nomination Committee itself,
it should include relevant information about these candidates.
Deviations from the Norwegian Code of Practice:
GSF Group deviates from the Norwegian Code of Practice in two ways.
1.
The Code of Practice recommends that all shareholders should be able to submit
proposals to the Nomination Committee for candidates to the Board of Directors and
other appointments in a simple and easy manner. Today, shareholders must contact
the Nomination Committee directly. The Company will observe the Norwegian Code
of Practice in respect of new proposals to facilitate that all shareholders can propose
candidates to the Board and Nomination Committee.
2.
The majority of Nomination Committee’s members are not independent of the Board.
8. BOARD OF DIRECTORS:
COMPOSITION AND INDEPENDENCE
NUMBER OF BOA RD MEMBER S
Pursuant to Article 6 of its Articles of Association, the Company’s Board of Directors
comprises up to seven members elected by the General Meeting.
The Board’s chair is elected by board members. In the event of a tied vote, the Board’s
chair has the casting vote. The CEO is appointed by the Board and has both a right and a
duty to attend board meetings. The CEO is only entitled to vote on board decisions if he
or she is an elected member of the Board.
ELECTION PERIOD
All board members are elected by the AGM for a period of two years. Board members
may be re-elected.
19 7
Name
Per Grieg jr.
Role
Chair
Asbjørn Reinkind
Vice chair
Karin Bing Orgland
Board member
Tore Holand
Board member
Solveig M.R. Nygaard Board member
Sirine Fodstad
Board member
*Per Grieg jr. and indirectly via the Grieg Group.
INDEPENDENT BOA RD MEMBER S
As at 31 December 2019, the Board of Directors consisted of the following members:
Considered
independent
Served since
Term expires
2019 Meeting
attendance
% of shares in GSF
per 31.12.2019
No
Yes
Yes
Yes
Yes
No
20.05.2009
27.05.2011
12.06.2013
12.06.2018
12.06.2018
13.06.2019
AGM 2021
AGM 2021
AGM 2021
AGM 2020
AGM 2020
AGM 2021
100 %
100 %
100 %
100 %
100 %
100 %
52.80%*
0.11%
0.0%
0.0%
0.0%
0.0%
The Company's annual report and the website provide information on board members’
background and expertise. An overview of board members’ shareholdings in the Company
appears in Note 17 to the Group Accounts in this Annual Report.
Deviations from the Norwegian Code of Practice: None.
9. THE WORK OF THE BOARD OF DIRECTORS
DUTIE S A ND A NNUA L PL A N
The Norwegian Public Limited Liability Companies Act regulates the duties and workings
of the Board of Directors. In addition, the Board of Directors has adopted supplementary
rules of procedure covering the duties of the Board of Directors and the chief execu-
tive officer (CEO), the division of labor between the Board and the CEO, the annual plan
for the Board of Directors, notices of board proceedings, administrative procedures,
minutes, board committees, transactions between the Company and the shareholders,
and confidentiality.
The Board has overall responsibility for the Group and for overseeing its day-to-day
management and business activities. The Company shall be managed by an effective
Board of Directors (the Board) which is jointly responsible for the success of the Company.
The Board represents and is accountable to the Company’s shareholders.
The Board’s duties include drawing up the Group’s strategy and ensuring that the adopted
strategy is implemented, effective supervision of the Group CEO, control and supervision
of the Group’s financial situation, internal control, anti-corruption, and the Company’s
responsibility to and communication with the shareholders. The Board shall initiate any
investigations it considers necessary to perform its duties. The Board shall also initiate
such investigations requested by one or more board members.
To ensure all matters are given unbiased and satisfactory consideration, members of the
Board and executive management cannot consider matters in which they have a special
and prominent interest. The Board of Directors jointly assess each board member´s
impartiality with respect to matters under consideration.
19 8
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
INS TRUCTIONS
The Board has drawn up a set of instructions for its members and executive management,
which contain a more detailed description of the Board’s duties, meetings, the Group
CEO’s duties in relation to the Board, the meeting schedule for the Board, participation,
separate entries in the minutes and duty of confidentiality.
The Board and the Group CEO have separate roles, and there is a clear division of respon-
sibility between the two. The Group CEO is responsible for the Company’s group manage-
ment team. The Board underlines that special care must be exercised in matters relating
to financial reporting and the remuneration of the group management team.
In matters of importance where the Board’s chair is or has been actively involved, the
Board’s discussions shall be chaired by the vice chair.
Board members and the group management team shall inform the Board if they have any
significant interest in a transaction to which the Company is a party. For further informa-
tion, please refer to Note 22 in the Group Accounts in this Annual Report.
The Instructions for the Board and management were last revised by the Board on 20
September 2017.
A NNUA L A S SE S SMENT
Each year, the Board shall carry out an assessment of its work in the previous year. The
assessment is based on the results of a questionnaire completed anonymously by each
member of the Board and the group management team.
AUDIT COMMIT TEE
The Board has set up a sub-committee (Audit Committee) comprising a minimum of two
and a maximum of three members elected from among the Board’s members, and has
drawn up a mandate for its work.
The committee assists the Board in the work of exercising its supervisory responsibil-
ity by monitoring and controlling the financial reporting process, systems for internal
control and financial risk management, external audits, and procedures for ensuring
that the Company complies with laws and statutory provisions, and with the Company’s
own guidelines.
As at 31 December 2019, the Audit Committee consisted of:
Board´s Audit Committee
Karin Bing Orgland
Tore Holand
Role
Chair
Member
Considered independent
Yes
Yes
19 9
REMUNER ATION COMMIT TEE
The Remuneration Committee is governed by a separate set of instructions adopted by
the Board of Directors. The members of the Remuneration Committee are appointed
by and from among the members of the Board of Directors and shall be independent
of the Company's executive management. As at 31 December 2019, the Remuneration
Committee consisted of:
Board's Compensation Committee
Role
Considered independent
Per Grieg jr
Asbjørn Reinkind
Sirine Fodstad
Chair
Member
Member
No
Yes
No
The primary purpose of the Remuneration Committee is to assist and facilitate the
Board’s decision-making in matters related to the remuneration of the group manage-
ment team, review recruitment policies, career planning and management development
plans, and prepare matters relating to other material employment issues with respect
to executive management.
The committee shall hold discussions with the Group CEO concerning his/her finan-
cial terms of employment. The committee shall submit a recommendation to the Board
concerning all matters relating to the Group CEO’s financial terms of employment.
The committee shall also keep itself updated on and propose guidelines for the determi-
nation of remuneration to group management team. The committee is also the advisory
body for the Group CEO in relation to remuneration schemes which cover all employees
to a significant extent, including the Group’s bonus system and pension scheme. Matters
of an unusual nature relating to personnel policy, or matters considered to entail an
especially great or additional risk, should be put before the committee.
The Remuneration Committee reports and makes recommendations to the Board of
Directors, but the Board retains responsibility for implementing such recommendations.
The composition of the committee is subject to assessment each year.
Deviations from the Norwegian Code of Practice: None.
RISK M A N AGEMENT A ND INTERN A L CONTROL
The Board has a responsibility to ensure that the Group has proper risk management
and such internal control as is required by statute. The Audit Committee has been given
a particular responsibility to monitor critical business risks and address the quality and
effectiveness of relevant risk-reducing measures. Management performs a risk assess-
ment quarterly, which is reviewed by the Audit Committee in connection with quarterly
reporting. The Audit Committee updates the Board after each meeting. Each year the
external auditor carries out a review of the internal control which is an element of finan-
cial reporting. The auditor’s review is submitted to the Audit Committee.
2 0 0
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
Internal control means activities carried out by the Group to organize its business activ-
ities and procedures in order to safeguard its resource and those of its customers, and
to realize its goals through appropriate operations. The achievement of these goals also
requires systematic strategy development and planning, identification of risk, choice of
risk profile, as well as establishing and implementing control measures to ensure that
the goals are achieved.
The Group’s core values, external guidelines, and social corporate responsibility consti-
tute the external framework for internal control. The Group is decentralized, and consid-
erable responsibility and authority are therefore delegated to the regional operating units.
Day-to-day implementation and assessment are a line management responsibility. This
means that corporate social responsibility is an integral component of all our opera-
tions, for all management teams, units, and departments. Risk management and internal
control are designed to take account of this.
Internal control is an on-going process that is initiated, implemented, and monitored by
the Group´s Board of Directors, management and other employees. Internal control is
designed to provide reasonable assurance that the Group’s goals will be achieved in the
following areas:
• Targeted, efficient, and appropriate operations.
• Reliable internal and external reporting.
• Compliance with laws and regulations, including internal guidelines.
The Group has implemented the 2017 COSO Enterprise Risk Management (COSO ERM)
scheme as the main framework for risk management, where risks and opportunities
are positioned in the context of objectives and performance. The framework includes
a description of the Group’s risk management policy, as well as all financial control
processes. There is an ongoing risk assessment of the main transaction processes.
Descriptions of the transaction processes are currently in preparation, with the aim of
clarifying key controls and ensuring that these controls are in place. This means assess-
ing all processes to determine the probability of non-conformity arising, and how serious
the economic consequences would be of any such non-conformity. The establishment of
controls in each region is aimed at reducing the likelihood of non-conformities with major
economic consequences arising.
The Group categorizes its main risks as: strategic risk, operational risk, financial risk,
compliance risk and climate risk. The Group’s greatest risk relates to biological devel-
opment during the production of smolt and sea farming. The Group therefore works
continuously and systematically to develop processes that safeguard animal welfare
and reduce disease and mortality, and ensure that "best practices" are implemented
at all levels. Control routines have been prepared for employee working conditions, as
well as escape prevention, animal welfare, pollution, water resources, and food safety.
The long-term effect of climate change on general economic conditions can also have a
material impact on the Group. The Groups climate risk management is been mapped in
accordance with the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD).
2 0 1
Amongst the financial risks the Group is exposed to, are: market risk (including foreign
exchange risk, interest rate risk, and price risk), contract risk, credit risk and liquidity
risk. The Group’s overall risk management plan focuses on the unpredictability of the
capital markets and seeks to minimize any potentially negative effects on the Group’s
financial results. The Group uses financial derivatives to hedge against some risks. Risk
management is drawn up at Group level and involves identifying, evaluating, and hedging
financial risk in close cooperation with the Group’s operational units. The Board has
established written principles for risk management related to foreign exchange and
interest rate risk, price risk, and the use of financial instruments.
The Board has established procedures for reporting within the Group. At the start of each
year the Board adopts a budget for the year. Deviations from the budget are reported on a
monthly basis. Forecasts are drawn up for the next five years and updated every month.
Every month, each region submits a report containing given Key Performance Indicators
(KPIs). The main KPIs are: EBIT/kg, feed factor, number of smolt transferred to the sea,
production, production cost, harvest volume, harvest cost, and level of sea lice. Analyses
are made and measured against budget figures and KPIs. Generational accounts for
harvested generations will be updated on a monthly basis. Each region’s performance
data is summarized in a report submitted to the Board.
Each quarter, the Group management holds meetings with the management of each
region. The aim of the meeting is to follow up the strategies and goals that have been set.
Deviations from the Norwegian Code of Practice: None.
11. REMUNERATION OF
THE BOARD OF DIRECTORS
Proposals concerning the remuneration of the Board are submitted by the Nomination
Committee. Remuneration to Board members is not linked to the Company’s results. No
board member has any special duties in relation to the Company over and above those
they have as a board member.
No board members participate in any incentive or share programs.
Board remuneration is shown in the financial statements of both the Company and the
Group.
Deviations from the Norwegian Code of Practice: None.
2 0 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
12. REMUNERATION OF THE GROUP
MANAGEMENT TEAM
Group management consists of the Group CEO, the Chief Operating Officer (COO), the Chief
Financial Officer (CFO), and the Chief Human Resource Officer (CHRO).
The objective of the guidelines for salary and other remuneration payable to senior
employees within the Group is both to attract people with the required competence and
retain key personnel. The guidelines should also motivate the employees to work with a
long-term perspective to achieve the Group´s goals.
The determination of salary and other remuneration to the Group’s senior employees is
therefore based on the following guidelines:
• Salary and other remuneration shall be competitive and motivating for each manager
and for everyone in the senior management group.
• Salary and other remuneration shall be linked to value creation generated by the
Company for the shareholders.
The principles used to determine salary and other remuneration shall be simple and
understandable to employees, shareholders, and the public at large.
The principles used to determine salary and other remuneration shall also be sufficiently
flexible to allow adjustments to be made on an individual basis in the light of the results
achieved and the contribution made by the individual to the development of the Group.
The salary paid to the group management team consists of a fixed and a variable element.
Under the bonus scheme, the variable salary cannot exceed six times the monthly salary.
Each year, information about the provisions of the bonus scheme is included in the Group
statement on the determination of salary to senior employees, and appears in the financial
statements for the Group, Note 14.
The Company´s Board approved the allocation of cash options based on the AGM´s reso-
lution on the share and cash options program. The last approval granted by the AGM
dates from 13 June 2019. The Group CEO, CFO, COO, CHRO, and the four regional manag-
ers are included in the synthetic options program. The options agreements have been
entered within the scope of the resolution adopted by the AGM. Minutes of this AGM can
be accessed from the Company’s web page.
The remuneration payable to the Group CEO is determined at a meeting of the Board of
Directors. The salary payable to the other members of the management group is deter-
mined by the Group CEO. The Group CEO shall discuss the remuneration which he/she
proposes with the Board’s chair before the amount of remuneration is determined.
General schemes for the allocation of variable benefits, including bonus schemes and
options programs, are determined by the Board. Schemes which entail an allotment of
shares, subscription rights, options, and other forms of remuneration related to shares or
the development of the Company’s share price, are determined by the AGM. The Board´s
statement on management remuneration is a separate item on the AGM’s agenda. The
AGM votes separately on guidelines to the Board and remuneration comprising the
synthetic options program.
2 0 3
SE V ER A NCE PAY
The Group CEO is entitled to 12 months’ severance pay after termination of the employ-
ment relationship by the Company. The Group CEO is further entitled to full salary during
sick leave of up to 12 months’ duration.
A severance pay agreement has also been established for the CFO and COO providing
for 12 months’ severance pay after termination of the employment relationship by the
Company.
Deviations from the Norwegian Code of Practice: None.
13. INFORMATION AND COMMUNICATION
FIN A NCI A L INFORM ATION
The guidelines for reporting financial and other information to the stock market are
defined within the framework established by securities and accounting legislation and
the rules and regulations of the stock exchange. The Company also complies with the
Oslo Stock Exchange Code of Practice for IR, of 1 March 2017.
The Board of Directors has adopted an investor relations policy to clarify roles and
responsibilities related to financial reporting and regulate contact with shareholders
and the investor market. This policy is based upon the key principles of openness and
equal treatment of market participants to ensure they receive correct, clear, relevant,
and up-to-date information in a timely manner. The IR policy is available on the Compa-
ny’s website.
In addition, the Board has adopted a separate manual on the disclosure of information,
which sets forth the Company's disclosure obligations and procedures.
The Company shall at all times provide its shareholders, the Oslo Stock Exchange, and
other stakeholders (through the Oslo Stock Exchange information system) with timely
and accurate information. The Board shall ensure that the Company’s quarterly reports
give a correct and complete picture of the Group’s financial and commercial position, and
whether the Group’s operational and strategic objectives are being reached. Financial
reporting shall also contain realistic forecasts for its commercial and performance-re-
lated development.
The Company publishes all information on its own website and through stock exchange/
press releases. Quarterly reports, annual reports and stock exchange/press releases
are presented on an ongoing basis on the Company’s website in accordance with the
Company’s financial calendar. The presentation of each quarter’s results is available
as a webcast.
The Company shall be open and active with respect to investor relations, and shall hold
regular presentations in connection with the annual and interim results.
2 0 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
SH A REHOLDER INFORM ATION
The Board shall ensure that information is provided on matters of importance for the
shareholders and for the stock market’s assessment of the Company, its activities and
results, and that such information is made publicly available without undue delay. Publi-
cation shall take place in a reliable and comprehensive manner, and by using information
channels which ensure that everyone has equal access to the information.
All information shall be provided in English. The Company has procedures to ensure
that this is done. The Board of Directors’ communication with shareholders and other
stakeholders is delegated to the Board’s chair, or other appointed persons in specific
cases. The Board’s chair shall ensure that the shareholders’ views are communicated
to the entire Board.
Deviations from the Norwegian Code of Practice: None.
14. TAKEOVERS
CH A NGE OF CONTROL A ND TA K EOV ER S
The Company has no established mechanisms which can prevent or avert takeover bids,
unless this has been resolved at a General Meeting of Shareholders by a majority of
two-thirds of the votes cast and of the share capital represented. After a takeover bid has
become known, the Board will not use its authorization to prevent it without the approval
of the General Meeting. If a takeover bid is received, management and the Board will
ensure that all shareholders are treated equally. The Board will obtain a valuation from
a competent independent party and advise the shareholders whether to accept or reject
the bid. Shareholders will be advised of any difference of views among board members
in the Board’s statements on the takeover bid.
At its meeting of 13 October 2015, the Board adopted some core principles for how it will
act in the event of any takeover bid. These core principles are in accordance with the
Norwegian Code of Practice.
Deviations from the Norwegian Code of Practice: None.
15. AUDITOR
Through its Audit Committee, the Board seeks to collaborate fully and transparently
with the Company’s auditor. Each year, the Audit Committee obtains confirmation that
the auditor meets the requirements of the Norwegian Auditing Act concerning the inde-
pendence and objectivity of the auditor.
The Board of Directors ensures that the auditor’s auditing plan is submitted to the Audit
Committee once a year. In particular, the Audit Committee considers whether the auditor
is performing a satisfactory control function.
2 0 5
Both the Company’s management and the auditor comply with guidelines issued by the
Financial Supervisory Authority of Norway concerning the extent to which the auditor
can provide advisory services.
The Board invites the auditor to meetings which deal with the annual financial statements.
The Audit Committee has an additional meeting with the auditor at least once a year to
review the auditor’s report on the auditor’s view of the Group’s accounting principles, risk
areas and internal control procedures. Moreover, each year the Board has a meeting with
the auditor when neither the Group CEO nor anyone else from company management is
present.
The auditor also attends meetings of the Audit Committee to consider quarterly reports
and other relevant matters. The auditor’s fee appears in the relevant note in this Annual
Report, showing the breakdown of the fee between auditing and other services.
Deviations from the Norwegian Code of Practice: None.
Bergen, 8 April 2020
Grieg Seafood ASA
ASBJØRN REINKIND
Vice Chair
PER GRIEG JR.
Chair
KARIN BING ORGLAND
Board Member
SOLVEIG M.R. NYGAARD
Board Member
TORE HOLAND
Board Member
SIRINE FODSTAD
Board Member
ANDREAS KVAME
CEO
2 0 6
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 3 O U R R E S U LT S
C O R P O R AT E G O V E R N A N C E
2 0 7
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
Grieg Seafood
Group Accounts
2 0 8
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
GROUP AC C OUN T S
210
211
212
214
216
Income statement
Comprehensive income statement
Statement of financial position
Statement of changes in equity
Cash flow statement
NOT E S
218
220
231
238
240
242
244
247
251
252
256
261
263
266
268
270
273
275
275
276
277
278
279
280
281
282
284
285
NOT E 1
NOT E 2
NOT E 3
NOT E 4
NOT E 5
NOT E 6
NOT E 7
NOT E 8
NOT E 9
General information
Accounting policies
Financial risk management
Critical accounting estimates and judgements
Investment in associates
Segment information
Biological assets and other inventories
Intangible assets
Property, plant and equipment incl. Right-of-use assets
NOT E 10
Borrowings
NOT E 11
Leases
NOT E 12
NOT E 13
NOT E 14
NOT E 15
NOT E 16
NOT E 17
NOT E 18
NOT E 19
NOT E 2 0
NOT E 21
NOT E 2 2
NOT E 2 3
NOT E 24
NOT E 25
NOT E 26
NOT E 27
NOT E 2 8
Classifications of financial instruments
Taxes
Declaration of salary and other remuneration to group management
Salaries and personnel expenses
Cash-based remuneration
Share capital and shareholder information
Earnings per share and dividend per share
Cash and cash equivalents
Trade receivables
Other current receivables
Related parties
Financial income and financial expenses
Other operating expenses
Other current liabilities
New accounting policies
Contingent liabilities
Post-balance sheet events
2 0 9
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
INC OME S TAT EMEN T
GRIEG SEAFOOD GROUP NOK 1 000
NOTE
2019
2018
Sales revenues
Other income
Other gains and losses
Share of profit from associates
Raw materials and consumables used
Salaries and personnel expenses
Other operating expenses
EBITDA before fair value adjustments of biological assets
Depreciation property, plant and equipment
Amortization licenses and other intangible assets
EBIT before fair value adjustments of biological assets
Fair value adjustment of biological assets
EBIT after fair value adjustments of biological assets
Financial income
Financial expenses
Net financial items
Profit before tax
Income tax expense
Net profit for the year
ALLOCATED TO
Controlling interests
Non-controlling interests
PROFIT AVAILABLE TO SHAREHOLDERS IN PARENT COMPANY
Earnings per share (NOK)
Diluted earnings per share (NOK)
6
6
6
5
7
15/16
11/20/24
9
8
3/7
23
23
13
18
18
8 273 592
7 500 316
26 519
3 612
211
-4 181 971
-610 803
-2 013 002
1 498 157
-404 895
-5 688
1 087 574
-220 714
866 860
51 309
-77 542
-26 234
25 853
26 157
-2 328
-3 852 855
-541 047
-1 821 623
1 334 473
-230 262
-5 393
1 098 818
256 097
1 354 916
18 874
-96 865
-77 991
840 626
1 276 925
-195 718
644 908
619 510
25 398
5.61
5.61
-279 805
997 120
972 506
24 615
8.81
8.81
2 10
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
C OMPREHEN SI V E INC OME S TAT EMEN T
GRIEG SEAFOOD GROUP NOK 1 000
NOTE
Net profit for the year
NET OTHER COMPREHENSIVE INCOME TO BE RECLASSIFIED TO PROFIT/LOSS IN SUBSEQUENT PERIODS
Currency effect on investment in subsidiaries
Currency effect on loans to subsidiaries
Cash flow hedges
Tax effect
3
3
NET OTHER COMPREHENSIVE INCOME NOT TO BE RECLASSIFIED TO PROFIT/LOSS IN SUBSEQUENT PERIODS
Change in fair value of equity instruments
Other comprehensive income for the period, net of tax
2019
644 908
52 826
29 819
-4 529
-5 564
-107
72 446
2018
997 120
-5 889
-4 193
15 026
-2 571
11
2 383
Total comprehensive income for the period
717 354
999 503
ALLOCATED TO
Controlling interests
Non-controlling interests
689 916
27 438
968 766
30 738
2 11
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
S TAT EMEN T OF FIN A NCI A L P O SI T ION
GRIEG SEAFOOD GROUP NOK 1 000
NOTE
2019
2018
ASSETS
Goodwill
Deferred tax assets
Licenses
Other intangible assets
Property, plant and equipment incl. Right-of-use assets
Investments in associates
Equity instruments
Other non-current receivables
Total non-current assets
Inventories
Biological assets
Trade receivables
Other current receivables
Derivatives and other financial instruments
Cash and cash equivalents
Total current assets
Total assets
8
13
8/10
8/10
9/11
5
5
7/10
7/10
3/10/20
21
3/12
3/19
109 526
998
1 133 630
16 205
2 957 942
81 071
1 053
2 077
109 013
1 718
1 121 662
25 175
2 292 912
37 122
1 160
167
4 302 503
3 588 929
177 847
3 437 948
459 897
334 625
7 368
214 497
126 092
3 195 142
925 232
166 432
2 743
137 920
4 632 181
4 553 561
8 934 684
8 142 490
2 12
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
GRIEG SEAFOOD GROUP NOK 1 000
NOTE
2019
2018
EQUITY AND LIABILITIES
Share capital
Treasury shares
Other equity
Retained earnings
Total controlling interests
Non-controlling interests
Total equity
Deferred tax liabilities
Cash-settled share options
Borrowings
Other non-current borrowings
Lease liabilities
Total non-current liabilities
Overdraft facility
Current portion of borrowings
Current portion of lease liabilities
Factoring liabilities
Cash-settled share options
Trade payables
Tax payable
Public tax payable
Derivatives and other financial instruments
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
BERGEN, 8 APRIL 2020
GRIEG SEAFOOD ASA
17
17
13
16
10
10
10/11
10
10
10/11
3/10
16
3
13
3/12
25
446 648
-4 855
154 559
3 487 859
4 084 211
56 632
4 140 843
874 664
8 379
1 563 935
13 240
632 666
3 092 883
-
98 212
199 327
86 122
11 270
855 061
211 569
50 570
9 321
179 507
1 700 958
446 648
-4 914
84 152
3 308 166
3 834 053
49 458
3 883 511
877 639
8 493
1 298 713
14 047
292 358
2 491 251
46 597
107 109
68 083
573 377
9 010
649 352
130 287
29 346
5 905
148 663
1 767 729
4 793 840
4 258 979
8 934 684
8 142 490
ASBJØRN REINKIND
Vice Chair
PER GRIEG JR.
Chair
KARIN BING ORGLAND
Board Member
SOLVEIG NYGAARD
Board Member
TORE HOLAND
Board Member
SIRINE FODSTAD
Board Member
ANDREAS KVAME
CEO
2 13
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
S TAT EMEN T OF CH A NGE S IN EQUI T Y
GRIEG SEAFOOD GROUP NOK 1 000
SHARE
CAPITAL
TREASURY
SHARES*
OTHER
EQUITY**
RETAINED
EQUITY
NON-
CONTROLLING
INTERESTS
TOTAL
Equity at 01.01.2018
446 648
-5 000
87 892
2 774 824
43 541
3 347 905
PROFIT FOR 2018
Other comprehensive income
Total comprehensive income 2018
Sale of treasury shares
Dividend paid
Transactions with owners [in their capacity as
owners] 2018
Total change in equity 2018
Equity at 31.12.2018
PROFIT FOR 2019
Other comprehensive income
Total comprehensive income 2019
Sale of treasury shares
Dividend paid
Transactions with owners [in their capacity as
owners] 2019
Total change in equity 2019
Equity at 31.12.2019
-
-
-
-
-
-
-
446 648
-
-
-
-
-
-
-
446 648
-
-
-
86
-
86
-
972 506
-3 740
-3 740
-
972 506
-
-
-
2 528
-441 691
-439 163
24 615
6 123
30 738
997 120
2 383
999 503
-
2 614
-24 821
-24 821
-466 512
-463 898
86
-4 914
-3 740
84 152
533 342
3 308 166
5 917
535 605
49 458
3 883 511
-
-
-
59
-
59
-
619 510
70 406
70 406
-
619 510
25 398
2 040
27 438
644 908
72 446
717 354
-
-
-
1 946
-441 764
-439 818
-
2 005
-20 263
-462 027
-20 263
-460 022
59
-4 855
70 406
179 692
154 559
3 487 859
7 175
257 332
56 632
4 140 843
* The recognized amount equals the nominal value of the parent company's holding of treasury shares
** Other equity, reclassified through OCI
2 14
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
SPECIFICATION OF RETAINED EQUITY
NOK 1 000
Book value at 01.01.2018
Changes in 2018
Changes in 2019
Book value at 31.12.2019
EFFECT OF
SHARE-BASED
REMUNERATION
PURCHASE/
SALES OF TREASURY
SHARES *
ACCUMULATED
INCOME LESS
ACCUMULATED
DIVIDEND
TOTAL
1 094
-
-
1 094
-13 036
2 528
1 946
-8 562
2 786 766
2 774 824
530 814
177 746
533 342
179 692
3 495 326
3 487 859
* The amount classified under "purchase of treasury shares" equals the cost price in excess of nominal value. See also Note 1.
SPECIFICATION OF ACCUMULATED
OTHER COMPREHENSIVE INCOME
NOK 1 000
CHANGES IN FAIR
VALUE OF EQUITY
INSTRUMENTS
CURRENCY EFFECT
ON LOANS TO
SUBSIDIARIES
CURRENCY EFFECT
ON INVESTMENT IN
SUBSIDIARIES
CASH FLOW HEDGES
TOTAL
Book value at 01.01.2018
Changes in 2018
Changes in 2019
Book value at 31.12.2019
492
11
-107
396
64 373
-3 271
23 259
84 361
29 592
-5 889
52 826
76 529
-6 565
5 409
-5 572
-6 728
87 892
-3 740
70 406
154 559
2 15
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
C A SH FLOW S TAT EMEN T
GRIEG SEAFOOD GROUP NOK 1 000
NOTE
8/9
5
7
16
13
8/9
9
8
5
10
10
10
10
10/11
10
23
23
EBIT after fair value adjustment of biological assets
Depreciation and amortization
(Gain)/loss on sale of property, plant and equipment
Share of profit from companies applying equity method of accounting
Fair value adjustment of biological assets
Change in inventories and biological assets excl. fair value
Change in trade and other receivables
Change in trade payables
Change in other accruals
Change in non-current, cash-settled share option liability
Taxes paid for the period
Net cash flow from operating activities
Proceeds from sale of property, plant and equipment
Payments on purchase of property, plant and equipment *
Payments on purchase of intangible assets
Investment in associates
Dividend from other investments
Net cash flow from investing activities
Draw-down/repayment of non-current revolver credit facility
Repayment of non-current syndicate loan
Repayment other current loan and overdraft facility
Draw-down non-current syndicate loan (refinancing)
Other changes from finacing activities
Repayment lease liabilities
Change in factoring liability
Other financial items
Dividend incl. allocation to non-controlling interests
Interest received
Interest paid
Net cash flow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at 01.01.
Currency translation of cash and cash equivalents
Cash and cash equivalents at 31.12.
* Net amount of investments (excluding investments financed by leasing)
2 16
2019
866 860
410 583
-6 339
-211
220 714
-497 707
297 143
205 710
92 337
-114
-132 982
1 455 994
2 121
-367 828
-1 635
-14 163
-
-381 505
369 319
-98 346
-55 494
-
-
-205 025
-487 255
-5 971
-462 027
14 100
-69 333
-1 000 031
74 458
137 920
2 119
214 497
2018
1 354 916
235 655
4 992
2 328
-256 097
-241 400
-131 731
63 974
-78 542
-355
-147 833
805 906
1 295
-495 976
-67 842
-30 000
10
-592 513
-40 000
-985 000
-
1 180 284
11 809
-69 053
72 401
6 951
-466 512
13 935
-71 449
-346 634
-133 241
271 715
-554
137 920
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
2 17
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 1 GENER A L INFORM AT ION
Grieg Seafood ASA is an integrated Norwegian seafood company
engaged in salmon farming and processing. Grieg Seafood ASA is
a public limited company registered in Norway. The head office is
located at C. Sundtsgt. 17/19, Bergen. The Company was listed on
the Oslo Stock Exchange on 21 June 2007 and has operations in
Norway, the UK and Canada. The consolidated financial statements
have been prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by EU, and were approved
by the Board of Directors on 8 April 2020.
In the following, "Group" describes information relating to the Grieg
Seafood Group, while "Company" refers to the parent company,
Grieg Seafood ASA.
The Group owns the company Ocean Quality AS together with
Bremnes Fryseri AS on a 60%/40% basis. Grieg Seafood does not
receive any of the profit from the sale of fish from Bremnes Fryseri
AS, as earnings are based on a skewed distribution of profit based
on the delivered volume from each shareholder. The share of profit
and share of equity in Ocean Quality AS attributable to Bremnes
Fryseri AS are presented as non-controlling interests.
Inc.) and Ocean Quality USA Inc. (new company, established in 2018)
are domiciled in the USA. Ocean Quality (Shanghai) International
Trading Company is domiciled in China with office in Beijing. The
remaining companies are domiciled in Norway.
Grieg Seafood Hjaltland UK Ltd. and Grieg Seafood Canada AS are
holding companies, which wholly own the production companies
Grieg Seafood Shetland Ltd. and Grieg Seafood BC Ltd., respectively.
Grieg Seafood ASA has a 60% stake in Ocean Quality AS and the
other subsidiaries are wholly owned.
Grieg Seafood Shetland Ltd ows the following, dormant companies
(no activities in these companies): Grieg Seafood Isle of Sky Ltd,
Collafirth Salmon Ltd, Hjaltland Hatcheries Ltd, Fish Holm Ltd,
Lerwich Fish Traders Ltd, Shetland Product, Skelda Salmon Farms
Limited and Vidlin Seafarms Ltd.
Ocean Quality AS wholly owns Ocean Quality UK Ltd, Ocean Quality
USA Inc., Ocean Quality (Shanghai) and Ocean Quality North
America Inc., while the latter wholly owns Ocean Quality Premium
Brands, Inc.
Grieg Seafood Group comprised the following entities at 31
December 2019:
All amounts are stated in NOK thousand unless otherwise specified.
Grieg Seafood Hjaltland UK Ltd, including all subsidiaries, and Ocean
Quality UK Ltd are domiciled in the UK. Grieg Seafood BC Ltd and
Ocean Quality North America Inc. are domiciled in Canada. Ocean
Quality Premium Brands, Inc. (formerly named Ocean Quality USA
2 18
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
G R O U P S T R U C T U R E
GRIEG
SEAFOOD
ASA
60%
OCEAN QUALITY AS
100%
100%
100%
100%
GRIEG SEAFOOD
ROGALAND AS
GRIEG SEAFOOD
FINNMARK AS
GRIEG SEAFOOD
HJALTLAND UK LTD
GRIEG SEAFOOD
CANADA AS
OCEAN QUALITY
UK LIMITED
OCEAN QUALITY
USA INC.
OCEAN QUALITY
(SHANGHAI)
INTERNATIONAL
TRADING COMPANY
OCEAN QUALITY
NORTH AMERICA INC.
GRIEG SEAFOOD
SHETLAND LTD
GRIEG SEAFOOD
B.C. LTD
OCEAN QUALITY
PREMIUM BRANDS INC.
S E G M E N T S T R U C T U R E
GRIEG
SEAFOOD
NOR
NOR
UK
CAN
ROGALAND
FINNMARK
SHETLAND
BRITISH COLUMBIA
GRIEG SEAFOOD
ROGALAND AS
OCEAN QUALITY
AS
OCEAN QUALITY
USA INC
OCEAN QUALITY
(SHANGHAI)
GRIEG SEAFOOD
FINNMARK AS
OCEAN QUALITY
AS
OCEAN QUALITY
USA INC
OCEAN QUALITY
(SHANGHAI)
GRIEG SEAFOOD
SHETLAND LTD
OCEAN QUALITY
UK LTD
OCEAN QUALITY
USA INC
OCEAN QUALITY
(SHANGHAI)
GRIEG SEAFOOD
B.C. LTD
OCEAN QUALITY
NORTH AMERICA INC.
OCEAN QUALITY
PREMIUM BRANDS INC.
OCEAN QUALITY
(SHANGHAI)
2 19
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 2 A C C OUN T ING P OL ICIE S
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies
have been consistently applied to all the periods presented, unless
otherwise indicated.
BASIS OF PREPARATION
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the EU.
The consolidated financial statements have been prepared under
the historical cost convention, modified for biological assets, equity
instruments, and financial assets/liabilities (including derivative
instruments) at fair value through profit or loss (the income
statement). The preparation of financial statements in accordance
with IFRSs requires the use of estimates. It also requires management
to exercise its judgement in the process of applying the company’s
accounting policies. Areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are material
to the consolidated financial statements are described in Note 4.
NEW STANDARDS ADOPTED BY THE GROUP
The Group has applied the following standards for the first time for
the annual reporting period commencing 1 January 2019
•
IFRS 16 Leases
Implementation of IFRS 16 Leases had a significant effect on
the consolidated financial statement of the Group, where leased
vessels and office buildings had the greatest impact. Please refer
to Note 11 for the Group’s lease arrangements and refer to Note 26
for further information about the implementation effects of IFRS
16 Leases.
CONSOLIDATION PRINCIPLES
SUBSIDIARIES
Subsidiaries are all entities (including structured entities) over
which the Group exercises control. Control over an entity arises
when the Group is exposed to variability in the return from the
entity and has the ability to impact this return by virtue of its
influence over the entity. Subsidiaries are consolidated from the
day control arises and deconsolidated when control ceases.
The acquisition method of accounting is applied for acquisitions.
The consideration is measured as the fair value of any transferred
assets, liabilities or issued equity instruments. The fair value of
all the assets or liabilities resulting from contingent consideration
agreements is included in the consideration. Identifiable assets
and liabilities and contingent liabilities assumed in a business
combination are initially measured at fair value at the acquisition
date. Non-controlling interests in the acquired entity are measured
from time to time either at fair value, or at their proportionate
share of net assets of the acquired entity.
2 2 0
Costs relating to business combinations are expensed as they are
incurred. In the case of multi-stage acquisitions, the proportion of
ownership from any earlier purchases is restated at fair value at
the date of control, with changes in value recognized in the income
statement.
Contingent consideration classified as equity shall not be
remeasured and its subsequent settlement shall be accounted for
within equity. Other contingent considerations shall be measured
at fair value at each reporting date and changes in fair value shall
be recognized in the income statement.
Intragroup transactions, intercompany balances, and unrealized
profits and losses between Group companies are eliminated.
Reported figures from the subsidiaries are restated when this
is necessary to achieve consistency with the Group's accounting
policies.
CHANGES IN SHAREHOLDINGS IN SUBSIDIARIES WITHOUT
LOSS OF CONTROL
Transactions with non-controlling owners of subsidiaries that do
not involve loss of control are treated as equity transactions. When
shares are purchased from non-controlling owners, the difference
between the consideration and the proportionate percentage of
net assets recognized in the subsidiary’s statement of financial
position relating to such shares is recognized in the parent
company’s owners’ equity. Gains or losses on disposals of non-
controlling owners are similarly recognized in equity.
DIVESTMENT OF SUBSIDIARIES
When the Group no longer has control, any residual ownership
interest is measured at fair value with changes in value recognized
through profit or loss (the income statement). Thereafter the fair
value is deemed to equate to cost, and the interest is recognized
either as an investment in associates or as a financial asset.
Amounts previously recognized in other comprehensive income
relating to this company are treated as if the Group had disposed of
the underlying assets and liabilities. This could mean that amounts
that were previously recognized in other comprehensive income
are reclassified through profit or loss (the income statement).
ASSOCIATES
Associates are entities over which the Group exercises significant
influence, but not control. Significant influence will generally exist
when the Group has a shareholding of between 20% and 50% of
the voting rights. Investments are recognized at cost at the time
of acquisition, and the Group’s share of the results in subsequent
periods is recognized through profit or loss (the income statement).
The amount recognized in the statement of financial position
includes any implicit goodwill identified at the date of purchase.
Shares of the income statement of associates that are closely
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
linked to the Group´s operations and are thus part of the
Group’s value chain, are classified on a separate line before the
Group’s EBIT. In the event of a reduction in a shareholding in an
associate where the Group exercises significant influence, only
a proportionate share of amounts previously recognized in other
comprehensive income is reclassified through profit or loss (the
income statement).
Foreign exchange gains resulting from the settlement of such
transactions that are not denominated in the entity´s functional
currency, are recognized through profit or loss (the income
statement). Translation differences on monetary items (assets
and liabilities), that are not denominated in the entity´s functional
currency, are also recognized through profit or loss (the income
statement).
The Group’s share of its associates’ post-acquisition profits or
losses is recognized in the income statement and added to the
value of the investment in the statement of financial position. The
Group’s share of other comprehensive income of the associate
is recognized in the consolidated statement of comprehensive
income plus the amount of the investment in the statement of
financial position. When the Group’s share of losses in an associate
equal or exceeds its interest in the associate, including any other
unsecured receivables for the entity, the Group does not recognize
further losses, unless it has incurred obligations or made
payments on behalf of the associate. If necessary, the subsidiaries’
financial statements are restated to achieve consistency with the
Group’s accounting policies.
At the end of each accounting period, the Group determines
whether there is any need to recognize an impairment of the
investment in the associate. In such cases, the impairment
amount is measured as the difference between the recoverable
amount of the investment and its carrying value, and the difference
is recognized in the income statement on a separate line together
with the item “Share of profit from associates”.
In the event of any gains or losses on transactions between the
Group and its associates, only the proportionate share relating
to external shareholders is recognized. Unrealized losses are
eliminated unless there is a need to recognize an impairment
for the asset that was the subject of the transaction. Accounting
policies of associates are changed when necessary to ensure
consistency with the accounting policies adopted by the Group.
Dilution gains and losses arising on investments in associates are
recognized in the income statement.
SEGMENT REPORTING
Operating segments are reported in a manner consistent with
internal reporting to the chief operating decision-maker. The
chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments,
has been identified as the Group management.
FOREIGN CURRENCY TRANSLATION
The financial statements of each of the Group’s entities are
generally measured using the currency of the economic area
in which the entity operates (“the functional currency”). The
consolidated financial statements are presented in Norwegian
Kroner (NOK), which is the parent company’s functional and
presentation currency.
Transactions and balance sheet items
Foreign currency transactions are translated into the functional
currency using the exchange rates in force at the transaction date.
Group companies
The income statements and statements of financial positions
of the Group entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency
different from the presentation currency are translated into the
presentation currency as follows:
The statement of financial position is translated using the closing
rate at the balance sheet date.
•
Income and expense items in the income statement are
translated at average exchange rates for the period (if the
average is not a reasonable estimate of the cumulative effects
of using the transaction rate, the transaction rate is used).
Translation differences are recognized in other comprehensive
income and specified separately.
•
When a foreign operation is sold, the exchange difference, which in
previous periods was recognized in other comprehensive income,
is not accrued. The accumulated exchange difference on the sale
of the foreign operation is hence reversed in other comprehensive
income. Gains or losses on the sale are recognized on a basis of
zero exchange difference in the net profit on ordinary activities.
Goodwill and fair value adjustments of assets and liabilities on the
acquisition of a foreign entity are treated as assets and liabilities
of the foreign entity and are translated using the closing currency
rate at the balance sheet date.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at historical cost less
depreciation and impairment losses. Historical cost includes
expenditure that is directly attributable to the acquisition of the
asset. Cost may also include gains or losses transferred from
equity as a result of hedging the cash flow in foreign currency on
the purchase of property, plant and equipment.
Improvements are recognized in the asset’s carrying amount or as
a separate asset when it is probable that future economic benefits
associated with the improvement will flow to the Group and the
cost of the item can be reliably measured. All other repairs and
maintenance are recognized in the income statement during the
financial period in which they are incurred.
Land and buildings mainly comprise factories and offices. Land
is not depreciated. Other operating assets are depreciated in
accordance with the straight-line method so that the cost, or
remeasured value, is written down to residual value over its
expected useful economic life as follows:
• Buildings/real estate 10–50 years
• Plants, barges, onshore power supply 5–30 years
2 2 1
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 2 C O N T I N U E D
• Nets/cages/moorings 5–25 years
• Other equipment 3–35 years
The assets’ useful lives and residual values are estimated at each
balance sheet date and adjusted if necessary.
An asset’s carrying value is written down to its recoverable amount
if the carrying value is greater than its estimated recoverable
amount. Gains and losses on disposals are recognized on a net
basis and represent the difference between the sales price and the
carrying value.
INTANGIBLE ASSETS
Intangible assets that arise internally within the Group are not
recognized. Goodwill and licenses with an indefinite economic
life are subject to annual impairment tests. Impairment tests
are performed more frequently if indications of impairment exist.
Amortized licenses are tested for impairment only if there are
indications that future earnings do not justify the asset’s carrying
value.
GOODWILL
Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group’s share of the net identifiable assets
of the acquired entity at the date of acquisition. Goodwill on
acquisitions of subsidiaries is classified as an intangible asset.
Goodwill on the purchase of a share in an associate is included
in “investments in associates”. Goodwill is tested annually for
impairment and carried at cost less accumulated impairment
losses. Impairment losses on goodwill are not reversed. Gains and
losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold.
NORWAY
The licensing regime for the production of salmon in Norway is
enacted by the Norwegian Parliament through the Aquaculture
Act. The Ministry of Trade, Industry and Fisheries grants permits
for aquaculture (licenses). All aquaculture operations are subject
to licensing and no one can produce salmon without permission
from the authorities, see Aquaculture Act § 4.
The aquaculture permit allows the production of salmon in limited
geographic areas within the current determined limitations of the
permit scope. The Aquaculture Act is administered centrally by the
Ministry of Trade, Industry and Fisheries, with the Directorate of
Fisheries as the supervisory authority. Regionally, several industry
jointly manage full administrative and supervisory
authorities
responsibility within the regulating range of the Aquaculture Act. The
county is the regional administrative body, while the Directorate of
Fisheries serves as appellate body in locality and licensing matters.
Seawater licenses
Each license for salmon in the sea is subject to a production
limit in the form of “maximum allowed biomass” (MAB). MAB
does not directly limit the tonnes of fish produced within a year,
but rather limits the biomass that can be kept in the sea at any
time. Normally, a license has a limit of 780 tonnes MAB, while in
Troms and Finnmark counties, a standard license has a limit of
945 tonnes MAB (provided all associated locations are situated in
Troms and Finnmark), but in conjunction with the new traffic light
system, Finnmark acquire additional production capacity and have
now 964 tonnes MAB. See the Salmon Allocation Regulation § 15
(“laksetildelingsforskriften”). Such licenses are limited in number
and only subject to application, following politically determined
licensing rounds.
For the purpose of impairment testing, goodwill is allocated to
those cash-generating units or groups of cash-generating units
that are expected to benefit from the business combination in
which the goodwill arose.
LICENSES
Fish-farming licenses with an indefinite useful life are not amortized
but reviewed for impairment annually, or more frequently if there
are indications that the carrying value may have decreased.
Hatchery licenses
Young salmon are defined as eggs, juveniles, parr or smolt to be
released in another location, see Salmon Allocation Regulation §
4 f. Such licenses are not limited and thus subject to continuous
application for new licenses or changes to existing licenses. In
essence, it is not permitted to produce smolt over 250 grams;
however, the regulations allow for applications to produce a certain
percentage of fish up to 1 kg. Grieg Seafood has authorization up
to 1 kg.
The Group considers the following licenses to have indefinite useful
lives:
Licenses granted with an indefinite useful life, where the company
has no other contractual restrictions relating to the use of the
license. Licenses granted with a finite useful life, but where
the license holders can renew the licenses without incurring
considerable expenses.
Licenses with a finite useful life are amortized over their useful lives.
These relate to water licenses for hatcheries and some specific
seawater licenses. The following sections provide a description of
licenses relating to the Norway, UK (Shetland) and Canada (BC)
segments. Please refer to Note 8 Intangible assets for an overview
of the number and types of licenses, as well as impairment testing.
R&D and broodstock licenses
These licenses are not limited in number. Permits are meanstested,
meaning that the applicant must demonstrate a need for the
production of eggs, specific research projects or for educational
purposes. Broodstock licenses include both a land and sea phase,
i.e. the broodfish and egg production are covered by the same
licensing process.
Harvesting cage licenses
Licenses utilized for cage-setting of live fish for harvesting. These
relate to specific locations.
Duration and renewal
The Ministry may in individual decisions or regulations specify
further provisions on the content of aquaculture licenses, including
2 2 2
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
relating to scope, time limitations, etc., see the Aquaculture Act
§ 5, second paragraph. Nonetheless, the preparatory work for
the Aquaculture Act specifies that licenses are normally granted
without a time limit.
BC
Grieg Seafood BC Ltd (GSF BC) has farms on both the west and
east coasts of Vancouver Island. In order to operate farms in British
Columbia, Canada, the following three licenses must be in place:
Grieg Seafood’s general food fish licenses and hatchery licenses
are not time-limited under current regulations. After the reform in
2009, a number of licenses were time-limited, mainly for 15 years.
As no government practices have been established relating to the
renewal of broodstock licenses, the current understanding is that
expiration of licenses allows for application for renewal based on
demand. A license for harvesting cages is valid for ten years and
must be renewed on expiration, provided that the license is still
connected to an approved harvesting facility.
Disposal and withdrawal
All licenses can be transferred and mortgaged in accordance
with the Aquaculture Act § 19. Transfers and mortgages must be
recorded in a separate register (the Aquaculture Register). It is not
permitted to rent out licenses or license capacity.
The Aquaculture Act § 9 reviews the basis for withdrawal of an
aquaculture license. This states that there must be significant
breaches of the terms of an aquaculture license before it can be
revoked.
UK
Grieg Seafood Shetland Ltd (GSF UK) has farms on both the west
and east coasts of Shetland, as well as the west coast of Scotland.
In order to operate farms in Scotland, the following five licenses
must be in place:
1. Water Environment (Controlled activities) “CAR” license – issued
by the Scottish Environment Protection Agency (SEPA)
2. Planning permission – issued by the local authorities (Town and
Country Planning Act)
3. Crown Estate Lease/Permission (The Crown Estate Act 1961)
4. Aquaculture Production Business License (APB) – issued by Aqua
Animal Health
5. Marine License (Navigation) – issued by the Scottish government
For restrictions regarding production quantity, see table in Note 8.
Duration and renewal
1. Requires periodic inspection and monitoring. If a substantial
negative impact on the environment can be proven as a
consequence of the operation, the production volume can be
reduced or, as in a worst-case scenario, revoked.
2. Planning Permission – indefinite duration; however, if the plant
is left unused for three consecutive years, the license may be
withdrawn
3. Crown Estate Lease/Permission – 25 years’ duration. The normal
procedure is to renew the licenses on expiration.
4. APB – indefinite duration subject to compliance with the licence’s
conditions.
5. Marine License – application for renewal required every six years.
Renewal is normally a formality.
1. Aquaculture license – issued by the Department of Fisheries
and Oceans
2. License of Occupation (Tenures) – issued by the Ministry of
Forest, Lands and Natural Resource Operations
3. Navigation Water Permit – issued by Transport Canada
(Canadian public authorities)
For restrictions regarding production quantity, see table in Note 8.
Duration and renewal
1. Aquaculture license – duration of one year, renewal each year
is a formality.
2. License of Occupation – duration of 2–20 years. Renewal is
applied for on expiration.
3. Navigation Water Permit – duration of five years, but possible to
apply for renewal.
New renewal process in Canada West
In June 2018, the Government of British Columbia announced
a new policy regarding renewal of aquaculture licenses in the
Broughton area. The new policy requires agreement with the local
First Nations prior to applying for license renewal from Fisheries
and Ocean Canada (DFO). The new policy will be affected from
2022. The authorities want to cooperate with companies that have
licenses where the production might conflict with the wild salmon
and find alternative solutions such as moving the licenses to new
areas. For Grieg Seafood BC, this is not a challenge due to location.
OTHER INTANGIBLE ASSETS
Acquired customer portfolios and computer software licenses
are recognized in the statement of financial position at cost and
amortized over their estimated useful lives. Customer portfolios
are recognized in the statement of financial position at cost at the
date of purchase. Amortization is calculated using the straight-
line method over the estimated useful life, as follows:
• Customer portfolios 6 years
• Computer software 3–10 years
IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets with an indefinite useful life are not amortized but are tested
annually for impairment. Assets that are subject to amortization
are reviewed for impairment whenever there are indications that
future earnings do not justify the carrying value.
An impairment loss is recognized for the amount by which the
asset’s carrying value exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating
units). Nonfinancial assets, other than goodwill, that have suffered
an impairment are reviewed for indicators of possible reversal of
the impairment at each reporting date.
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FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity. The classification is performed in accordance with
the substance of the contractual arrangement, and in line with the
definitions of a financial asset, a financial liability and an equity
instrument.
Ordinary purchases and sales of investments are recognized on
the trade-date – the date on which the Group commits to purchase
or sell the asset. All financial assets that are not stated at fair
value through profit or loss (the income statement) are initially
recognized at fair value plus transaction costs.
FINANCIAL ASSETS
Financial assets are classified, at
initial recognition, as
subsequently measured at amortized cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss
(the income statement).
The classification of financial assets at initial recognition depends
on the financial asset’s contractual cash flow characteristics and
the Group’s business model for managing them. With the exception
of trade receivables that do not contain a significant financing
component, the Group initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value through
profit or loss (the income statement), transaction costs. The Group
has financial assets classified as follows:
• Financial assets at amortized cost (debt instruments)
• Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition
(equity instruments)
• Financial assets at fair value through profit or loss (the income
statement)
Financial assets measured at amortized cost
The Group measures financial assets at amortized cost if both of
the following conditions are met:
• The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows and,
• The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding
Financial assets at amortized cost are subsequently measured
using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognized in profit or loss (the
income statement) when the asset is derecognized, modified or
impaired.
The Group's financial assets at amortized cost includes trade
receivables and other short-term deposit. Trade receivables that
do not contain a significant financing component are measured
at the transaction price determined under IFRS 15 Revenue from
contracts with customers.
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Equity instruments designated at fair value through OCI
Upon initial recognition, the Group can elect to classify irrevocably
its equity investments as equity instruments designated at fair
value through OCI when they meet the definition of equity under
IAS 32. The classification is determined on an instrument-by-
instrument basis.
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities.
Gains and losses on these financial assets are never recycled to
profit or loss (the income statement). Dividends are recognized as
other income in the income statement when the right of payment
has been established, except when the Group benefits from such
proceeds as a recovery of part of the cost of the financial asset, in
which case, such gains are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject to impairment
assessment.
The Group elected to classify irrevocably its equity investments
under this category.
Financial assets at fair value through profit or loss (the income
statement)
Financial assets at fair value through profit or loss (the income
statement) are carried in the statement of financial position at
fair value with net changes in fair value recognized in the income
statement.
This category includes derivative instruments and listed equity
investments which the Group had not irrevocably elected to classify
at fair value through OCI. Dividends on listed equity investments
are recognized as other income in the income statement when
the right of payment has been established. Derivatives are initially
recognized at fair value on the date a derivative contract is entered
into, and are subsequently stated at fair value on an ongoing basis.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or
part of a group of similar financial assets) is primarily derecognized
(i.e., removed from the Group’s consolidated statement of financial
position) when:
• The rights to receive cash flows from the asset have expired, or
• The Group has transferred its rights to receive cash flows from
the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either
— the Group has transferred substantially all the risks and
rewards of the asset, or
— the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred
control of the asset.
—
Impairment on financial assets
The Group recognizes an allowance for expected credit losses
(ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and
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all the cash flows that the Group expects to receive, discounted
at an approximation of the original effective interest rate. ECLs
are recognized in two stages. For credit exposures for which
there has not been a significant increase in credit risk since initial
recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12-months (a
12-month ECL). For those credit exposures for which there has
been a significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected over the
remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
See the “Trade receivable”-section in this Note for specific
accounting principles on expected credit loss on trade receivables.
FINANCIAL LIABILITIES
Financial liabilities are classified, at
initial recognition, as
amortized cost (loans and borrowings), or as financial liabilities at
fair value through profit or loss (the income statement).
Financial liabilities at amortized cost (loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortized cost using the EIR method.
Gains and losses are recognized in profit or loss when the liabilities
are derecognized as well as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part
of the EIR. The EIR amortization is included as finance costs in the
income statement.
Financial liabilities at fair value through profit or loss (the
income statement)
Financial liabilities at fair value through profit or loss (the income
statement) include financial derivative contracts. Derivatives are
initially recognized at fair value on the date a derivative contract
is entered into, and are subsequently stated at fair value on an
ongoing basis.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the
liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated
as the derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is
recognized in the income statement.
HEDGING
Hedge accounting
The Group applies hedge accounting according to IFRS 9 for non-
current foreign currency forward contracts entered into in connection
with contracts of future physical delivery of fish to customers.
Changes in value of foreign currency forward contracts which meet
the hedging criteria are recognized in other comprehensive income.
Changes in the fair value of derivatives entered into to hedge operating
revenues are recognized in revenues.
Non-hedge accounting
The Group do not utilize hedge accounting for its short-term
foreign currency forward contracts. Such contracts are recognized
at fair value through profit or loss (the income statement) and
presented as financial income/financial expenses.
NASDAQ FISH POOL SALE AND PURCHASE AGREEMENTS
With regard to financial contracts relating to sale and purchase
agreements on Nasdaq Fish Pool, changes in unrealized gains
and losses on the sale and purchase agreements are recognized
net in the income statement as a value adjustment of biological
assets, while the carrying value is reported as a derivative in the
statement of financial position at the gross carrying amount of
sales and contracts, respectively. Assets/liabilities in this category
are classified as current assets/ current liabilities when they are
intended to be disposed of within 12 months, otherwise as non-
current assets/liabilities.
INVENTORIES
Inventories are stated at the lower of cost and net realizable value.
Cost is determined using the first-in, first-out (FIFO) method. The
net realizable value is the estimated sales price less the estimated
costs of completion and sale.
BIOLOGICAL ASSETS
The accounting treatment of live fish by enterprises applying IFRS
is regulated by IAS 41 Agriculture. IAS 41 comprises a hierarchy of
methods for accounting measurement of biological assets at level
3. The basic principle is that such assets shall be measured at fair
value less costs to sell. Fair value is defined in IFRS 13 as “the
price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants
at the measurement date”. According to IFRS 13, the highest and
best use of the biological asset establishes the valuation premises.
Considering the industry’s common goal to harmonize the model,
Grieg Seafood made adaptations to the model during Q4 2018.
The previous calculation was based on a growth model which has
been the standard model in the salmon industry, while the new
calculation is cash-flow based (present value model). Changes
to the model involve calculation techniques and do not represent
a change in accounting policy. The changes in the new model
affected the income statement by NOK -45.4 million in Q4 2018.
Biological assets comprise of live fish, smolt and fish in sea. The
fish are divided into two main groups, depending on the stage of
the life cycle. At the earliest stage of the life cycle, the fish are
classified in group 1) roe, fry and smolt. Group 1 biological assets
is disclosed as “biological assets onshore” in Note 7, see the
tables “Status of biological assets” and “abnormal mortality –
write down”. Roe, fry and smolt are kept onshore.
When the fish is large enough to be released to sea, they are
classified in group 2) biomass in sea. The group 2 biological assets
classification is further decomposed in Note 7 as “immature fish
in sea, round weight < 4.76 kg” and “mature fish in sea, round
weight > 4.76 kg” – see the tables “Status of biological assets” and
“abnormal mortality – write down”.
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N O T E 2 C O N T I N U E D
• Fish onshore (smolt) are recognized at accumulated cost. The
best estimate of fair value is considered to be the accumulated
cost because of very little biological transformation. This
assessment must be seen in the light of the fact that smolt are
currently released to sea at a stage when their weight is still
relatively low.
• For fish in sea, the fair value is calculated by applying a cash-
flow based present value model.
The volume (biomass) is based on the actual number of individuals
in the sea at the balance sheet date, adjusted to cover estimated
mortality up to harvest date and multiplied by the estimated
harvest weight per individual at the time of harvest. The fish in sea
is adjusted for gutting waste, as the price is measured for gutted
weight. Budgeted harvesting and freight costs are applied. Foreign
currency forward contracts associated with the date of harvesting
are applied when translating the price into CAD and GBP.
The fair value of fish in the sea is estimated for each location.
In accordance with the principle for highest and best use, the
Industry Group considers that the fish have optimal harvest weight
when they have a live weight of 4.76 kg, which corresponds to 4
kg gutted weight. Fish with a live weight of 4.76 kg or more are
classified as ready for harvest (mature fish), while fish that have
still not achieved this weight are classified as not ready for harvest
(immature fish).
The cash-flow based present value model does not rely on historical
and company specific factors. In a hypothetical market with perfect
competition, a hypothetical buyer of live fish would maximum be
willing to pay the present value of the estimated future profit from
the sale of the fish when it is ready for harvest. The estimated
future profit, considering all price adjustments and payable fees
for completion, constitutes the cash flow. No deductions are made
for sales expenses, as these are not observable on the market.
Such expenses are also deemed immaterial.
Incoming cash flow is calculated as a function of estimated volume
multiplied by estimated price. For fish not ready for harvest, a
deduction is made to cover estimated residual costs to grow
the fish to harvest weight. The cash flow is discounted monthly
by a discount rate. The discount rate comprises three main
components: 1) the risk of incidents that influence cash flow, 2)
hypothetical license lease and 3) the time value of money. Please
refer to the Note 4 on significant accounting estimates for more
detailed information.
When estimating the actual accumulated cost at the respective
seawater facility, direct costs (fish feed and similar) are allocated
to each group of fish, set into sea at the same location. Financial
costs are not included in the costs of production.
The sales price for fish in the sea are based on the forward price
from Fish Pool. Fish Pool is a marketplace for financial purchase
and sale agreements for superior Norwegian Salmon size 3-6
kg gutted weight. The volume on Fish Pool is limited, but Grieg
Seafood’s opinion is that the observable forward prices must be
seen as the best approach to a price for the sale of salmon. With
regard to foreign countries, the most relevant price information
available for the expected harvesting period is applied. For fish
in the sea, the forward price in Norway is adjusted for historical
differences in achieved prices between Norway and Canada/the
UK. The price/net sales value is adjusted for quality differences
(superior, ordinary and prod.), and for logistics expenses and sales
commissions. Estimated harvesting expenses are deducted.
The change in the fair value of biological assets is recognized
through profit or loss (the income statement) and presented as
“fair value adjustment of biological assets”.
Onerous contracts are contracts where the expenses of fulfilling
the contracts are higher than the economic yield the company
expects to gain by fulfilling the contracts. The Group enters into
contracts related to future deliveries of salmon. As biological
assets are recognized at fair value, the fair value adjustments of
the biological assets will be included into the estimated expenses
required to fulfil the contract. This implies that the Group may
experience loss-making (onerous) contracts according to IAS 37
even if the contract price for physical delivery contracts is higher
than the actual production cost for the products. If that occurs, a
provision is made for the estimated negative value.
Changes arising from physical delivery contracts are recognized
as “fair value adjustment of biological assets”. The liability in the
statement of financial position is recognized as other current
liabilities (see Note 7).
Fish farming naturally comes with a certain level of loss of fish
along the production cycle, and our budgets are typically produced
with an inherent assumption of a 0.5-1% monthly mortality. The
losses associated with normal levels of survival are not directly
recognized in the income statement. In periods where specific
abnormal incidents lead to reduced survival, we immediately
recognize write-downs of the biomass inventory, to better reflect
the actual biomass in sea or on land. The write-down cost is
recorded as they arise under raw materials and consumables used
in the income statement.
TRADE RECEIVABLES
Trade receivables arise from the trading of goods or services within
the ordinary operating cycle, and under normal terms of payment
are initially recognized at nominal value. Trade receivables with
longer terms of payment are discounted to present value.
EXPECTED CREDIT LOSS ON TRADE RECEIVABLES
For trade receivables, the Group applies a simplified approach in
calculating ECLs. Therefore, the Group does not track changes
in credit risk, but instead recognizes a loss allowance based on
lifetime ECLs at each reporting date. For receivables where the
credit risk has increased substantially after the establishment,
a write-down shall be made for the expected credit loss over
the maturity of the receivables. The model for calculating loss
allowance classifies the trade receivables into two groups: normal
risk and high-risk, based on their country of origin. Furthermore,
the trade receivables are classified as credit-insured receivable or
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not. According to internal policy, 85% of all trade receivables must
be credit insured. The provision is the difference between nominal
and recoverable amount, which is the present value of estimated
future cash flows, discounted at the original effective interest rate.
Loss allowance is recognized as “other operating expenses” in the
income statement.
FACTORING AGREEMENTS
The Group is engaged in factoring agreements that compromises
financing of outstanding receivables for the Ocean Quality entities
in Norway and in UK. See the section “Derecognition of financial
assets“ in this Note for accounting principle disclosure for
derecognition of financial assets and Note 3 and 10 for further
information on the Group’s factoring agreements.
The majority of the receivables sold under the factoring agreements
are derecognized as of 31 December 2019.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, bank deposits,
other short-term highly liquid investments with original maturities
of three months or less. The overdraft facility is included in current
borrowings in the statement of financial position.
SHARE CAPITAL
Ordinary shares are classified as equity. Costs directly attributable
to the issue of new shares or options, net of tax, are shown in
equity as a deduction, net of tax, from the proceeds.
BORROWINGS
Borrowings are initially recognized at fair value when the funds
are received, net of transaction costs incurred. Borrowings are
subsequently stated at amortized cost applying the effective
interest method. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognized in the
income statement over the period of the borrowings. Borrowings
are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least
12 months after the balance sheet date.
DEFERRED TAX
Deferred tax is provided for in full at nominal value, using the liability
method, on temporary differences arising between the value of
assets and liabilities for tax and accounting purposes. Deferred
tax is determined using tax rates and laws that have been enacted
or substantively enacted by the balance sheet date and that are
expected to apply when the related deferred tax asset is realized,
or the deferred income liability is settled. Deferred tax assets are
recognized to the extent that it is probable that future taxable
income will be available, from which the temporary differences
can be deducted. Deferred tax is calculated on temporary
differences arising on investments in subsidiaries and associates,
except where the timing of the reversal of the temporary difference
is controlled by the Group and it is probable that the temporary
difference will not be reversed in the foreseeable future.
EMPLOYEE BENEFITS
PENSION OBLIGATIONS
The company pays premiums to local, defined-contribution
schemes for all employees. The company's pension schemes
meet the requirements in the Mandatory Occupational Pension
Act. Pension premiums are recognized in the income statement
through operations on an ongoing basis. Employer’s social security
contributions are expensed based on paid pension premiums. The
Group companies Grieg Seafood Rogaland AS and Grieg Seafood
Finnmark AS have a contractual early retirement pension scheme
(AFP). The financial commitments associated with this scheme
are included in the Group’s pension expenses. The AFP early
retirement scheme follows the rules for public sector AFP, and
both companies are members of the Norwegian Confederation
of Trade Unions (LO)/the Confederation of Norwegian Enterprise
(NHO) scheme. The pension payment calculations are based on
standard assumptions relating to the development of mortality and
disability as well as other factors such as age, years of service and
remuneration. Pension premiums are recognized in the income
statement through operations as they arise.
SHARE-BASED REMUNERATION
The Group operates a share-based management remuneration
scheme with settlement in cash, where individual employees are
obliged to buy shares proportionate to their annual salary. The
fair value of the employee services received in exchange for the
grant of the options is recognized as an expense. The total amount
to be charged over the vesting period is calculated on the basis
of the fair value of the options granted, excluding the impact of
any non-market vesting conditions (for example, profitability and
sales growth targets). Non-market vesting conditions are included
in assumptions about the number of options that are expected to
vest. At each balance sheet date, the company revises its estimates
of the number of options that are expected to be vested and
recognizes the impact of the revision relative to original estimates,
if any, in the income statement. The Black and Scholes option
pricing model is used for valuation. The company´s obligations
are recognized under non-current liabilities if the latest possible
redemption date is more than one year into the future.
SHARE SAVINGS PROGRAM
Grieg Seafood established a share savings program for its
employees in 2018 and it was continued in 2019. It is the Board's
intention that the plan shall be a continuing part of the company's
employee incentive scheme. The Board shall, however, have the
right to decide, in its sole discretion, whether the plan will be
extended in the future, and the terms of the plan.
Employees may invest up to NOK 20 000 per year. There is a 3 years
lock-up period. The saved amount is deducted from the monthly
net salary and used to purchase Grieg Seafood shares on behalf of
the employees. The purchase will be made from transfer of Grieg
Seafood's treasury shares or bought in the market. The purchase
price and the number of shares acquired by the company will be
reported in accordance with the applicable regulations.
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TERMINATION BENEFITS
Termination benefits are payable when employment is terminated
by the Group before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for these
benefits. The Group recognizes termination benefits when it is
demonstrably committed to either terminating the employment
of current employees according to a detailed formal plan without
the possibility of withdrawal or providing termination benefits as a
result of an offer made to encourage voluntary redundancy.
PROFIT-SHARING AND BONUS SCHEMES
The Group recognizes a provision where it has a contractual
obligation or where there is a past practice that has created a
constructive obligation.
PROVISIONS
Provisions (e.g. environmental improvements, restructuring costs
and legal claims) are recognized when:
• the Group has a present legal or constructive obligation as a
•
result of past events;
it is more likely than not that an outflow of resources will be
required to settle the obligation;
• the amount of the obligation can be reliably estimated
Restructuring provisions comprise lease termination penalties and
employee termination payments. Provisions are not recognized for
future operating losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognized even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions are measured as the present value of the expenditures
expected to be required to settle the obligation, using a pre-tax
discount rate that reflects the current market situation and the
risks specific to the obligation. The increase in the provision due to
the change in value because of passage of time is recognized as a
financial expense.
REVENUE RECOGNITION
Revenue from contracts with customers is recognized when
control of the goods or services are transferred to the customer
at an amount that reflects the consideration to which the Group
expects to be entitled in exchange for those goods or services. For
the Group, this is when
• the Group has delivered its products to, and performed its
services for, the customer
• the customer has accepted the products and collectability of
the related receivables, and
• the risks and rewards have been transferred to the customer.
The Group’s revenue streams are primarily the sale of fresh and
frozen salmon, and processed fish. The main sale each week is
settled with the customer, and fixed delivery contracts are entered
into with customers, specifying per-week volume. In addition, the
Group also sells roe, smolt and ensilage, together historically
making up about 1 % of the total sales. The Group furthermore
2 2 8
offers harvest services to other aquaculture companies in the case
of surplus capacity (however these services constitute less than 1
% of total revenues). This is presented as other operating income
in the income statement.
For the Group’s revenue streams, each contract is considered as
one performance obligation, as they are related to the delivery of
fish. The sales price is determined upon contract settlement and
is based on available market price (hereof Nasdaq prices including
transport and margin, and the price is per kilogram). The price
varies according to the quality of the fish and its size, and the fish
is mainly sold Delivery Duty Paid (DDP) to customer. The payment
is settled upon delivery, and all of the Group’s performance
obligations towards its customers is satisfied at point in time of
delivery. That also applies to the fulfillment of physical delivery
contracts.
Revenue is shown net of value added tax, returns, rebates and
discounts and after eliminating intragroup sales. The Group
has generally concluded that it is the principal in its revenue
arrangements, because it typically controls the goods or services
before transferring them to the customer.
INTEREST INCOME
Interest income is recognized in the income statement based on
the effective interest rate (EIR) method.
DIVIDEND INCOME
Dividend income from investments or equity instruments, is
recognized when the right to receive payment is established.
Dividend income from entities recognized under the equity method
are not recognized but recorded as a reduction in the carrying
value of the investment.
LEASES
IDENTIFYING A LEASE
At the inception of a contract, The Group assesses whether the
contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
SEPARATING COMPONENTS IN THE LEASE CONTRACT
For contracts that constitute, or contain a lease, the Group
separates lease components if it benefits from the use of each
underlying asset either on its own or together with other resources
that are readily available, and the underlying asset is neither highly
dependent on, nor highly interrelated with, the other underlying
assets in the contract. The Group then accounts for each lease
component within the contract as a lease separately from non-
lease components of the contract.
RECOGNITION OF LEASES AND EXEMPTIONS
At the lease commencement date, the Group recognizes a
lease liability and corresponding right-of-use asset for all lease
agreements in which it is the lessee, except for short term leases
(defined as 12 months or less) and lease agreements where
the leased asset is of low value. For leases that meet these two
exceptions as elaborated on above, the Group recognizes the lease
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payments as other operating expenses in the income statement
when they incur.
Lease liabilities
The lease liability is recognized at the commencement date of the
lease. The Group measures the lease liability at the present value
of the lease payments for the right to use the underlying asset
during the lease term that are not paid at the commencement
date. The lease term represents the non-cancellable period of the
lease, together with periods covered by an option either to extend
or to terminate the lease when the Group is reasonably certain to
exercise this option.
remaining useful life of the right-of-use asset. The Group applies
IAS 36 Impairment of Assets to determine whether the right-of-
use asset is impaired and to account for any impairment loss
identified.
ACCOUNTING POLICIES FOR THE COMPARABLE FIGURES-
THE GROUP AS LESSEE
The Group has applied IFRS 16 using the modified retrospective
approach, and as such the comparable information for 2018 has
not been restated. The comparable figures for 2018 has been
prepared according to IAS 17 Leases. Accounting policies for the
comparable figures are as follows:
The lease payments included in the measurement comprise of:
• Fixed lease payments (including in-substance fixed payments),
less any lease incentives receivable
• Variable lease payments that depend on an index or a
rate, initially measured using the index or rate as at the
commencement date.
Lease payments generally also include any exercise price of a
purchase option/payments of penalties for terminating a lease,
provided that the Group is reasonably certain to exercise such an
option.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability, reducing
the carrying amount to reflect the lease payments made and
remeasuring the carrying amount to reflect any reassessment or
lease modifications, or to reflect adjustments in lease payments
due to an adjustment in an index or rate.
The Group does not include variable lease payments in the lease
liability. Instead, the Group recognizes these variable lease
expenses in the income statement.
The Group presents its lease liabilities as separate line items in
the statement of financial position.
Right-of-use assets
The Group measures the right-of use asset at cost, less any
accumulated depreciation and impairment losses, adjusted for
any remeasurement of lease liabilities. The cost of the right-of-
use asset comprise:
• The amount of the initial measurement of the lease liability
recognized,
• Any lease payments made at or before the commencement
date, less any incentives received, and
• Any initial direct costs incurred by the Group.
The Group presents its right-of-use asset included on the financial
statement line item “Property, plant and equipment incl. Right-of-
use assets”.
Finance leases
Leases, or other arrangements as described in IFRIC 4, relating to
property, plant and equipment where the Group has substantially
all the risks and control, are classified as finance leases. Finance
leases are recognized in the statement of financial position at the
lease’s commencement at the lower of the fair value of the leased
property and the present value of the aggregate minimum lease
payments.
Accounting treatment of finance leases according to IAS 17 is
consistent with IFRS 16, with reference to accounting policies for
IFRS 16 provided in the previous section of this Note.
Operating leases
Leases, or other arrangements described in IFRIC 4, of which more
than an insignificant portion of the risks and rewards of ownership
are retained by the lessor, are classified as operating leases.
Payments made under operating leases (net of any financial
incentives from the lessor) are charged to the income statement
on a straight-line basis over the term of the lease.
DIVIDENDS
Dividends payable to the company’s shareholders are recognized
as a liability in the Group’s financial statements when the dividends
are approved by the AGM.
BORROWING COSTS
Borrowing costs incurred during the construction of operating
assets are capitalized during the period of time that is required
to complete and prepare the asset for its intended use. Other
borrowing costs are expensed in the income statement.
CONTINGENT ASSETS AND LIABILITIES
Contingent liabilities are defined as:
• possible obligations resulting from past events whose existence
depends on future events;
• obligations that are not recognized because it is not probable
that they will lead to an outflow of resources entailing financial
benefits from the company.
• obligations that cannot be measured with sufficient reliability.
The Group applies the depreciation requirements in IAS 16
Property, Plant and Equipment in depreciating the right-of-use
asset, except that the right-of-use asset is depreciated from the
commencement date to the earlier of the lease term and the
Contingent liabilities are not recognized in the annual financial
statements apart from contingent liabilities resulting from the
acquisition of an entity. Material contingent liabilities are disclosed,
with the exception of contingent liabilities where the probability of
2 2 9
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
effect such as acquisitions, sales, calculated interest rates and
unrealized currency translation differences.
Changes in financial assets are disclosed if cash flows have been,
or will be, included in the cash flow from financing activities. This
may be the case for instance for assets pledged as security for
financial liabilities.
EARNINGS PER SHARE
Earnings per share are calculated by allocating the profit for the
year to the company’s shareholders based on a weighted average
of the number of issued ordinary shares during the year. Diluted
earnings per share are calculated by adjusting the weighted
average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
the liability crystalizing is remote.
Contingent liabilities acquired through the purchase of operations
(an acquisition) are recognized at fair value even if it is not probable
that the liability will become unconditional. The assessment of
probability and fair value is subject to constant review. Subsequent
measurement is at the higher of the amount initially recognized
(less any amount recognized as revenue) and the amount according
to the general provision measurement rules.
Contingent assets are not recognized in the statement of financial
position, but are disclosed if it is likely that a benefit will accrue to
the Group.
CASH FLOW STATEMENT
The Group’s cash flow statement shows the overall cash flow
broken down into operating, investing and financing activities
using the indirect method. The cash flow statement illustrates the
effect of the various activities on cash and cash equivalents. Cash
flows resulting from the divestment of operations are presented
under investing activities.
The Group has prepared an overview of changes in the Group’s
liabilities in accordance with IAS 7, Statement of Cash Flows (see
Note 10). This includes changes due to cash flow (e.g. utilization
and repayments of loans) and changes without cash flow
2 3 0
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 3 F IN A NCI A L RISK M A N A GEMEN T
CAPITAL MANAGEMENT
The Group aims to ensure sufficient access to capital to enable the business to develop in accordance with adopted strategies and thus
continue to be one of the leading players in the sector. Historically, the industry has always been vulnerable to price fluctuations in the
market. For this reason, accounting results may fluctuate considerably from year to year. Consequently, the Group also strives to ensure
that the business maintains an appropriate level of disposable liquidity.
The Group aims to provide a competitive return on invested capital to shareholders, by distributing dividends and increasing the share price.
The Board aims to achieve an average long-term dividend corresponding to 30–40% of the Company's profit after tax, allowing for the effects
of fair value adjustments of biomass on profits. However, all dividends must be assessed in the light of what is deemed to be a healthy and
optimal level of equity.
At 31 December 2019, the Group had interest-bearing liabilities, including lease liabilities and factoring, of NOK 2 590 million, see Note 10.
Funding mainly constitutes of bank loans. The level of liabilities and alternative forms of funding are subject to constant evaluation.
FINANCIAL RISK FACTORS
The Group is exposed to a number of financial risks; market risk (including foreign exchange risk, interest rate risk and price risk), credit
risk and liquidity risk. The Group’s overall risk management program focuses on the volatility of the financial markets and seeks to minimize
potential adverse effects on the Group’s financial performance. The Group uses financial derivatives to reduce certain risks.
The Group identifies, evaluates and hedges financial risks in close cooperation with the Group’s operational units. The Board has established
written principles for the management of foreign exchange risk, interest rate risk and use of the Group´s financial instruments.
I) MARKET RISKS
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk from various currency exposures, primarily CAD, USD, GBP and
EUR. Foreign exchange risk arises from future commercial transactions, recognized assets, and liabilities and net investments in foreign
operations. The Group enters into foreign currency forward contracts to manage this risk.
TRADE RECEIVABLES AND
TRADE PAYABLES
CURRENCY IN NOK 1 000
2019
Trade receivables
Trade payables
2018
Trade receivables
Trade payables
NOK
USD
EUR
GBP
CAD
JPY
OTHER
CURRENCIES
TOTAL
28 521
147 185
134 953
116 987
649 551
-48
18 096
88 795
25 744
92 279
5 615
-
892
459 897
6 389
855 061
131 760
470 931
164 470
437 337
153 281
16 894
16 566
825
17 403
69 716
86 096
-
4 923
4 380
925 232
649 352
2 31
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 3 C O N T I N U E D
NET INTEREST-BEARING LIABILITIES
CURRENCY IN NOK 1 000
2019
Cash and cash equivalents*
Interest-bearing liabilities**
Net interest-bearing liabilities
2018
Cash and cash equivalents*
Interest-bearing liabilities**
Net interest-bearing liabilities
NOK
USD
EUR
GBP
CAD
JPY
OTHER
TOTAL
384 665
21 300
-124 398
-92 791
1 716 376
-474
568 114
270 260
1 331 711
-21 774
692 512
363 051
20 897
36 007
15 110
4 205
618
214 497
-
-
2 590 283
-4 205
-618
2 375 786
81 372
10 418
1 320
16 683
29 013
-1 594
707
137 920
1 871 412
106 755
316 193
88 903
-5 075
1 790 040
96 336
314 872
72 221
-34 088
12 900
14 494
5 252
2 396 340
4 544
2 258 419
* The Group has set up a group account scheme (cash pool agreement), in which Grieg Seafood ASA, the parent company, is the legal account holder. All subsidiaries can make
overdrafts on individual bank accounts as long as the Group's total bank deposit is positive. All subsidiaries participating in the group account scheme are jointly and severally liable
for the entire amount of the commitment under the scheme. Cash and cash equivalents include the currency exposure in the group account scheme. For 2018 comparable figures, the
currency exposure in the group account scheme is included in interest-bearing liability, as it was a net liability. the At 31 December 2019, the net amount of bank deposits in the group
account scheme amounted to NOK 3 million (2018: NOK -47 million)
** Overview of interest-bearing liabilities, see Note 10
The Group has investments in foreign subsidiaries whose net assets are exposed to foreign currency translation risk. Currency exposure
arising from the net assets of the Group’s foreign operations was previously primarily managed through borrowings denominated in the
relevant foreign currencies.
The base currency of the syndicated bank loan was previously solely in NOK, however after the renegotiation of the syndicate agreement in
February 2018, the term loan was split into NOK 600 million and EUR 60 million. This was carried forward as a great proportion of the sales
revenues are denominated in EUR, and hence the EUR loan would act as a hedge against currency fluctuation. Further, converting to EUR
loan would reduce the interest cost.
The parent company extends current and non-current loans to the subsidiaries denominated in these companies’ functional currency. All
non-current loans are considered to be equity in these companies, as they will not be repaid. The currency effect of loans is recognized
under "currency effect of net investments" in consolidated comprehensive income. The numerical effects for 2019 and 2018 are presented
below.
CURRENCY EFFECTS ON LOANS TO SUBSIDIARIES NOK 1 000
Currency effect
Tax effect (22 %)
Net effect recognized in equity through OCI
2019
29 819
-6 560
23 259
2018
-4 193
923
-3 271
Sensitivity analysis
A 10% appreciation of NOK against USD, CAD, GBP and EUR at the balance sheet date would be expected to have the following effects on
net interest-bearing liabilities (in NOK 1 000).
10% APPRECIATION AGAINST NOK 1 000
(Gain)/loss before tax in profit or loss on net interest-bearing liabilities
USD
2 177
EUR
GBP
-69 251
-36 306
CAD
-1 511
2 3 2
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
FORWARD CURRENCY CONTRACTS
Hedge accounting has been applied to foreign currency forward contracts relating to non-current physical delivery contracts. The effect on
profit is recorded in other comprehensive income. Current forward currency contracts are not subject to hedge accounting. Value changes in
current forward contracts affect profit or loss, as these contracts are recognized at fair value through profit or loss, see accounting policies
(Note 2).
FORWARD CURRENCY CONTRACTS AT FAIR VALUE THROUGH PROFIT OR LOSS
SOLD
CHF
CAD
EUR
EUR
GBP
JPY
USD
USD
Total
AMOUNT
CURRENCY
IN 1 000
BOUGHT
AMOUNT
CURRENCY IN 1 000
WEIGHTED
HEDGING RATE MARKET RATE
MATURITY INTERVAL *
MARKET VALUE
NOK 1 000
31.12.2019
16
631
113
7 784
445
83 400
2 419
9 995
NOK
USD
GBP
NOK
NOK
NOK
NOK
CAD
149
475
96
77 191
5 184
6 773
21 633
13 173
9.1118
0.7528
0.8531
9.9169
11.6492
0.0812
8.9446
1.3177
9.0877
0.7696
0.8508
9.8638
07.01.2020
09.01.2020
05.05.2020
02.01.2020-04.01.2021
11.5936
06.01.2020-17.01.2020
0.0809
8.7803
1.2994
06.01.2020-10.01.2020
02.01.2020-07.02.2020
03.01.2020-14.02.2020
0
-90
-1
348
18
23
387
1 204
1 891
*Maturity specified as an interval for multiple contracts
HEDGING CONTRACTS THROUGH COMPREHENSIVE INCOME AT FAIR VALUE
SOLD
EUR
GBP
JPY
NOK
USD
Total
AMOUNT
CURRENCY
IN 1 000
1 260
2 211
369 000
92 522
525
BOUGHT
AMOUNT
CURRENCY IN 1 000
WEIGHTED
HEDGING RATE MARKET RATE
MATURITY INTERVAL *
NOK
EUR
NOK
EUR
NOK
12 574
2 588
27 961
9 010
4 767
9.9760
1.1704
0.0758
10.2695
9.0747
9.8638
1.1754
0.0809
9.8638
8.7803
02.01.2020-06.03.2020
17.01.2020-26.10.2020
06.01.2020-08.01.2021
06.01.2020-04.01.2021
02.01.2020-10.01.2020
MARKET VALUE
NOK 1 000
31.12.2019
160
-17
-2 144
2 627
160
786
*Maturity specified as an interval for multiple contracts
FORWARD CURRENCY CONTRACTS AT FAIR VALUE THROUGH PROFIT OR LOSS
AMOUNT
CURRENCY
IN 1 000
BOUGHT
AMOUNT
CURRENCY IN 1 000
WEIGHTED
HEDGING RATE MARKET RATE
MATURITY INTERVAL *
MARKET VALUE
NOK 1 000
31.12.2018
SOLD
USD
EUR
GBP
JPY
NOK
USD
Total
*Maturity specified as an interval for multiple contracts
222
366
214
7 380
7 644
6 550
NOK
NOK
NOK
NOK
GBP
CAD
1 756
3 515
22 866
546
700
8 781
7.9283
9.6164
10.6900
0.0740
10.9259
1.3410
8.6885
09.01.2019
9.9483
02.01.2019 - 07.01.2019
11.1213
02.01.2019 - 09.01.2019
0.0790
04.01.2019 - 09.01.2019
11.1213
02.01.2019 - 09.01.2019
1.3636
09.01.2019 - 01.02.2019
-171
-121
-952
-98
146
-967
-2 162
2 3 3
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 3 C O N T I N U E D
HEDGING CONTRACTS THROUGH COMPREHENSIVE INCOME AT FAIR VALUE
SOLD
USD
EUR
JPY
SEK
CHF
NOK
Total
AMOUNT
CURRENCY
IN 1 000
BOUGHT
AMOUNT
CURRENCY IN 1 000
WEIGHTED
HEDGING RATE MARKET RATE
MATURITY INTERVAL *
MARKET VALUE
NOK 1 000
31.12.2018
1 900
6 706
774 691
135
12
3 047
NOK
NOK
NOK
NOK
NOK
GBP
16 583
66 926
58 437
131
107
275
8.7277
9.9806
0.0754
0.9727
8.8827
8.6885
9.9483
0.0790
0.9701
8.8280
02.01.2019 - 04.01.2019
02.01.2019 - 06.03.2020
04.01.2019 - 08.01.2021
02.01.2019 - 04.01.2019
03.01.2019
11.0810
11.1213
02.01.2019 - 04.01.2019
55
-72
-3 741
0
1
15
-3 743
*Maturity specified as an interval for multiple contracts
(ii) Interest rate risk
Since the Group has no significant interest-bearing assets apart from bank deposits, its income and operating cash flows are largely
independent of changes in market interest rates. The Group’s interest rate risk arises from borrowings. Borrowings at variable rates expose
the Group to cash flow interest rate risk. Fixed-interest contracts are used to reduce this risk. The Group continuously monitors its interest
rate exposure. The Group calculates the impact on profit or loss of a defined interest rate change. The same change in the interest rate is
used for all currencies in each simulation. The scenarios are only run for liabilities that represent major interest-bearing positions.
Sensitivity calculations show the following expected values: If the interest rate had been 1% higher (lower) throughout the year, all other
factors remaining unchanged, the pre-tax profit would have decreased (increased) by NOK 21 million in 2019 and NOK 20 million in 2018 due
to the floating rate of interest on loans and deposits. The sensitivity analysis is based on average net interest-bearing liabilities during 2019
and 2018, irrespective of concluded interest rate swap agreements.
SENSITIVITY NOK 1 000
CHANGE IN INTEREST RATE POINTS
2019
2018
Effect on profit before income tax
-/+ 1%
-/+ 20 688
-/+ 20 025
INTEREST RATE SWAP AGREEMENTS
The purpose of the Group’s risk management activities is to establish an overview of the financial risk that exists at any given time and
to provide more time to adapt to relevant developments. To this end, the Group has chosen to employ interest rate swap agreements to
establish greater stability for the Group’s variable-rate loan interest expenses. The Group has decided that at any given time, a certain
percentage of its variable interest-bearing liabilities should be hedged using interest rate swap agreements. A given proportion will always
be at a floating rate, while the remainder will be subject to potential hedging. This situation is constantly reviewed in light of the market
situation. The interest rate swap agreements have a duration of four years. The Company constantly evaluates whether these periods should
be rolled over.
AGREEMENT
PRINCIPAL
NOK 1 000
FIXED
RATE (%)
BASIS OF
FLOATING RATE
MATURITY
MARKET VALUE
NOK 1 000
31.12.2019
MARKET VALUE
NOK 1 000
31.12.2018
Fixed rate paid - floating rate received
Fixed rate paid - floating rate received
Fixed rate paid - floating rate received
Fixed rate paid - floating rate received
Total
400 000
260 000
200 000
200 000
Interest rate swap contracts assessed at market value excl. accrued interest
1.69
Nibor 3 months
27.03.2019
1.28
Nibor 3 months
20.10.2021
1.64
1.61
Nibor 3 months
Nibor 3 months
05.07.2022
28.08.2023
-
2 641
1 016
1 820
5 477
-394
1 252
-
-
858
2 3 4
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
(iii) Price risk
Financial salmon price contracts allow the buyer and seller to agree prices and volumes for future delivery. As at 31 December 2019, 19% of
the estimated harvest volumes in 2020 in Norway and 8% of the estimated harvest volumes in the UK are hedged under fixed price contracts.
The total share of fixed price contracts in 2019 was 22% and 24% for Norway and the UK, respectively. The financial contracts are presented
gross in the balance sheet with changes in value recognized through profit/loss as part of the fair value adjustment of biological assets. As
biological assets are recognized at fair value, the expected costs to meet contract terms will be included in the fair value adjustment. As
at 31 December 2019, the Group had financial salmon contracts for 2019 totalling NOK -10 million, of which all were sales contracts, and
physical delivery contracts recognized as liability, totalling NOK -2 million.
Fair value of financial derivatives
The carrying value of derivatives and other financial instruments as at 31 December is shown below. The carrying value equals fair value.
Positive values are classified as an asset, while negative values are classified as a liability in the balance sheet.
FAIR VALUE OF FINANCIAL DERIVATIVES NOK 1 000
Forward currency contracts at fair value through profit or loss
Forward currency hedging contracts at fair value through
comprehensive income
Interest rate swap agreements
Financial salmon contract - purchase contracts
Financial salmon contract - sales contracts
Total financial instruments at fair value
2019
2018
ASSETS
CURRENT
LIABILITIES
ASSETS
CURRENT
LIABILITIES
1 891
-
5 477
-
-
7 368
-
786
-
-
-10 107
-9 321
-
-
858
-
1 885
2 743
-2 162
-3 743
-
-
-
-5 905
II) CREDIT RISK
Credit risk is managed at Group level. Credit risk arises from transactions involving derivatives and deposits in banks and financial
institutions, transactions with customers, including trade receivables, and fixed contracts as well as loans to associates. The Group has
procedures to ensure that products are only sold to customers with satisfactory creditworthiness. The company normally sells to new
customers solely against presentation of a letter of credit or against advance payment. Credit insurance is used when deemed necessary.
For customers who have a reliable track record with the Group, sales up to certain previously agreed levels are permitted without any
security. Factoring agreements have been concluded with Ocean Quality AS and Ocean Quality UK Ltd. regarding trade receivables. See
further information about the factoring agreement in Note 10.
All fish produced in the Group is sold to Ocean Quality Group, which in turn sells to external customers. The Ocean Quality Group secures
the bulk of its sales through credit insurance and bank guarantees.
The book value of financial assets represents the maximum credit exposure. For further information about loss allowance, please refer to
Note 20.
MAXIMUM CREDIT RISK EXPOSURE NOK 1 000
Trade receivables
Other receivables
Cash and cash equivalents
Total
NOTE
20
21
19
2019
278 391
60 000
214 497
552 888
2018
262 015
22 100
137 920
422 036
2 3 5
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 3 C O N T I N U E D
III) LIQUIDITY RISK
The Group adopts a prudent approach to liquidity risk management, which includes maintaining sufficient cash and marketable securities,
securing funding through sufficient credit facilities and maintaining the ability to close market positions when considered appropriate.
Due to the dynamic underlying nature of the business, the Group aims to secure flexibility through available credit lines. The Group maintains
a financing agreement through a 50/50 syndicate with DNB and Nordea. The agreement includes a non-current credit facility of NOK 1 300
million and a bank overdraft facility of NOK 100 million. For further information about the agreement and other non-current liabilities, see
Note 10.
Management monitors the Group’s liquidity reserve, which comprises credit facilities (see Note 10) and cash and cash equivalents (Note
19), based on expected cash flows. This is generally carried out at Group level in cooperation with the operating companies. At 31 December
2019, the Group had a good level of free liquidity and unutilized credit facilities, with available cash and credit facilities of NOK 955 million.
The following table shows a breakdown of the Group’s non-derivative financial liabilities, classified by maturity structure. The amounts in the
table are undiscounted contractual cash flows. Note 10 shows the payment profile for the Group’s non-current liabilities.
31.12.2019
NOK 1 000
< 3 M
3 M
- 1 Y
Y 2
Y 3
Y 4
Y 5
Y 6
Y 7
Y 8
Y 9
Y 10
> 10
YRS
TOTAL
Non-current loan
instalments
49 106
49 106
98 212
98 212
748 215
Loan interest - floating
5 068
14 941
18 129
16 096
2 563
-
-
-
-
629 319
4 304
13 412
17 844
17 844
2 999
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 1 042 850
-
56 797
-
629 319
-
56 402
19 080
54 495
69 040
62 852
56 068
46 423
37 296
35 257
32 688
24 067
14 009
878
452 152
3 670
9 985
11 229
9 009
7 046
5 471
4 188
3 029
2 029
960
237
3
56 855
34 595
91 157
90 347
72 193
34 918
22 192
5 394
5 423
5 608
2 594
1 097
14 323
379 841
2 651
6 527
6 087
3 790
2 229
1 407
1 036
857
672
530
464
14 377
40 626
Trade payables
Factoring liabilities
855 061
86 122
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
855 061
86 122
Total liabilities
1 059 658
239 622
310 887
279 995 1 483 355
75 493
47 913
44 566
40 997
28 151
15 807
29 581 3 656 026
KEY FOR TABLE M = Months Y = Year YRS = Years
2 3 6
Non-current credit
facility
Interest non-current
credit facility
Lease liabilities (prior
IAS 17 finance leases)
Interest on lease
liabilities (prior IAS 17
finance leases)
Lease liabilities (prior
IAS 17 operational
leases)
Interest on lease
liabilities (prior IAS 17
operational leases)
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
31.12.2018
NOK 1 000
< 3 M
3 M
- 1 Y
Y 2
Y 3
Y 4
Y 5
Y 6
Y 7
Y 8
Y 9
Y 10
> 10
YRS
TOTAL
Non-current loan
instalments
49 106
49 106
98 212
98 212
98 212
754 181
Loan interest - floating
5 442
14 395
17 728
15 896
14 113
2 247
Non-current credit
facility
Interest non-current
credit facility
-
-
-
-
-
260 000
1 540
4 791
6 412
6 394
6 394
1 074
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 1 147 027
-
69 821
-
260 000
-
26 605
Finance leases
18 266
49 817
54 458
48 267
41 396
35 556
27 669
24 317
22 116
20 203
11 217
7 160
360 442
Interest finance leases
2 629
7 113
7 898
6 284
4 881
3 702
2 849
2 134
1 457
907
349
109
40 311
Trade payables
Export credits
649 352
-
-
8 897
Factoring liabilities
573 377
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
649 352
8 897
573 377
Total liabilities
1 299 712
134 119
184 706
175 052
164 995 1 056 761
30 518
26 451
23 574
21 110
11 566
7 269 3 135 832
KEY FOR TABLE M = Months Y = Year YRS = Years
Available liquidity, available drawdowns on the credit facility, as well as positive cash flows from operations, are deemed to be sufficient to
cover current and non-current liabilities.
FAIR VALUE ESTIMATION
(I) FINANCIAL INSTRUMENTS
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques (see Note 12). The
Group uses different methods and makes assumptions based on market conditions at each balance sheet date. The fair value of forward
foreign exchange contracts is determined using quoted forward exchange rates at the balance sheet date. The fair value of financial salmon
contracts is determined using forward prices from Fish Pool.
(II) TRADE RECEIVABLES AND TRADE PAYABLES
The nominal value less write-downs for realized losses on trade receivables and trade payables is assumed to correspond to the fair value
of these items. The fair value of financial liabilities is assumed to approximate to the book value, as virtually all these items are exposed to
floating interest rates.
(III) BIOLOGICAL INVENTORIES
Fish in sea is measured at estimated fair value. Consequently, the value of biological inventories is likely to vary more than the value of
inventories based on cost. The estimated fair value varies for a number of reasons, including volatility in the price of Atlantic salmon,
factors relating to production, changes in harvesting schedules, and changes in the composition of inventories. Grieg Seafood considers
three components to be key parameters for valuation; price, estimated harvest biomass volume and the applied monthly discount rate. The
monthly discount rate is applied to expected future cash flows, to account for risk, time value of money and the cost of contributory assets.
In the following table is a sensitivity analysis, showing the change in the fair value of the biological assets, and hence the Group profit before
tax, in the event of changes in these parameters.
SENSITIVITY ANALYSIS OF BIOMASS - EFFECT ON PRE-TAX PROFIT NOK 1 000
Change in discount rate +1%
Change in discount rate -1%
Changes in sales price +1 NOK/kg
Changes in sales price -1 NOK/kg
Changes in biomass volume +1% kg
Changes in biomass volume -1% kg
2019
-127 246
138 808
59 411
-59 411
35 207
-35 207
2018
-139 099
155 255
57 516
-57 516
33 009
-33 009
Note that changes in sales price or harvest volume have a linear effect on the fair value of biological assets. Therefore any change in price
or harvest volume as a multiple of the numbers in the above table, will have the similar multiple effect on the fair value of biological assets.
2 3 7
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 4 CRI T IC A L A CCOUN T ING E S T IM AT E S A ND
JUDGEMEN T S
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
Management is required to make estimates and assumptions
concerning the future, which affect which accounting policies
are to be used and reported amounts for assets, liabilities and
contingent liabilities in the balance sheet, as well as income
and expenses for the accounting year in accordance with IFRS.
Estimates and underlying assumptions are continuously evaluated
and are based on historical experience and other factors, including
expectations of future events that are believed to be probable under
the present circumstances. The final outcomes may deviate from
these estimates. Changes in accounting estimates are recognized
in the period in which the estimates are changed. The Group is
involved in claims and complaints related to the sale of goods on a
continuous basis. As of year-end there were no material ongoing
issues.
ESTIMATED IMPAIRMENT OF GOODWILL, LICENSES AND
PROPERTY, PLANT AND EQUIPMENT
The Group tests whether goodwill and licenses have suffered any
impairment on an annual basis, in accordance with the accounting
policy stated in Note 2. The recoverable amounts of cash-generating
units are determined based on value-in-use calculations. These
calculations require the use of estimates of future cash flows
from the cash-generating unit, and the application of a discount
rate in order to calculate the present value of future cash flows.
Expectations of future cash flows will vary over time. Changes in
market conditions and expected cash flows can result in losses
due to future value decreases. The value of long-term growth
in demand, changes in market competition, the strength of the
production stage in the value chain and thus also expectations of
the long-term profit margin are also of significance. The different
parameters could variously affect the value of the licenses over
time. Any change in these critical assumptions will result in
related write-downs, or the reversal of write-downs of the value
of licenses in accordance with the accounting policies described in
Note 2. Please also refer to Note 8 for further comments on tests
relating to value impairment.
CLASSIFICATION OF LICENSES
All licenses where the Group has no other contractual restrictions
relating to the use of the licenses have indefinite lives and, as
such are not amortized. Also, licenses granted with a finite useful
life, but where the license holders can renew the licenses without
incurring considerable expenses are assessed as indefinite lives.
However, the Group’s licenses in each country are subject to
certain requirements and the Group risks penalties, sanctions or
even license revocation if the Group fails to comply with license
requirements or related regulations. Also, local government
may change the way licenses are renewed. In June 2018, B.C
government announced a new approach to salmon farm tenures
2 3 8
in BC, Canada. The new regulation will be effective from June
2022, where the licenses must be approved by both Fisheries
and Oceans Canada (DFO) and the local First Nations in the area
where the company has its licenses. The DFO wants to cooperate
with companies that have licenses where the production might
conflict with the wild salmon and find alternative solutions such
as moving the licenses to new areas. As per today Grieg Seafood
BC does not have any licenses in areas where this is an issue.
The government in Canada also has a high focus on sustainable
utilization of ocean resources, and is following up that the farming
industry is complying with the requirements. The agreements
with First Nations are set to varying durations of 5 to 25 years,
but there are continuous meetings where the parties review how
the collaboration has worked and agree to extend the duration
of the agreement beyond 25 years or longer. This is part of the
agreements. Even though the agreements cannot be said to be
everlasting, the Group has nevertheless classified the licenses
as indefinite lives, as finding the right depreciation profiles is very
difficult. Given that it is desirable for both First Nations and the
Group to have a close and good working relationship and that they
want the Group to operate in the area, the Group’s best estimate
is that the licenses will still be classified as indefinite lives. This
will be continuously assessed. If the situation changes and the
Group agrees not to use the option to extend the duration of the
agreement, the estimate of the remaining depreciation period
must be re-evaluated. For further information, please see Note 8.
BIOLOGICAL ASSETS
The Group’s biological assets comprise smolt and fish in the sea.
Biological assets are measured at fair values less costs to sell.
The measurement unit is the individual fish, however, for practical
reasons, cash flows and estimates are carried out per locality. The
fair value model assessed by the Group calculates the net present
value of expected cash flow. Valuation is based on a different
premise, many of which are non-observable. The premises are
divided into the four following categories:
1.
Sales price
2. Production cost
3.
Volume
4. Discount rate
For mature fish (ready for harvesting) at the balance sheet date,
uncertainty mainly involves realized prices and volume. For
immature fish (not ready for harvesting), level of uncertainty is
higher. Price, volume, discount rate, and remaining production
costs are the main uncertainty factors; however, uncertainty is
also related to biological transformation and mortality prior to
harvest date for the fish.
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
Sales price
Salmon sales prices are volatile. The sales price is based on
forward prices and/or the most relevant pricing information
available for the period in which the fish is expected to be mature
(ready for harvesting). Changes in price assumptions have the
greatest impact on the fair-value estimate. The market price
constitutes the basis for calculating fair value for both mature and
immature fish. The forward prices for superior Norwegian salmon
weighing 3-6 kg gutted weight from Nasdaq Fish Pool are applied.
For fish ready for harvest, the forward price for the following month
is applied. For fish not ready for harvest the forward price for the
month when the fish is expected to be harvested is applied. Fish
harvested before optimal harvest weight of 4.0 kg gutted weight
(4.76 kg live weight) an additional price adjustment is required.
The price is adjusted for export margin and clearing costs. This
accounts for both fish ready for harvest and not ready for harvest.
Production cost
The planned point of harvesting is assumed to be when the fish
reaches a live weight of 4.76 kg, however, there may be uncertainty
regarding the estimated growth rate. For immature fish the fair
value is adjusted by the estimated remaining cost necessary to
grow the fish to optimal harvest weight. Forecasted production
costs include provisions for estimated feed prices, costs of
treatment of lice and other costs to prevent biological accidents.
Here, estimations are affected by uncertainty regarding the
number of lice treatments to be carried out, the sea temperature
and other conditions affecting growth and costs.
Volume
Estimated harvest volume is based on estimated number of fish at
the balance sheet date less estimated future mortality multiplied
by optimal harvest weight (4.76 kg). Actual harvest volume may
differ from the estimated volume due to changes in biological
conditions or due to special events, such as a mass mortality.
Estimated number of fish is based on the number of smolt released
to sea, and mortality is a given percentage of the fish in sea. The
normal estimated harvest weight is assessed to be the live weight
of fish that results in gutted weight of 4.0 kg. If there are any
specific conditions at the balance sheet date resulting in the fish
being harvested before they reach optimal weight, the estimated
harvest weight is adjusted. Mortality during the period from the
balance sheet date to the date when the fish reach harvest weight
is estimated to be 1% of the number of incoming fish per month.
Discount rate
The sales income and remaining expenses are allocated to
the same period as the fish is harvested. The cash flows from
all localities where the Group has fish in the sea will then be
distributed over the entire period it takes to farm the fish in the
sea. With the current size of the smolt released and the frequency
of the smolt releases, this period may be up to 18 months. The
estimated future cash flow is discounted by a monthly rate,
which was 6% at 31 December 2019. The discount rate takes into
account both risk adjustment (risk related to volume, cost and
price), compensation for the value of the licenses (hypothetical
rent) and time value (tying up capital). The risk adjustment shall
reflect the price discount a hypothetical buyer would demand as
compensation for the risk assumed by investing in live fish rather
than a different investment. The longer it takes to reach harvest
date, the higher the risk that something may occur that will affect
the cash flow. Three significant factors could have an impact on the
cash flow; volume, costs and prices. The one thing all three factors
have in common is that the sample space is asymmetrical.
Due to limited access to licenses for farming fish, the license
value is currently considered to be very high. For a hypothetical
buyer of live fish to take over and continue to farm the fish, the
buyer needs a license, locality and other permits required for such
production. However, in a hypothetical market for the purchase
and sale of live fish, one must assume that this would be possible.
In that scenario, a hypothetical buyer would claim a significant
discount to allocate a sufficient share of the returns to the buyer's
own licenses. It is difficult to create a model that would allow a
hypothetical annual lease cost to be derived from prices for sold
licenses as the curve in the model would be based on projections
of future profit performance in the industry.
A discount must be made for the time value of the tied-up capital
linked to the share of the present value of the cash flow allocated
to the biomass. The buyer who is investing in live fish rather than
some other type of investment, would claim compensation for
the alternative cost. The production cycle for salmon in the sea
currently takes up to 18 months. The cash flow will therefore
extend over a similar period. Assuming a constant sales price
throughout the period, the cash flow would decrease for each
month, as costs are incurred to farm the fish to harvested weight.
The cost increase for every month the fish are in the sea. As
such, the effect of deferred cash flow is lower than what would
be the case if the cash flow had been constant. This component
is however deemed important due to the major values the stock
of fish represents. Please refer to Note 2 and Note 7 for further
information on estimation and calculation of fish values.
Significant assumptions sensitivity
The estimate of fair value of biomass will always be based on
uncertain assumptions, even though the Group has built expertise
in assessing these factors. There are three components that acts
as key parameters for valuation; average price, estimated biomass
volume and monthly discount rate. Please refer to Note 3 for a
sensitivity analysis of these factors.
2 3 9
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 5
IN V E S T MEN T IN A S S OCI AT E S
Associates that are closely related to the Group's operations and included in the Group´s value chain are classified on a separate line in
EBIT when the relevant associates operate in the same position in the value chain as the Group. For 2018 and 2019, no investments were
classified on a separate line after EBIT.
In 2019, the Group, through Grieg Seafood Finnmark AS, has invested NOK 1.2 million in Nordnorsk Smolt AS to acquire 50% of the company's
shares. The remaining shareholdings are held by Norway Royal Salmon ASA (50%). The expansion of the smolt facility of Nordnorsk Smolt
AS has been financed by loan from the shareholders during the development and expansion period. The loan has been converted to equity at
the end of 2019, to strengthen the balance. Planned production is approximately 800 tonnes of smolt per year. At 31 December 2019, Grieg
Seafood Finnmark has provided a long-term loan to Nordnorsk Smolt AS, amounting to 1.9 million, which is included in other non-current
receivables.
In 2018, the Group, through Grieg Seafood Rogaland AS, invested NOK 30 million in Tytlandsvik Aqua AS to acquire 33.33% of the company's
shares. The remaining shareholdings are held by Bremnes Seashore AS (33.33%) and Vest Havbruk AS (33.33%). Through Tytlandsvik Aqua
AS, the partners will secure increased and improved access to post smolt and are planning for an annual production capacity of 3 000
tonnes, of which Grieg Seafood's share of the volume is 50%. A total of approximately NOK 300 million has been invested in the facility, which
was completed according to plan at the end of 2018. The production started at the beginning of 2019. The investment in Tytlandsvik Aqua AS
and Nordnorsk Smolt AS are classified on a separate line in the balance sheet, and the share of profit is included in EBIT. Total recognized
share of profit/loss from associates in 2019 was NOK 0.2 million and the total book value was NOK 81 million at 31 December 2019.
ASSOCIATES CLASSIFIED AS
OPERATIONS
EQUITY INTEREST
AT 31.12.2019
BOOK VALUE AT
01.01.2019
NOK 1 000
PROFIT/LOSS 2019
NOK 1 000
CHANGES IN THE
PERIOD, INCLUD.
REPAID CAPITAL
NOK 1 000
BOOK VALUE AT
31.12.2019
NOK 1 000
Nordnorsk Smolt AS
Tytlandsvik Aqua AS
Total associates classified as operations
50.00%
33.33%
-
37 122
37 122
-1 304
1 516
211
43 737
-
43 737
42 433
38 638
81 071
The share issue and shareholder agreement for Nordnorsk Smolt were signed on 30 June 2019. Value added relating to the investment has
been allocated to hatcheries under construction, based on provisional accounting figures from Nordnorsk Smolt AS at the acquisition time.
AT 31.12.2019
Nordnorsk Smolt AS
Tytlandsvik Aqua AS
Total ownership
TIME OF
INVESTMENT
EQUITY INTERST
01.07.2019
01.06.2017
50.00%
33.33%
FAIR VALUE
ADJUSTMENT
HATCHERY
NOK 1 000
17 022
14 600
31 623
DEPRECIATION OF
VALUE ADDED
NOK 1 000
BOOK VALUE OF
VALUD ADDED
NOK 1 000
851
294
1 145
16 171
14 307
30 478
Value added of Tytlandsvik Aqua is amortized from the time the facility was commissioned. The value added allocated to Nordnorsk Smolt is
amortized from the date of acquisition. Tytlandsvik Aqua AS and Nordnorsk Smolt have the same financial year as the Group. The following
table displays provisional financial information at 31 December 2019 (100%).
2 4 0
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
AT 31.12.2019 NOK 1 000
TOTAL ASSETS
TOTAL LIABILITIES
TOTAL EQUITY OPERATING INCOME
PRE-TAX PROFIT/LOSS
Nordnorsk Smolt AS
Tytlandsvik Aqua AS
113 495
322 747
60 973
249 746
52 523
73 001
32 925
101 107
-6 783
6 711
ASSOCIATES CLASSIFIED AS
OPERATIONS
EQUITY INTEREST
AT 31.12.2018
BOOK VALUE AT
01.01.2018
NOK 1 000
PROFIT/LOSS 2018
NOK 1 000
CHANGES IN THE
PERIOD, REPAID
CAPITAL NOK 1 000
BOOK VALUE AT
31.12.2018
NOK 1 000
Tytlandsvik Aqua AS
33.33%
Total associates classified as operations
9 450
9 450
-2 328
-2 328
30 000
30 000
37 122
37 122
The share issue and shareholder agreement were signed on 1 June 2017. Value added relating to the investment has been allocated to
hatcheries under construction, based on provisional accounting figures from Tytlandsvik Aqua as at 31 December 2018.
AT 31.12.2018
TIME OF INVESTMENT
EQUITY INTERST
FAIR VALUE ADJUSTMENT HATCHERY NOK 1 000
Tytlandsvik Aqua AS
Completed share issue through the year
Total ownership
01.06.2017
2018
16.67%
16.66%
33.33%
Value added will be written down when the facility is completed and commissioned.
14 600
Tytlandsvik Aqua AS has the same financial year as the Group. The following table displays abridged, provisional financial information at
31 December 2018 (100 %).
AT 31.12.2018 NOK 1 000
TOTAL ASSETS
TOTAL LIABILITIES
TOTAL EQUITY OPERATING INCOME
PRE-TAX PROFIT/LOSS
Tytlandsvik Aqua AS
260 973
189 251
71 722
210
-4 128
2 41
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 6 SEGMEN T INFORM AT ION
The operating segments are identified on the basis of the reports which Group management (the chief decision-maker) uses to assess
performance and profitability at a strategic level. Group management assesses business activities from a geographical perspective, based
on the location of assets.
The Group has only one production segment: Production of farmed salmon. Geographically, management assesses the results of production
in Rogaland – Norway, Finnmark – Norway, BC – Canada and Shetland - UK.
Group management evaluates the results from the segments based on EBIT before value adjustments of biological assets. The method
of measurement excludes the effect of non-recurring costs, such as restructuring costs, legal costs on acquisition and amortisation of
goodwill and intangible assets when amortisation is attributable to an isolated event which is not expected to recur. The measurement
method also excludes the effect of cash-settled share options, as well as unrealised gains and losses on financial instruments.
The Group’s customers are divided into different geographical markets. All sales from Norway, the UK and Canada go through the sales
company Ocean Quality AS, which is also partly owned by Bremnes Fryseri AS. Grieg Seafood ASA owns 60% of Ocean Quality AS (see Note
1 for further information). Norway therefore shows the aggregate figures for the Norwegian market. Ocean Quality is fully consolidated and
is part of the associated segment.
The Group's revenues mainly comprise revenues from sale of whole and processed fish and some ensilage. Furthermore, the Group also
generates revenues from sale of roe and harvest services to external parties. Sales revenues are recognized when the goods are delivered
and both title and risk have been transferred to the customer. This will normally be upon delivery. In 2019, sale of whole fish (fresh and
frozen) constituted 92% (2018: 93%) of the Group's total sales revenues, while processed fish constituted 7% (2018: 7%).
GEOGRAPHICAL MARKET
NOK 1 000
UK
NORWAY
BC
ELIM.
SALES REVENUES 2019
SALES REVENUES 2018
EU
UK
USA
Canada
Russia
Asia
Other markets
Total
156 325
4 224 795
510 853
131 814
462 414
6 893
1 679
182 338
-
-
-
-
645 282
251 319
-
13 910
1 242 241
66 403
492
376 834
-
815 073
6 495 515
963 004
-
-
-
-
-
-
-
-
4 381 121
973 267
783 988
435 336
-
1 322 554
377 326
8 273 592
53%
12%
9%
5%
-
16%
5%
100%
3 792 747
1 301 892
792 002
252 606
-
1 048 755
312 313
7 500 316
51%
17%
11%
3%
-
14%
4%
100%
SALES REVENUES DISTRIBUTED BY PRODUCTS
NOK 1 000
NORWAY
BC
UK
TOTAL
2019
2018
2019
2018
2019
2018
2019
2018
6 014 749
5 287 188
790 465
910 697
802 201
767 753
7 607 415
6 965 638
650
21 253
-
-
-
4 777
650
337 366
279 321
172 169
164 411
38 587
104 162
11 421
25 957
38
332
-
164
6 220
1 337
5 315
24 478
515 755
2 530
366
39 963
109 809
26 030
468 210
13 951
26 487
6 495 515
5 625 140
963 004
1 075 272
815 073
799 904
8 273 592
7 500 316
Fresh whole fish
Frozen whole fish
Fresh processed fish
Frozen processed fish
Other products
Total
2 4 2
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
Information reported to Group management from the reporting segments.
GEOGRAPHICAL
SEGMENTS
NOK 1 000
Sales revenues
Other income **
NORWAY
ROGALAND
NORWAY
FINNMARK
CANADA
BC
UK
SHETLAND
OTHERS/
ELIMINATIONS *
GRIEG SEAFOOD
GROUP
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
1 538 871
959 604 1 815 257 1 671 334
861 361 1 075 272
731 583
799 904 3 326 519 2 994 204 8 273 592
7 500 316
Other gain/losses **
185
464
6 401
-1 615
53 234
24 005
-
-
3 488
-756
15 878
-2 719
12 779
10 065
-42 983
-24 095
134
295
-2 352
29 732
26 519
3 612
25 853
26 157
Share of profit from
associates
Operating costs before
depreciation and
amortisation
EBITDA before fair value
adjustment of biological
assets
Depreciation,
amortization and
reversals
EBIT before fair value
adjustment of biological
assets
Harvesting volume
(tonnes GWT)
EBIT/kg (NOK)
Assets
Total assets
1 516
-2 328
-1 304
-
-
-
-
-
-
-
211
-2 328
-935 367
-714 119 -1 104 887
-984 074
-718 193
-752 703
-708 873
-730 113 -3 338 457 -3 034 517 -6 805 777
-6 215 526
658 440
267 626
715 467
685 645
145 900
335 728
35 623
80 151
-57 272
-34 677
1 498 157
1 334 473
-90 210
-47 989
-135 310
-90 728
-72 585
-44 864
-102 857
-46 400
-9 621
-5 673
-410 583
-235 655
568 229
219 637
580 157
594 917
73 315
290 864
-67 235
33 752
-66 893
-40 350
1 087 574
1 098 818
25 217
22.53
16 293
13.48
32 362
17.93
29 774
14 120
16 632
11 273
11 924
19.98
5.19
17.49
-5.96
2.83
82 973
13.11
74 623
14.72
1 965 193 1 799 591 2 703 202 2 454 923 1 558 627 1 293 051 1 608 545 1 141 181 1 099 116 1 453 744 8 934 683
8 142 490
1 965 193 1 799 591 2 703 202 2 454 923 1 558 627 1 293 051 1 608 545 1 141 181 1 099 116 1 453 744 8 934 683
8 142 490
Liabilities
598 593
661 483 1 101 732
851 729
729 498
520 559 1 470 327
956 532
893 689 1 268 676 4 793 839
4 258 979
Total liabilities
598 593
661 483 1 101 732
851 729
729 498
520 559 1 470 327
956 532
893 689 1 268 676 4 793 839
4 258 979
* Others/ eliminations
A proportion of non-controlling interests (Bremnes Fryseri AS) is reported with ownership expenses and other posts as an elimination. A share of sales revenue and other operational
expenses from non-controlling interests is eliminated on subordinated account lines in the column "Others/eliminations". Sales revenue from sales for Bremnes Fryseri AS amount to
appr. NOK 2 581 million, while other operational expenses including cost of goods sold amounts to appr. NOK 2 274 million.
Other items comprise the profit/loss from activities conducted by the parent company or other Group companies not geared for production. Internal transactions between the subsidiary
and the parent company, as well as other posts relating to the parent company, are eliminated.
** Other income/gains/losses
Other gains/losses include foreign currency, as well as sale of fixed assets and other equipment.
Other income mainly relates to the settlement of insurance and other services not directly related to production.
GROUP EBIT NOK 1 000
2019
2018
EBIT before fair value adjustment of biological assets
Fair value adjustment of biological assets (Note 7)
EBIT after fair value adjustment of biological assets
Net financial items (Note 23)
Profit before tax
Estimated taxes
Profit for the year
1 087 574
-220 714
866 860
-26 234
840 626
-195 718
644 908
1 098 818
256 097
1 354 916
-77 991
1 276 925
-279 805
997 120
2 4 3
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 7 BIOLOGIC A L A S SE T S A ND OT HER IN V EN TORIE S
Biological assets at 01.01.
Currency translation differences
Increase due to production
Decrease due to abnormal mortality/loss
Decrease due to sales
Fair value adjustment at 01.01.
Fair value adjustment at 31.12.
TONNES
2019
56 399
N/A
109 993
-4 559
-94 218
N/A
N/A
2018
54 677
N/A
90 683
-5 061
-83 900
N/A
N/A
NOK 1 000
2019
3 195 142
57 178
3 717 490
-191 694
2018
2 698 352
-11 446
3 154 824
-207 716
-3 137 022
-2 728 092
-971 309
768 163
-682 089
971 309
Book value of biological assets at 31.12.
67 615
56 399
3 437 948
3 195 142
RECOGNIZED FAIR VALUE ADJUSTMENT
Change in fair value adjustment of biological assets (1)
Currency adjustment of fair value adjustment of biological assets
Change in physical delivery contracts relating to fair value adjustment of biological assets (2) (Note 25)
Change in fair value of financial derivatives from salmon (Fish Pool contracts) (3)
Total recognition of fair value adjustment of biological assets
-203 146
-3 998
-1 577
-11 993
-220 714
289 220
8 363
-458
-41 028
256 097
The biological assets are, in accordance with IAS 41, measured at fair value, unless the fair value cannot be measured reliably. Broodstock
and smolt are measured at cost less impairment losses. Fair value of biological assets is calculated on a discounted cash flow based present
value model, which does not rely on historical cost. Please refer to Note 2 for further information
Recognized value adjustments of biological assets include:
1. Fair value adjustments of biological assets
2. Fair value (liability) change in loss contracts
3. Change in unrealized gains/losses from financial purchases/sales contracts (derivatives) from fish at Nasdaq Fish Pool
Provisions allocated to future physical delivery contracts that require fair value adjustments are recognized as other current liabilities
in the balance sheet. The contracts are calculated based on the same forward prices used for fair value calculation of biological assets.
Value adjustment of financial derivatives from salmon are recognized in the balance sheet as derivatives and other financial instruments.
Financial derivatives are calculated at market value. Please refer to Note 3 for further information.
For further information on accounting policies for biological assets, please refer to Note 2 and Note 4.
BASIS FOR VALUES 31.12.2019
Weighted price per kg GWT
Source
BC
CAD 9.57
SHETLAND
GBP 5.74
NORWAY
NOK 60.83
Nasdaq Fish Pool
Nasdaq Fish Pool
Nasdaq Fish Pool
2 4 4
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
Forward prices from Nasdaq Fish Pool as stated above are adjusted for expected quality reductions and stated before logistics expenses.
The standard deduction for quality reduction is considered. Forward prices are weighted in relation to the intended harvesting period. The
price for BC is based on the forward price in Norway adjusted for historical differences in price levels between Norway and Canada. The
same principle applies to Shetland. Self-budgeted harvesting and logistics expenses are assumed. Forward exchange rates are used to
translate prices into CAD and GBP in relation to the harvesting period.
STATUS OF BIOLOGICAL ASSETS
2019
Biological assets onshore *
Immature fish in sea, round weight < 4.76 kg
Mature fish in sea, round weight > 4.76 kg
Total
2018
Biological assets onshore *
Immature fish in sea, round weight < 4.76 kg
Mature fish in sea, round weight > 4.76 kg
Total
* Smolt production
NUMBER OF
FISH 1 000
BIOLOGICAL
ASSETS
TONNES
ACCRUED COST
OF PRODUCTION
NOK 1 000
FAIR VALUE
ADJUSTMENT
NOK 1 000
BOOK VALUE
NOK 1 000
23 746
34 374
40
58 160
23 668
33 409
351
57 428
893
66 518
202
67 613
712
53 624
2 063
56 399
189 019
2 472 663
8 103
2 669 785
153 451
2 006 654
63 728
2 223 833
-
766 717
1 446
768 163
-
944 047
27 262
971 309
189 019
3 239 380
9 549
3 437 948
153 451
2 950 701
90 990
3 195 142
Abnormal mortality - write-down
Cost related to abnormal mortality will be immediately recognized in profit or loss and presented as "decrease due to abnormal mortality/
loss" in the table above. Normal mortality is classified as part of the production cost. The classification of mortality only affects the note
presentation, and hence not the fair-value calculation. The main causes of abnormal mortality during 2019, were harmful algal bloom,
yellow mouth, environmental issues in BC, gill disease and furunculosis in Shetland, and treatment losses in Rogaland.
ABNORMAL MORTALITY - WRITE-DOWN
2019
Biological assets onshore *
Immature fish in sea, round weight < 4.76 kg
Mature fish in sea, round weight > 4.76 kg
Total
2018
Biological assets onshore
Immature fish in sea, round weight < 4.76 kg
Mature fish in sea, round weight > 4.76 kg
Total
* The mortality is related to roe
NUMBER OF
FISH 1 000
BIOLOGICAL
ASSETS
TONNES
AVERAGE
SIZE KG
ACCRUED COST
OF PRODUCTION
NOK 1 000
1 000
1 449
266
2 715
961
1 027
427
2 415
-
3 226
1 332
4 559
214
2 951
1 895
5 061
0.01
2.23
5.01
0.45
0.22
2.88
4.43
2.10
3 982
139 072
48 640
191 694
23 602
112 926
70 109
206 638
2 4 5
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 7 C O N T I N U E D
OTHER INVENTORIES NOK 1 000
Raw materials (feed) at cost price
Roe
Other (goods in transit, frozen fish, supplementary products)
Total inventories
Impairment of inventories recognized at year-end
COST OF RAW MATERIALS AND CONSUMABLES USED NOK 1 000
Inventories at 01.01. (inverted number)
Raw materials and consumables used
Inventories at 31.12.
Total
2019
92 135
19 760
65 947
177 841
-
2019
-126 092
-4 233 720
177 841
-4 181 971
2018
63 453
10 090
52 549
126 092
205
2018
-92 262
-3 886 685
126 092
-3 852 855
Raw materials and consumables used mainly comprises feed, roe, recognition of extraordinary mortality, and external purchase of fish in
the sales company, Ocean Quality.
2 4 6
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 8
IN TA NGIBL E A S SE T S
2019 NOK 1 000
GOODWILL
FISH FARMING
LICENSES –
INDEFINITE LIVES
FISH FARMING
LICENSES –
FINITE LIVES
OTHER
INTANGIBLE
ASSETS*
Book value at 01.01.
Currency translation differences
Additions
Disposals
Amortization
109 013
512
-
-
-
1 099 744
12 392
-
-
-
Book value at 31.12.
109 526
1 112 136
ACCUMULATED VALUES
Acquisition cost
Accumulated amortization
Accumulated impairments
Book value at 31.12.
* Other intangible assets mainly comprise software.
199 128
-
-89 602
109 526
1 112 149
-13
-
1 112 136
21 917
996
-
-
-1 418
21 495
52 903
-31 408
-
21 495
25 175
-
1 636
-6 337
-4 269
16 205
46 183
-29 978
-
16 205
2018 NOK 1 000
GOODWILL
FISH FARMING
LICENSES –
INDEFINITE LIVES
FISH FARMING
LICENSES –
FINITE LIVES
OTHER
INTANGIBLE
ASSETS*
Book value at 01.01.
Currency translation differences
Additions
Disposals
Amortization
109 038
-25
-
-
-
1 044 786
-2 042
57 000
-
-
Book value at 31.12.
109 013
1 099 744
ACCUMULATED VALUES
Acquisition cost
Accumulated amortization
Accumulated impairments
Book value at 31.12.
* Other intangible assets mainly comprise software.
198 615
-
-89 602
109 013
1 099 757
-13
-
1 099 744
23 766
-506
-
-
-1 342
21 917
51 907
-29 990
-
21 917
18 384
1
10 843
-
-4 051
25 175
50 885
-25 709
-
25 175
TOTAL
1 255 850
13 899
1 635
-6 337
-5 687
1 259 360
1 410 363
-61 400
-89 602
1 259 360
TOTAL
1 195 975
-2 573
67 842
-
-5 393
1 255 850
1 401 166
-55 713
-89 602
1 255 850
2 47
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 8 C O N T I N U E D
LICENSES
The tables below provide an overview of the Group’s licenses. See Note 2 for further information on licenses.
Canada - BC
All owners of industrial open net pens must be approved by the the Department of Fisheries and Oceans Canada (DFO), who has regulated
the industry since 2009. From 2022, a company need to obtain support from local First Nations in the area where the company has its
licenses, together with the DFO. Grieg Seafood BC already got a number of licenses approved by First Nations, however the company
needs to apply for more. Each local First Nations establishes its own protocol and procedures for engaging with companies operating in
its territory. Grieg Seafood BC are working with all local First Nations in their area of its operations and have positively engaged with all of
them. The new regulation will contribute to a more sustainable future for local communities and workers. We expect that the changes will
not affect the definition of indefinite useful life of licenses in Canada. See Note 4 for further information.
CAPACITY PER LOCATION
NORWAY
TONNES
LICENSE CATEGORY
TOTAL NUMBER
2 100
Seawater licences
0
R&D permit
41
1
3
2
2
2
1
UK*
FARM/AREA
Bight of Foraness
Boatsroom Voe
Cole Deep
Coleness
Collafirth Delting Site 3
Corlarach
East of Langa
East of Papa Little
Easter Score Holm
Fish Holm
Geo of Valladale (Urafirth)
Gob na Hoe
Hamar Sound
Hamnavoe, Lunnaness
Laxfirth Voe East (Site 2)
Leinish Bay
Linga (South of Linga)
Muckle Roe East (Heights)
North Havra
North of Papa
North Voe
Olnafirth North (Site 2)
Olnafirth South (Site 1)
Papa, East Head of Scalloway
Punds Voe
Roe Sound
Setter Voe
Setterness North
Setterness South
Snizort
South Voe of Gletness
Spoose Holm (Oxna)
Swining Voe Site 3 (Collafirth Ness)
Taing of Railsborough
Wadbister Inshore
West of Burwick
Total
2 4 8
Broodstock
Smolt
Harvesting cage
Education**
Smolt
CANADA*
FARM/AREA
Ahlstrom
Atrevida
Barnes bay
Bennet Point
Conception
Culloden
Esperanza
Gore
Hecate
Kunechin
Muchalat N.
Muchalat S.
Newcomb
Salten
Site 13
Site 9
Streamer Point
Tsa-ya
Vantage
Williamson
Wa-kwa
Total
2 178
752
1 200
1 602
1 643
1 750
2 500
1 910
809
2 215
738
1 910
942
1 700
2 299
350
1 496
1 332
1 920
300
1 000
1 500
960
350
987
2 500
2 358
2 125
750
1 500
1 920
1 043
800
1 923
51 362
CAPACITY
TONNES
37 706
780
2 340
2 815
1 106
1 560
2 500 000 pcs.
CAPACITY PER
LOCATION
TONNES
1 100
3 300
3 000
4 400
4 100
1 500
3 600
4 100
4 000
1 500
4 100
3 900
1 000
1 500
900
1 500
3 600
3 000
1 500
3 900
2 500
58 000
* The total capacity of UK and BC is merely a theoretical capacity, as all locations
cannot be utilized simultaneously.
**Finnmark and Rogaland are renting education licenses from the Finnmark and
Rogaland counties respectively.
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
IMPAIRMENT TESTING OF GOODWILL AND LICENSES
No impairments were recognized for goodwill or licenses in 2019 or 2018. Goodwill and licenses with indefinite economic lives are subject
to an annual impairment test. Tests are performed more frequently where indications of impairment exist. Licenses with finite useful lives
are tested for impairment only if there are indications of a decline in value. The estimated value in use is used as a basis for calculating
the recoverable amount. An impairment is deemed to exist when the carrying value is higher than the recoverable amount.
CASH-GENERATING UNIT NOK 1 000
LOCATION
BOOK VALUE OF
RELATED GOODWILL
BOOK VALUE
OF LICENSES
British Columbia (BC)
Finnmark
Shetland
Rogaland
Total value
Canada
Norway
UK
Norway
10 283
-
78 780
20 463
109 526
163 975
356 814
477 867
134 974
TOTAL
174 258
356 814
556 647
155 437
1 133 630
1 243 156
Goodwill arises on the acquisition of the subsidiaries and is allocated to the Group’s cash-generating units (CGUs), which are identified by
operating segment. An annual impairment test is carried out for goodwill and licenses. The recoverable amount of a CGU is determined
based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets from the respective
cash-generating units over a three-year period. Cash flows beyond the three-year period are extrapolated using the estimated growth
rates stated below. The estimated growth rate corresponds to expected inflation.
ASSUMPTIONS USED FOR VALUE-IN-USE CALCULATIONS
BC
FINNMARK
SHETLAND
ROGALAND
Budget period
Increase in revenues in budget period
EBITDA margin 1)
EBITDA margin in terminal period
Harvest growth – tonnes 2)
Required rate of return 3)
Growth rate 4)
3 years
100%
3 years
18 %
3 years
48%
3 years
-2%
17% - 23%
41% - 42%
14% -19%
35% - 37%
26%
99%
7%
1%
41%
20%
7%
1%
22%
56%
7%
1%
35%
7%
7%
1%
As stated above, the budget period/explicit period is three years. Impairment tests are initially based on the Group´s rolling four-
year projections, with another two years added on in less detail, which are also used in connection with the Group's liquidity planning.
Consequently, it is important to apply conservative assumptions. The estimated increase future price level is calculated using Nasdaq Fish
Pool projections for future prices, taking into account quality reductions and shipping.
Other comments/explanations on assumptions applied in impairment testing are presented below.
1. Budgeted EBITDA margin. The margin remains stable for the Norwegian regions, and is assumed to increase for our overseas regions
2.
during the budget period. Increase in harvest volume is assumed in all regions towards 2025.
The growth rate in the harvested volume in the budget period (nominal growth rate) is measured against the 2020 volume. A
corresponding increase in output is assumed over time.
3. Weighted required return on capital employed before tax. Cash flow forecasts are thus estimated before tax.
4. Weighted average growth rate used to extrapolate cash flows beyond the budget period. In the years after 2022, the annual reinvestment
is assumed to be equal to annual depreciation
2 49
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 8 C O N T I N U E D
EBITDA MARGIN IN THE BUDGET AND TERMINAL PERIOD
The budgeted EBITDA margin is based on past performance, expected cost of production and expected market developments. An increase
in gutted weight output is assumed towards 2022. The increased harvest volume assumes an increase in utilization of existing production
capacity and licenses, reflecting the Group's post-smolt strategy and operational improvement. Over the past few years the group has
expanded its smolt capacity for more and larger smolt, and further expansions are underway. A higher number and larger average weight of
smolt will contribute to both higher growth and harvesting volumes. Larger smolt will also reduce the production time in the sea, which in
turn will reduce the biological risk level, including mortality. An increase in smolt numbers will also improve overall utilization of locations
and licenses. Rogaland, Finnmark and BC have received new locations in recent years, helping better utilize their licenses and increasing
production volumes. In BC, Canada, an increase in harvesting volumes is based on improved production of smolt, more efficient monitoring
of algae, and recirculation of fresh water from the deeper sea. Measures to secure the intake water have been successful. The company is
constantly striving to increase utilization of its favorable locations in Shetland in order to secure improved production. Measures being taken
include delivering larger smolt with a lower number of days in the sea. Monitoring of algae, as well as recirculation of fresh water from
the deeper sea, represent further important measures for Shetland. Along with prolonged fallowing and utilization of the best locations,
modification of the production cycle in the sea from 24 to 18 months will reduce biological risk. Together, the combined measures will help
to reduce the company's cost as measured per kilogram.
The assumptions in the terminal year are based on the budget for 2022, but with some adjustments to reflect EBIT/kg in the benchmark
and the Group’s own historical results. The applied discount rates are pre-tax and reflect specific risks relating to the relevant operating
segments.
SENSITIVITY ANALYSIS
Value-in-use is sensitive to changes in the assumptions made, the most important of which are return and EBIT/kg requirements.
A sensitivity analysis has been carried out based on these assumptions for all CGUs. An isolated requirement to increase the return rate by
two percentage point would result in a need to recognize impairments for the Shetland CGU of NOK 89 million, while a NOK 3 reduction in
EBIT/kg would require an recognized impairment for the Shetland CGU of NOK 308 million. The other CGUs are not sensitive to equivalent
changes in the same assumptions.
2 5 0
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 9 P R OP ER T Y, P L A N T A ND EQUIP MEN T INCL .
RIGH T- OF-USE-A S SE T S
BUILDINGS/
PROPERTY
PROD. PLANTS
AND BARGES
NETS, CAGES
AND MOORINGS
OTHER
EQUIPMENT
2019 NOK 1 000
Book value at 01.01.
Initial application effect of IFRS 16
Currency translation differences
Reclassification asset under construction *
Reclassification of non-current assets
Additions **
Disposals
Depreciation
Book value at 31.12.
ACCUMULATED VALUES
Acquisition cost
Accumulated depreciation
Accumulated impairments
Book value at 31.12.
RIGHT-OF-USE ASSETS
Book value at 31.12 of right-of-use assets
(see separate specification in Note 11)
Of which book value of non-depreciable property
477 168
65 248
9 648
106 968
-373
42 522
-365
-37 646
663 171
946 472
-283 301
-
663 171
70 016
41 167
1 042 385
-
17 056
-112 679
-
233 585
-1 438
-109 857
1 069 051
2 085 633
-976 690
-39 891
1 069 051
534 869
-
15 106
-
-
149 348
-1 619
-111 485
586 218
1 409 435
-823 217
-
586 218
238 491
253 806
9 480
5 711
-
279 255
-1 335
-145 906
639 502
985 007
-345 672
168
639 502
TOTAL
2 292 912
319 054
51 290
-
-373
704 710
-4 756
-404 895
2 957 942
5 426 547
-2 428 881
-39 723
2 957 942
282 764
95 503
417 224
865 507
* Reclassification assets under construction relates to hatchery in Adamselv. The asset under construction has been recognised as "Prod. plants and barges" until commissioning of the completed
facility. Acquisition cost of the constructed asset not related to "prod.plant and barges" has been reclassified to "Buildings/property" and "other equipment".
** Investments in 2019 related to expansion of smolt plant in BC, new locations, operations center in Rogaland, digitalization, new equipment such as aeration systems, algal monitoring and
general maintenance.
See Note 11 for specification of the Group's right-of-use assets and further information on its leases.
2018 NOK 1 000
Book value at 01.01.
Currency translation differences
Reclassification of non-current assets
Additions *
Disposals
Depreciation
Book value at 31.12.
ACCUMULATED VALUES
Acquisition cost
Accumulated depreciation
Accumulated impairments
Book value at 31.12.
Book value of finance leases included above**
Depreciation of finance leases included above**
BUILDINGS/
PROPERTY
PROD. PLANTS
AND BARGES
NETS, CAGES
AND MOORINGS
OTHER
EQUIPMENT
459 618
-433
-
40 576
-79
-22 515
477 168
722 823
-245 655
-
477 168
-
-
767 920
-416
22 378
343 932
-3 969
-87 461
1 042 385
1 949 109
-866 833
-39 891
1 042 385
193 463
-14 821
459 139
-2 294
2 038
170 660
-2 481
-92 193
534 869
1 246 601
-711 732
-
534 869
105 648
-15 504
185 126
-905
-24 417
110 024
-3 243
-28 094
238 491
438 089
-199 766
168
238 491
113 201
-8 558
TOTAL
1 871 804
-4 048
-
665 192
-9 771
-230 262
2 292 912
4 356 622
-2 023 986
-39 723
2 292 912
412 312
-38 882
Of which book value of non-depreciable property
40 015
* Investments in 2018 related to expansion of the hatcheries in Rogaland and Finnmark, operations center in Rogaland, digitalization, new equipment such as aeration systems, algal monitoring
and general maintenance. Expansion of the hatchery in Finnmark is at year end treated as an asset under construction recognized in "prod.plant and barges".
**As of 1 January 2019 the Group apply IFRS 16 on its leases. See Note 11 and 26 for further information on the transition from IAS 17 to IFRS 16 for the Group's leases classified as finance leases
according to IAS 17.
2 51
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 10 BORR O W ING S
The company has a syndicated loan provided 50/50 by DNB and Nordea.The financing agreement includes (among other things) two term
loans of NOK 600 million and EUR 60 million, a revolving credit facility of NOK 1 300 million, alongside overdraft facilities of NOK 100 million.
Repayments of NOK 50 million and EUR 5 million will be made for term loans of respectively NOK 600 million and EUR 60 million, split into
half-yearly instalments. The drawdown rate of the EUR loan is 9.6691. The agreement has a term of five years and matures on 28 February
2023.
The agreement includes covenants, stipulating consolidated equity of 35% (in the Group, excluding Ocean Quality), a revolving NIBD/EBITDA
ratio of 5.0 if the book equity ratio is higher than 40% and 4.5 if the book equity ratio is between 35% and 40%. As at 31 December 2019, the
NIBD/EBITDA for the Group excluding Ocean Quality was 1.4 and the equity ratio was 51%. Consequently, the Group fully complied with all
covenants at the year-end.
The Group applied IFRS 16 leases as from 1 January 2019, and consequently recognized all its leases, with certain exceptions, in its
statement of financial position. The initial application effect of IFRS 16 as of 1 January 2019 relates to the recognition of leases classified as
operating leases under IAS 17, which were the rental costs were expensed as incurred. According to the financing agreement, Net interest-
bearing debt (NIBD) in the covenant calculation should not include effects of IFRS 16. For more information about the new standard, please
refer to Note 11 and 26.
Ocean Quality in Norway and the UK each have a factoring agreement that comprises financing of outstanding receivables. The agreement
for Ocean Quality UK entails that any significant risk and control of trade receivables remain with Ocean Quality UK. Prepayments/financing
from factoring are included in net interest-bearing liabilities. Factoring is recognized as financing in the balance sheet. Ocean Quality AS
has had similar terms in their agreement. However, in Q3 2019, Ocean Quality AS entered into a new factoring agreement, in which the
factoring company purchases all credit-insured trade receivables from Ocean Quality AS, and the risk of trade receivables is transferred to
the factoring company. Trade receivables bought by the factoring company from Ocean Quality AS is hence deducted from the total amount
of trade receivables.
NON-CURRENT LIABILITIES AND FINANCE LEASE OBLIGATIONS (INTEREST-BEARING) NOK 1 000
Non-current syndicated loan
Non-current credit facility
Non-current lease liabilities (prior IAS 17 finance leases)
Non-current lease liabilities (prior IAS 17 operational leases)
Total
NON-CURRENT LIABILITIES (NON-INTEREST BEARING)
Subordinate loan
Total
Amortization effect of loans
Total non-current liabilities
2019
944 638
629 319
378 577
254 090
2 206 624
13 240
13 240
-10 022
2 211 945
2018
1 048 816
260 000
292 358
-
1 601 174
14 047
14 047
-10 102
1 605 119
2 5 2
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
CURRENT LIABILITIES (INTEREST-BEARING) NOK 1 000
Current portion of borrowings
Current portion lease liabilities (prior IAS 17 finance leases)
Current portion lease liabilities (prior IAS 17 operational leases)
Overdraft facility
Factoring liabilities
Export loan
Total current liabilities (interest-bearing)
2019
98 212
73 575
125 752
-
86 122
-
383 660
2018
98 212
68 083
-
46 597
573 377
8 897
795 165
NET INTEREST-BEARING LIABILITIES NOK 1 000
2019
2018
Total non-current interest-bearing liabilities
Total current interest-bearing liabilities
Gross interest-bearing liabilities
Cash and cash equivalents
Loans to associates
Net interest-bearing liabilities
Factoring liabilities
Quote of Bremnes' share of cash OQ AS (40%)
Lease liabilities (prior IAS 17 operational leases)
Net interest-bearing liabilities according to covenants
2 206 624
383 660
2 590 283
214 497
-
2 375 786
-86 122
28 849
-379 841
1 938 672
1 601 174
795 165
2 396 340
137 920
22 100
2 236 320
-573 377
26 595
-
1 689 537
At the end of 2019, the Group had a good level of free liquidity. Please refer to Note 3 for further information.
PAYMENT PROFILE NON-CURRENT LIABILITIES NOK 1 000
2020
2021
2022
2023
2024
LATER
TOTAL
Non-current syndicated loan
Non-current credit facility
Subordinate loan
Lease liabilities (prior IAS 17 finance leases)
Lease liabilities (prior IAS 17 operational leases)
Total
NOK 1 000
Liabilities secured by mortgages/charges on assets
98 212
98 212
98 212
-
-
73 575
125 752
297 539
-
-
-
-
69 040
90 347
62 852
72 193
748 215
629 319
-
56 068
34 918
257 598
233 256
1 468 520
-
-
-
46 423
22 192
68 615
-
-
13 240
144 195
34 440
1 042 850
629 319
13 240
452 152
379 841
191 874
2 517 402
2019
2018
2 590 283
2 396 340
ASSETS PLEDGED AS SECURITY NOK 1 000
2019
2018
Licences
Property, plant and equipment
Trade receivables
Inventories and biological assets excluded fair value of biological assets
Total assets pledged as security
Pledges include shares in subsidiaries. The book value of these shares in the consolidated financial statements is NOK 0.
1 133 630
2 583 781
459 897
2 847 632
7 024 939
1 121 662
2 292 912
925 232
3 321 234
7 661 040
2 5 3
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 10 C O N T I N U E D
DESCRIPTION OF
LIABILITIES
CURRENCY
FIXED OR
FLOATING
INTEREST RATE
EFFECTIVE
INTEREST RATE
FINAL
MATURITY
(MTH/YEAR)
CURRENT
PORTION
NOK 1 000
NON-
CURRENT
PORTION
NOK 1 000
CURRENT
PORTION
NOK 1 000
NON-
CURRENT
PORTION
NOK 1 000
2019
2018
GRIEG SEAFOOD ASA
Non-current syndicated
loan
Syndicated loan- credit
facility
OCEAN QUALITY
Export loans
Factoring liabilities
GRIEG SEAFOOD
GROUP
Lease liability (prior
IAS 17 finance leases)
Lease liability (prior IAS
17 operational leases)
Subordinate loan
Total
NOK
Floating
Price grid
02/2023
98 212
934 616
98 212
1 038 713
NOK
Floating
Price grid
02/2023
GBP
Multiple
Floating
5.5%
-
-
86 122
629 319
-
260 000
-
-
8 897
573 377
-
-
Multiple
Floating
73 575
378 577
68 083
292 358
Multiple
Floating
125 752
-
254 090
13 240
-
-
-
14 047
383 660
2 209 841
748 569
1 605 119
BOOK VALUE OF GROUP LOANS BY
CURRENCY NOK 1 000
Non-current syndicated loan
Syndicated loan- credit facility
Factoring
Lease liability (prior IAS 17 finance leases)
Lease liability (prior IAS 17 operational leases)
Subordinate loan
Total
31.12.2019
NOK
GBP
EUR
USD
CAD
OTHER
1 032 827
629 319
86 122
452 152
379 841
13 240
514 978
580 000
-
-
-
85 650
446 699
164 670
-
-
184 618
13 240
283 508
517 850
49 319
946
-
-
-
-
-
-474
-
-
-
-
-
-
5 453
30 554
-
568 114
-474
36 007
2 593 501
1 706 346
-
-
-
-
-
-
-
2018
2.20%
1.21%
Average interest rate on syndicate loan and credit facility
Average interest rate on EUR term loan
The effect of interest rate swaps is not taken into account in calculating the average interest rate on loans and credit facilities.
2019
2.57%
1.10%
2 5 4
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
BOOK VALUE AND FAIR VALUE OF BORROWINGS NOK 1 000
Borrowings (non-current and credit facility)
Total
The book value of other loans closely approximates to the fair value.
BOOK VALUE
2019
1 563 935
1 563 935
2018
1 298 713
1 298 713
FAIR VALUE
2019
1 563 935
1 563 935
2018
1 298 713
1 298 713
CHANGE IN LIABILITIES ARISING FROM FINANCING ACTIVITIES NOK 1 000
LEASE LIABILITY
BORROWINGS
TOTAL
LIABILITIES ARISING FROM FINANCING ACTIVITIES
At 31.31.2017
Non-cash movement in factoring liabilities
Repayment finance lease liabilities
Repayment non-current syndicated loan (former agreement)
Draw-down non-current syndicated NOK term loan incl. credit facility
Draw-down non-current syndicated EUR term loan
Repayment non-current syndicated term loan (NOK and EUR)
Draw-down overdraft facility
Repayment non-current credit facility
Draw-down finance leases
Foreign currency adjustments
At 31.12.2018
Recognized lease liabilities on adoption of IFRS 16 (see Note 11 and 26)
At 01.01.2019
Non-cash movement in factoring liabilities
Draw-down non-current syndicated NOK term loan incl. credit facility
Repayment non-current syndicated term loan (NOK and EUR)
Repayment overdraft facility
Repayment export loan
Draw-down lease liability (prior IAS 17 finance leases)
Repayment lease liability (prior IAS 17 finance leases)
Draw-down lease liability (prior IAS 17 operational leases)
Repayment lease liability (prior IAS 17 operational leases)
Foreign currency adjustments
At 31.12.2019
260 252
-
-69 053
-
-
-
-
-
-
169 216
27
360 441
319 054
679 495
-
-
-
-
-
181 376
-90 136
165 807
-114 888
10 339
831 993
1 810 202
72 401
-
2 070 453
72 401
-69 053
-1 285 000
-1 285 000
900 000
580 146
-49 174
46 597
-40 000
-
14 773
2 049 944
-
2 049 944
-487 255
369 319
-98 346
-46 597
-8 897
-
-
-
-
-6 640
1 771 529
900 000
580 147
-49 174
46 597
-40 000
169 216
14 800
2 410 387
319 054
2 729 441
-487 255
369 319
-98 346
-46 597
-8 897
181 376
-90 136
165 807
-114 888
3 699
2 603 523
2 5 5
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 11 L E A SE S
THE GROUP AS A LESSEE
The Group has several lease arrangements. Prior to IFRS 16, the
Group had both financial leases according to IAS 17 recognized on
the statement of financial position, in addition to operating leases
recognized in the "other operating expenses" as the lease cost
incurred. As of 1 January 2019, the Group applied IFRS 16 using
the modified retrospective approach. Please refer to Note 26 for
further information on the impact of the initial application of IFRS
16.
Leases previously classified as finance leases under IAS 17
Prior to 1 January 2019, the Group classified finance leases
according to IAS 17 as property, plant & equipment. The carrying
amount of the right-of-use asset and the lease liability at 1 January
2019 was determined to be the carrying amount of the lease asset
and lease liability at the date if initial application of IFRS 16. The
leases relate to barges, cage installations, plant, machinery and
other equipment. The lease term for equipment of this kind is
normally 7-8 years. The Group must give written notification if it
wishes to terminate these agreements.
Leases previously classified as operating leases under IAS 17
The Group leases offices, docks, berths, vessels, etc. with terms
of 5–10 years. The Group also leases various well-boat services,
as well as contracts for delousing and cleaning of nets. The term
of the contracts is 2–5 years, whereof some of the contracts have
extension options. On transition to IFRS 16 at 1 January 2019, the
Group recognized right-of-use assets (ROU assets) corresponding
to the present value of lease liabilities at a total amount of NOK 319
million on leases previously classified as operating leases under
IAS 17. Equity effect of the transitioning was NOK 0. The right-of-
use asset is classified as property, plant and equipment.
The incremental borrowing rates applied to the lease liabilities
at the date of initial recognition are in the interval of 3.1% - 4.1%
for buildings and properties and 2.8% - 4.1% for other assets.
Please refer to note 26 for information on the weighted average
incremental borrowing rate applied when recognizing the lease
liability for leases previously classified as operating leases under
IAS 17, at initial application of IFRS 16 at 1 January 2019.
CURRENCY
The leases are recognized in the respective Group companies
in local currencies, and translated to the Groups presentation
currency at the balance sheet date.
PRACTICAL EXPEDIENTS APPLIED
The Group leases smaller office equipment, such as coffee
machines with contract terms of 1-3 years. The Group has elected
to apply the practical expedient of low-value assets for some of
these leases. Leases that have a present value as new lower than
USD 5 000, are considered low value leases. The Group has also
applied the practical expedient for short-term leases. Short term is
defined as a lease term of 12 month or less at the commencement
date. For low-value leases and short-term leases, the Group does
not recognize lease liabilities or right-of-use assets. The leases
are instead expensed when they incur.
EXTENSION OPTIONS
Some of the Group's agreements have extension options which
may by exercised during the last period of the lease term. The
Group assesses at the commencement whether it is reasonably
certain to exercise the renewal right. The Group's potential future
lease payments not included in the lease liabilities related to
extension options is NOK 235 million at 31 December 2019.
VARIABLE LEASE PAYMENTS
In addition to the lease liabilities, the Group is committed to pay
variable payments for some of the leases. The variable lease
payments are expensed as incurred, and not considered material
for the Group.
2 5 6
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
SPECIFICATION OF FIXED ASSETS AND RIGHT-OF-USE ASSETS
AT 1 JANUARY 2019 NOK 1 000
CLOSING BALANCE
31.12.2018
IMPLEMENTATION
EFFECT IFRS 16**
OPENING BALANCE
01.01.2019
Property, plant and equipment incl. Right-of-use-assets
Lease liability
2 292 912
360 442
319 054
319 054
2 611 966
679 496
The "Implementation effect IFRS 16" refers to the initial application effect of IFRS 16, recognizing the lease liability and corresponding
right-of-use assets of leases previously classified as operating leases under IAS 17, per 1 January 2019. Please refer to Note 26 for
further information on the initial application of IFRS 16.
Prior to 1 January 2019, the Group included its leases classified as finance leased assets under IAS 17 as property plant and equipment.
Following the initial application of IFRS 16, the Group recognizes all its right-of-use assets on the same financial statement line item as
property, plant and equipment. See Note 9 for further information. Comparable figures are not restated, as the modified retrospective
approach is applied when implementing IFRS 16.
IMPLEMENTATION EFFECT ON STATEMENT OF
FINANCIAL POSITION NOK 1 000
CLOSING BALANCE
31.12.2018
IFRS 16 EFFECTS ON
OPENING BALANCE
ADJUSTED OPENING
BALANCE AS
OF 01.01.2019
IFRS 16 CHANGES
YTD 2019
Non-current assets
Current assets
Total assets
Equity
Non-current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
3 588 929
4 553 561
8 142 490
3 883 511
2 491 251
1 767 729
4 258 979
8 142 490
319 054
-
319 054
-
236 580
82 474
319 054
319 054
3 907 983
4 553 561
8 461 544
3 883 511
2 727 831
1 850 203
4 578 033
8 461 544
EFFECT ON INCOME STATEMENT NOK 1 000
Total operating income
Share of profit from associates
Raw materials and consumables used incl. change in inventories
Salaries and personnel expenses
Other operating expenses
EBITDA before fair value adjustment of biological assets
Depreciation and amortization
EBIT before fair value adjustment of biological assets
Fair value adjustment of biological assets
EBIT after fair value adjustment of biological assets
Net financial items
Profit before tax
YTD 2019 BEFORE
IFRS 16 EFFECT *
IFRS 16 EFFECTS
YTD 2019
8 303 723
211
-4 181 971
-610 803
-2 139 536
1 371 624
-289 917
1 081 707
-220 714
860 993
-14 790
846 203
-
-
-
-
126 533
126 533
-120 666
5 868
-
5 868
-11 443
-5 576
*Figures are presented as if IAS 17 still applies (incl. IAS 17 finance leases recognized on the statement of financial position).
55 107
-
55 107
-5 680
17 510
43 277
60 787
55 107
YTD 2019
8 303 723
211
-4 181 971
-610 803
-2 013 003
1 498 157
-410 583
1 087 574
-220 714
866 860
-26 233
840 626
2 5 7
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 11 C O N T I N U E D
SPECIFICATION OF RIGHT-OF-USE ASSETS
The Group's right-of-use assets are included in the financial statement line item "Property, plant and equipment incl. Right-of-use-assets".
2019
NOK 1 000
BUILDINGS/
PROPERTY
PROD. PLANTS
AND BARGES
NETS, CAGES
AND MOORINGS
OTHER
EQUIPMENT
Book value at 01.01.2019*
Initial application effect of IFRS 16**
Currency translation differences
Additions
Disposals
Depreciation
Book value at 31.12.2019
-
65 248
1 750
13 190
-
-10 172
70 016
193 463
-
1 254
130 330
-24 827
-17 456
282 764
105 648
-
710
18 145
-12 142
-16 858
95 503
113 201
253 806
4 213
175 216
-10 059
-119 153
417 224
TOTAL
412 312
319 054
7 927
336 881
-47 028
-163 640
865 507
*For leases that as of 31 December 2018 were classified as finance leases under IAS 17, the carrying amount of the right-of-use asset and the lease liability at 1 January 2019 was
determined to be the carrying amount of the lease asset and lease liability at the date if initial application of IFRS 16.
**The intital applicaton effect of IFRS 16 relates to the recognition of leases classified as operational leases under IAS 17.
See Note 26 for further information on the application of IFRS 16 for the Group.
LEASE LIABILITY
SUMMARY OF THE LEASE LIABILITIES NOK 1 000
At initial application 01.01.2019
New leases recognized during the year
Cash payments for the principal portion of the lease liability
Currency exchange differences
Total lease liabilities at 31.12.2019
679 496
347 183
-205 025
10 339
831 993
MATURITY ANALYSIS - LEASE LIABILITIES NOK 1 000
FORMER IAS 17
FINANCIAL LEASE
FORMER IAS 17
OPERATIONAL LEASE
TOTAL LEASE
LIABILITY
2019
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Total undiscounted lease liabilities at 31.12.2019
Lease liabilities included in the statement of financial position at 31.12.2019
Current portion
Non-current portion
87 230
80 269
71 861
63 113
51 894
154 641
509 008
452 152
134 931
96 434
75 983
37 146
23 599
52 374
420 467
379 841
222 160
176 702
147 844
100 260
75 493
207 015
929 475
831 994
199 327
632 666
2 5 8
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
AMOUNTS RECOGNIZED IN PROFIT OR LOSS NOK 1 000
Interest on lease liabilities
Depreciation right-of-use assets
Expenses relating to short-term leases
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets
Total
AMOUNTS RECOGNIZED IN THE STATEMENT OF CASH FLOW NOK 1 000
Total cash outflow for leases
2019
25 729
163 640
52 559
8
241 963
2019
230 753
IAS 17 LEASES DISCLOSURES - COMPARABLE FIGURES
The 2018 figures is prepared according to IAS 17. Please refer to the section above for characteristics of these leases as of 31 December 2018.
The future aggregate minimum lease payments under operating leases are as follows:
OPERATIONAL LEASES
2018
OVERVIEW OF FUTURE MINIMUM OPERATING LEASES NOK 1 000
FUTURE MINIMUM
LEASE AMOUNT
PRESENT VALUE OF FUTURE MINIMUM
LEASE PAYMENTS (5% DISCOUNT RATE)
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Total lease liabilities at 31.12.2018
NOK 1 000
Lease payments charged in the year
177 079
107 162
69 488
46 933
39 087
79 140
518 888
168 647
97 199
60 026
38 612
30 626
53 630
448 739
2018
195 785
2 5 9
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 11 C O N T I N U E D
FINANCE LEASE COMMITMENTS – GROUP COMPANY AS LESSEE
The Group has signed finance leases for barges, pen installations, plant, machinery and other equipment. The lease term for equipment of
this kind is normally 7-8 years. The Group must give written notification if it wishes to terminate these agreements.
The future aggregate minimum lease payments relating to finance leases are as follows:
FINANCE LEASES
2018
OVERVIEW OF FUTURE MINIMUM FINANCE LEASES
NOK 1 000
FUTURE MINIMUM
LEASE AMOUNT
FUTURE FINANCIAL
EXPENSES RELATED TO
FINANCE LEASES
PRESENT VALUE OF
FINANCE LEASES
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Total lease liabilities at 31.12.2018
77 825
62 356
54 551
46 276
39 258
120 486
400 753
9 742
7 898
6 284
4 881
3 702
7 805
40 311
LEASED ASSETS RECOGNIZED AS FINANCE LEASES NOK 1 000
Carrying value of leased assets (equipment, vessels)
Carrying value of lease commitment
68 083
54 458
48 268
41 395
35 556
112 682
360 441
2018
412 312
360 441
2 6 0
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 12 CL A S SIF IC AT IONS OF F IN A NCI A L INS T RUMEN T S
FINANCIAL INSTRUMENTS AT 31.12.2019 NOK 1 000
FVPL 1)
AMORTIZED COST
FVOCI 2)
TOTAL
FINANCIAL ASSETS
Equity instruments
Trade receivables
Other receivables
Derivatives 3)
Cash and cash equivalents
Total financial assets
FINANCIAL LIABILITIES
Borrowings
Lease liability (prior IAS 17 finance leases)
Lease liability (prior IAS 17 operational leases)
Factoring liabilities
Cash-settled options
Derivatives 3)
Trade payables
Total financial liabilities
-
-
-
7 368
-
7 368
-
-
-
-
19 649
10 107
-
29 756
-
459 897
60 000
-
214 497
734 394
1 675 386
452 152
379 841
86 122
-
-
855 061
3 448 562
1 053
-
-
-
-
1 053
-
-
-
-
-
-786
-
-786
1 053
459 897
60 000
7 368
214 497
742 815
1 675 386
452 152
379 841
86 122
19 649
9 321
855 061
3 477 532
FINANCIAL INSTRUMENTS AT 31.12.2018 NOK 1 000
FVPL 1)
AMORTIZED COST
FVOCI 2)
TOTAL
FINANCIAL ASSETS
Equity instruments
Trade receivables
Other receivables
Derivatives 3)
Cash and cash equivalents
Total financial assets
FINANCIAL LIABILITIES
Borrowings
Overdraft facility
Finance lease liabilities
Factoring liabilities
Export loan 4)
Cash-settled options
Derivatives 3)
Trade payables
Total financial liabilities
-
-
-
2 743
-
2 743
-
-
-
-
-
17 503
2 162
-
19 665
-
952 232
22 100
-
137 920
1 112 252
1 410 972
46 597
360 442
573 377
8 897
-
-
649 352
3 049 637
1 160
-
-
-
-
1 160
-
-
-
-
-
-
3 743
-
3 743
1) FVPL: Fair value through profit or loss.
2) FVOCI: Fair value through other comprehensive income.
3) The purpose of the derivatives is to reduce the Group´s exposure to changes in floating interest rates and exchange rates. See Notes 2 and 3 for further details.
4) Export loan is reported in "Current portion of borrowings" in the balance sheet.
1 160
952 232
22 100
2 743
137 920
1 116 155
1 410 972
46 597
360 442
573 377
8 897
17 503
5 905
649 352
3 073 045
2 61
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 12 C O N T I N U E D
CREDITWORTHINESS OF FINANCIAL ASSETS
Credit risk attaching to financial instruments that have not matured or have not been written down is shown in accordance with the internal
classification of historical information on breaches of credit covenants. Further information about credit risk is provided in Note 3.
TRADE RECEIVABLES NOK 1 000
2019
2018
COUNTERPARTIES WITH NO EXTERNAL CREDIT RATING
Group 1
Group 2
Group 3
Total trade receivables
BANK DEPOSITS NOK 1 000
AAA
AA
A
Total bank deposits
46 665
354 736
58 495
459 897
2019
-
214 497
-
214 497
1 204
838 932
85 096
925 232
2018
-
137 920
-
137 920
Group 1 - new customers/related parties (less than 6 months).
Group 2 - existing customers/related parties (more than 6 months) with no history of credit covenant breaches.
Group 3 - existing customers/related parties (more than 6 months) with a history of one or more credit covenant breaches. All amounts due
have been paid in full following the breaches.
2 6 2
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 13 TA X E S
BREAKDOWN OF TAX EXPENSE NOK 1 000
Tax payable Norway
Tax payable abroad
Changes in assessment of taxes for prior years
Change in deferred tax Norway
Change in deferred tax abroad
Taxes
TAX RECONCILIATION
Profit before tax
Taxes calculated at nominal tax rate
Withholding tax
Change in deferred tax liabilities because of tax rate change
Tax losses carried forward not recognized
Other permanent differences
Taxes
CHANGE IN BOOK VALUE OF DEFERRED TAX
Balance sheet value at 01.01.
Currency conversion
Effect of equity transaction and group contribution
Tax effect of loans to subsidiaries (Note 3)
Other effects
Change in deferred tax recognized in income in period
Deferred tax liability at balance sheet date
2019
209 797
4 235
9 806
-15 035
-13 085
195 718
840 626
187 744
1 016
1 994
-
4 964
195 718
877 639
15 295
-955
6 560
4 245
-28 120
874 664
2018
126 441
4 810
-4 065
85 450
67 170
279 805
1 276 925
301 823
1 012
-25 053
-148
2 171
279 805
721 689
-3 637
5 765
923
279
152 620
877 639
Weighted average tax rate
23.28%
21.91%
The nominal tax rate in Norway is 22%. The nominal tax rate for 2019 in BC, Canada was 27% and on Shetland 19%.
The significant tax effect is attributable to a change in the tax rate and other permanent differences.
The following tables provide a breakdown of deferred tax. The tax effects of taxable and deductible temporary differences are shown
separately. The Norwegian, Canadian and UK parts of the Group each have a net deferred tax position. Deferred tax liabilities and deferred
tax assets within Norway, BC, Canada, and UK can be offset.
2 6 3
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 13 C O N T I N U E D
DEFERRED TAX
NOK 1 000
LICENSES
NON-
CURRENT
ASSETS
BIOLOGICAL
ASSETS
RECEIVABLES
/PENSIONS
INVENTORIES
DEFERRED
CAPITAL GAIN
CURRENT
LIABILITIES
TOTAL
2018
Opening balance 01.01.
167 245
53 719
487 427
31 790
3 921
Recognized in income in
the period
Currency translation
differences
Other effects
At 31.12.
2019
Recognized in income in
the period
Currency translation
differences
Other effects
At 31.12.
-1 925
9 411
153 813
-6 221
5 084
-385
-
12
-
-2 226
-1 986
164 935
63 142
637 028
-
3 494
29 063
2
-
9 007
-105
31 379
-51 772
-558
187
2 405
-1 218
1 674
-360
10 992
-417
166 017
95 836
595 831
-
7 556
36 061
351
-3 193
6 352
348
-76
-
-
271
-55
-
-
217
0
-
-
-
0
-
-
-
0
744 450
160 085
-2 596
1 508
903 446
-20 923
15 422
2 369
900 313
DEFERRED TAX
ASSET NOK 1 000
LOSS CARRY
FORWARDS
NON-
CURRENT
ASSETS
PENSIONS
RECEIVABLES
/PENSIONS
LEASE
OBLIGATIONS
TAX CREDITS
OTHER
LIABILITIES
TOTAL
2018
Opening balance 01.01.
-20 796
Recognized in income in
the period
Currency translation
differences
Other effects
Effect of business
combinations
At 31.12.
2019
Recognized in income in
the period
Currency translation
differences
Other effects
Effect of business
combinations
At 31.12.
-3 869
-120
351
5 766
-18 669
-19 869
149
4 748
15
-33 626
-0
-
-
-
-
-0
-
-
-
-
-0
0
-
0
-
-
-
-
0
-
-
-
-2 125
-0
-1 374
-2 041
-26 336
701
-1 783
615
-3 130
-7 465
-
-
-
-28
-
-
-1 424
-1 811
45
-
-
-714
361
-99
-
-4 909
258
252
5 766
-27 526
5 898
1 396
-650
6 028
-7 197
105
-
-
4 578
-120
5 382
-
4 848
-55
-
-
-205
-1 943
-126
8 187
-
15
-1 419
-1 028
-26 648
2 6 4
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOK 1 000
Net deferred tax
Deferred tax classified as non-current assets
Deferred tax classified as non-current liabilities
Tax payable classified as current liabilities
NET CHANGE IN DEFERRED TAX RECOGNIZED IN INCOME NOK 1 000
Change in deferred tax in Norway
Change in deferred tax abroad
Change in book value of deferred tax
Change in the period for positions with net deferred tax
Change in the period for positions with net deferred tax asset
Change in book value of deferred tax
2019
2018
873 666
875 920
998
874 664
211 569
2019
-15 035
-13 085
-28 120
-20 923
-7 197
-28 120
1 719
877 639
130 287
2018
85 450
67 170
152 620
160 085
-7 465
152 620
Loss carried forward
Deferred tax assets related to an allowable deficit are recognized in the balance sheet in so far as it is likely that these can be offset against
future taxable profits.
DEFERRED TAX ASSETS RELATING TO A TAX LOSS CARRIED FORWARD
ARE DIVIDED AMONG THE FOLLOWING JURISDICTIONS
Norway
UK
BC, Canada
Total
2019
-
-33 626
-
-33 626
2018
-478
-18 191
-
-18 669
There is no time limit on the utilization of tax losses carried forward in Norway or the UK.
2 6 5
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 14 DECL A R AT ION ON T HE DE T ERMIN AT ION OF
S A L A R Y A ND OT HER REMUNER AT ION PA ID TO
GR OUP M A N A GEMEN T
THE BOARD’S DECLARATION
The Board of Grieg Seafood ASA has appointed a dedicated
Remuneration Committee, whose remit is to advise the Board on
all matters pertaining the Company's compensation to the CEO
and other incentive schemes for managers.
The Board determines the salary and other remuneration paid
to the CEO and approves remuneration schemes involving the
granting of options to managers. The Board adopts guidelines and
principles used to determine salaries and other remuneration paid
to key personnel.
MAIN PRINCIPLES OF THE GROUP’S REMUNERATION
POLICY
Grieg Seafood ASA’s performance is contingent on the Group´s
ability to recruit and retain the highest qualified and most
motivated employees.
Grieg Seafood ASA´s remuneration policy is based on the principle
that the Group shall offer its employees competitive compensation
terms
industry standards. Where
appropriate, this may include incentive elements, where the basic
salary shall reflect individual performance.
in accordance with local
The Group runs performance-related bonus schemes for its
employees. The Remuneration committee determines the bonus
basis each year.
PRINCIPLES FOR REMUNERATION
FIXED BASIC SALARY
Remuneration for the management team must be competitive. The
basic salary, which is determined by reference to job descriptions,
competence levels, qualifications and seniority, comprises the
main portion of management remuneration and consists of a fixed
basic element and other fixed remuneration elements such as a
fixed car allowance and similar benefits.
ADDITIONAL BENEFITS
Bonus scheme
The Group has an annual bonus scheme based on a combination
of earnings and personal performance targets. The bonus scheme
incentivizes employees to make continuous improvements in
operations and the Group's profitability. The CEO has an annual
maximum bonus of six times the monthly salary, while other
Group managers can earn a bonus up to a maximum of five times
the monthly salary.
Pension schemes
All the Norwegian Group subsidiaries comply with the Act relating
to mandatory occupational pensions. The Group only operates
defined contribution pension schemes. Foreign subsidiaries
comply with their respective jurisdictions pertaining to employee
pension schemes.
The Group managers are members of the Group´s collective
defined contribution pension scheme. As well as participating in
the Company’s ordinary defined contribution pension scheme, the
CEO has a separate salary compensation agreement for pension
benefits exceeding 12G.
Options
A synthetic option scheme (hereafter referred to as a "cash
option") for the Company’s management group was established in
2009. The cash options scheme requires participants to directly
own shares throughout the entire program period. Employees
who are entitled to the options are required to use 50% of the net
gain under the scheme to purchase shares until the ownership
corresponds to 100% of their fixed annual salary. The gain under
the cash option scheme cannot exceed 12 times the monthly
salary per participant per year. The exercise price is increased by
0.5% each month. An option must be exercised no later than 24
months after the initial exercise date. At the year-end, the cash
option scheme corresponded to a total of 1 610 205 shares, after
the awarding of 1 800 000 options in 2017. The final exercise date
for options awarded in 2017 is 31 May 2021.
Severance pays
The Group limits the payment of severance pay, though has
paid such remuneration in specific cases. The CEO is entitled
to a separate severance pay agreement in case of termination
of employment comprising 12 months’ rolling severance pay
calculated from the termination date. The termination date is
deemed to be end of the notice period. The CEO has a period of
notice of six months. The CFO and COO are entitled to 12 months´
severance pay from the termination date or date of change of
position/employment. For other employees, individual contracts
of employment apply, essentially based on conditions in the
Norwegian Working Environment Act.
Benefits in kind
Managers are normally granted benefits in kind typical for similar
positions, such as a free newspaper, telephone and internet
connection.
2 6 6
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
GUIDELINES FOR DETERMINATION OF REMUNERATION
PAID TO THE GROUP MANAGEMENT
INTRODUCTION
For details about remuneration paid to individual employees,
please refer to the notes to the financial statements.
Other incentive schemes, including bonus schemes, are determined
by the Board. The Remuneration committee determines the
minimum performance level for the bonus each year and informs
the Board accordingly. The CEO awards incentive schemes and
other benefits to group management and regional managers within
the framework of programs adopted by the Board.
For information about remuneration paid to group management,
see Note 15.
For more information about options, see Note 16.
DETERMINATION OF SALARY PAID TO THE CEO
Remuneration paid to the CEO is determined each year by the
Remuneration Committee on the mandate of the Board.
DETERMINATION OF SALARY PAID TO GROUP MANAGEMENT
AND REGIONAL MANAGERS
Remuneration paid to other group managers and regional
managers are determined by the CEO in consultation with the
Remuneration Committee.
The Board should be informed about the decision afterwards.
DETERMINATION OF INCENTIVE SCHEMES
The Remuneration Committee evaluates the options scheme and
the exercise allocation within the framework of the AGM.
DETERMINATION OF REMUNERATION PAID TO MANAGERS IN
OTHER GROUP COMPANIES
Subsidiaries of the Group must comply with the main principle
of the Group´s management remuneration policy, as described
under the main principles.
BOARD REMUNERATION
Compensation paid to Board members is not performance-related.
The Board members have not been granted options. Compensation
paid to the Board is determined by the Annual General Meeting.
Bergen, 8 April 2020
The Board of Grieg Seafood ASA
2 67
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 15 S A L A RIE S A ND P ER S ONNEL E X P EN SE S
SALARIES AND PERSONNEL EXPENSES NOK 1 000
Salaries
Social security costs
Share options granted to directors and key employees, incl. social security costs (Note 16)
Pension costs
Other personnel costs
Total
2019
469 263
33 691
16 387
25 028
66 434
610 803
2018
412 680
32 545
15 173
20 402
60 247
541 047
Average number of employees
837
769
The Board´s guidelines and principles for determination of remuneration and other benefits paid to key personnel are described in Note
14.
Share savings program
Grieg Seafood established a share savings program for its employees in 2018 and this has continued in 2019.
Employees may invest up to NOK 20 000 per year. There is a 3 years lock-up period. The saved amount is deducted from the monthly
net salary and used to purchase Grieg Seafood shares on behalf of the employees. The purchase will be made from transfer of Grieg
Seafood's treasury shares or bought in the market. The purchase price and the number of shares acquired by the company will be
reported in accordance with the applicable regulations.
At 31 December 2019, the equity effect of the share savings program was NOK 2.0 million (2018: NOK 2.6 million), of which loan to employees
constitutes NOK 1.6 million (2018: NOK 2.1 million). The total shares sold to employees was 14 737 in 2019.
REMUNERATION PAID TO GROUP
MANAGEMENT IN 2019 NOK 1 000
SALARY
BONUS
RETAINED, NOT
YET PAID
OPTIONS
EXERCISED
DURING THE
YEAR
OTHER
REMUNERATION
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
Total remuneration paid to group management
3 009
1 954
2 091
1 637
8 691
347
184
133
280
945
601
383
345
265
1 594
2 592
1 652
1 787
1 645
7 677
101
101
101
103
406
Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement.
TOTAL
6 650
4 276
4 458
3 930
19 314
2 6 8
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
REMUNERATION PAID TO BOARD MEMBERS IN 2019 NOK 1 000
Per Grieg jr. 1)
Asbjørn Reinkind 1)
Wenche Kjølås (until 13.06.2019) 2)
Karin Bing Orgland 2)
Solveig M.R. Nygaard
Tore Holand 2)
Sirine Fodstad (from 13.06.2019) 3)
Total remuneration including social security costs
TOTAL
456
319
140
311
257
285
154
1 923
Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement.
1) Payment for work performed on the Remuneration Committee of NOK 19 968 is included in the remuneration paid to Per Grieg jr. and Asbjørn Reinkind.
2) Payment for work performed on the Audit Committee is included in the remuneration paid to Wenche Kjølås, Karin Bing Orgland and Tore Holand, amounting to NOK 25 673, 54 198
and 28 525, respectively.
3) Payment for work performed on the Remuneration Committee of NOK 11 410 is included in the remuneration paid to Sirine Fodstad.
The amounts include social security costs.
REMUNERATION PAID TO GROUP
MANAGEMENT IN 2018 NOK 1 000
SALARY
BONUS
RETAINED, NOT
YET PAID
OPTIONS
EXERCISED
DURING THE
YEAR
OTHER
REMUNERATION
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
Total remuneration paid to group management
2 685
1 748
1 748
1 466
7 647
630
335
195
347
1 508
389
207
149
314
1 058
2 522
1 607
1 607
1 448
7 184
90
97
97
92
376
Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement.
REMUNERATION PAID TO BOARD MEMBERS IN 2018 NOK 1 000
Per Grieg jr. 1)
Wenche Kjølås 2)
Karin Bing Orgland 2)
Asbjørn Reinkind 1)
Ola Braanaas (until 12.06.2018 ) 3)
Solveig M.R. Nygaard (from 12.06.2018)
Tore Holand (from 12.06.2018)
Total remuneration including social security costs
Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement.
1) Payment for work performed on the Remuneration Committee of NOK 17 115 is included in the remuneration paid to Per Grieg jr. and Asbjørn Reinkind.
2) Payment for work performed on the Audit Committee of NOK 51 345 is included in the remuneration paid to Wenche Kjølås and Karin Bing Orgland.
3) Payment for work performed on the Remuneration Committee of NOK 8 558 is included in the remuneration paid to Ola Braanaas.
The amounts include social security costs.
TOTAL
6 316
3 993
3 796
3 667
17 772
TOTAL
434
280
280
302
123
114
114
1 646
2 69
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 16 C A SH-B A SED REMUNER AT ION (OP T ION S)
The Company has issued options to the management group and regional directors. The options’ strike price is the stock market price on
the date of issue, rising by 0.5% per month until the exercise date. As at 31 December 2019, no equity options were available for vestment.
Since 2009, an option scheme with settlement in cash has been established for the management and regional directors. The most recent
allocation was in 2017, totalling 1 800 000 options. The final exercise date is 31 May 2021. The options have a term of two years, where 50%
is vested each year.
Employees taken on after the initial allocation of options are allocated options on taking up employment.
The Black & Scholes option pricing model is used to calculate the market value. A brokerage firm is used to perform the calculations. The
table below shows the movement in outstanding options during 2018 and 2019.
OVERVIEW 2019 (TOTAL OPTIONS)
OPTION
CATEGORY
OUTSTANDING
OPTIONS AT
31.12.2018
EXERCISED
OPTIONS
EXPIRED
OPTIONS
OUTSTANDING
OPTIONS AT
31.12.2019
OF WHICH
CASH-SETTLED
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
Others
Total
Cash settlement
Cash settlement
Cash settlement
Cash settlement
Cash settlement
600 000
276 044
300 000
200 000
999 999
2 376 044
29 530
18 826
20 364
67 288
157 238
293 246
170 470
57 218
79 636
-
165 269
472 593
400 000
200 000
200 000
132 712
677 492
400 000
200 000
200 000
132 712
677 492
1 610 205
1 610 205
OVERVIEW 2018 (TOTAL OPTIONS)
OPTION
CATEGORY
OUTSTANDING
OPTIONS AT
31.12.2017
EXERCISED
OPTIONS
EXPIRED
OPTIONS
OUTSTANDING
OPTIONS AT
31.12.2018
OF WHICH
CASH-SETTLED
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
Others
Total
Cash settlement
Cash settlement
Cash settlement
Cash settlement
Cash settlement
658 272
311 274
352 366
300 000
1 329 634
2 951 547
55 275
35 230
35 230
100 000
262 677
488 412
2 997
-
17 136
-
66 958
87 091
600 000
276 044
300 000
200 000
999 999
600 000
276 044
300 000
200 000
999 999
2 376 044
2 376 044
ALLOCATION:
YEAR - MONTH
EXPIRY DATE:
YEAR - MONTH
STRIKE PRICE NOK
PER SHARE AT 31.12.2019
STRIKE PRICE NOK
PER SHARE AT 31.12.2018
2015–06
2017–11
2017–11
Total
2019–06
2020–05
2021–05
-
94.29
94.29
31.60
88.78
88.78
Cash-based options available for settlement
Weighted average exercise price on outstanding options (NOK per option)
2 7 0
OPTIONS
2019
-
710 205
900 000
2018
576 044
900 000
900 000
1 610 205
2 376 044
2019
2018
1 610 205
83.00
1 476 044
66.49
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOK/OPTION
AMOUNTS IN NOK 1 000
OPTION
CATEGORY
LISTED
PRICE ON
ALLOCATION
CALCULATED
VALUE PER
OPTION ON
ALLOCATION
CALCULATED
TOTAL
VALUE ON
ALLOCATION *
TOTAL VALUE
OF ALL
OPTIONS AT
01.01.2019
CHANGE IN
PROVISION
CB-OB *
EXERCISED
OPTION 2019
ACC. COST
RECOGNIZED
IN EQUITY AT
31.12.2019
RECOGNIZED
LIABILITY CASH
SETTLEMENT
AT 31.12.2019
2019
Former employees
with expired options Equity option
Andreas Kvame
(CEO)
Atle Harald
Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O.
Mathisen (CHRO)
Andreas Kvame
(CEO)
Atle Harald
Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O.
Mathisen (CHRO)
Other options
allocated in 2015
Other options
allocated in 2017
Total
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
25.50
25.50
25.50
79.00
83.00
83.00
83.00
83.00
25.50
83.00
3.36
3.97
3.97
3.63
2.26
2.79
2.79
2.38
3.60
2.35
1 342
2 575
-2 575
2 592
793
793
363
906
557
557
475
1 634
1 773
-1 634
-1 773
1 652
1 787
-
-
1 645
1 709
2 298
1 057
1 130
1 448
1 558
898
994
-
-
-
-
2 876
3 027
-3 027
3 267
1 880
10 543
3 699
17 503
4 858
2 145
2 995
13 939
*) Amounts exclude social security costs
6 887
-
-
-
-
-
-
-
-
-
-
6 887
-
-
-
-
4 007
2 505
2 688
1 891
-
8 557
19 649
NOK/OPTION
AMOUNTS IN NOK 1 000
OPTION
CATEGORY
LISTED
PRICE ON
ALLOCATION
CALCULATED
VALUE PER
OPTION ON
ALLOCATION
CALCULATED
TOTAL
VALUE ON
ALLOCATION *
TOTAL VALUE
OF ALL
OPTIONS AT
01.01.2018
CHANGE IN
PROVISION
CB-OB *
EXERCISED
OPTION
2018
ACC. COST
RECOGNIZED
IN EQUITY AT
31.12.2018
RECOGNIZED
LIABILITY CASH
SETTLEMENT
AT 31.12.2018
2018
Former employees
with expired
options
Andreas Kvame
(CEO)
Atle Harald
Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O.
Mathisen (CHRO)
Andreas Kvame
(CEO)
Atle Harald
Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O.
Mathisen (CHRO)
Other options
allocated in 2015
Other options
allocated in 2016
Other options
allocated in 2017
Total
Equity
option
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
25.50
25.50
25.50
79.00
83.00
83.00
83.00
83.00
25.50
79.00
83.00
3.36
3.97
3.97
3.63
2.26
2.79
2.79
2.38
3.60
3.34
2.35
1 342
4 255
-1 679
2 522
793
793
363
906
557
557
475
1 857
2 868
-223
-1 095
1 607
1 607
237
-237
1 448
147
1 563
90
90
77
967
1 040
821
-
-
-
-
2 876
5 227
-2 200
2 859
669
441
-441
2 896
*) Amounts exclude social security costs
1 880
11 212
305
15 594
3 394
1 909
-
12 939
6 887
6 887
-
-
-
-
-
-
-
-
-
-
-
2 575
1 634
1 773
-
1 709
1 057
1 130
898
3 027
-
3 699
17 503
2 7 1
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 16 C O N T I N U E D
ACCRUED COSTS RELATED TO CASH OPTIONS NOK 1 000
2019
2018
CLASSIFICATION IN FINANCIAL STATEMENTS
Change in provisions
Exercised options during the year
Total costs excl. social security costs
Social security costs
Total costs incl. social security costs
2 145
13 939
16 085
303
16 387
1 909
Other provisions for liabilities
12 939
Salaries and personnel expense / cash
14 848
325
Public taxes payable
15 173
Salaries and personnel expense
Cost relating to cash-based remuneration in 2019 totalled NOK 16 387 thousand. This is recognized in the income statement as a personnel
cost. Social security contributions are provided for on an ongoing basis based on the fair value of the options.
As at 31 December 2019, outstanding options with the right to cash settlement were stated at NOK 19 649 thousand, of which NOK 8 379
thousand were classified as non-current liabilities. Issued options are cancelled on termination of employment.
ESTIMATES USED TO CALCULATE ALLOCATION OF OPTIONS
31.12.2019
31.12.2018
Anticipated volatility (%)
Risk-free rate of interest (%)
Estimated qualification period (years)
37.90%
1.39%
0.98
41.49%
1.07%
1.56
The estimated qualification period for the options is based on historical data, and does not necessarily represent future developments.
In order to estimate volatility, management has applied historical volatility for comparable listed companies.
2 7 2
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 17 SH A RE C A P I TA L A ND SH A REHOL DER INFORM AT ION
As at 31 December 2019, the company had 111 662 000 shares with a nominal value of NOK 4 per share. All shares issued by the company
are fully paid-up. There is one class of shares and all shares confer the same rights. In June 2011, the company purchased 1 250 000
treasury shares at NOK 14.40 per share. 21 November 2018, the company sold 21 576 shares to employees for use in the share savings
program. The sales price was NOK 121.56 per share, which provided a gain of NOK 107.16 per share. Another 14 737 shares were sold to
employees in November 2019 at a sales price of NOK 136.05 per share, providing a gain of NOK 121.65 per share. After the transactions the
company has 1 213 687 treasury shares.
SHARE CAPITAL AND NUMBER OF SHARES
NOMINAL VALUE NOK
TOTAL SHARE CAPITAL NOK 1 000 NO. OF ORDINARY SHARES
Holdings of treasury shares
Sale of treasury shares to employees 2018
Sale of treasury shares to employees 2019
Total at 31.12.2019
4.00
4.00
4.00
4.00
446 648
-5 000
86
59
441 793
111 662 000
-1 250 000
21 576
14 737
110 448 313
THE LARGEST SHAREHOLDERS IN GRIEG SEAFOOD ASA
31.12.2019
31.12.2019
31.12.2018
31.12.2018
NO. OF SHARES
SHAREHOLDING
NO. OF SHARES
SHAREHOLDING
Grieg Aqua AS
OM Holding AS
Folketrygdfondet
Ystholmen Felles AS
State Street Bank and Trust Comp
Clearstream Banking S.A.
Verdipapirfondet Pareto Investment
Verdipapirfondet Alfred Berg Gamba
Handelsbanken Nordiska Smabolag
Grieg Seafood ASA
State Street Bank and Trust Comp
Swedbank Robur Smabolagsfond
JPMorgan Chase Bank, N.A., London
DPam Invest B
Pictet & Cie (Europe) S.A.
UBS Switzerland AG
Arctic Funds PLC
Citibank, N.A.
State Street Bank and Trust Comp
Verdipapirfondet Alfred Berg Norge
Total –20 largest shareholders
Other shareholders
Total shares
56 018 799
50.17%
56 018 799
50.17%
6 169 379
5 100 130
2 928 197
2 166 080
1 745 002
1 701 000
1 500 796
1 332 190
1 213 687
1 057 400
940 000
915 596
888 362
878 324
780 949
706 424
619 195
597 876
562 479
5.53%
4.57%
2.62%
1.94%
1.56%
1.52%
1.34%
1.19%
1.09%
0.95%
0.84%
0.82%
0.80%
0.79%
0.70%
0.63%
0.55%
0.54%
0.50%
6 039 379
3 760 350
2 928 197
2 055 051
866 255
1 926 457
1 700 796
1 057 190
1 228 424
149 622
-
828 120
-
-
566 035
234 349
-
404 867
380 000
87 821 865
23 840 135
111 662 000
78.65%
21.35%
100.00%
80 143 891
31 518 109
111 662 000
5.41%
3.37%
2.62%
1.84%
0.78%
1.73%
1.52%
0.95%
1.10%
0.13%
-
0.74%
-
-
0.51%
0.21%
-
0.36%
0.34%
71.77%
28.23%
100.00%
2 7 3
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 17 C O N T I N U E D
SHARES CONTROLLED BY BOARD MEMBERS
AND GROUP MANAGEMENT
31.12.2019
31.12.2019
31.12.2018
31.12.2018
NO. OF SHARES
SHAREHOLDING
NO. OF SHARES
SHAREHOLDING
BOARD OF DIRECTORS
Per Grieg jr. *
Asbjørn Reinkind (Reinkind AS)
Wenche Kjølås (Jawendel AS) (Board member to 13 June 2019)
Karin Bing Orgland
Solveig Nygaard
Tore Holand
Sirine Fodstad (Board member from 13 June 2019)
GROUP MANAGEMENT
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
58 961 996
120 000
7 000
-
-
-
-
39 165
24 208
23 507
3 456
52.80%
0.11%
0.01%
-
-
-
-
0.04%
0.02%
0.02%
0.00%
58 961 996
120 000
7 000
-
-
-
-
39 165
24 208
23 507
3 456
* THE SHARES OWNED BY THE FOLLOWING COMPANIES ARE CONTROLLED BY PER GRIEG JR. AND FAMILY
Grieg Aqua AS
Nye Ystholmen AS
Per Grieg jr. privately
Total shares
56 018 799
2 928 197
15 000
58 961 996
50.17%
2.62%
0.01%
52.80%
56 018 799
2 928 197
15 000
58 961 996
52.80%
0.11%
0.01%
-
-
-
-
0.04%
0.02%
0.02%
0.00%
50.17%
2.62%
0.01%
52.80%
2 74
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 18 E A RNING S P ER SH A RE A ND DI V IDEND P ER SH A RE
CALCULATION OF EARNINGS PER SHARE
Profit for the year (majority share) (NOK 1 000)
Number of shares at 01.01
Effect of treasury shares (Note 17)
Sale of treasury shares to employees (21.11.2018)
Sale of treasury shares to employees (21.11.2019)
Number of outstanding shares at 31.12
Adjustment for effect of share options
Weighted average number of outstanding shares at 31.12
Diluted average number of outstanding shares at 31.12
Earnings per share (NOK)
Diluted earnings per share (NOK)
Proposed dividend per share (NOK)
Proposed dividend 2018, paid out in 2019
Dividend paid out according to proxy approved at the AGM 13.06.2019
NOT E 19 C A SH A ND C A SH EQUI VA L EN T S
CASH AND CASH EQUIVALENTS NOK 1 000
Restricted deposits relating to employee tax deductions
Other cash and bank deposits
Total
The Group's currency and interest rate exposure is described in Note 3.
2019
619 510
111 662 000
-1 250 000
21 576
14 737
2018
972 506
111 662 000
-1 250 000
21 576
-
110 448 313
110 433 576
14 855
110 433 458
110 433 458
19 152
110 414 424
110 414 424
5.61
5.61
0.00
2019
14 515
199 981
214 497
8.81
8.81
2.00
2.00
2.00
2018
12 388
125 532
137 920
2 7 5
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 2 0 T R A DE RECEI VA BL E S
TRADE RECEIVABLES NOK 1 000
Gross amount of trade receivables
Trade receivables deducted*
Loss allowance
Trade receivables at 31.12.
* Trade receivables bought by the factoring company
RECOGNIZED LOSSES NOK 1 000
Change in loss allowance
Confirmed losses in the year
Amounts received for previously written off trade receivables
Total recognized losses on receivables
2019
1 233 786
-764 034
-9 856
459 897
2019
-2 076
2 725
-1 698
-1 049
2018
937 163
-
-11 931
925 232
2018
564
1 547
-7 246
-5 135
Losses on receivables are classified as other operating expenses in the income statements.
In the Group's ECL (Expected credit loss) calculation model, customers are categorized as high or low risk, depending on their country
of origin and as credit insured or unsecured. The group of unsecured receivables also consist of some receivables that have other type of
securities and hence, the risk of loss is considered as low and no loss allowance is calculated for these receivables. The risk evaluation
is based on own experience and input from Credit Insurance Companies. Loss allowance is further calculated on a %-basis of the aging
distribution (days past due). The Group also makes manual accruals if significant information implies that there is a higher risk of losses.
Some credit risk (10%) also remains for the factored trade receivables, thus the aging analysis given below is based on the total receivables
rather than total receivables less the factored receivables. For more information about credit risk, refer to Note 3.
NOK 1 000
GROSS
AMOUNT
EXPOSED
AMOUNT
NOT YET
DUE
OVERDUE
0-30 DAYS
OVERDUE
31-60 DAYS
OVERDUE
61-90 DAYS
OVERDUE
> 90 DAYS
OVERDUE
> 1 YEAR
TOTAL
AGING PROFILE OF TRADE RECEIVABLES (TR) 31.12.2019
TR Credit insured
921 822
89 656
613 675
285 868
12 606
2 835
5 412
1 426
921 822
Regular/
normal risk
countries
High risk
countries
Total
TR Unsecured
211 395
149 887
177 279
TR Credit insured
TR Unsecured
68 741
31 827
7 250
31 598
46 130
19 186
19 780
19 973
9 921
2 906
1 037
919
1 233 786
278 391
856 270
335 542
17 468
2 603
1 085
1 016
7 539
30
877
57
460
8 513
519
783
314
211 395
-
-
68 741
31 827
15 226
1 740
1 233 786
368
2 213
3 016
3 274
23
435
610
-
-
5 523
150
1 166
9 856
170
1 424
4 100
2 823
85
31
5
50
LOSS ALLOWANCE 31.12.2019
Regular/
normal risk
countries
High risk
countries
Total
TR Credit insured
TR Unsecured
TR Credit insured
TR Unsecured
-
-
-
-
-
89 656
149 887
7 250
31 598
278 391
90
580
20
87
777
230
152
45
135
562
2 76
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOK 1 000
GROSS
AMOUNT
EXPOSED
AMOUNT
NOT YET
DUE
OVERDUE
0-30 DAYS
OVERDUE
31-60 DAYS
OVERDUE
61-90 DAYS
OVERDUE
> 90 DAYS
OVERDUE
> 1 YEAR
TOTAL
AGING PROFILE OF TRADE RECEIVABLES (TR) 31.12.2018
Regular/
normal risk
countries
High risk
countries
Total
TR Credit insured
712 685
123 403
429 138
260 979
11 762
787
7 971
2 047
712 685
TR Unsecured
149 704
107 562
TR Credit insured
TR Unsecured
45 944
28 830
4 930
26 121
99 774
29 127
15 290
44 521
15 551
9 655
2 061
912
1 569
937 163
262 015
573 330
330 707
16 303
-
92
1 253
2 132
3 122
-
932
226
262
128
149 704
45 944
28 830
12 026
2 664
937 163
LOSS ALLOWANCE 31.12.2018
Regular/
normal risk
countries
High risk
countries
Total
TR Credit insured
TR Unsecured
TR Credit insured
TR Unsecured
-
-
-
-
-
123 403
215
393
107 562
1 000
4 930
26 121
58
611
262 015
1 885
1 343
93
1 159
2 988
77
281
22
565
945
24
107
5
751
887
628
2 047
3 384
1 096
-
838
226
262
128
4 054
441
4 052
2 562
2 664
11 931
NOT E 21 OT HER CURREN T RECEI VA BL E S
OTHER CURRENT RECEIVABLES NOK 1 000
Vat receivable
Prepaid expenses
Loan extended to Nordnorsk Smolt AS
Current loans extended to non-controlling interests
Other current receivables
Total
2019
120 847
77 421
-
60 000
76 357
334 625
2018
87 666
46 432
22 100
-
10 234
166 432
2 7 7
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 2 2 REL AT ED PA R T IE S
2019 NOK 1 000
OPERATING INCOME
OPERATING EXPENSES
NON-CURRENT
BALANCES
CURRENT BALANCES
Total related parties as shareholders
Total related parties as associates
Total
40 340
-
40 340
277 257
72 535
349 791
-
1 910
1 910
-35 584
60 000
24 416
2018 NOK 1 000
OPERATING INCOME
OPERATING EXPENSES
NON-CURRENT
BALANCES
CURRENT BALANCES
Total related parties as shareholders
Total related parties as associates
Total
38 110
-
38 110
259 786
338
260 125
-
-
-
4 113
-
4 113
The Group has transactions with companies controlled by Grieg Maturitas II AS, who is the parent company of Grieg Aqua AS, majority owner
of Grieg Seafood.
These services include:
•
ICT-related services and other functions such as catering, reception etc. are provided by Grieg Group Resources AS on an arm’s length
basis.
• Grieg Seafood ASA rents its offices from Grieg Gaarden AS on an arm’s length basis.
• The regions purchased cleansing fish from Ryfylke Rensefisk AS, a company owned by Grieg Kapital AS.
• Purchase of roe and other operating services from SalmoBreed AS, which is a related party of a board member.
• Purchase of feed relating to operations from Biomar Group, which is a related party of a board member.
• Purchase of veterinary services from Fomas AS and SLab AS, which are a related parties of a board member.
• Purchase of equipment from Mørenot Group, which are a related parties of a board member.
The Group also purchases services relating to operations from other related parties and associates. The board and management are related
parties. See Note 16 on share-based options and Note 17 on shares controlled by board members and management.
2 7 8
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 2 3 F IN A NCI A L INCOME A ND F IN A NCI A L E X P EN SE S
FINANCIAL ITEMS NOK 1 000
2019
2018
FINANCIAL INCOME
Other interest income *
Dividend
Net currency gains
Total
FINANCIAL EXPENSE
Interest expense on external borrowings and leases **
Amortized establishment cost
Other interest expenses ***
Net change in fair value of derivatives
Net currency losses
Other financial expenses
Total
18 719
-
32 590
51 309
59 153
2 750
9 911
2 690
-
3 038
77 542
18 864
10
-
18 874
48 773
5 304
11 873
5 490
23 199
2 226
96 865
Net financial items decreased by NOK 52 million compared to last year, mainly driven by currency gains on loans and receivables.
* The Group sells fish on behalf of non-controlling interests. The majority of other interest income comprises cash discounts from non-controlling interests, based on settlement of
trade payables with shorter-than-normal credit terms.
** Interest expenses on bank borrowings and leases includes recognized gains/losses from realized interest rate swaps. In addition, IFRS 16 was implemented from 1 January 2019.
The effect on interest expenses in 2019 amounted to NOK 11 million.
*** Interest expenses relating to the factoring agreement at Ocean Quality are included in other interest expenses.
2 7 9
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 2 4 OT HER OP ER AT ING E X P EN SE S
OTHER OPERATING EXPENSES NOK 1 000
Transportation costs
Maintenance costs
Electricity and fuel
Lease expenses 1)
Outsourced services 2)
Insurance
IT expenses
Marketing costs
Other operating expenses 3)
Other production-related costs 1, 4)
Total other operating expenses
2019
612 272
289 029
125 139
52 567
103 412
61 931
54 369
10 415
110 184
593 684
2 013 002
2018
521 659
265 461
101 499
97 764
51 774
54 092
37 124
8 996
104 735
578 520
1 821 623
1) IFRS 16 was implemented 1 January 2019, reducing recognized lease expenses by NOK 89 million and other production-related costs by NOK 38 million (YTD 2019 IFRS 16 compared
with IAS 17). See Note 11 for further information.
2) Outsourced services include auditor´s fees. See more detailed information below.
3) Includes equipment, telephony/postage, office supplies, fees, travel costs etc.
4) Production-related costs comprise harvesting costs including expenses for well-boat services, packaging material, diving services, vaccination, de-lousing, oxygen, and analyses etc.
BREAKDOWN OF AUDITOR'S FEES NOK 1 000
AUDITOR'S FEES
Group auditor
Other auditors
OTHER CERTIFICATION SERVICES
Group auditor
Other auditors
TAX ADVICE
Group auditor
Other auditors
OTHER SERVICES
Group auditor
Other auditors
Total Group auditor
Total other auditors
Total auditor's fees
2 8 0
2019
3 414
628
574
-
578
460
179
157
4 745
1 245
5 990
2018
2 504
542
323
-
350
195
121
119
3 298
857
4 154
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 25 OT HER CURREN T L I A BIL I T IE S
OTHER CURRENT LIABILITIES NOK 1 000
Accrued expenses *
Other current liabilities **
Other current liabilities
2019
169 895
9 612
179 507
2018
139 803
8 859
148 663
* Accrued expenses relate to other operating expenses, including accrued purchases, transportation costs, bonuses/discounts for buyers, accrued salaries, and insurance.
** At year-end 2019, the Group had physical delivery contracts recognized as liability, totalling NOK 2 million.
2 8 1
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 26 NE W A CCOUN T ING S TA NDA RD S
CHANGES IN ACCOUNTING POLICIES AND
DISCLOSURE OF NEW STANDARDS
A) NEW AND AMENDED STANDARDS, AND
INTERPRETATIONS - ADOPTED IN 2019
IFRS 16 LEASES
IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases,
IFRIC 4 Determining whether an Arrangement contains a Lease,
SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the
Substance of Transactions Involving the Legal Form of a Lease.
The Group as a lessee
IFRS 16 sets out the principles for the recognition, measurement,
presentation and disclosure of leases and requires lessees to
account for most leases under a single on-balance sheet model.
At the commencement date of a lease, a lessee will recognize a
liability to make lease payments and an asset representing the
right to use the underlying asset during the lease term ("right-of-
use asset"). The standard includes a number of optional practical
expedients related to recognition and initial application. Lessees
will be required to separately recognize the interest expense on
the lease liability and the depreciation expense on the right-of-use
asset.
Effective 1 January 2019 the Group adopted IFRS 16 using the
modified retrospective approach and accordingly comparative
information has not been restated.
Determining whether a contract is or contains a lease
For contracts entered into before 1 January 2019, on the transition
to IFRS 16, the Group elected to not reassess whether a contract
is, or contains a lease, as a practical expedient. As such, the Group
rely on the assessment made applying IAS 17 and IFRIC 4, on
whether the contract is, or contains, a lease.
Leases previously classified as operating leases under IAS 17
At the date of initial application of IFRS 16, the Group measured
lease liabilities at the present value of the remaining lease
payments, discounted using the Group's incremental borrowing
rate at 1 January 2019. Further, the Group recognized right-of-use
assets at an amount equal to the lease liability adjusted by the
amount of any prepaid or accrued lease payments.
At the initial application date of IFRS 16, there were no onerous
lease contracts that would have required an adjustment to the
right-of-use asset at 1 January 2019.
The Group has applied the following practical expedients to leases
previously classified as operating leases at the date on initial
application:
2 8 2
• Exemption for short-term leases (defined as 12 months or less)
• Exemption for low value assets
• Excluded any initial direct costs from the measurement of the
right-of-use asset
• Use of a single discount rate to a portfolio of leases with similar
characteristics
• Applied hindsight when determining the lease term for
contracts containing options.
Leases previously classified as finance leases under IAS 17
For leases that were classified as finance leases under IAS 17, the
carrying amount of the right-of-use asset and the lease liability
at 1 January 2019 was determined to be the carrying amount of
the lease asset and lease liability at the date of initial application
of IFRS 16.
IFRS 16 IMPACT ON THE CONSOLIDATED FINANCIAL
STATEMENTS
On transition to IFRS 16, the Group recognized NOK 319 million in
right-of-use assets and NOK 319 million as lease liabilities. The
initial application of IFRS 16 did not impact the opening balance of
retained earnings. The impact on the date of initial application is
further presented below:
RECONCILIATION OF LEASE COMMITMENTS TO
LEASE LIABILITIES NOK 1 000
01.01.2019
Operating lease commitments 31 December 2018
- Estimation adjustment of the operating lease
commitment
+ Extension options reasonably certain to be exercised
- Termination options reasonably certain to be exercised
- Non-lease component of vessel charter hire
- Practical expedient related to short term leases
- Practical expedient related to low value leases
- Discounting using the incremental borrowing rate
Lease liabilities recognized at initial application
The weighted average incremental borrowing rate
applied:
Right-of-use assets recognized at initial application
518 888
54 955
-
-
46 071
56 995
61
41 751
319 054
3.04%
319 054
Refer to note 11 for a summary of the implementation effect on
the opening balance at 1 January 2019 (hereof information on
the current- and non-current classification of the lease liability
at initial application of IFRS 16), in addition to a 2019 full year
comparison of the consolidated income statement, comparing
IFRS 16 with the superseded IAS 17.
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
AMENDED STANDARDS AND INTERPRETATIONS
IFRIC 23 Uncertainty over Income Tax Treatments
The interpretation clarifies how to consider uncertain tax treatment
within the scope of IAS 12 Income Taxes. Uncertainty over income
tax treatments arises when it is unclear how the applicable tax
regulations should be understood for a specific transaction or
event, and when it is uncertain whether taxation authorities will
approve an entity's tax treatment. The interpretation specifically
addresses the following:
• Whether an entity considers uncertain
treatments
tax
separately or together
• The assumptions an entity makes about the examination of tax
treatments by taxation authorities
Amendments to IFRS 9, IAS 39 and IFRS 7 due to the IBOR reform
The amendments provide companies with temporary reliefs to
certain requirements related to hedge accounting in the period
of uncertainty before the replacement of an existing interest rate
benchmark with an alternative nearly risk-free interest rate (an
RFR).
For the hedging relationships where the reliefs are applied,
companies are required to disclose additional qualitative and
quantitative information. However, the amendments also provide
an exemption from the disclosure requirements in IAS 8.28 related
to the adjustment amounts in the current and prior period.
• How an entity determines taxable profit (tax loss), tax bases,
unused tax losses, unused tax credits and tax rates (how to
reflect uncertainty in these positions)
• How an entity considers changes in facts and circumstances
The effective date of the amendments is for annual periods
beginning on or after 1 January 2020, with early application
permitted. The requirements must be applied retrospectively. The
Group does not intend to early adopt the amendments.
The interpretation is effective for annual reporting periods
beginning on or after 1 January 2019, but certain transition reliefs
are available. The interpretation has not had material effect on the
Group as per 31 December 2019, however, could affect the Group
in the future.
Other amended standards and new interpretations, other than
IFRIC 23, has not had material effect on the Group.
The Group has not early adopted any standards, interpretations or
amendments that have been issued but are not yet effective.
B) NEW STANDARDS, AMENDMENTS AND
INTERPRETATIONS - NOT YET ADOPTED
Standards, amendments and interpretations that are issued up to
the date of issuance of the consolidated financial statement, but
not yet effective, are disclosed below. The Group’s intention is to
adopt the relevant new and amended standards and interpretations
when they become effective, subject to EU approval before the
consolidated financial statement are issued.
Amendments to IAS 1 on classification of liabilities as current or
non-current
IASB has on the 23 January 2020 issued amendments to IAS 1 to
clarify the requirements for classifying liabilities as current or
non-current. The amendment clarifies
• The interpretation of the right to defer settlement of a liability
• That a right to defer must exist at the end of the reporting period
• That classification is unaffected by the likelihood that an entity
will exercise its deferral right
• That only if an embedded derivative in a convertible liability is
itself an equity instrument would the terms of a liability not
impact its classification.
The new guidance will be effective for annual periods starting on
or after 1 January 2022.
OTHER STANDARDS, AMENDMENTS AND INTERPRETATIONS
No other new standards, amendments and interpretations, not yet
adopted at 31 December 2019, is expected to have material impact
on the consolidated financial statement of the Group.
2 8 3
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 2 7 C ON T INGEN T L I A BIL I T IE S
In February 2019, the European Commission launched an
investigation to explore potential anti-competitive behavior in the
Norwegian salmon industry. Grieg Seafood is one of the companies
under investigation. Based on the EU investigation, US competition
authorities launched their own investigation into the matter in
November 2019. By the end of the year, four class-action lawsuits
had been filed by minor customers in the USA and two in Canada.
Grieg Seafood is not aware of any anti-competitive behavior within
the Group, not in Norway, the EU, the USA, or in Canada. We are
fully collaborating with European and American authorities in
this matter and will follow up the lawsuits in the USA and Canada
accordingly. Approximately NOK 20 million was spent on lawyer
fees related to the EU commission investigation during the year.
There is no new information regarding the EU investigation, and
Grieg Seafood considers it to be probable that the investigation will
be in its favor, which also is supported by legal advice. Furthermore,
the amount of the contingent liability related to a negative outcome
of this matter cannot be reasonable estimated, due to the lack of
information. Consequently, no provision has been recognized in
relation to both the EU and the US investigation, nor to any of the
civil lawsuits.
2 8 4
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D G R O U P A C C O U N T S
NOT E 2 8 P O S T-B A L A NCE SHEE T E V EN T S
In January 2018, Ocean Quality AS was suspected of exporting
salmon with PD (Pancreas Disease) to China. The case was
dismissed in January 2020. Norwegian Authorities concluded that
Ocean Quality had not done anything wrong.
14 January 2020, Grieg Seafood notified the Norwegian Food Safety
Authority (FSA) of the possibility of an ISA (Infectious Salmon
Anemia) outbreak on fish at the Laholmen site in Nordkapp. The
suspicion was confirmed by the FSA 23 January. The fish was of
harvest size and has now been completely harvested according to
procedures and requirements set by the FSA.
In February 2020, Norway`s Ministry of Trade, Industry and
Fisheries presented the updated “traffic lights”, allowing a net
national production increase of salmon and trout of approximately
23 000 tonnes per year. The sites of Grieg Seafood Rogaland have
been amended from yellow to green light.
On 7 February 2020, Grieg Seafood announced that it had signed
Sales and Purchase Agreements (SPA) for the acquisition of Grieg
Newfoundland AS in Newfoundland, Canada. The project currently
comprises licenses for 11 sea sites across four areas in Placentia
Bay, Newfoundland. Three licenses are approved, three are
expected to be approved in 2020 and the rest are in different stages
of application. The project also includes a high-end Recirculating
Aquaculture System (RAS) facility currently under construction.
The first harvest will be in 2022/23, and the region is expected to
contribute 15 000 tonnes harvest in 2025. The project has a long-
term annual harvest potential of 30 000 - 45 000 tonnes Atlantic
salmon. For more information, see the notification to the Oslo
Stock Exchange on www.griegseafood.com.
On 25 March 2020, the Extraordinary General Meeting approved
the Sales and Purchase Agreements for the acquisition of Grieg
Newfoundland AS. The Group has accordingly renegotiated
the syndicate loan agreement and hence the financing of the
acquisition is secured. The parties have agreed to prolong the long
stop date for the transaction until 14 April 2020.
After the balance sheet date and until the date of the release
of the Annual report, the world has been severely affected by
the coronavirus pandemic, and the salmon marked makes no
exemption. Although the demand for salmon currently remains,
there has been a shift from demand from hotels, restaurants and
catering to demand from the retail sector. Airfreight is making
the distribution more challenging for the sales teams, however
transport on trucks remains relatively good. The production
is currently running as normal. Grieg Seafood is constantly
monitoring the situation and fully complies with the authorities’
recommendations in all locations. The employees’ wellbeing is
highly prioritized. As food producers, critical employees in the
salmon farming industry are recognized as essential workers in
Norway, Canada and the UK. The governments want production
to continue and have signaled that they are willing to facilitate
that where necessary. For further details, please refer to the
Outlook section in the Board of Director’s report and in the profit &
innovation section in part 2 of the Annual report.
Since 31 December 2019, the NOK has been depreciating
significantly against the Group’s other transaction currencies.
The most significant change has been NOK against USD, with a
20% depreciation as of 31 December 2019 until 31 March 2020.
The NOK has furthermore been depreciating 17% against the
EUR during the same period. As such, a depreciation of the
NOK will have a positive effect on the Group’s sales revenues,
as approximately 50% of the sales revenues are denominated in
EUR. The Group also carries out purchases denominated in EUR
and USD, which will be negatively impacted by a depreciation of
the NOK. This will significantly increase the feed cost for all our
production companies. Otherwise, the Group companies mainly
have cost denominated in local currencies, except Grieg Seafood
UK, which has deliveries from Norway, and can hence be positively
affected by a depreciation of the NOK.
In order to reduce some of the currency fluctuation risk, the Group
has a portion of the syndicate term loan denominated in EUR,
which was carried out in 2018 as a part of the Group’s hedging
strategy.
The production companies carry out sales to the sales company
(Ocean Quality) in their local currencies. Ocean Quality hedges
transactions against currency fluctuations related to CAD/USD,
EUR/NOK, GBP/EUR and USD/NOK, and other currencies if
necessary.
Hence, the depreciation of the NOK will most likely have a positive
effect on the Group’s EBIT.
Please refer to Note 3 and the board of directors’ report for further
information about currency risk.
No other significant events have been recorded after the balance
sheet date.
2 8 5
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
Grieg Seafood
ASA Accounts
2 8 6
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
A S A AC C OUN T S
289
290
292
293
Income statement
Statement of financial position
Statement of changes in equity
Cash flow statement
NOT E S
294
296
296
299
302
303
303
304
304
305
305
306
307
308
309
310
311
312
NOT E 1
NOT E 2
NOT E 3
NOT E 4
NOT E 5
NOT E 6
NOT E 7
NOT E 8
NOT E 9
Accounting policies
Operating income
Salaries, personnel and other operating expenses
Cash-based remuneration
Financial income and expenses
Other current receivables/other liabilities
Bank deposits
Financial instruments
Investments in subsidiaries
NOT E 10
Investments in shares
NOT E 11
NOT E 12
NOT E 13
NOT E 14
NOT E 15
NOT E 16
NOT E 17
NOT E 18
Intangible assets
Property, plant and equipment
Share capital and shareholder information
Taxes
Guarantees
Related parties
Net interest-bearing liabilities and pledges
Post-balance sheet events
2 8 7
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
2 8 8
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
INC OME S TAT EMEN T
GRIEG SEAFOOD ASA NOK 1 000
Other operating income
Total operating income
Salaries and personnel expenses
Depreciation and amortization
Other operating expenses
Total operating expenses
Operating loss
Financial income
Financial expenses
Net financial items
Profit before tax
Income tax expense
Net profit for the year
APPROPRIATION OF PROFIT FOR THE YEAR
Proposed dividend
Additional dividend paid-out, not accrued previous year
Transferred to other equity
Total appropriations
NOTE
2/16
3/4
11/12
3/16
5/16
5/16
14
2019
79 264
79 264
-61 186
-5 840
-99 620
-166 646
-87 382
982 858
-42 171
940 687
2018
72 136
72 136
-56 652
-5 528
-71 661
-133 841
-61 704
673 851
-78 431
595 420
853 305
533 716
-186 345
666 960
-
220 897
446 064
666 960
-118 343
415 373
220 867
220 867
-26 361
415 373
2 8 9
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
S TAT EMEN T OF FIN A NCI A L P O SI T ION
GRIEG SEAFOOD ASA NOK 1 000
NOTE
31.12.2019
31.12.2018
ASSETS
Software
Property, plant and equipment
Investments in subsidiaries
Loan to Group companies
Other non-current receivables
Investment in shares
Total non-current assets
Trade receivables from Group companies
Other receivables from Group companies
Other current receivables
Bank deposits
Total current assets
Total assets
11
12/17
9/17
16/17
10
16/17
16/17
6/17
7
15 238
3 379
1 385 840
648 991
167
677
18 739
4 488
1 385 840
619 171
167
676
2 054 291
2 029 082
21 217
1 806 443
17 961
6 395
466
1 112 619
34 840
5 790
1 852 016
1 153 715
3 906 306
3 182 797
2 9 0
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
GRIEG SEAFOOD ASA NOK 1 000
NOTE
31.12.2019
31.12.2018
EQUITY AND LIABILITIES
Share capital
Treasury shares
Other paid-in equity
Other retained earnings
Total equity
Deferred tax
Cash-settled share options
Total provisions
Non-current loan
Total non-current liabilities
Current portion of non-current loan
Overdraft facility
Cash-settled share options
Proposed dividend
Trade payables
Trade payables to Group companies
Current liabilities to Group companies
Tax payable
Public tax payable
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
BERGEN, 8 APRIL 2020
GRIEG SEAFOOD ASA
13
13
14
4
17
17
17
4
16
16/17
14
6/8
446 648
-4 855
39 627
1 279 034
1 760 455
23 083
8 379
31 461
1 563 935
1 563 935
98 212
-
11 270
-
11 415
1 625
216 868
180 394
2 808
27 865
550 455
446 648
-4 914
13 877
856 775
1 312 386
18 147
8 493
26 641
1 298 713
1 298 713
98 212
46 597
9 010
220 867
5 715
16 068
11 476
115 816
2 568
18 728
545 057
2 145 851
1 870 411
3 906 306
3 182 797
ASBJØRN REINKIND
Vice Chair
PER GRIEG JR.
Chair
KARIN BING ORGLAND
Board Member
SOLVEIG NYGAARD
Board Member
TORE HOLAND
Board Member
SIRINE FODSTAD
Board Member
ANDREAS KVAME
CEO
2 9 1
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
S TAT EMEN T OF CH A NGE S IN EQUI T Y
GRIEG SEAFOOD ASA NOK 1 000
SHARE CAPITAL
TREASURY SHARES
OTHER PAID-IN EQUITY OTHER EQUITY
TOTAL EQUITY
446 648
-5 000
13 652
-
-
225
-
-
13 877
-
25 597
153
-
39 627
880 823
415 373
10
2 304
-220 867
-220 867
856 775
666 960
-25 597
1 793
-220 897
1 279 034
1 336 123
415 373
10
2 615
-220 867
-220 867
1 312 386
666 960
-
2 005
-220 897
1 760 455
Equity at 01.01.2018
PROFIT FOR THE YEAR 2018
Other gains and losses recognized in equity
Sale of treasury shares to employees
Dividend paid-out 2018, not accrued 2017
Proposed dividend, to be paid in 2019
-
-
-
-
-
-
-
86
-
-
Equity at 31.12.2018
446 648
-4 914
PROFIT FOR THE YEAR 2019
Reclassification of equity
Sale of treasury shares to employees
Dividend paid-out 2019, not accrued 2018
-
-
-
-
-
-
59
-
Equity at 31.12.2019
446 648
-4 855
2 9 2
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
C A SH FLOW S TAT EMEN T
GRIEG SEAFOOD ASA NOK 1 000
Profit before tax
Recognized, not paid Group contribution
Taxes paid
Depreciation and amortization
Change in trade receivables
Change in trade payables
Change in other accruals
Items classified as investing or financing activities
Currency translation differences
Net cash flow from operating activities
Dividend income
Purchase of property, plant and equipment
Purchase of intangible assets
Payments/proceeds, loans to/from Group companies
Payment of shares in Group companies
Group contribution from subsidiaries
Payments/proceeds, loans to/from associates
Net cash flow from investing activities
Change in overdraft facility
Change in non-current interest-bearing liabilities
Change in loans to/from Group companies
Change in non-current liabilities
Interest paid
Dividends paid
Net cash flow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at 01.01.
Cash and cash equivalents at 31.12.
NOTE
14
11/12
5
12
11
17
2019
853 305
-862 390
-115 816
5 840
-20 752
-8 742
6 450
19 157
-36 919
-159 867
14 737
-534
-695
-297 964
-
610 982
22 940
349 465
-46 597
-98 346
60 939
370 667
-33 893
-441 764
-188 993
604
5 790
6 395
2018
533 716
-610 981
-122 802
5 528
41 140
-21 085
-9 830
17 141
20 247
-146 925
20 189
-576
-4 505
-47 904
-158 860
534 522
-9 840
333 026
46 597
-49 173
-4 528
148 356
-37 330
-441 691
-337 770
-151 670
157 460
5 790
2 9 3
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 1 A C C OUN T ING P OL ICIE S
The annual financial statements have been prepared in accordance
with the Norwegian Accounting Act and generally accepted
accounting principles in Norway.
All amounts are stated in NOK thousand, unless otherwise
indicated.
REVENUE RECOGNITION
Revenue from the sale of goods is recognized at the time of
delivery. Revenue from the sale of services is recognized when the
services are delivered. The share of sales revenue associated with
future service is recognized in the balance sheet as accrued sales
revenues and is transferred to income at the time of execution.
CLASSIFICATION AND VALUATION OF BALANCE
SHEET ITEMS
Assets intended for long-term ownership or use are classified as
non-current assets. Assets related to the normal operating cycle
are classified as current assets. Receivables are classified as
current assets if they are expected to be repaid within 12 months
of the transaction date. Similar criteria are applied to liabilities.
Current assets are valued at the lower of cost and fair value.
Current liabilities are recognized in the balance sheet at nominal
value. Non-current assets are valued at historical cost. Property,
plant and equipment whose value will deteriorate is depreciated
on a straight-line basis over the asset’s estimated useful life.
Non-current assets are written down to fair value where this is
required by accounting rules. Nominal amounts are discounted if
the interest rate element is material.
INTANGIBLE ASSETS
Expenditure on intangible assets is recognized in the balance sheet
to the extent that a future economic benefit can be identified as
deriving from the development of an identifiable intangible asset
and cost can be measured reliably. Otherwise, the cost is expensed
as it arises. Capitalized development costs are amortized over
their useful life.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recognized in the balance sheet
and depreciated on a straight-line basis over its estimated useful
life, providing the asset has an expected useful life of more than 3
years and a cost price of more than NOK 15 thousand. Maintenance
costs are recognized in income as operating expenses as they arise,
while improvements and additions are added to the acquisition
cost of the asset and depreciated at the same rate as the asset.
The distinction between maintenance and improvements is made
based on the asset’s relative condition at the original purchase
date.
SUBSIDIARIES
Subsidiaries are valued at cost in the single-entity financial
2 94
statements. Investments are recognized as the cost of the shares
adjusted for any minor impairments where necessary. Group
contributions paid to subsidiaries, net of tax, are recognized
as an increase in the cost of the shares. Dividends and Group
contributions are recognized in the same year as they are
proposed in the subsidiary’s financial statements. If dividends/
Group contributions materially exceed retained earnings after
acquisition, the excess amount is regarded as a reimbursement
of invested capital and is deducted from the recorded cost in the
balance sheet. Group contributions received are recognized as
other financial income.
IMPAIRMENT OF NON-CURRENT ASSETS
Impairment tests are performed upon indication that the carrying
amount of a non-current asset exceeds its estimated fair value.
The test is performed at the lowest level of non-current assets
at which independent cash flows can be identified. If the carrying
amount is higher than both the fair value less costs to sell and the
recoverable amount (net present value of future use/ownership),
the asset is written down to the higher of fair value less costs to
sell and the recoverable amount. Previous impairment charges
are reversed in a later period if the prerequisites for impairment
are no longer present (except for impairment of goodwill).
TRADE AND OTHER RECEIVABLES
Trade and other receivables are recognized in the balance sheet
at nominal value after a provision for bad debts. The provision for
bad debts is estimated based on an individual assessment of each
material receivable. An additional general provision is recognized
for minor receivables based on estimated expected losses.
(shares and
CURRENT INVESTMENTS
investments which are
investments
Current
considered current assets) are carried at the lower of average
purchase cost and net realizable value at the balance sheet date.
Dividends and other distributions received are recognized as other
financial income.
PENSIONS
The company’s pension schemes meet the requirements of the
Mandatory Occupational Pensions Act. The company operates
a defined contribution pensions scheme for its employees.
The premium is paid through operations and is expensed on an
ongoing basis. Social security costs are charged based on the
pension premium paid.
GROUP ACCOUNT SCHEME – DEPOSITS AND LOANS
Grieg Seafood ASA operates as an internal bank for its subsidiaries.
Grieg Seafood ASA borrows funds under the agreement from
financial institutions and then lends these funds to its subsidiaries.
The company has set up a group account scheme (multi-account
scheme) in which Grieg Seafood ASA is the legal account holder.
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
Deposits and loans are recognized as intercompany transactions.
All subsidiaries are jointly and severally liable to the financial
institutions for the entire amount of the commitment under the
scheme.
FOREIGN CURRENCY
The company’s functional and presentational currency is NOK.
All foreign currency transactions are translated into NOK at the
transaction date. Exchange rate and translation differences are
recognized under other financial income or expenses. All monetary
items denominated in foreign currency are translated using the
balance sheet rate. Derivatives are recognized at fair value with
changes in value recognized in the income statement.
CASH-BASED REMUNERATION
The company operates a share-based remuneration scheme with
settlement in cash, where each employee is obliged to purchase
shares relative to their annual salary. The company’s estimated
liability is recognized under current or non-current liabilities
based on the estimated settlement date. The cost for the year is
recognized in the income statement.
DERIVATIVES
FORWARD CURRENCY CONTRACTS
Realized gains are recognized in the income statement as financial
income. The fair value of the contracts is measured based on the
exchange rate at the balance sheet date.
INTEREST RATE SWAPS
Interest rate swap contracts are stated at the lowest value
principle.
TAXES
The tax expense in the income statement consists of both taxes
payable for the accounting period and changes in deferred tax.
Deferred tax is calculated at the relevant rate on temporary
differences between the value of assets and liabilities for tax
purposes and any allowable loss to be carried forward at the
year-end in the financial statements. Temporary differences, both
positive and negative, are offset within the same period. Deferred
tax assets are recognized in the balance sheet when it is likely
on the balance of probabilities that the tax assets will be utilized.
Deferred tax assets and deferred tax liabilities are presented net in
the balance sheet. Tax on paid Group contributions recognized as
an increase in the purchase price of shares in other companies, and
tax on received Group contribution recognized directly in equity,
are recognized directly against tax items in the balance sheet
(offset against tax payable if the Group contribution affects tax
payable and offset against deferred taxes if the Group contribution
affects deferred taxes).
CASH FLOW STATEMENT
The cash flow statement has been prepared according to the
indirect method. Cash and cash equivalents include cash, bank
deposits and other short-term highly liquid investments which
entail no appreciable exchange rate risk, and which mature within
three months of the purchase date.
2 9 5
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 2 OP ER AT ING INC OME
OPERATING INCOME NOK 1 000
Administrative services – Group companies (Note 16)
Other operating income
Total operating income
2019
79 394
-130
79 264
2018
71 516
620
72 136
NOT E 3 SAL ARIES, PERSONNEL AND OTHER OPERATING EXPENSES
SALARIES AND PERSONNEL EXPENSES NOK 1 000
Wages and salaries
Social security costs
Share options for directors and key personnel (Note 4)
Pension costs – defined contribution scheme
Other personnel costs
Total
Average number of employees
2019
30 013
5 912
16 387
1 424
7 450
61 186
25
2018
29 020
5 667
15 173
1 282
5 510
56 652
24
The Company has a pension scheme covering all employees at 31 December 2019. The pension scheme is funded and managed through an
insurance company.
Grieg Seafood established a share savings program for its employees and has been continued in 2019. See the consolidated financial
statements Note 15 for further information.
The board's guidelines and principles for the determination of salaries and other remuneration paid to the management group are disclosed
in the consolidated financial statements Note 14.
2 96
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
REMUNERATION PAID TO GROUP
MANAGEMENT IN 2019 NOK 1 000
SALARY
BONUS
RETAINED,
NOT YET PAID
OPTIONS EXERCISED
DURING THE YEAR
OTHER
BENEFITS
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
Total remuneration incl. social security costs
3 009
1 954
2 091
1 637
8 691
347
184
133
280
945
601
383
345
265
1 594
2 592
1 652
1 787
1 645
7 677
101
101
101
103
406
Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement.
REMUNERATION PAID TO BOARD MEMBERS IN 2019 NOK 1 000
Per Grieg jr. 1)
Asbjørn Reinkind 1)
Wenche Kjølås (until 13.06.2019) 2)
Karin Bing Orgland 2)
Solveig M.R. Nygaard
Tore Holand 2)
Sirine Fodstad (from 13.06.2019) 3)
Total remuneration including social security costs
TOTAL
6 650
4 276
4 458
3 930
19 314
TOTAL
456
319
140
311
257
285
154
1 923
1) Payment for work performed on the Remuneration Committee of NOK 19 968 is included in the remuneration paid to Per Grieg jr. and Asbjørn Reinkind.
2) Payment for work performed on the Audit Committee is included in the remuneration paid to Wenche Kjølås, Karin Bing Orgland and Tore Holand, amounting to NOK 25 673, 54 198
and 28 525, respectively.
3) Payment for work performed on the Remuneration Committee of NOK 11 410 is included in the remuneration paid to Sirine Fodstad.
The amounts include social security costs.
REMUNERATION PAID TO GROUP
MANAGEMENT IN 2018 NOK 1 000
SALARY
BONUS
RETAINED,
NOT YET PAID
OPTIONS EXERCISED
DURING THE YEAR
OTHER
BENEFITS
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
Total remuneration incl. social security costs
2 685
1 748
1 748
1 466
7 647
630
335
195
347
389
207
149
314
1 508
1 058
2 522
1 607
1 607
1 448
7 184
90
97
97
92
376
Recognized expenses arising from synthetic options not declared throughout the year are not included in the above statement.
TOTAL
6 316
3 993
3 796
3 667
17 772
2 9 7
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
REMUNERATION PAID TO BOARD MEMBERS IN 2018 NOK 1 000
Per Grieg jr. 1)
Wenche Kjølås 2)
Karin Bing Orgland 2)
Asbjørn Reinkind 1)
Ola Braanaas (until 12.06.2018 ) 3)
Solveig M.R. Nygaard (from 12.06.2018)
Tore Holand (from 12.06.2018)
Total remuneration including social security costs
1) Payment for work performed on the Remuneration Committee of NOK 17 115 is included in the remuneration paid to Per Grieg jr. and Asbjørn Reinkind.
2) Payment for work performed on the Audit Committee of NOK 51 345 is included in the remuneration paid to Wenche Kjølås and Karin Bing Orgland.
3) Payment for work performed on the Remuneration Committee of NOK 8 558 is included in the remuneration paid to Ola Braanaas.
The amounts include social security costs.
BREAKDOWN OF AUDITOR'S FEES NOK 1 000
Statutory audit
Other certification services
Tax advisory fee
Other services
Total
2019
994
514
302
173
1 983
TOTAL
434
280
280
302
123
114
114
1 646
2018
808
291
144
56
1 299
In February 2019, the European Commission launched an investigation to explore potential anti-competitive behavior in the Norwegian
salmon industry. Grieg Seafood is one of the companies under investigation. Based on the EU investigation, US competition authorities
launched their own investigation into the matter in November 2019. By the end of the year, four action-class lawsuits had been filed in the
USA, and two in Canada.
Grieg Seafood is not aware of any anti-competitive behavior within the Group, not in Norway, the EU, the USA, or in Canada. We are fully
collaborating with European and American authorities in this matter and will follow up the lawsuits in the USA and Canada accordingly.
Approximately NOK 20 million was spent on lawyer fees related to the EU commission investigation during the year.
There is no new information regarding the EU investigation, and Grieg Seafood considers it to be probable that the investigation will be in
its favor, which also is supported by legal advice. Furthermore, the amount of the contingent liability related to a negative outcome of this
matter cannot be reasonable estimated, due to the lack of information. Consequently, no provision has been recognized in relation to both
the EU and the US investigation, nor to any of the civil lawsuits.
2 9 8
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
NOT E 4 C A SH-B A SED REMUNER AT ION (OP T ION S)
The Company has issued options to the management group and regional directors. The options’ strike price is the stock market price on
the date of issue, rising by 0.5% per month until the exercise date. As at 31 December 2019, no equity options were available for vestment.
Since 2009, an option scheme with settlement in cash has been established for the management and regional directors. The most recent
allocation was in 2017, totalling 1 800 000 options. The final exercise date is 31 May 2021. The options have a term of two
years, where 50% is vested each year.
Employees taken on after the initial allocation of options are allocated options on taking up employment.
The Black & Scholes option pricing model is used to calculate the market value. A brokerage firm is used to perform the calculations. The
table below shows the movement in outstanding options during 2018 and 2019.
OVERVIEW 2019 (TOTAL OPTIONS)
OPTION
CATEGORY
OUTSTANDING
OPTIONS AT
31.12.2018
EXERCISED
OPTIONS
EXPIRED
OPTIONS
OUTSTANDING
OPTIONS AT
31.12.2019
OF WHICH
CASH-SETTLED
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
Others
Total
Cash settlement
Cash settlement
Cash settlement
Cash settlement
Cash settlement
600 000
276 044
300 000
200 000
999 999
2 376 044
29 530
18 826
20 364
67 288
157 238
293 246
170 470
57 218
79 636
-
165 269
472 593
400 000
200 000
200 000
132 712
677 492
400 000
200 000
200 000
132 712
677 492
1 610 205
1 610 205
OVERVIEW 2018 (TOTAL OPTIONS)
OPTION
CATEGORY
OUTSTANDING
OPTIONS AT
31.12.2017
EXERCISED
OPTIONS
EXPIRED
OPTIONS
OUTSTANDING
OPTIONS AT
31.12.2018
OF WHICH
CASH-SETTLED
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
Others
Total
Cash settlement
Cash settlement
Cash settlement
Cash settlement
Cash settlement
658 272
311 274
352 366
300 000
1 329 634
2 951 547
55 275
35 230
35 230
100 000
262 677
488 412
2 997
-
17 136
-
66 958
87 091
600 000
276 044
300 000
200 000
999 999
600 000
276 044
300 000
200 000
999 999
2 376 044
2 376 044
ALLOCATION:
YEAR - MONTH
EXPIRY DATE:
YEAR - MONTH
STRIKE PRICE NOK
PER SHARE AT 31.12.2019
STRIKE PRICE NOK
PER SHARE AT 31.12.2018
2015–06
2017–11
2017–11
Total
2019–06
2020–05
2021–05
-
94.29
94.29
31.60
88.78
88.78
Cash-based options available for settlement
Weighted average exercise price on outstanding options (NOK per option)
OPTIONS
2019
-
710 205
900 000
1 610 205
2018
576 044
900 000
900 000
2 376 044
2019
2018
1 610 205
83.00
1 476 044
66.49
2 9 9
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 4 C O N T I N U E D
NOK/OPTION
AMOUNTS IN NOK 1 000
OPTION
CATEGORY
LISTED
PRICE ON
ALLOCATION
CALCULATED
VALUE PER
OPTION ON
ALLOCATION
CALCULATED
TOTAL
VALUE ON
ALLOCATION *
TOTAL VALUE
OF ALL
OPTIONS AT
01.01.2019
CHANGE IN
PROVISION
CB-OB *
EXERCISED
OPTION 2019
ACC. COST
RECOGNIZED
IN EQUITY AT
31.12.2019
RECOGNIZED
LIABILITY CASH
SETTLEMENT
AT 31.12.2019
2019
Former employees
with expired options
Equity
option
Andreas Kvame
(CEO)
Atle Harald
Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O.
Mathisen (CHRO)
Andreas Kvame
(CEO)
Atle Harald
Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O.
Mathisen (CHRO)
Other options
allocated in 2015
Other options
allocated in 2017
Total
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
25.50
25.50
25.50
79.00
83.00
83.00
83.00
83.00
25.50
83.00
3.36
3.97
3.97
3.63
2.26
2.79
2.79
2.38
3.60
2.35
1 342
2 575
-2 575
2 592
793
793
363
906
557
557
475
1 634
1 773
-1 634
-1 773
1 652
1 787
-
-
1 645
1 709
2 298
1 057
1 130
1 448
1 558
898
994
-
-
-
-
2 876
3 027
-3 027
3 267
1 880
10 543
3 699
17 503
4 858
2 145
2 995
13 939
*Amounts exclude social security costs
6 887
-
-
-
-
-
-
-
-
-
-
6 887
-
-
-
-
4 007
2 505
2 688
1 891
-
8 557
19 649
NOK/OPTION
AMOUNTS IN NOK 1 000
OPTION
CATEGORY
LISTED
PRICE ON
ALLOCATION
CALCULATED
VALUE PER
OPTION ON
ALLOCATION
CALCULATED
TOTAL
VALUE ON
ALLOCATION *
TOTAL VALUE
OF ALL
OPTIONS AT
01.01.2018
CHANGE IN
PROVISION
CB-OB *
EXERCISED
OPTION 2018
ACC. COST
RECOGNIZED
IN EQUITY AT
31.12.2018
RECOGNIZED
LIABILITY CASH
SETTLEMENT
AT 31.12.2018
2018
Former employees
with expired options
Equity
option
Andreas Kvame
(CEO)
Atle Harald
Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O.
Mathisen (CHRO)
Andreas Kvame
(CEO)
Atle Harald
Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O.
Mathisen (CHRO)
Other options
allocated in 2015
Other options
allocated in 2016
Other options
allocated in 2017
Total
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
25.50
25.50
25.50
79.00
83.00
83.00
83.00
83.00
25.50
79.00
83.00
3.36
3.97
3.97
3.63
2.26
2.79
2.79
2.38
3.60
3.34
2.35
*Amounts exclude social security costs
3 0 0
1 342
4 255
-1 679
2 522
793
793
363
906
557
557
475
1 857
2 868
-223
-1 095
1 607
1 607
237
-237
1 448
147
1 563
90
90
77
967
1 040
821
-
-
-
-
2 876
5 227
-2 200
2 859
669
441
-441
2 896
1 880
11 212
305
15 594
3 394
1 909
-
12 939
6 887
6 887
-
-
-
-
-
-
-
-
-
-
-
2 575
1 634
1 773
-
1 709
1 057
1 130
898
3 027
-
3 699
17 503
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
ACCRUED COST RELATED TO CASH OPTIONS NOK 1 000
2019
2018
CLASSIFICATION IN FINANCIAL STATEMENTS
Change in provisions
Exercised options during the year
Total cost excl. social security costs
Social security costs
Total cost incl. social security costs
2 145
13 939
16 085
303
16 387
1 909
Other provisions for liabilities
12 939
Salaries and personnel expense / cash
14 848
325
Public taxes payable
15 173
Salaries and personnel expense
Cost relating to cash-based remuneration in 2019 totalled NOK 16 387 thousand. This is recognized in the income statement as a
personnel cost. Social security contributions are provided for on an ongoing basis based on the fair value of the options.
As at 31 December 2019, outstanding options with the right to cash settlement were stated at NOK 19 649 thousand, of which NOK 8 379
thousand were classified as non-current liabilities. Issued options are cancelled on termination of employment.
ESTIMATES USED TO CALCULATE ALLOCATION OF OPTIONS
31.12.2019
31.12.2018
Anticipated volatility (%)
Risk-free rate of interest (%)
Estimated qualification period (years)
37.90%
1.39%
0.98
41.49%
1.07%
1.56
The estimated qualification period for the options is based on historical data, and does not necessarily represent future developments.
In order to estimate volatility, management has applied historical volatility for comparable listed companies.
3 0 1
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 5 F IN A NCI A L INCOME A ND F IN A NCI A L E X P ENSE S
FINANCIAL ITEMS NOK 1 000
FINANCIAL INCOME
Interest income from Group companies
Other interest income
Group contributions from subsidiaries
Dividend
Unrealized value changes, derivatives (Note 8)
Unrealized currency change, non-current EUR term loan
Unrealized currency change, non-current loans from Group companies
Net realized currency gains
Net unrealized currency gains
Total
FINANCIAL EXPENSE
Loan interest expenses
Interest expenses to Group companies
Other interest expenses
Realized value changes, derivatives (Note 8)
Unrealized currency change, non-current loans from Group companies
Unrealized currency change, non-current EUR term loan
Other financial expenses
Net realized currency losses
Net unrealized currency losses
Total
Net financial items
2019
2018
34 484
615
862 390
14 737
4 704
7 100
29 819
1
29 008
982 858
35 494
535
860
125
-
-
2 381
2 776
-
42 171
31 640
840
610 982
20 189
9 723
-
-
478
-
673 851
34 808
-
3 322
4 944
4 193
16 054
1 334
-
13 776
78 431
940 687
595 420
3 0 2
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
NOT E 6 OT HER CURREN T RECEI VA BL E S /
OT HER CURREN T L I A BIL I T IE S
OTHER CURRENT RECEIVABLES NOK 1 000
Prepaid expenses
VAT
Loan to Nordnorsk Smolt AS *
Unrealized gain on interest rate swap contracts (Note 8)
Other current receivables
Total other current receivables
2019
8 925
3 061
-
5 477
497
17 961
2018
8 028
2 492
22 940
858
523
34 840
*In 2018, GSF entered into a partnership with Norway Royal Salmon in order to secure additional smolt capacity in Finnmark. NRS and GSF each own 50% of Nordnorsk Smolt AS. As
part of the agreement, GSF has extended loans to Nordnorsk Smolt AS to cover operations, investments and accumulation of working capital in connection with development of the
facility. The loan was transferred from GSF ASA to GSF Finnmark in 2019.
OTHER CURRENT LIABILITIES NOK 1 000
Accrued interest
Other accrued expenses
Unrealized loss on foreign currency contracts (Note 8)
Other current liabilities
Total other current liabilities
NOT E 7 B A NK DEP O SI T S
BANK DEPOSITS NOK 1 000
Restricted deposits relating to employees' tax deductions
Other bank deposits
Total
2019
4 984
20 090
-
2 791
27 865
2018
2 584
13 552
85
2 507
18 728
2019
1 591
4 804
6 395
2018
1 495
4 295
5 790
The company has an overdraft facility of NOK 100 million. Available credit on the overdraft facility was NOK 100 million at year-end 2019
(2018: NOK 53 million).
3 0 3
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 8 F IN A NCI A L IN S T RUMEN T S
FINANCIAL INSTRUMENTS NOK 1 000
2019
2018
ASSETS
CURRENT
LIABILITIES
ASSETS
CURRENT
LIABILITIES
Interest rate swap contracts (three contracts of NOK 260 million, NOK 200 million and NOK
200 million maturing in 2021, 2022 and 2023, respectively)*
Foreign currency contract EUR/NOK (one contract comprising 52 transactions maturing
December 2018)
Total financial instruments
5 477
-
5 477
-
-
-
858
-
858
*Booked as other current receivables, see Note 6. Amounts exclude accrued interest totalling NOK 399.9 thousand (2018: NOK -392.2 thousand)
CHANGES IN FINANCIAL INSTRUMENTS RECOGNIZED AS FINANCIAL ITEMS NOK 1 000
Unrealized gain/loss on interest rate swaps
Unrealized gain/loss on foreign currency contracts
Net unrealized gain/(loss) on financial instruments
2019
4 619
85
4 704
-
-85
-85
2018
4 929
4 795
9 723
The Company is exposed to a number of financial risks; market risk (including foreign exchange risk, interest rate risk and price risk), credit
risk and liquidity risk. The Company’s overall risk management program focuses on the volatility of the financial markets and seeks to
minimize potential adverse effects on the Company’s financial performance. The Company uses financial derivatives to reduce certain risks.
The Board has established written principles for the management of foreign exchange risk, interest rate risk and use of the Company´s
financial instruments.
NOT E 9
IN V E S T MEN T S IN S UB SIDI A RIE S
SUBSIDIARY
REGISTERED
OFFICE COUNTRY
REGISTERED
OFFICE LOCATION
OWNERSHIP/
VOTING SHARE
Grieg Seafood Rogaland AS
Grieg Seafood Canada AS
Grieg Seafood Finnmark AS
Grieg Seafood Shetland Ltd
Ocean Quality AS
Total
Norway
Norway
Norway
UK
Norway
Bergen
Bergen
Bergen
Shetland
Bergen
100%
100%
100%
100%
60%
EQUITY AT
31.12.2019
NOK 1 000
PROFIT/
LOSS 2019
NOK 1 000
BOOK VALUE
NOK 1 000
733 125
227 353
956 045
89 774
111 336
2 117 633
411 356
-42
416 021
-79 180
56 969
805 125
223 497
297 112
400 481
458 750
6 000
1 385 840
Equity and profit/loss are taken from provisional financial statements, which have been prepared in accordance with local accounting
standards.
3 0 4
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
NOT E 10 IN V E S T MEN T S IN SH A RE S
INVESTMENTS IN SHARES
REGISTERED
OFFICE COUNTRY
REGISTERED OFFICE
LOCATION
OWNERSHIP/
VOTING SHARE
NUMBER OF
SHARES
ACQUISITION COST
NOK 1 000
BOOK VALUE
NOK 1 000
Finnøy Næringspark AS
DNB Global Allokering
Norsk Villaksforvaltning
The Seafood Innovation Cluster AS
Book value of shares at 31.12
Norway
Norway
Norway
Norway
Finnøy
Oslo
Førde
Bergen
7.14%
0.00%
15.15%
25.00%
100
3 038
5
25
103
630
50
41
103
483
50
41
677
NOT E 11 IN TA NGIBL E A S SE T S
2019 NOK 1 000
Book value at 01.01
Additions
Amortization
Book value at 31.12
ACCUMULATED VALUES
Acquisition cost
Accumulated amortization
Book value at 31.12
Economic life/amortization schedule
2018 NOK 1 000
Book value at 01.01
Additions
Amortization
Book value at 31.12
ACCUMULATED VALUES
Acquisition cost
Accumulated amortization
Book value at 31.12
Economic life/amortization schedule
SOFTWARE
18 739
695
-4 196
15 238
46 492
-31 254
15 238
3–10 years
SOFTWARE
18 196
4 505
-3 962
18 739
45 797
-27 058
18 739
3–10 years
3 0 5
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 12 P R OP ER T Y, P L A N T A ND EQUIP MEN T
2019 NOK 1 000
Book value at 01.01
Additions
Depreciation
Book value at 31.12
ACCUMULATED VALUES
Acquisition cost
Accumulated depreciation
Book value at 31.12
Economic life/depreciation schedule
2018 NOK 1 000
Book value at 01.01
Additions
Depreciation
Book value at 31.12
ACCUMULATED VALUES
Acquisition cost
Accumulated depreciation
Book value at 31.12
Economic life/depreciation schedule
PLANT, EQUIPMENT AND OTHER FIXTURES ETC.
4 488
534
-1 643
3 379
17 665
-14 286
3 379
3–5 years
PLANT, EQUIPMENT AND OTHER FIXTURES ETC.
5 478
576
-1 566
4 488
17 131
-12 643
4 488
3–5 years
The company has operating lease agreements, which are not recognized in the balance sheet:
2019
ASSETS
Buildings
Other equipment
Total lease amount charged
3 0 6
DURATION
OPERATING LEASE EXPENSE
Until 2028
3-5 years
2 598
494
3 092
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
NOT E 13 SH A RE C A P I TA L A ND SH A REHOL DER INFORM AT ION
As at 31 December 2019, the company had 111 662 000 shares with a nominal value of NOK 4 per share. All shares issued by the company
are fully paid-up. There is one class of shares and all shares confer the same rights. In June 2011, the company purchased 1 250 000
treasury shares at NOK 14.40 per share. 21 November 2018, the company sold 21 576 shares to employees for use in the share savings
program. The sales price was NOK 121.56 per share, which provided a gain of NOK 107.16 per share. Another 14 737 shares were sold to
employees in November 2019 at a sales price of NOK 136.05 per share, providing a gain of NOK 121.65 per share. After the transactions the
company has 1 213 687 treasury shares.
SHARE CAPITAL AND NUMBER OF SHARES
NOMINAL VALUE (NOK) TOTAL SHARE CAPITAL NOK 1 000 NO. OF ORDINARY SHARES
Holdings of treasury shares
Sale of treasury shares to employees 2018
Sale of treasury shares to employees 2019
Total at 31.12.2019
4.00
4.00
4.00
4.00
446 648
-5 000
86
59
441 793
111 662 000
-1 250 000
21 576
14 737
110 448 313
THE 20 LARGEST SHAREHOLDERS IN GRIEG SEAFOOD ASA
31.12.2019
31.12.2019
31.12.2018
31.12.2018
NO. OF SHARES
SHAREHOLDING
NO. OF SHARES
SHAREHOLDING
Grieg Aqua AS
OM Holding AS
Folketrygdfondet
Ystholmen Felles AS
State Street Bank and Trust Comp
Clearstream Banking S.A.
Verdipapirfondet Pareto Investment
Verdipapirfondet Alfred Berg Gamba
Handelsbanken Nordiska Smabolag
Grieg Seafood ASA
State Street Bank and Trust Comp
Swedbank Robur Smabolagsfond
JPMorgan Chase Bank, N.A., London
DPam Invest B
Pictet & Cie (Europe) S.A.
UBS Switzerland AG
Arctic Funds PLC
Citibank, N.A.
State Street Bank and Trust Comp
Verdipapirfondet Alfred Berg Norge
Total –20 largest shareholders
Other shareholders
Total shares
56 018 799
50.17%
56 018 799
50.17%
6 169 379
5 100 130
2 928 197
2 166 080
1 745 002
1 701 000
1 500 796
1 332 190
1 213 687
1 057 400
940 000
915 596
888 362
878 324
780 949
706 424
619 195
597 876
562 479
5.53%
4.57%
2.62%
1.94%
1.56%
1.52%
1.34%
1.19%
1.09%
0.95%
0.84%
0.82%
0.80%
0.79%
0.70%
0.63%
0.55%
0.54%
0.50%
6 039 379
3 760 350
2 928 197
2 055 051
866 255
1 926 457
1 700 796
1 057 190
1 228 424
149 622
-
828 120
-
-
566 035
234 349
-
404 867
380 000
87 821 865
23 840 135
111 662 000
78.65%
21.35%
100.00%
80 143 891
31 518 109
111 662 000
5.41%
3.37%
2.62%
1.84%
0.78%
1.73%
1.52%
0.95%
1.10%
0.13%
-
0.74%
-
-
0.51%
0.21%
-
0.36%
0.34%
71.77%
28.23%
100.00%
3 0 7
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
N O T E 13 C O N T I N U E D
SHARES CONTROLLED BY BOARD MEMBERS
AND GROUP MANAGEMENT
31.12.2019
31.12.2019
31.12.2018
31.12.2018
NO. OF SHARES
SHAREHOLDING
NO. OF SHARES
SHAREHOLDING
BOARD OF DIRECTORS
Per Grieg jr. *
Asbjørn Reinkind (Reinkind AS)
Wenche Kjølås (Jawendel AS) (Board member to 13 June 2019)
Karin Bing Orgland
Solveig Nygaard
Tore Holand
Sirine Fodstad (Board member from 13 June 2019)
GROUP MANAGEMENT
Andreas Kvame (CEO)
Atle Harald Sandtorv (CFO)
Knut Utheim (COO)
Kathleen O. Mathisen (CHRO)
58 961 996
120 000
7 000
-
-
-
-
39 165
24 208
23 507
3 456
52.80%
0.11%
0.01%
-
-
-
-
0.04%
0.02%
0.02%
0.00%
58 961 996
120 000
7 000
-
-
-
-
39 165
24 208
23 507
3 456
* THE SHARES OWNED BY THE FOLLOWING COMPANIES ARE CONTROLLED BY PER GRIEG JR. AND FAMILY
Grieg Aqua AS
Nye Ystholmen AS
Per Grieg jr. privately
Total shares
56 018 799
2 928 197
15 000
58 961 996
50.17%
2.62%
0.01%
52.80%
56 018 799
2 928 197
15 000
58 961 996
NOT E 14 TA X E S
BASIS FOR TAX PAYABLE NOK 1 000
Profit before tax
Dividends recognized in profit or loss
3% dividend tax
Net other permanent differences
Change in financial derivatives
Change in temporary differences
Change in temporary differences from 2018
Group contribution received/provided
Taxable loss
Group contribution received
Basis for tax expense for the year
22% (23%) tax payable
Underprovision for tax previous year
22% (23%) tax payable
3 0 8
2019
853 305
-14 737
442
2 665
-5 104
-17 328
-16 054
-862 390
-59 200
862 390
803 190
176 702
3 692
180 394
52.80%
0.11%
0.01%
-
-
-
-
0.04%
0.02%
0.02%
0.00%
50.17%
2.62%
0.01%
52.80%
2018
533 716
-20 189
606
-410
-9 723
-451
-
-610 982
-107 432
610 982
503 550
115 816
-
115 816
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
BREAKDOWN OF DEFERRED TAX BASIS NOK 1 000
CHANGE
2019
2018
TEMPORARY DIFFERENCES
Non-current assets
Profit and loss account
Cash-based options
Non-current debt/amortized cost
Revaluation account non-current liabilities
Net temporary differences
Financial instruments
Basis for deferred tax in balance sheet
22% deferred tax
Change in deferred tax assets due to change in tax rate 22% (23%)
Deferred tax assets/deferred tax liabilities in the balance sheet
BREAKDOWN OF TAX CHARGE
Tax payable
Change in deferred tax, previous rate 22% (23%)
Change in deferred tax due to change of tax rate
Tax effect of foreign tax not credited Norwegian tax
Tax expense in income statement
RECONCILIATION OF TAX EXPENSE
Profit before tax
Estimated tax 22% (23%)
Tax expense in income statement
Difference
THE DIFFERENCE CONSISTS OF THE FOLLOWING:
22% of permanent differences
Tax effect of foreign tax not credited Norwegian tax
Change in tax/deferred tax due to change of tax rate
Total reconciled difference
NOT E 15 GUA R A N T EE S
-810
-199
-2 448
-80
20 865
17 328
5 104
22 432
4 751
794
-22 419
10 022
105 895
99 044
5 877
104 921
23 083
-
23 083
180 394
4 935
-
1 016
186 345
853 305
-187 727
186 345
-1 382
-2 558
1 016
161
-1 382
5 561
993
-19 971
10 102
85 030
81 715
773
82 488
18 972
-825
18 147
115 816
2 340
-825
1 012
118 343
533 716
-122 755
118 343
-4 411
-4 598
1 012
-825
-4 411
Grieg Seafood ASA acted as a guarantor for Ocean Quality UK Limited and Ocean Quality North America Inc in connection with sales
contracts with customers. The total guaranteed amounts are EUR 250 000 and USD 3 000 000.
3 0 9
G R I E G S E A F O O D
A N N U A L R E P O R T 2 0 19
NOT E 16 REL AT ED PA R T IE S
2019
NOK 1 000
OPERATING
INCOME
OPERATING
EXPENSES
FINANCIAL
INCOME
FINANCIAL
EXPENSES
NON-
CURRENT
RECEIVABLES
TRADE
RECEIVABLES
CURRENT
RECEIVABLES
TRADE
PAYABLES
OTHER
CURRENT
LIABILITIES
Total related parties
– Group companies
Total related parties
– Shareholders
Total
79 394
40
79 434
-
941 516
-535
648 991
21 217
1 806 443
-1 625
-216 868
-10 060
-10 060
-
941 516
-
-535
-
-
-
648 991
21 217
1 806 443
-505
-2 130
-
-216 868
2018
NOK 1 000
OPERATING
INCOME
OPERATING
EXPENSES
FINANCIAL
INCOME
FINANCIAL
EXPENSES
NON-
CURRENT
RECEIVABLES
TRADE
RECEIVABLES
CURRENT
RECEIVABLES
TRADE
PAYABLES
OTHER
CURRENT
LIABILITIES
Total related parties
– Group companies
Total related parties
– Shareholders
Total
71 516
-14 510
663 952
-5 336
619 171
466
1 112 619
-16 068
-11 476
126
71 643
-8 792
-23 301
-
-
-
663 952
-5 336
619 171
-
466
-
-
-
1 112 619
-16 068
-11 476
The company carries out transactions with companies controlled by
Grieg Maturitas II AS, who is the parent company of Grieg Aqua AS,
majority owner of Grieg Seafood ASA.
The parent company, Grieg Maturitas II AS, is headquartered
in C. Sundts gate 17/19, Bergen, Norway, where one can obtain
consolidated financial statements, in which the Company is
included.
The services provided include:
•
ICT-related and other services such as catering, reception etc.
are delivered by Grieg Group Resources AS. The services are
provided on an arm's length basis.
• Grieg Seafood ASA rents its offices from Grieg Garden AS on an
arm’s length basis.
The parent company provides a range of services to the subsidiaries.
The services include administrative services and services relating
to the provision of parent company non-current loans and current
credit facilities to the subsidiaries. Interest is charged on an arm's
length basis.
Ocean Quality AS has been classified as a subsidiary of Grieg
Seafood ASA since 2015.
Grieg Seafood ASA enters into hedging contracts on behalf of
Grieg Seafood Rogaland AS and Grieg Seafood Finnmark AS. The
arrangement is intended to reduce these companies´ exposure to
salmon prices. The agreements with the subsidiaries are priced on
the basis of a “back-to-back” arrangement.
In June 2019, Grieg Seafood ASA acquired 50% of the shares in
Nordnorsk Smolt AS. The shares, together with all indebtedness,
were immediately sold to Grieg Seafood Finnmark AS at a total
amount of NOK 37.7 million. Grieg Seafood Finnmark AS is a wholly-
owned subsidiary of Grieg Seafood ASA. The transaction between
Grieg Seafood ASA and Grieg Seafood Finnmark AS was executed in
accordance with the Norwegian Public Limited Liability Companies
Act (Aksjeloven) §3-9. For further information about the investment,
please see the consolidated financial statements Note 5.
Grieg Seafood ASA has had transactions with related parties
through the acquisition of shares in Grieg Newfoundland in 2020.
Please refer to Note 18 and the consolidated financial statements
Note 28 for further information.
310
PA R T 0 3 O U R R E S U LT S
G R I E G S E A F O O D A S A A C C O U N T S
NOT E 17 NE T IN T ERE S T-BE A RING L I A BIL I T IE S A ND P L EDGE S
The company has a syndicated loan provided 50/50 by DNB and Nordea.The financing agreement includes (among other things) two term
loans of NOK 600 million and EUR 60 million, a revolving credit facility of NOK 1 300 million, alongside overdraft facilities of NOK 100 million.
Repayments of NOK 50 million and EUR 5 million will be made for term loans of respectively NOK 600 million and EUR 60 million, split into
half-yearly instalments. The drawdown rate of the EUR loan is 9.6691. The agreement has a term of five years and matures on 28 February
2023.
The agreement includes covenants, stipulating consolidated equity of 35% (in the Group, excluding Ocean Quality), a revolving NIBD/
EBITDA ratio of 5.0 if the book equity ratio is higher than 40% and 4.5 if the book equity ratio is between 35% and 40%. As at 31 December
2019, the NIBD/EBITDA for the Group excluding Ocean Quality was 1.4 and the equity ratio was 51%. Consequently, the Group fully complied
with all covenants at the year-end.
NON-CURRENT LIABILITIES (INTEREST-BEARING) NOK 1 000
2019
2018
Non-current syndicated loan
Non-current revolving credit facility *
Amortized cost
Total
CURRENT LIABILITIES (INTEREST-BEARING) NOK 1 000
Current overdraft facility *
Current portion of non-current borrowing
Current liquidity loan from subsidiaries
Total
944 638
629 319
-10 022
1 563 935
2019
-
98 212
60 000
158 212
1 048 816
260 000
-10 102
1 298 713
2018
46 597
98 212
-
144 808
NET INTEREST-BEARING LIABILITIES NOK 1 000
2019
2018
Gross interest-bearing liabilities
Unrestricted bank deposits
Loans to subsidiaries
Loans to other companies
Net interest-bearing liabilities
1 722 146
4 803
1 375 657
-
341 686
1 443 522
4 295
1 108 432
22 100
308 695
* At the end of 2019, the Company had a total revolving credit facility and overdraft facility of NOK 1 400 million, of which NOK 769 million was available for utilization at the reporting
date.
MATURITY PROFILE - NON-CURRENT LIABILITIES NOK 1 000
2020
2021
2022
2023
2024
LATER
TOTAL
Non-current loan
Non-current credit facility
Total
98 212
98 212
98 212
748 215
-
-
-
629 319
98 212
98 212
98 212
1 377 534
-
-
-
-
-
-
1 042 850
629 319
1 672 169
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LIABILITIES SECURED BY MORTGAGE NOK 1 000
Liabilities to credit institutions
Total liabilities
BOOK VALUE OF ASSETS PLEDGED AS SECURITY
Shares in subsidiaries
Property, plant and equipment
Trade receivables
Loans to subsidiaries*
Total assets pledged as security
2019
2018
1 662 146
1 662 146
1 443 522
1 443 522
1 385 840
3 379
21 217
1 375 657
2 786 093
1 385 840
4 488
466
1 108 432
2 499 226
* The subsidiaries and the parent company have a joint and several liability against the credit institutions. See the consolidated financial statements Note 10 for further information
about liabilities secured by mortgage.
TYPE OF LIABILITY NOK 1 000
CURRENCY
INTEREST
RATE
MATURITY
CURRENT
PART
NON-CURRENT
PART
CURRENT
PART
NON-CURRENT
PART
2019
2018
Syndicated non-current loan
Syndicated non-current loan
Syndicated loan revolving credit
Syndicated loan revolving credit
Overdraft facility
Total
NOK
EUR
NOK
EUR
Multiple
Floating
Floating
Floating
Floating
Floating
02/2023
02/2023
02/2023
02/2023
50 000
48 212
-
-
-
475 000
469 638
580 000
49 319
-
98 212
1 573 957
50 000
48 212
-
-
46 597
144 808
514 898
523 816
260 000
-
-
1 298 713
CURRENCY EXPOSURE ON LOANS TO CREDIT INSTITUTIONS
NOK 1 000
31.12.2019
NOK
GBP
EUR
USD
OTHER
Syndicated non-current loan (NOK)
Syndicated non-current loan (EUR)
Syndicated loan revolving credit (non-current) (NOK)
Syndicated loan revolving credit (non-current) (EUR)
Total
525 000
517 850
580 000
49 319
525 000
-
580 000
-
1 672 169
1 105 000
-
-
-
-
-
-
517 850
-
49 319
567 169
-
-
-
-
-
Average interest rate (NOK)
Average interest rate (EUR)
2019
2.57 %
1.10 %
-
-
-
-
-
2018
2.20%
1.21%
NOT E 18 P O S T-B A L A NCE SHEE T E V EN T S
On 7 February 2020, Grieg Seafood entered into Sales and Purchase agreements with Grieg Kapital AS, Kvasshøgdi AS, Knut Skeidsvoll
and Canada Inc. for the purchase of the shares in Grieg Newfoundland AS. Grieg Kapital AS is wholly-owned by Grieg Maturitas II AS
and Kvasshøgdi AS is wholly-owned by Per Grieg jr. Any material agreement between related parties should be approved by the General
Meeting, according to the Norwegian Public Limited Liability Companies Act (Aksjeloven). The agreement was approved by Extraordinary
General Meeting on 25 March 2020. Please refer to the consolidated financial statements Note 28 for further information.
There has been no signifcant events after the reporting date that will materially affect the financial statement.
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PricewaterhouseCoopers AS, Sandviksbodene 2A, Postboks 3984 - Sandviken, NO-5835 Bergen T: 02316, org. no.: 987 009 713 VAT, www.pwc.no State authorised public accountants, members of The Norwegian Institute of Public Accountants, and authorised accounting firm To the General Meeting of Grieg Seafood ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Grieg Seafood ASA, which comprise: • The financial statements of the parent company Grieg Seafood ASA (the Company), which comprise the Statement of financial position as at 31 December 2019, the Income statement, Statement of changes in equity and Cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • The consolidated financial statements of Grieg Seafood ASA and its subsidiaries (the Group), which comprise the balance sheet as at 31 December 2019, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion: • The financial statements are prepared in accordance with the law and regulations. • The accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 2019, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway. • The accompanying consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Basis for Opinion We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The activities of the group have in general been unchanged compared to previous year. We have not identified regulatory changes, transactions or other events that qualify as new Key audit matters for the 2019 audit. Consequently, our areas of focus are the same as previous year. G R I E G S E A F O O D
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Independent Auditor's Report - Grieg Seafood ASA (2) Key Audit Matter How our audit addressed the Key Audit Matter Measuring of the amount of biological assets Biological assets include inventories of broodstock, smolt and live fish held for harvesting purposes. For audits of significant inventories, the international audit standards require that the auditor participate at inventory count, provided it is practicable. The biological assets are by nature difficult to count, observe and measure due to lack of sufficiently accurate measuring techniques that at the same time does not affect fish health. As a result, there is some uncertainty related to the number of fish and biomass in the sea. Therefore, we focused on measuring the inventory of biological assets (biomass), emphasizing live fish held for harvesting purposes, which constitute the major part of the Group’s biological assets. The amount of biomass in the sea has direct influence on the valuation; see more about this in the paragraph «Valuation of biological assets at fair value» below. See note 2 and 7 for further information about measuring of biological assets. The Group’s biomass system shows the number of fish, average weight and biomass per site. We directed our effort at the movement in biological inventory (in numbers) in the period. The movement is the total of smolt stocked, loss of fish and harvested fish for the period. We reviewed the Group’s processes for controlling the number of fish stocked. To assure accuracy of the number of fish registered in the biomass system, we tested a selection of smolt stocked, by tracing the number of fish stocked back to underlying documentation. Underlying documentation are e.g. vaccination documentation for internally produced smolt and invoices for purchase of external smolt. The growth in the period is connected to the total feed consumption and is closely associated with purchase of feed. We reviewed the Group’s internal controls of reconciliation of feed inventory and obtained external confirmation from feed suppliers in order to verify purchased volume. We also assessed recorded accumulated feed conversion rate for live fish held for harvesting purposes and obtained explanations from management and further documentation for sites with significantly either higher or lower feed conversion rate than expected. Our procedures substantiated that the growth for the year was reasonable. In order to challenge the historical accuracy of management’s biomass estimates we reviewed the harvest deviation for the period. By harvest deviation, we refer to the deviation between actual harvested biomass (in numbers and kilos) and the estimated biological inventory according to the group’s biomass system. We found the accumulated deviations to be reasonable. We satisfied ourselves that the disclosures in the notes about measuring of biological assets were reasonable and in accordance with the requirements in the accounting standards. PA R T 0 3 O U R R E S U LT S
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Independent Auditor's Report - Grieg Seafood ASA (3) Valuation of biological assets at fair value The Group measures biological assets at fair value using the requirements in IAS 41. As per 31.12.2019, the book value of biological assets is MNOK 3 438, of which MNOK 2 670 is historical cost and MNOK 768 is value adjustment. Biological assets comprise about 40 % of total assets. The fluctuations in the fair value estimate that occur due to, for instance, changes in the market price, may have significant impact on the period’s operating result. The Group therefore shows the effect of fair value adjustments for biological assets as a separate line item before operating result (EBIT). We focused on the valuation of biological assets at fair value due to the size of the amount, the complexity of the calculation, because the estimate involves judgement and due to its significance on the financial result for the year. See note 2 and 7 for information about valuation of biological assets at fair value. We challenged management’s model for calculation of fair value of biological assets by assessing the model against the criteria in IAS 41 and IFRS 13. We found that the model includes the elements that the accounting standards require. We examined whether the biomass that formed the basis for the Group’s model corresponded with the Group’s biomass system and controlled that the model made the mathematical calculations as intended. After having assured that these fundamental elements were in place, we assessed whether the assumptions that management used in the model were reasonable. We assessed the price assumptions against observable forward prices from FishPool. We challenged the assumption made with regards to when the fish is considered to be ready for harvest and the expected monthly mortality rate. We found the management’s assumptions to be reasonable and consistent with industry norm. Further, we assessed whether information about fish health and harvest deviation after the balance sheet date is reflected in the valuation. We found that the calculation model adequately reflects available information. We satisfied ourselves that the disclosures in notes 2 and 7 to the financial statements referring to valuation of biological assets appropriately reflect the valuation method and that the disclosures are according to requirements in the accounting principles. Other information Management is responsible for the other information. The other information comprises information in the annual report, except the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. G R I E G S E A F O O D
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Independent Auditor's Report - Grieg Seafood ASA (4) Responsibilities of the Board of Directors and the Managing Director for the Financial Statements The Board of Directors and the Managing Director (Management) are responsible for the preparation in accordance with law and regulations, including fair presentation of the financial statements of the Company in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and fair presentation of the consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's or the Group's internal control. • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company and the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. PA R T 0 3 O U R R E S U LT S
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Independent Auditor's Report - Grieg Seafood ASA (5) • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements Opinion on the Board of Directors’ report Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors’ report and in the statements on Corporate Governance and Corporate Social Responsibility concerning the financial statements, the going concern assumption and the proposed allocation of the result is consistent with the financial statements and complies with the law and regulations. Opinion on Registration and Documentation Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, it is our opinion that management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the Company’s accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway. Bergen, 8. April 2020 PricewaterhouseCoopers AS Jon Haugervåg State Authorised Public Accountant G R I E G S E A F O O D
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PricewaterhouseCoopers AS, Sandviksbodene 2A, Postboks 3984 - Sandviken, NO-5835 Bergen T: 02316, org. no.: 987 009 713 VAT, www.pwc.no State authorised public accountants, members of The Norwegian Institute of Public Accountants, and authorised accounting firm To the Board of Directors of Grieg Seafood ASA Independent statement regarding Grieg Seafood ASA’s sustainability reporting We have been engaged by Grieg Seafood ASA (Grieg Seafood) to examine whether the Group’s sustainability reporting is conducted in accordance with the Global Reporting Initiative (GRI) Standards Core Option, and to examine whether the sustainability KPIs is calculated, estimated and reported in accordance with the definitions and explanations provided in relation to each key performance indicator - Grieg Seafood’s GRI Index for 2019 is an overview of which principles, aspects and indicators from the GRI guidelines that Grieg Seafood use to measure and report on sustainability; together with a reference to where the material sustainability information is reported within the integrated annual report for 2019 (Annual Report 2019). We have examined whether Grieg Seafood has developed a GRI Index for 2019 and whether mandatory disclosures are presented in accordance with the Standards published by The Global Reporting Initiative (www.globalreporting.org/standards) (criteria). - Key performance indicators for sustainability are reported in “Our Scoreboard” on pages 18-19 in the Annual Report 2019. This table contains sustainability indicators that Grieg Seafood measures and controls. Grieg Seafood has defined the key performance indicators in the referenced pages in the Scoreboard, where they also explain how they are measured (criteria). We have examined the basis for the KPIs reported in “Our Scoreboard” and examined whether these are calculated, estimated and reported in accordance with the criteria. Tasks and responsibilities of management Management is responsible for Grieg Seafood’s Sustainability Reporting for 2019 and that the GRI Index for 2019 is developed in accordance with the Standards published by the GRI. Management is also responsible for key performance indicators for sustainability and that these are calculated, estimated and reported in accordance with the definitions given in the referenced pages in “Our Scoreboard”. Their responsibility includes to implement such internal control as management determines is necessary to enable development and reporting of the GRI Index and to enable correct calculation, estimation and reporting of the sustainability KPIs in the Annual Report 2019. Our independence and quality control We are independent of the company in accordance with applicable laws and regulations and the Code of Ethics for Professional Accountants (IESBA Code) and with the ethical requirements that are relevant to our independent statement, and we have fulfilled our ethical obligations in accordance with these requirements and IESBA Code. We use ISQC 1 - Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and maintains a comprehensive quality control system including documented policies and procedures of the ethical standards, professional standards and applicable legal and regulatory requirements. The Auditors responsibilities Our responsibility is to express an opinion on Grieg Seafoods sustainability reporting based on our controls. We have performed our work in accordance with the Standard on Assurance Engagements ISAE 3000: “Assurance engagements other than audits or review of historical financial information". Our work involves performing procedures to obtain evidence that Grieg Seafood’s GRI Index 2019 and key performance indicators for sustainability are developed in accordance with GRI Standards Core PA R T 0 3 O U R R E S U LT S
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(2) Option and the criteria for reporting and measurement that are given in relation to “Our Scoreboard” containing key performance indicators. The procedures selected depend on our judgement, including assessments of the risks that the sustainability reporting as a whole are free from material misstatement, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the preparation of the GRI Index 2019 and sustainability KPIs. Therefore, we design procedures that are appropriate to the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. Our control also includes an assessment of whether the applied criteria are appropriate and an assessment of the overall presentation of the GRI Index 2019 and sustainability KPIs. Our controls include meetings and interviews with representatives from Grieg Seafood that are responsible for the key areas covered by the sustainability reporting, evaluating internal controls and procedures for reporting key performance indicators for sustainability, collecting and reviewing relevant information that supports the calculation and estimation of key performance indicators, evaluating the completeness of the key performance indicators and controlling whether the calculation and estimation of the key performance indicators are accurate. We believe that the evidence we have obtained is sufficient and appropriate to provide basis for our conclusion. Conclusion In our opinion the GRI Index 2019 is, in all material respects, developed and presented in accordance with the requirements of the Global Reporting Initiative Standards Core Option. Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that the calculation, estimation and reporting of the sustainability key performance indicators presented in “Our Scoreboard” in the Annual Report for 2019 are not prepared, in all material respects, in accordance with the definitions and explanations provided in relation to each key performance indicator presented in “Our Scoreboard”. Bergen, 8 April 2020 PricewaterhouseCoopers AS Jon Haugervåg State authorized public accountant 3 2 0
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 4 A P P E N D I X
C O N T E N T
PA R T 0 4
APPENDIX
T C F D R E P O R T
G R I I N D E X
3 2 2- 3 2 9
3 3 0 - 3 4 3
3 2 1
G R I E G S E A F O O D
A PPENDI X
TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES (TCFD)
REPORT
Mapping of climate-related risk and opportunities in
accordance with the recommendations of the Task Force
on Climate-Related Financial Disclosures (TCFD).
The Task Force on Climate-Related Financial Disclosures (TCFD) was established by the
Financial Stability Board to improve companies’ disclosure of climate-related financial
information. The TCFD’s recommendations are summarized in a framework for disclos-
ing clear, comparable and consistent information about the risks and opportunities
presented by climate change. The recommended disclosure includes critical questions
relating to how climate risks are addressed by companies’ boards and managements,
and how climate-related risk management, strategy revisions, and targets are struc-
tured. In preparing this report, we have disclosed our climate-related risks and oppor-
tunities, including our corresponding climate-related risk management, and we have
adhered to the TCFDs seven Principles for Effective Disclosures.
We have worked systematically to reduce our environmental impact for many years,
and we consider ourselves well positioned to manage stricter climate requirements.
However, due to the increasing pace of change in climate-related expectations, there is a
need for a more systematic and strategic approach to climate-related risk and opportu-
nity management, and a better understanding of the possible financial impacts of climate
change in different emission pathways and time horizons. We see this as a requirement
to ensure our position as a future-proofed, sustainable, and circular company.
3 2 2
ANNUAL REPORT 2019 PA R T 0 4 A P P E N D I X
T C F D R E P O R T
ACUTE
PHYSICAL
RISKS
CHRONIC
PHYSICAL
RISKS
REGULATORY
RISKS
OUR CLIMATE-RELATED RISKS AND OPPORTUNITIES
Increase in accidents for employees.
Increase in downtime due to harsh weather.
Extreme weather events: More frequent extreme weather events, such as storms, waves, and ice, have several potential
impacts on our fish production sites in the ocean:
• Damage to production facilities and infrastructure.
•
•
• Higher risk of fish escapes due to facility impairment.
Relevant studies done by the Norwegian Environmental Agency (2017, M406 report) shows an increase in extreme weather
events with storms and increased precipitation of snow and ice. We already experience extreme weather situations, amongst
others in Finnmark, where severe wind, snow and ice can occur at the same time. The risk of extreme weather will increase,
and future weather events will become more extreme. An example is that a massive amount of ice on our pens, which are
already heavy, cause lack of the floating capacity and the pens may start to sink. Extreme wind and waves may cause challen-
ges for our employees to enter our sites to care for the fish. We might have situations where the fish manage to escape due to
damages on the constructions. Overall, these risks might result in decreased harvest due to loss of fish, or lost opportunity to
farm in the most exposed areas.
Availability and cost of raw materials from suppliers: Extreme weather in locations where our suppliers source feed raw
materials may impact the price and availability of fish feed. For example, higher temperatures may impact supply of fish meal
and fish oil in Peru, potentially increasing the cost of these raw materials globally, hence increasing the cost of our salmon
fish feed. Droughts and floods may impact land-based inputs (soy, wheat, etc.) for fish feed. Corresponding cost increases will
be passed on to Grieg Seafood.
Increased water temperature: Higher average temperatures in sea water can cause damage to salmon health. Temperature
increase can lead to elevated risk of algae bloom, which leads to lower oxygen levels, which can cause higher levels of fish
disease and mortality.
Carbon tax: Grieg Seafood is increasingly transporting products by air freight, particularly to new markets. Any carbon taxes
may have a significant financial impact and make our products less competitive. In 2017, the Norwegian government approved
the Norwegian Climate Act, which aims to reduce overall emissions by 40% in 2030 and 80-95% in 2050 (base year 2010). In
January 2020, the Norwegian government increased their ambitions to reducing overall emissions by 50% by 2030. In order to
reach these emission reductions, the government has established a series of taxation on fuels, including a consumption tax and
a CO2 tax. This will increase our cost of consumption of fossil fuels in Norway, impacting our operating cost. We use diesel for
feeding processes, lighting and other energy related activities. Even though we are testing out new technologies to reduce our
overall carbon footprint from these sources, such as switching diesel engines used on sites with battery packs, electricity from
grid or hybrid solutions, our largest direct source of emissions is still coming from the use of fuels for our boats, vehicles and
on-site energy production from generators. Hence, if we do not substitute our fossil fuel consumption with renewable energy
technologies, we will be taxed in the future.
Increasing cost of carbon may change market dynamics in favor of local, land-based production or closed-containment techn-
ologies, leaving us with an obsolete business model and mode of production. Our own resilience to emerging climate-related
regulations is also dependent on our suppliers’ ability to adapt to new climate-related regulations that affect them. If they are
not prepared to face these risks themselves it is highly likely that their increased operating cost would be passed on to us.
Currently, our suppliers’ ability to quickly adapt to changing regulations or market demands may be limited.
MARKET RISKS
Supply: We rely heavily on access to good quality, sustainably sourced raw materials for our fish feed. If climate change causes
acute or chronic physical changes, the availability of these raw materials may become scarcer and hence more expensive. We
are also reliant on our suppliers as invested partners to find more sustainable production and transportation methods as these
could become more heavily regulated in the future.
Demand: Climate change and increased consumer attention to climate-related issues can have a multitude of effects on the
demand for protein sources. One of the main changes we monitor closely, is the risk from shifts in consumer preferences of
preferring certified fish. This could potentially have a substantive financial impact if we are not able to meet these demands.
Increased demand from grocery stores for environmental/climate-related certified products can already be observed in the
market, not just in Norway but in the rest of Europe and throughout North America. We have been contacted by clients who
want or even demand this. Certified products, such as ASC certified fish, can become a common customer demand, and the risk
of not receiving the certification may impact our revenues. However, we are committed to expand the number of ASC certified
locations, and at year-end, a total of ten sites were ASC certified.
3 2 3
TECHNOLOGY
RISKS
Developments in land-based fish farming: If land-based fish farming increases in markets such as China and the US, we will
be at a great disadvantage, particularly as we use air freight to reach consumer markets. R&D efforts in land-based farming
technologies may increase as the cost of carbon rises, making land-based fish farming more competitive, and placing us at a
competitive disadvantage. If the transport of fish could be accomplished at low carbon emission levels, however (i.e. via alter-
native freezing methods), we would still be well positioned.
Developments in alternative protein: Climate change and a growing awareness of the meat industry’s substantial carbon
footprint is boosting efforts to develop alternative proteins, plant based or lab based. If alternative protein can be produced at
a competitive cost and quality, it could affect demand for farmed fish.
REPUTATIONAL
RISKS
Business models based on extensive use of air freight may see growing reputational pressure as climate awareness increases.
This may impact our attractiveness to consumers, employees, and investors.
Investor interest may decrease if we fail to develop a convincing narrative on our approach to sustainability (i.e. how we are
going to cut emissions in line with the Paris Agreement).
Consumer interest may also decrease if we fail to effectively communicate our dedication to sustainable and climate-friendly
solutions. We provide certified fish as a part of our climate-related focus on offering more environmentally friendly and climate
conscious products. With the growing focus on certified seafood from the public, this can be even more relevant for our future
reputation.
OPPORTUNITIES
Low-emission protein source: Farmed salmon has a substantially better carbon footprint than meat-based protein, making it
more resilient to climate-related regulations and shifts in consumer preference away from carbon-intensive protein sources.
Renewable energy: Grieg Seafood sees opportunities in shifting from fossil fuels to electrical power at our locations in Norway
in order to reduce emissions and lower our cost. Fuels from generators from on-site energy production is one of the largest
direct sources of emissions in our sector, and we are testing new technologies to reduce the carbon footprint from these sources,
such as switching diesel engines used on sites with battery packs or hybrid solutions. These are great opportunities which can
also be beneficial economically in the long run. With the passing of the Norwegian Climate Act, there is a great opportunity for
Grieg Seafood to reap the reputational benefits of eliminating fuel-related emissions because we still use fossil aggregates
in several locations along the coastline of Norway. State-owned enterprises, such as Enova, are also distributing subsidies
for switching to renewable energy, that we can apply for. By switching our locations from diesel to electricity, we will reduce
emissions from these locations by 90%, and even more in the future with more renewable sources in the power grid in 2050
than in today's Nordic mix. We have already implemented initiatives to switch from diesel to electricity by installing off-grid
electricity in some locations. Additionally, this activity is not only beneficial for the climate, but also has further environmental,
pollution and water benefits. We have a policy that emphasizes our responsibility as to protect the biodiversity in the ocean.
Early adaptation to climate changes: Grieg Seafood BC has adapted its operations to the consequences of a changing climate
(i.e. increased amount and types of algae, and lower oxygen levels). This knowledge should be easily transferrable to other areas.
Innovation: Grieg Seafood have tried to find more sustainable ways to store our fish for transportation. The opportunity to reduce
the amount of ice in boxes that we transport fish in, can decrease both cost and emissions. Sub- chilling entails bringing the
salmon to low temperatures without freezing more than 20% of its water. Approximately 10% of the overall weight in salmon
transport is ice. Sub-chilling makes ice redundant, and reduces emissions and transportation cost. Sub-chilling does not just
have economic benefits with a longer shelf life, but also gives the opportunity to transport the fish in shipping containers instead
of airfreight, which is considerably cheaper and more environmentally friendly. Increased shelf life provides further market
opportunities. This technology challenges existing regulations and definitions of fresh and frozen fish.
New business regions due to ice cap melting. If the northern ice cap continues to melt, the North-East passage to China from
Finnmark in northern Norway might open. In that case, Grieg Seafood Finnmark might benefit from transporting products to
Asia with a low carbon footprint, given that appropriate freezing methods have been developed.
3 2 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 4 A P P E N D I X
T C F D R E P O R T
TCFD MATRIX: RESULTS 2019
#
DISCLOSURE
RESPONSE
REFERENCE
GOVERNANCE
1
2
Describe the board’s
oversight of climate-
related risks and
opportunities.
For more informa-
tion about our risk
management, see Part
3 – Corporate Gover-
nance and the Board of
Directors’ Report in the
Annual Report 2019.
The Board exercises oversight of strategic, operational and financial matters,
including the nature and extent of major risks. Therefore, the Board also has the
highest-level responsibility to oversee developments in climate-related risks and
opportunities. On the Board, the Audit Committee has a particular responsibility
to monitor critical business risks, and address the quality and effectiveness of
relevant risk reducing measures. The Audit Committee receives a risk review
quarterly, and significant risks are reported further to the Board. Climate-related
risks have not yet been treated as a separate risk category, but rather as a part of
the broader sustainability issues. However, climate-related risks and opportuni-
ties are increasingly recognized as crucial considerations to ensure the success
of Grieg’s business strategy, and there is consequently an ongoing effort to make
these topics a prioritized agenda item.
Going forward, we will ensure that climate-related risks are adequately assessed
as a separate risk category, and that the Audit Committee and the Board regularly
review these risks. A clear strategy to address both risks and opportunities will be
developed. The Board of Directors holds the group management team accountable
for pursuing our strategies and for assessing risks related to climate change and
the environment.
Describe management’s
role in assessing and
managing climate-related
risks and opportunities.
Grieg Seafood’s management level action on sustainability and climate change
is led by the Chief Sustainability Officer (CSO). The CSO leads a team with one
dedicated person in each region who is responsible for climate and sustainability
issues in their own region. The CSO reports to the Chief Operational Officer, who
is a member of the group management team. In mitigating and managing overall
climate-related risks, we have a target to reduce emissions from our operations
by 2030.
For more informa-
tion about our risk
management, see Part
3 – Corporate Gover-
nance and the Board of
Directors’ Report in the
Annual Report 2019.
Going forward, we will ensure a coherent understanding of climate risks relevant
to Grieg Seafood, and include these risks and opportunities as a separate issue
in our strategy and risk management.
STRATEGY
3
Describe the climate-
related risks and
opportunities the
organization has
identified over the short,
medium and long term.
See “Our risks and opportunities” as presented in the table above.
Going forward, we will develop likelihood and impacts analyses for different emis-
sion pathways and time horizons by using scenario analyses for climate-related
risks.
3 2 5
#
4
5
DISCLOSURE
RESPONSE
REFERENCE
Describe the impact of
climate-related risks
and opportunities on the
organization’s business
strategy and financial
planning.
Examples of impact are described in the table “Our risk and opportunities” above.
Overall, we expect the impacts of climate-related risks to be moderate in the
short term, but these impacts could become more severe in the medium to long
term. Any significant physical change is likely to interfere with our current busi-
ness model or damage our facility infrastructure, both of which could be costly.
Similarly, the transitional risks related to increased climate-change regulation or
significant changes in consumer preferences could likely affect our bottom line
and access to capital. On the other hand, we see Grieg Seafood as being uniquely
placed to mitigate these risks and take advantage of climate-related opportunities.
In order to get a full overview over how these climate-related risks and opportu-
nities may evolve and affect us, we will develop likelihood and impacts analyses
under different emission pathways and time horizons.
Going forward, we will address climate-related risk as part of our strategy. We
have already developed some cost estimates, but more detailed financial planning
is necessary.
Describe the resilience
of the organization’s
strategy, taking into
consideration different
climate-related
scenarios, including a 2°C
or lower scenario.
The resilience of our strategy under different emission pathways and time hori-
zons is not currently known, and this will be an area of focus in our ongoing work
on climate-related risks.
Going forward, we will develop scenarios analyses to ensure adequate manage-
ment of and a strategic approach to our climate-related risks.
RISK MANAGEMENT
6
Describe the
organization’s processes
for identifying and
assessing climate-related
risks.
On a quarterly basis we perform a risk analysis, which is reported to the Board’s
Audit Committee. Climate-related risk has so far been treated as an integrated
part of other risk categories. In the future, it will be separated as its own risk area.
By preparing this report, we initiated a formal process for identifying and asses-
sing climate-related risks as a separate risk category, which will be a part of our
integrated risk identification, assessment, and management process. This is to
ensure thorough monitoring of these risks and that proper actions are taken in
our strategic and financial planning. The risk owner for climate-related risks will
be the CSO who currently already monitors climate-related risks with the help of
a team made up of sustainability heads in each region.
The process for identifying and assessing climate-related risks will be similar to
our general risk and opportunity assessment. First, we identify overall company
targets, and then identify relevant risks linked to these targets. The risks are
classified into risk categories in terms of which area of the company they are likely
to affect. Each risk category has a risk owner, who is responsible for monitoring
and assessing the risks that fall under their category of responsibility. Identified
risks are subsequently assessed against the risk appetite for each risk category.
Each risk is assessed in terms of likelihood and potential impact with regards to
long-term value creation and achievement of strategic targets.
3 2 6
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 4 A P P E N D I X
T C F D R E P O R T
#
7
8
DISCLOSURE
RESPONSE
REFERENCE
Describe the
organization’s processes
for managing climate-
related risks.
Describe how processes
for identifying, assessing
and managing climate-
related risks are
integrated into the
organization’s overall
risk management.
The process for managing risk in general, is carried out by the group manage-
ment team and overseen by the Board. The Finance Department is responsible
for maintaining a risk register, based on discussions with the group management
team and the CSO. The risk owners have the direct responsibility to manage risks
in their risk category. They are mandated to initiate measures to mitigate risks that
exceed the risk appetite for the category, i.e. that interfere with the company’s set
targets and overall strategic goals. Risk management and mitigation progress is
reported to the Audit Committee and further to the Board. High risk areas will be
followed up closely until the risk is reduced to an acceptable level.
So far, our process for managing climate-related risks has occurred under other
risk categories or been manifested in the overall reduction of carbon emissi-
ons. A formal process for managing climate-related risks as an independent risk
category has recently been initiated. Going forward, we will include management
of climate-related risks as a separate category of our risk framework. This will
ensure regular assessment and risk management ownership at the correct level,
particularly with regard to longer-term investments and strategic decisions.
Climate-related risks have been integrated as part of other risk categories in the
processes of identifying, assessing and managing company risks. We recognize
integration of climate-related risk into the wider risk framework as a positive way
for climate issues to be fully mainstreamed in our strategic operations. There is a
need to understand the specific impact climate change will have on the resilience
of our strategy and operations. Therefore, we see a need to establish an indepen-
dent risk category, under which we can tailor our identification, assessment, and
management processes specifically to climate-related risks and opportunities,
for example by using scenario analyses. This will mean that climate-related risks
will be included and integrated in the wider risk framework, but that it will also
be possible to make individual climate-related risk judgements.
Going forward, we will integrate climate-related risks into our risk framework as
a fully integrated but independent risk category. Responsibility for climate risk
is assigned to the CSO.
3 2 7
#
DISCLOSURE
RESPONSE
REFERENCE
We have estimated cost related to selected climate-related risks and opportunities.
RISK /
OPPORTUNIT Y
T YPE OF
FINANCIAL IMPACT
ESTIMATED
IMPACT FIGURE
EXPL ANATION
Regulatory
risk
Increased
operating cost
from pricing of
GHG emissions
MNOK 10
MNOK 33
Regulatory
risk
Reduced
revenue from
decreased
demand due
to shifts in
consumer
preferences
MNK 200
Acute
physical
risk
Reduced
revenue from
decreased
production
capacity due
to extreme
weather events
Opportunity Reduced
MNOK 610
exposure to
future fossil
fuel price
increases by
switching to
lower-emission
sources of
energy
If we substitute all use of fossil
fuels for energy at our sites in
Norway, we will save approx. MNOK
600 (over the installations lifetime
of 20 years). With a 1.7% increase
already regulated in 2019, this price
will increase to MNOK 610. The
potential financial impact figure of
this risk is therefore MNOK 10.
We base the calculation of the
financial impact figure of this risk
on the total harvested volume in
2019 of 82 873 tonnes GWT. Given
a scenario where the common
customer demand for ASC is 20% of
our harvested volume, which pays
NOK 2 more per kg ASC certified
fish, we have calculated that this
could represent a possible loss of
income of MNOK 33.
In a scenario where our pens are
damaged, and 500 000 fish close to
harvest weight of 5kg (and a market
value of NOK 60 per kg) escape, the
impact could be a loss of revenues
of MNOK150. Damages on the
constructions could possibly be up
to MNOK 40 -50. The total cost of
potential financial impact figure is
approx. MNOK 200.
If we substitute all use of fossil
fuels on our sites in Norway, it
will save us MNOK 600 (over the
installations lifetime of 20 years).
The total saving by realizing this
opportunity is MNOK 610 MNOK,
including 1.7% increase on the
taxation of fuel.
Going forward, we will continue developing key metrics to track risk management,
including by developing scenario analyses. We will also consider the development
of an internal carbon pricing scheme.
We calculate our own emissions in Scope 1 and Scope 2. Our emissions in 2019 are:
EMISSION SCOPE
GREENHOUS GAS EMISSIONS (TCO2E)
Scope 1
Scope 2
Total
39 363
3 304
42 667
We target a 30% reduction in emissions/tonnes GWT by 2030, compared to the
base year 2017.
Going forward, we will commit to the Science-Based Targets Initiative (SBTi). We
will develop targets to track climate-related risks and opportunities.
METRICS & TARGETS
9
Disclose the metrics used
by the organization to
assess climate-related
risks and opportunities
in line with its strategy
and risk management
process.
Disclose Scope 1, Scope
2, and, if appropriate,
Scope 3 greenhouse gas
(GHG) emissions, and the
related risks.
Describe the targets used
by the organization to
manage climate-related
risks and opportunities
and performance against
targets.
10
11
3 2 8
See our Scope 1 and
Scope 2 emissions in
Part 2 – Sustainable
Food – Reducing carbon
Emissions, in the
Annual Report 2019.
ANNUAL REPORT 2019GRIEG SEAFOOD
PA R T 0 4 A P P E N D I X
T C F D R E P O R T
3 2 9
G R I E G S E A F O O D
A PPENDI X
GLOBAL REPORTING INITIATIVE INDEX
This report has been prepared in accordance with the GRI Standards:
Core option. We follow the GRI Standards to report our economic,
environmental and social performance, allowing for greater transparency
and accountability. For more information on our approach to corporate
social responsibility and transparency, see Part 1.
REP ORT QUA LIT Y
The quantitative information provided in this report, is mainly data we have retrieved from our
production, logistics and financial systems. Where data have been measured or estimated, this
is indicated in footnotes. If we use external data, the source is specified. Our data is reported
consistently, unless otherwise indicated. Any restatement of historical data is disclosed. All
entities consolidated into the Grieg Seafood Group’s financial statement are included in our
sustainability data.
E X TERN A L V ERIFICATION
To ensure the quality of our report and the information (both quantitative and qualitative)
provided, it is reviewed and verified internally. To ensure high data quality and to enhance the
credibility of our sustainability reporting, it has been verified by our independent auditor, PwC.
The auditor´s opinion on sustainability reporting concludes that our Annual Report 2019 is
presented according to the GRI Standards Core Option. In addition to assessing the extent to
which our report complies with the GRI Standards Core Option, PwC has also examined selected
metrics. These metrics include data reported to the Global Salmon Initiative and our greenhouse
gas emissions. Reference is made to the auditor´s statement on sustainability reporting in the
Annual Report 2019.
M A N AGEMENT A PPROACH
With our vision of farming the ocean for a better future, we demonstrate our commitment to
corporate responsibility by operating profitably and sustainably in a manner that conforms
with fundamental ethical norms and respect for the individual, the environment, and society as
whole. We apply the precautionary principle as our strategy for approaching issues of potential
harm when scientific knowledge is lacking. We aim to collaborate and take part in research to
develop and test new solutions. In pursuit of our vision, we will face risks and opportunities.
Our risk management is clearly connected with a multitude of stakeholder expectations, and
the topics we have identified as material.
The Board exercises oversight of strategic, operational and financial matters, including the
nature and extent of major risks. The Board and the CEO have delegated responsibility to the
various business areas and functions, ensuring that operational responsibility is an integral
part for all management teams and units and departments. We have a whistleblower channel,
operated by EY, available for our employees and external parties to report any unwanted behav-
ior and breaches to our Code of Conduct.
3 3 0
PILLAR
FOUNDATION
HEALTHY OCEAN
SUSTAINABLE FOOD
Safe &
We need to ensure that our fish meet rigorous food safety stan-
We have procedures, including traceability and strict quality control, in place
3
healthy food
dards, in some cases even above and beyond official regulations,
to ensure that our salmon is safe. We operate according to standards and
to meet customer expectations.
certify our supply chain. Samples are taken by external laboratories to ensure
our salmon is well below limits for environmental contaminants.
PROFIT &
INNOVATION
PEOPLE
LOCAL COMMUNITIES
Respecting Indigenous rights is essential as we need their permi-
We aim for good relations and dialogue, and recognize the special rights of
8, 16, 17
ssion to farm salmon on their land.
Indigenous peoples.
Respecting and supporting local communities are essential for our
We have principles related to the use of local suppliers and service providers,
2, 5, 8, 17
license to operate.
and we engage and support local projects.
TOPIC DEFINITION AND BOUNDARIES
MANAGEMENT APPROACH
CHOSEN
UN SDGs
Strong corporate governance is essential in achieving our objecti-
Our governance system consists of our culture, management principles, risk
16, 17
ves and acting as a responsible organization. We need to ensure
and internal control framework, policies, procedures etc. We adhere to our
that all employees practice sound ethics, care for the environment,
Principles of Corporate Governance, and our Code of Conduct guides our
and social wellbeing. We expect nothing less from our suppliers
behavior. Training in our Code is performed regularly. External assurance and
through our Supplier Code of Conduct.
certifications are performed in several areas of our operations.
Ensuring fish health and welfare is an ethical responsibility and
We have policies and operational procedures to ensure good fish health and
14
important to ensure good growth, quality and lower cost. It includes
welfare. We adhere to regulations, and report to authorities. KPIs to measure
the full lifecycle of the salmon as well as our use of cleaner fish.
fish health and welfare includes survival rate and causes for reduced survival.
Sea lice
control
Sea lice control is important to ensure the health and welfare of our
We have policies and several approaches to keep the sea lice level low. We
14
fish, as well as to protect wild salmon, in particular in Norway. In BC,
adhere to local regulations, and report sea lice levels regularly to authorities.
the wild salmon carries sea lice, impacting our farms each autumn.
Main KPI is keeping the adult female sea lice level below national limits.
Medicines
& chemicals
We aim to avoid using medicines to combat sea lice or diseases, as
We have policies and procedures in place for the use of medicines and
3, 12, 14
it can impact the local environment, or in the case of antibiotics,
chemicals. We also adhere to regulations. We track the use of medicines
make the salmon resistant for further treatment.
and chemicals, and the result of our measures is the survival rate and the
quality of our fish.
Avoiding fish escape incidents is important to minimize impact on
We have procedures in place, as well as high technical standard on equip-
14
wild salmon, as well as to protect our values.
ment to avoid escapes. Any escape incident is an indicator that our measures
are not effective, and require an investigation of our procedures.
We aim to keep emissions of feed and feces from the open-net
We assess our sites and apply operating procedures to ensure that local
12, 14
pens in line with regulations to minimize local emissions and avoid
emissions are below legal limits. Environmental monitoring programs and
eutrophication.
tests is the main approach to evaluate the effectiveness of our measures.
We aim to avoid impact on wild mammals and birds.
We have procedures and equipment in place to minimize the risk of injury
12
to wildlife. Any lethal incident is an indicator that we need to reassess our
measures.
Sustainable
We need to ensure that marine and protein ingredients are sustainable.
As we do not produce our own fish feed, we set requirements for our feed
12, 13, 17
suppliers to develop more sustainable feed. We comply with standards, and
support and/or participate to develop new and higher standards for sustai-
nable sourcing of feed raw materials.
To ensure future competitiveness and do our part in reaching the
We have set a target for reduction, and have improved our data collection
3, 12, 13
Paris Agreement, we must reduce our greenhouse gas emissi-
for a more systematic assessment of our emissions. We are not satisfied
ons, while also working with upstream suppliers and downstream
with the increase in our GHG emissions, and will develop transition plans.
transportation to reduce our own and our supply chain´s footprint.
Plastic waste
We aim not to pollute the environment where we farm our salmon,
We work to reduce negative impacts of plastic waste, including using recycled
3, 12, 13,
and to improve the circular economy.
materials and recycling our materials. We work with suppliers to assess
14, 17
alternative materials.
Economic
performance
our operations.
We aim to create value for our stakeholders, in particular our
We have a target for the return on capital employed, and strategies in place
5, 8
shareholders, by focusing on sustainable production and improve
to ensure focus on particular areas.
Human rights
Respecting human rights is the basis for society, and also for our
We have our own principles and Code of Conduct in place, and adhere to
8, 16
business and our value chain.
various global principles and practices. We also require our suppliers to
follow our Supplier Code of Conduct.
We aim to prevent accidents, and offer workplace conditions and
We work systematically to safeguard our employees, and have principles,
3, 4, 17
other support to help ensure the health and safety of our employ-
systems, programs and risk assessment in place.
ees. We expect the same from our value chain.
Business integrity is essential for our business strategy.
Our Code of Conduct and the Supplier Code of Conduct state the principles
8, 16
for anti-corruption.
MATERIAL
TOPIC
Corporate
governance &
responsible
business
conduct
Fish health
& welfare
Escape
control
Organic
emission
Wildlife
interactions
feed
ingredients
GHG
emissions
Workplace
safety (HSE)
Anti-
corruption
Indigenous
relations
Local value
creation
ANNUAL REPORT 2019 PA R T 0 4 A P P E N D I X
G R I I N D E X
PILLAR
FOUNDATION
MATERIAL
TOPIC
TOPIC DEFINITION AND BOUNDARIES
MANAGEMENT APPROACH
Corporate
governance &
responsible
business
conduct
Strong corporate governance is essential in achieving our objecti-
ves and acting as a responsible organization. We need to ensure
that all employees practice sound ethics, care for the environment,
and social wellbeing. We expect nothing less from our suppliers
through our Supplier Code of Conduct.
Our governance system consists of our culture, management principles, risk
and internal control framework, policies, procedures etc. We adhere to our
Principles of Corporate Governance, and our Code of Conduct guides our
behavior. Training in our Code is performed regularly. External assurance and
certifications are performed in several areas of our operations.
HEALTHY OCEAN
Fish health
& welfare
Ensuring fish health and welfare is an ethical responsibility and
important to ensure good growth, quality and lower cost. It includes
the full lifecycle of the salmon as well as our use of cleaner fish.
We have policies and operational procedures to ensure good fish health and
welfare. We adhere to regulations, and report to authorities. KPIs to measure
fish health and welfare includes survival rate and causes for reduced survival.
Sea lice
control
Sea lice control is important to ensure the health and welfare of our
fish, as well as to protect wild salmon, in particular in Norway. In BC,
the wild salmon carries sea lice, impacting our farms each autumn.
We have policies and several approaches to keep the sea lice level low. We
adhere to local regulations, and report sea lice levels regularly to authorities.
Main KPI is keeping the adult female sea lice level below national limits.
CHOSEN
UN SDGs
16, 17
14
14
Medicines
& chemicals
We aim to avoid using medicines to combat sea lice or diseases, as
it can impact the local environment, or in the case of antibiotics,
make the salmon resistant for further treatment.
We have policies and procedures in place for the use of medicines and
chemicals. We also adhere to regulations. We track the use of medicines
and chemicals, and the result of our measures is the survival rate and the
quality of our fish.
3, 12, 14
Escape
control
Avoiding fish escape incidents is important to minimize impact on
wild salmon, as well as to protect our values.
We have procedures in place, as well as high technical standard on equip-
ment to avoid escapes. Any escape incident is an indicator that our measures
are not effective, and require an investigation of our procedures.
14
Organic
emission
We aim to keep emissions of feed and feces from the open-net
pens in line with regulations to minimize local emissions and avoid
eutrophication.
We assess our sites and apply operating procedures to ensure that local
emissions are below legal limits. Environmental monitoring programs and
tests is the main approach to evaluate the effectiveness of our measures.
12, 14
Wildlife
interactions
We aim to avoid impact on wild mammals and birds.
We have procedures and equipment in place to minimize the risk of injury
to wildlife. Any lethal incident is an indicator that we need to reassess our
measures.
SUSTAINABLE FOOD
Safe &
healthy food
We need to ensure that our fish meet rigorous food safety stan-
dards, in some cases even above and beyond official regulations,
to meet customer expectations.
We have procedures, including traceability and strict quality control, in place
to ensure that our salmon is safe. We operate according to standards and
certify our supply chain. Samples are taken by external laboratories to ensure
our salmon is well below limits for environmental contaminants.
12
3
PROFIT &
INNOVATION
PEOPLE
Sustainable
feed
ingredients
GHG
emissions
We need to ensure that marine and protein ingredients are sustainable.
As we do not produce our own fish feed, we set requirements for our feed
suppliers to develop more sustainable feed. We comply with standards, and
support and/or participate to develop new and higher standards for sustai-
nable sourcing of feed raw materials.
12, 13, 17
To ensure future competitiveness and do our part in reaching the
Paris Agreement, we must reduce our greenhouse gas emissi-
ons, while also working with upstream suppliers and downstream
transportation to reduce our own and our supply chain´s footprint.
We have set a target for reduction, and have improved our data collection
for a more systematic assessment of our emissions. We are not satisfied
with the increase in our GHG emissions, and will develop transition plans.
3, 12, 13
Plastic waste
We aim not to pollute the environment where we farm our salmon,
and to improve the circular economy.
We work to reduce negative impacts of plastic waste, including using recycled
materials and recycling our materials. We work with suppliers to assess
alternative materials.
3, 12, 13,
14, 17
Economic
performance
We aim to create value for our stakeholders, in particular our
shareholders, by focusing on sustainable production and improve
our operations.
We have a target for the return on capital employed, and strategies in place
to ensure focus on particular areas.
5, 8
Human rights
Respecting human rights is the basis for society, and also for our
business and our value chain.
We have our own principles and Code of Conduct in place, and adhere to
various global principles and practices. We also require our suppliers to
follow our Supplier Code of Conduct.
8, 16
Workplace
safety (HSE)
We aim to prevent accidents, and offer workplace conditions and
other support to help ensure the health and safety of our employ-
ees. We expect the same from our value chain.
We work systematically to safeguard our employees, and have principles,
systems, programs and risk assessment in place.
3, 4, 17
Anti-
corruption
Business integrity is essential for our business strategy.
Our Code of Conduct and the Supplier Code of Conduct state the principles
for anti-corruption.
8, 16
LOCAL COMMUNITIES
Indigenous
relations
Respecting Indigenous rights is essential as we need their permi-
ssion to farm salmon on their land.
We aim for good relations and dialogue, and recognize the special rights of
Indigenous peoples.
8, 16, 17
Local value
creation
Respecting and supporting local communities are essential for our
license to operate.
We have principles related to the use of local suppliers and service providers,
and we engage and support local projects.
2, 5, 8, 17
3 31
GRI 102: GENERAL DISCLOSURES 2019
#
DISCLOSURE
DESCRIPTION
ORGANIZATIONAL PROFILE
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
102-1
102-2
102-3
Name of the organi-
zation
Activities, brands,
products, and services
Location of headquar-
ters
Grieg Gaarden, C. Sundts gate 17/19,
5004 Bergen, Norway.
102-4
Location of operations
102-5
Ownership and legal
form
102-6
Markets served
102-7
102-8
Scale of the organi-
zation
Information on employ-
ees and other workers
102-9
Supply chain
Feed was our main supply category
in 2019, comprising 44% of our
cost. Our main feed suppliers are
Skretting, Cargill and BioMar. Other
main suppliers include Sølvtrans and
Egersund Net.
102-10
Significant changes to
the organization and its
supply chain
There have not been any significant
changes to the organization’s size,
structure, ownership or supply chain
in 2019.
102-11
Precautionary Princi-
ple or approach
We respect and adhere to the precau-
tionary principle.
102-12
External initiatives
102-13
Membership of asso-
ciations
Membership in political organizations:
Norwegian Seafood Federation, The
Federation of European Aquacul-
ture Producers, Scottish Salmon
Producers Organisation, BC Salmon
Farmers Association, Newfoundland
Aquaculture Industry Association,
and Canadian Aquaculture Industry
Alliance.
Front page
Part 1: Our business model
Part 2: Profit - Ocean Quality and our market
26-27
104-105
Part 1: Our organization
6
Part 3: Grieg Seafood Group accounts - Note 1
218
Part 2: Profit - Ocean Quality and our market
104-105
Part 1: Our organization; Key figures; Our
business model
6; 14-15;
26-27
Part 2: People - Embracing diversity, Results;
Creating attractive jobs, Results
140-141;
144-146
Part 1: Our business model
26-27
Part 4: Global Reporting Initiative Index -
Management approach
330
Part 1: The UN Sustainable Development
Goals; Transparent reporting on our progress
32-33;
40
No
No
No
No
No
No
No
No
No
No
No
No
3 3 2
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 4 A P P E N D I X
G R I I N D E X
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
#
DISCLOSURE
DESCRIPTION
STRATEGY
102-14
Statement from senior
decision-maker
ETHICS AND INTEGRITY
102-16
Values, principles, and
norms of behavior
102-17
Mechanisms for advice
and concerns about
ethics
GOVERNANCE
102-18
Governance structure
Decision-making on economic, envi-
ronmental, and social topics lies with
the Group management team.
STAKEHOLDER ENGAGEMENT
102-40
102-41
102-42
102-43
102-44
List of stakeholder
groups
Collective bargaining
agreements
Identifying and select-
ing stakeholders
Approach to stake-
holder engagement
Key topics and concerns
raised
REPORTING PRACTICES
102-45
Entities included in the
consolidated financial
statements
102-46
Defining report content
and topic boundaries
102-47
List of material topics
No
Part 1: CEO letter
16-17
No
No
No
No
No
No
No
No
Part 1: Our vision, Our values
Part 2: People - Human rights and ethics;
Anti-corruption
7
136-139;
150-151
Part 2: People - Human rights and ethics
136-139
Part 3: Board of Directors' report; Corporate
Governance
168-187;
188-206
Part 1: Stakeholder dialogue
38-39
Part 2: People - Human rights and ethics
136-139
Part 1: Stakeholder dialogue
Part 1: Stakeholder dialogue
Part 1: Stakeholder dialogue
Part 4: Global Reporting Initiative Index -
Management approach
38-39
38-39
38-39
330
Part 3: Grieg Seafood Group accounts - Note 1
218
Part 1: Our materiality matrix for sustainable
reporting
Part 4: Global Reporting Initiative Index -
Management approach
Part 1: Our materiality matrix for sustainable
reporting
36
330
36
330
3 3 3
102-48
Restatements of infor-
mation
No significant restatements are
made.
Part 4: Global Reporting Initiative Index -
Report quality
#
DISCLOSURE
DESCRIPTION
102-49
Changes in reporting
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
No
No
No
No
No
No
No
No
Part 4: Global Reporting Initiative Index
330
Part 4: Global Reporting Initiative Index
330-343
Part 4: Global Reporting Initiative Index -
External verification
330
The topics defined as material in our
matrix have changed in relation to the
Annual Report 2018, based on feed-
back from our stakeholders. More
topics are categorized as material in
2019 than in 2018. New topics in 2019
include human rights and Indigenous
relations. We have also renamed
some topics, while others have been
divided into subcategories.
102-50
Reporting period
January 1 - December 31, 2019
102-51
Date of most recent
report
102-52
Reporting cycle
102-53
Contact point for
questions regarding
the report
The Annual Report 2018 is the
previous most recent report of this
kind but does not adhere to GRI
Standards. This report was published
April 8, 2020.
We report annually according the
GRI Standards. Our quarterly reports
include some of our sustainability
metrics.
Chief Sustainability Officer: Tor Eirik
Homme, tor.eirik.homme@griegsea-
food.com.
Group Communication Manager:
Kristina Furnes, kristina.furnes@
griegseafood.com.
Global Finance Officer: Renete
Kaarvik, renete.kaarvik@griegsea-
food.com.
102-54
Claims of reporting in
accordance with the GRI
standards
This report has been prepared in
accordance with the GRI Standards:
Core option.
102-55
GRI content index
102-56
External assurance
The Chief Sustainability Officer seeks
external verification of sustainability
reporting according to GRI Standards
Core Option and selected sustainabil-
ity KPIs. Our sustainability reporting
has been verified by our independent
auditor PwC. Reference is made to
the auditor's statement according to
ISAE 3000 at the end of the Annual
Report 2019.
3 3 4
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 4 A P P E N D I X
G R I I N D E X
TOPIC-SPECIFIC DISCLOSURES
#
DISCLOSURE
DESCRIPTION
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
CORPORATE GOVERNANCE AND RESPONSIBLE BUSINESS CONDUCT
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRI INDICATORS
206-1
307-1
419-1
Legal actions for
anti-competitive behav-
ior, anti-trust, and
monopoly practices
Non-compliance with
environmental laws
and regulations
Non-compliance with
laws and regulations in
the social and economic
area
HEALTHY OCEAN
FISH HEALTH & WELFARE
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
No
No
No
Part 4: Global Reporting Initiative Index -
Management approach
330
Part 3: Corporate governance
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: People - Anti-corruption, Results
Part 4: Global Reporting Initiative Index -
Management approach
188-206
330
150-151
330
No
Part 2: People - Anti-corruption, Results
150-151
No
No
No
No
No
Part 2: People - Anti-corruption, Results
150-151
Part 2: People - Anti-corruption, Results
150-151
Part 2: Healthy Ocean - Fish health and
welfare
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Fish health and
welfare
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Fish health and
welfare, Results
Part 4: Global Reporting Initiative Index -
Management approach
56-65
330
56-65
330
64-65
330
3 3 5
#
DISCLOSURE
DESCRIPTION
GRIEG SEAFOOD INDICATORS
Survival in seawater
Grieg
Seafood
indicator
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
No
Part 2: Healthy Ocean - Fish health and
welfare, Results
64
This Grieg Seafood indicator corre-
sponds to the GSI indicator "Fish
Mortality" which is defined as "12
months rolling mortality = (total # of
mortalities in sea last 12 months -
total # of culled fish due to illness or
similar and not in harvest figures)/
(closing # of fish in sea + total # of
mortalities in last 12 months + total #
of harvested fish in last 12 months +
total # of culled fish in sea) x 100".
No
No
No
No
No
No
No
No
Part 2: Healthy Ocean - Fish health and
welfare, Results
65
Part 2: Healthy Ocean - Sea lice control
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Sea lice control
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Sea lice control
Part 4: Global Reporting Initiative Index -
Management approach
66-71
330
66-71
330
66-71
330
Part 2: Healthy Ocean - Sea lice control,
Results
70
Part 2: Healthy Ocean - Fish health and
welfare, Sea lice control
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Fish health and
welfare, Sea lice control
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Fish health and
welfare, Results; Sea lice control, Results
Part 4: Global Reporting Initiative Index -
Management approach
56-65;
66-71
330
56-65;
66-71
330
64-65;
69-71
330
Grieg
Seafood
indicator
Main causes for
reduced survival
List of the main cause of reduced
survival, with loss stated in number
and tonnes of fish.
This Grieg Seafood indicator corre-
sponds to the GSI indicator "Sea lice
counts" which is defined as "sea lice
according to local action levels set
by the authorities" for Rogaland,
Finnmark and Shetland. For BC, the
sea lice levels are adjusted from
"motile" to "adult females".
SEA LICE CONTROL
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRIEG SEAFOOD INDICATOR
Sea lice levels
Grieg
Seafood
indicator
MEDICINES & CHEMICALS
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
3 3 6
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 4 A P P E N D I X
G R I I N D E X
#
DISCLOSURE
DESCRIPTION
GRIEG SEAFOOD INDICATORS
Use of antibiotics
Grieg
Seafood
indicator
Grieg
Seafood
indicator
Hydrogen peroxide
treatments
Grieg
Seafood
indicator
Active substances used
for treatments
ESCAPE CONTROL
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRIEG SEAFOOD INDICATOR
Grieg
Seafood
indicator
Number of escape inci-
dents and fish escapes
ORGANIC EMISSIONS
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
This Grieg Seafood indicator
corresponds to the GSI indicator
"Antiobiotic Use" which is defined as
"the amount of active pharmaceutical
ingredients (API) used (in g) per tonne
of fish produced (LWE)".
This Grieg Seafood indicator equals
the GSI indicator "Use of hydrogen
peroxide", which is defined as "the
amount of active pharmaceutical
ingredients (API) used (in gr) per
tonne of fish produced (LWE)",
however we have chosen to recalcu-
late to use kg instead of gr.
This Grieg Seafood indicator corre-
sponds to the GSI indicator "Sea lice
treatments" which is defined as "the
amount of active pharmaceutical
ingredients (API) used (in kg) per
tonne of fish produced (LWE)".
This Grieg Seafood indicator
corresponds to the GSI indicator
"Fish escapes" which is defined as
"number of fish escape incidents and
number of fish escaped (after net
recapturing)".
No
No
No
No
No
No
No
No
No
Part 2: Healthy Ocean - Fish health and
welfare, Results
Part 2: Healthy Ocean - Sea lice control,
Results
Part 2: Healthy Ocean - Sea lice control,
Results
Part 2: Healthy Ocean - Escape control
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Escape control
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Escape control,
Results
Part 4: Global Reporting Initiative Index -
Management approach
65
69
69
72-73
330
72-73
330
73
330
Part 2: Healthy Ocean - Escape control,
Results
73
Part 2: Healthy Ocean - Limiting local
emissions
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Limiting local
emissions
Part 4: Global Reporting Initiative Index -
Management approach
74-76
330
74-76
330
3 3 7
#
DISCLOSURE
DESCRIPTION
103-3
Evaluation of the
management approach
GRIEG SEAFOOD INDICATOR
RESPONSE
OMISSION
CHAPTER REFERENCE
No
Part 2: Healthy Ocean - Limiting local emis-
sions, Results
Part 4: Global Reporting Initiative Index -
Management approach
PAGE
76
330
Grieg
Seafood
indicator
Environmental status
of our sites
Result of benthic monitoring accord-
ing to local regulations.
No
Part 2: Healthy Ocean - Limiting local emis-
sions, Results
76
This Grieg Seafood indicator is
based on the GSI indicator "Wildlife
interactions" which is defined as
"total number of lethal incidents by
species divided by total number of
sites" except that we report the total
number of lethal incidents per region.
No
No
No
No
No
No
No
Part 2: Healthy Ocean - Interaction with
wildlife
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Interaction with
wildlife
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Healthy Ocean - Interaction with
wildlife, Results
Part 4: Global Reporting Initiative Index -
Management approach
78-79
330
78-79
330
79
330
Part 2: Healthy Ocean - Interaction with
wildlife, Results
79
Part 2: Sustainable food - Safe and healthy
food
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Sustainable food - Safe and healthy
food
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Sustainable food - Safe and healthy
food, Results
Part 4: Global Reporting Initiative Index -
Management approach
82-84
330
82-84
330
84
330
WILDLIFE INTERACTIONS
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRIEG SEAFOOD INDICATOR
Grieg
Seafood
indicator
Number of dead birds
and marine mammals
SUSTAINABLE FOOD
SAFE & HEALTHY FOOD
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
3 3 8
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 4 A P P E N D I X
G R I I N D E X
#
DISCLOSURE
DESCRIPTION
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
GRI 416 CUSTOMER HEALTH AND SAFETY 2016 & GRIEG SEAFOOD INDICATOR
416-2
Incidents of non-
compliance concerning
the health and safety
impacts of products and
services
There have been no incidents of
non-compliance concerning the
health and safety impact of our
salmon in 2019.
Grieg
Seafood
indicator
Level of environmental
contaminants
The level of the environmental
contaminants PCB, PCB-like dioxins
and heavy metal, based on samples
of our salmon.
SUSTAINABLE FEED INGREDIENTS
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRIEG SEAFOOD INDICATOR
Grieg
Seafood
indicator
Forage fish dependency
ratio (FFDR)
GHG EMISSIONS
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRI 305 EMISSIONS 2016
This Grieg Seafood indicator corre-
sponds to the GSI indicator "Use of
marine ingredients in feed", which is
defined as "forage fish dependency
ratio, calculated per calendar year".
No
Part 2: People - Anti-corruption, Results
150-151
No
No
No
No
No
No
No
No
Part 2: Sustainable food - Safe and healthy
food, Results
84
Part 2: Sustainable food - Sustainable feed
ingredients
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Sustainable food - Sustainable feed
ingredients
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Sustainable food - Sustainable feed
ingredients, Results
Part 4: Global Reporting Initiative Index -
Management approach
88-90
330
88-90
330
90
330
Part 2: Sustainable food - Sustainable feed
ingredients, Results
90
Part 2: Sustainable food - Reducing carbon
emissions
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Sustainable food - Reducing carbon
emissions
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Sustainable food - Reducing carbon
emissions, Results
Part 4: Global Reporting Initiative Index -
Management approach
92-95
330
92-95
330
94-95
330
305-1
Direct (Scope 1) GHG
emissions
Biogenic CO2 emissions (tCO2e) is
not relevant for our operations.
No
Part 2: Sustainable food - Reducing carbon
emissions, Results
94-95
3 3 9
#
305-2
305-4
DISCLOSURE
DESCRIPTION
Energy indirect (Scope
2) GHG emissions
GHG emissions
intensity
305-5
GHG emissions
PLASTIC WASTE
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRIEG SEAFOOD INDICATOR
Grieg
Seafood
indicator
Measure taken to
reduce the use of
plastic in the produc-
tion
PROFIT & INNOVATION
RESPONSE
OMISSION
CHAPTER REFERENCE
No
No
No
No
No
No
Part 2: Sustainable food - Reducing carbon
emissions, Results
Part 2: Sustainable food - Reducing carbon
emissions, Results
Part 2: Sustainable food - Reducing carbon
emissions, Results
Part 2: Sustainable food - Waste manage-
ment
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Sustainable food - Waste manage-
ment
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Sustainable food - Waste manage-
ment
Part 4: Global Reporting Initiative Index -
Management approach
PAGE
94-95
94-95
94-95
98-99
330
98-99
330
98-99
330
We will work to develop and measure
relevant KPI(s) regarding waste
management going forward.
No
Part 2: Sustainable food - Waste manage-
ment
98-99
ECONOMIC PERFORMANCE
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRI 201 ECONOMIC PERFORMANCE 2016
201-1
Direct economic
value generated and
distributed
3 4 0
No
No
No
No
Part 2: Profit & Innovation - Economic
productivity
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Profit & Innovation - Economic
productivity
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Profit & Innovation - Economic
productivity
Part 4: Global Reporting Initiative Index -
Management approach
106-109
330
106-109
330
106-109
330
Part 2: Profit & Innovation - Economic
productivity
109
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 4 A P P E N D I X
G R I I N D E X
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
#
DISCLOSURE
DESCRIPTION
PEOPLE
HUMAN RIGHTS
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRI 412 HUMAN RIGHTS ASSESSMENT 2016
In 2019, we did not perform any
human right reviews.
412-1
412-2
Operations that have
been subject to human
rights reviews or
impact assessments
Employee training on
human rights policies
or procedures
WORKPLACE SAFETY (HSE)
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRI 403 OCCUPATIONAL HEALTH AND SAFETY 2018
403-1
Occupational health
and safety management
system
Workers covered by this standard
(workers who are not employees
but whose work and/or workplace is
controlled by the organization) are
not a material part of Grieg Seafood's
operations. Therefore, this part of the
standard is not relevant.
No
No
No
No
Yes
No
No
No
Part 2: People - Human rights and ethics
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: People - Human rights and ethics
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: People - Human rights and ethics,
Results
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: People - Human rights and ethics,
Results
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: People - Human rights and ethics,
Results
Part 4: Global Reporting Initiative Index -
Management approach
136-139
330
136-139
330
138-139
330
138
330
138
330
Part 2: People - Keeping our employees safe
Part 4: Global Reporting Initiative Index -
Management approach
146-149
330
Part 2: People - Keeping our employees safe
Part 4: Global Reporting Initiative Index -
Management approach
146-149
330
Part 2: People - Keeping our employees
safe, Results
Part 4: Global Reporting Initiative Index -
Management approach
148-149
330
No
Part 2: People - Keeping our employees safe
146-149
403-2
Hazard identification,
risk assessment, and
incident investigation
403-3
Occupational health
services
No
No
Part 2: People - Keeping our employees safe
146-149
Part 2: People - Keeping our employees safe
146-149
3 41
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
No
Part 2: People - Keeping our employees safe
146-149
#
403-4
403-5
403-6
403-7
DISCLOSURE
DESCRIPTION
Worker participation,
consultation, and
communication on
occupational health and
safety
Worker training on
occupational health and
safety
Promotion of worker
health
Prevention and miti-
gation of occupational
health and safety
impacts directly linked
by business relation-
ships
403-9
Work-related injuries
Workers covered by this standard
(workers who are not employees
but whose work and/or workplace is
controlled by the organization) are
not a material part of Grieg Seafood's
operations. Therefore, this part of the
standard is not relevant.
ANTI-CORRUPTION
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
GRI 205 ANTI-CORRUPTION 2016
205-1
205-3
Operations assessed
for risks related to
corruption
Confirmed incidents of
corruption and actions
taken
LOCAL COMMUNITIES
INDIGENOUS RELATIONS
GRI 103 MANAGEMENT APPROACH 2016
103-1
Explanation of the
material topic and its
Boundary
3 4 2
No
No
No
No
No
No
No
No
No
No
Part 2: People - Keeping our employees safe
146-149
Part 2: People - Keeping our employees safe
146-149
Part 2: People - Keeping our employees safe
146-149
Part 2: People - Keeping our employees
safe, Results
148-149
Part 2: People - Anti-corruption
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: People - Anti-corruption
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: People - Anti-corruption, Results
Part 4: Global Reporting Initiative Index -
Management approach
150-151
330
150-151
330
150-151
330
Part 3: Corporate governance
188-206
Part 2: People - Anti-corruption, Results
150-151
Part 2: Local communities - Local value
creation; Case story
Part 4: Global Reporting Initiative Index -
Management approach
154-159;
160-161
330
ANNUAL REPORT 2019GRIEG SEAFOOD PA R T 0 4 A P P E N D I X
G R I I N D E X
#
103-2
DISCLOSURE
DESCRIPTION
The management
approach and its
components
103-3
Evaluation of the
management approach
RESPONSE
OMISSION
CHAPTER REFERENCE
PAGE
No
No
Part 2: Local communities - Local value
creation; Case story
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Local communities - Local value
creation; Case story
Part 4: Global Reporting Initiative Index -
Management approach
154-159;
160-161
330
154-159;
160-161
330
GRI 411 RIGHTS OF INDIGENOUS PEOPLES 2016
411-1
Incidents of violations
involving rights of
Indigenous peoples
In 2019, we did not have any incidents
of violations involving rights of Indig-
enous peoples.
No
LOCAL VALUE CREATION
GRI 103 MANAGEMENT APPROACH 2016
103-1
103-2
Explanation of the
material topic and its
Boundary
The management
approach and its
components
103-3
Evaluation of the
management approach
No
No
No
Part 2: Local communities - Local value
creation
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Local communities - Local value
creation
Part 4: Global Reporting Initiative Index -
Management approach
Part 2: Local communities - Local value
creation
Part 4: Global Reporting Initiative Index -
Management approach
154-159
330
154-159
330
154-159
330
GRI 203 INDIRECT ECONOMIC IMPACTS 2016 & GRI 204 PROCUREMENT PRACTICES 2016
203-1
Infrastructure invest-
ments and services
supported
We did not support any infrastructure
investments or services in Shetland
in 2019.
204-1
Proportion of spending
on local suppliers
No
No
Part 2: Local communities - Local value
creation
154-159
Part 2: Local communities - Local value
creation
154-159
3 4 3
GRIEG SE A FOOD
PRODUCTION
Visiting
Grieg Gaarden
Grieg Seafood's annual report 2019 has
been produced by Group Finance and
C. Sundts gate 17-19
Group Communication
Design and layout: Mission AS
N-5004 Bergen
Norway
Post
Postbox 234 Sentrum
5804 Bergen
Contact
Tlf: +47 55 57 66 00
Fax: +47 55 57 69 70
info@griegseafood.com
www.griegseafood.com
A N N U A L R E P O R T 2 019